BUS206_StudyGuide

BUS206

Managing People Study Guide (5CU)

BUS206 Managing People School of Business SIM University

Publishing Director: Roy Lee

Editorial Manager: Lian Siew Han

Senior Development Editor: Tanmayee Bhatwadekar

Development Editors: Deborah Yip Kenneth Chow Associate Development Editor: Willie Ong

Senior Regional Director: Janet Lim

Senior Product Manager: Charles Ho

Regional Manager, Production and Rights: Pauline Lim

Senior Production Executive: Cindy Chai

Cover Designer: Jermaine Sim

© 2015 Cengage Learning Asia Pte Ltd ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be reproduced, transmitted, stored or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitalizing, taping, Web distribution, information networks, or information storage and retrieval systems, without the prior written permission of the publisher. ISBN-13: 978-900-0020--61-4

ISBN-10: 900-0020-61-1

Cengage Learning Asia Pte Ltd 151 Lorong Chuan #02-08 New Tech Park Singapore 556741 Cengage Learning is a leading provider of customized learning solutions with office locations around the globe, including Andover, Melbourne, Mexico City, Boston (MA), Toronto, Hong Kong, New Delhi, Seoul, Singapore and Tokyo. Locate your local office at www.cengage.com/global Cengage Learning products are represented in Canada by Nelson Education, Ltd. For your lifelong learning solutions, visit www.cengage.com/custom Visit our website at www.cengageasia.com Custom Creations is a Cengage Learning publishing program for academics to present their course material speedily and professionally to their students and hence has not undergone the editorial process.

For product information and technology assistance, contact us at Cengage Learning Asia Customer Support, 65-6410-1200

For permission to use material from this text or product,

submit all requests online at www.cengageasia.com/permissions Further permissions questions can be emailed to

[email protected]

Printed in Singapore 1 2 3 4 5 19 18 17 16 15

Course Development Team

Head of Programme

: Dr Park Byung Joon

Course Developer : Ms Beth Lee

Production : Educational Technology & Production Team

Curriculum Administration Team

Course Guide © 2015 SIM University. All rights reserved.

Study Units © 2013 SIM University and Cengage Learning Asia. All rights reserved.

No part of this material may be reproduced in any form or by any means without

permission in writing from the Educational Technology & Production, SIM

University.

Educational Technology & Production

SIM University

461 Clementi Road

Singapore 599491

Release V1.1

CONTENTS

SECTION 1: COURSE GUIDE 1.1 Introduction .................................................................................................... 1 1.2 Course Description and Aims ...................................................................... 2

1.3 Learning Outcomes ....................................................................................... 2

1.4 Overall Assessment ....................................................................................... 4

1.5 Learning Materials.........................................................................................6

SECTION 2: STUDY UNITS

STUDY UNIT 1

Chapter 1: Introduction to Management ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU1‐1

Learning Outcomes

Welcome Aboard, New Manager!

The Definition of Management

The Four Management Functions

Organisational Performance

Management Skills

When Skills Fail

Management Types

What Is It Like to be a Manager?

Innovative Management for the New Workplace

Chapter 2: Planning and Goal‐setting ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU1‐13

Learning Outcomes

Overview of the Goal‐setting and Planning Process

Goal‐setting in Organisations

Operational Planning

Benefits and Limitations of Planning

Planning for a Turbulent Environment

Chapter 3: Decision‐making ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU1‐22

Learning Outcomes

Decision‐making is Tough

Definition of Decision‐making

Types of Decisions and Problems

Decision‐making Models

Decision‐making Steps

Suggested Answers to Review Questions ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU1‐32

References ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU1‐37

STUDY UNIT 2

Chapter 1: Leadership ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU2‐1

Learning Outcomes

To Serve versus to be Served

The Nature of Leadership

Contemporary Leadership

From Management to Leadership

Leadership Traits

Behavioural Approaches

Contingency Approaches

Charismatic and Transformational Leadership

Followership

Power and Influence

Chapter 2: Corporate Culture ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU2‐17

Learning Outcomes

The Culture at Crothall Healthcare

The Internal Environment: Corporate Culture

Types of Culture

Shaping Corporate Culture for Innovative Response


References ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU2‐27

STUDY UNIT 3

Chapter 1: Motivation ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU3‐1

Learning Outcomes

Motivation in the Eyes of a Call Agent

The Concept of Motivation

Content Perspectives on Motivation

Process Perspectives on Motivation

Reinforcement Perspective on Motivation

Job Design for Motivation

Innovative Ideas for Motivating

Chapter 2: Teamwork ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU3‐15

Learning Outcomes

Teamwork Makes Shift Less Lonely

Why Teams at Work

How to Make Teams Effective

Types of Teams

Team Characteristics

Team Processes

Managing Team Conflict

Work Team Effectiveness


References ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU3‐34

STUDY UNIT 4

Chapter 1: Designing Adaptive Organisations ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU4‐1

Learning Outcomes

Best‐Fit Structure

Organising the Vertical Structure

Departmentalisation

Chapter 2: Quality and Performance ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU4‐13

Learning Outcomes

Control is Good and Necessary

The Meaning of Control

Feedback Control Model

Financial Control

The Changing Philosophy of Control

Total Quality Management (TQM)


References ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU4‐28

STUDY UNIT 5

Chapter 1: Nature of Human Resource Management ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU5‐1

Learning Outcomes

Definitions of HRM and Human Capital

Human Capital in Organisations

HR Activities

HRM Roles

Current HRM Challenges

Chapter 2: Recruiting Human Resources ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU5‐10

Learning Outcomes

Definitions of Recruitment and Strategic Recruitment

Labour Markets

Strategic Recruitment Decisions

Internal Recruitment Methods

External Recruitment Sources

Internet Recruitment

Recruitment Evaluation and Metrics

Chapter 3: Selecting Human Resources ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU5‐23

Learning Outcomes

Selection and Placement

Selection Responsibilities

Selection Testing

Selection Interviews

Background Investigation

Making the Job Offer


References ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU5‐38

STUDY UNIT 6

Chapter 1: Training and Developing Human Resources ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU6‐1

Learning Outcomes

Nature of Training

Training and Organisational Strategy

Developing Human Resources

Chapter 2: Compensating Human Resources and Managing Employee

Benefits ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU6‐7

Learning Outcomes

Nature of Total Rewards and Compensation

Benefits and HR Strategy

Chapter 3: Managing Employee Relations ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU6‐12

Learning Outcomes

Employee Rights and Responsibilities

Rights Affecting the Employment Relationship

Alternative Dispute Resolution


References ∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙∙ SU6‐22

BUS206

Managing People

COURSE GUIDE

BUS206 MANAGING PEOPLE COURSE GUIDE

SIM UNIVERSITY 1

SECTION 1: COURSE GUIDE

1.1 Introduction

Welcome to your study of BUS206, Managing People, a 5‐credit unit (CU) course.

This Study Guide is divided into two sections – the Course Guide and Study Units.

The Course Guide provides a structure for the entire course. As the phrase implies,

the Course Guide aims to guide you through the learning experience. In other

words, it may be seen as a roadmap through which you are introduced to the

different topics within the broader subject. This Guide has been prepared to help

you understand the aim[s] and learning outcomes of the course. In addition, it

explains how the various materials and resources are organised and how they may

be used, how your learning will be assessed, and how to get help if you need it.

Course Schedule

To help monitor your study progress, you should pay special attention to your

Course Schedule. It contains study unit related activities including Assignment,

self‐evaluations, and examinations. Please refer to the Course Timetable in the

Student Portal for the updated Course Schedule.

NOTE: You should always make it a point to check the Student Portal for any

announcements and latest updates.

You need to ensure you fully understand the contents of each Study Unit listed in

the Course Schedule. You are expected to complete the suggested activities either

independently and/or in groups. It is imperative that you read through your

Assignment questions and submission instructions before embarking on your

Assignment. It is also important you comprehend the Overall Assessment

Weighting of your course. This is listed in Section 1.4 of this Guide.

Manage your time well so you can meet given deadlines and do regular revisions

after completing each unit of study. They will help you retain the knowledge

garnered and prepare you for any required formal assessment. If your course

requires an end‐of‐semester examination, do look through the Specimen or Past

Year Exam Paper which is available on MyUniSIM.

COURSE GUIDE BUS206 MANAGING PEOPLE

2 SIM UNIVERSITY

Although flexible learning – learning at your own pace, space and time – is a

hallmark at UniSIM, you are encouraged to engage your instructor and fellow

students in online discussion forums. A sharing of ideas through meaningful

debates will help broaden your learning and crystallise your thinking.

1.2 Course Description and Aims

BUS206 Managing People provides students with an introduction into

management, organisational behaviour and human resource management. It

seeks to help students understand the key concepts in each of these areas of

management. It reviews the fundamentals of the four management functions

(Planning, Organising, Leading and Controlling); individual, group and

organisational processes in organisational behaviour; and the four functional

areas of human resource management (Staffing, Training and Development,

Motivation and Maintenance).

1.3 Learning Outcomes

Knowledge & Understanding (Theory Component)

1. Give an overview of management, planning and goal setting.

2. Present the different types of decisions, models of decision and the

decision making process.

3. Relate leadership concepts, theories and approaches to a work place.

4. Examine corporate culture, levels and elements of culture, types of culture

and how they can be used to achieve organisational performance.

5. Appraise the role of motivation in achieving organisational goals.

6. Develop the understanding of the types of team, team characteristics and

team processes; and strategies that encourage team cohesion, improve

team effectiveness and manage team conflicts.

7. Summarise the contextual dimensions of structure and the types of

organisation structures and the advantages and disadvantages of each

type.

8. Interpret the control process and the management of quality and

performance.


SIM UNIVERSITY 3

9. Analyse various recruitment methods, selection process, selection tests and

types of interviews in employment.

10. Explain the roles of training and development for developing capabilities

and competencies of employees.

11. Relate compensation and benefits to employee attraction, employee

motivation and employee retention.

12. Discuss alternatives to employee relations.

Key Skills (Practical Component)

1. Apply management, organisation behaviour and HR concepts, principles

and processes to real and hypothetical situations.

2. Demonstrate the essential knowledge and interpersonal skills to work

effectively as a team.

3. Illustrate proficiency in oral and written communication and able to make

presentations in areas related to management, organisation behaviour and

human resource management.


4 SIM UNIVERSITY

1.4 Overall Assessment

The overall assessment weighting for this course for the Evening Cohort is as

follows:

Assessment

Description Weight Allocation

Assignment 1

Pre‐Class Quiz 1 6%



Assignment 2 Group‐based Assignment 1 30%

Examination Written Examination 50%

TOTAL 100%

The overall assessment weighting for this course for the Day‐time Cohort is as

follows:

Assessment Description Weight Allocation

Assignment 1 Pre‐Course Quiz 10%

Assignment 2 Class Participation 10%

Assignment 3 Group‐Based Assignment 1 30%

Examination Written Examination 50%

TOTAL 100%

UniSIM’s assessment strategy consists of two components, Overall Continuous

Assessment (OCAS) and Overall Examinable Component (OES) that make up the

overall course assessment score.

For SBiz courses, both components will be equally weighted: 50% OCAS and 50%

OES.

(a) OCAS: In total, this continuous assessment will constitute 50 percent of overall

student assessment for this course. The sub‐components are reflected in the table

above and are different for the day‐time and evening cohort. The continuous

assignments are compulsory and are non‐substitutable. It is imperative that you

read through your Assignment questions and submission instructions before

embarking on your Assignment.

(b) OES: The Examination is 100% of this component.

To be sure of a pass result, you need to achieve scores of at least 40% in each

component. Your overall rank score is the weighted average of both components.


SIM UNIVERSITY 5

Practical Advice

UniSIM adopts activity‐based learning, an approach that aims to help students to

become critical thinkers and effective business leaders. With the implementation of

activity‐based seminars, the facilitator and students are co‐producers of the

learning outcome. In this context, the active participation and engagement of the

students are essential elements of the positive learning experience that activity‐

based seminar can become. In this respect, students are expected to put in

considerable effort to perform well in the course.

Below is a summary of the activities and tasks that students need to perform at

three stages ‐ pre‐seminar, during seminar and post‐seminar:

Pre‐Seminar During Seminar Post‐Seminar

Read the specific

chapters outlined

in the course

schedule.

Check the

announcement

page for weekly

update of

activities.

Complete the

weekly prescribed

activities given by

the facilitator.

These activities

may include

discussion

questions, case

studies, research

topics.

Although attendance

is not compulsory,

students are strongly

encouraged to attend

class regularly to

benefit from activity‐

based learning.

Participate in class

activities.

Share experiences

with fellow ‐

students.

Interact with fellow‐

students and the

facilitator.

Ask questions to

clarify

concepts/theories

that you do not

understand. This is

important because

not only do you clear

your doubts, you

also help others to

learn, too.

Form small study groups

or a learning community

to help each other learn.

You may touch base

regularly to encourage

each other to learn

together.

Participate in discussion

forums.

Review and learn from

feedback from Group‐

Based Assignment


6 SIM UNIVERSITY

Resources Available

As a part‐time adult learner, you need to be resourceful and know where to obtain

information that will enable you to progress well in the course. Below is a list of

useful resources which you should access in the course of study.

Resource Accessibility

Important Announcements

Online quiz instructions and

deadlines

GBA deadline

Weekly announcement on class

activities

School announcements

Blackboard, Announcement Menu Bar

Course Schedule Student Portal, E‐services

Course Guide

Examination Reports by semester

Blackboard, Course Information Menu

Bar

Formative Quizzes Blackboard, Study Units Menu Bar

Weekly Supplementary Materials

Weekly Activities

Blackboard, Additional Resources

Menu Bar

Group‐Based Assignment Blackboard, Assessments Menu Bar

Revision Lecture Blackboard, Online Revision Menu Bar

Examination Timetable Student Portal

1.5 Learning Materials

The following is a list of the required learning materials to complete this course.

Required Textbook

Author(s)

Last name, First

name

Title Year Publisher

SIM University BUS206 Managing People 2012 Cengage

Learning

Asia Pte

Ltd,

Singapore

BUS206

Managing People

STUDY UNIT 1

CHAPTER 1: Introduction to Management

CHAPTER 2: Planning and Goal‐setting

CHAPTER 3: Decision‐making

BUS206 STUDY NOTES STUDY UNIT 1

SIM UNIVERSITY SU1-1

CHAPTER 1: INTRODUCTION TO MANAGEMENT

LEARNING OUTCOMES

At the end of Chapter 1, you are expected to:

Explain basic concepts and principles of management, its four functions and the

type of management activity associated with each function.

Differentiate the various categories of management skills and management

types.

Summarise the ten roles that managers perform in organisations.

Examine the personal challenges involved in becoming a new manager.

Appraise the turbulent forces that require a new workplace and the innovative

management competencies needed to deal with today’s environment.

STUDY UNIT 1 BUS206 STUDY NOTES

SU1-2 SIM UNIVERSITY

WELCOME ABOARD, NEW MANAGER!

John is a very happy man. He has recently been promoted to manager. John is

pleased that his patience, perseverance and diligence have finally paid off and that

the upper management has recognised his value to the company. ʺIʹm going to call

my lovely wife, Helen and tell her the good newsʺ, John tells himself.

John wants to be an effective manager. He knows a managerial role is different

from a specialist role. It can be especially challenging to manage people who were

once his peers. John has many questions in his mind. What are the management

functions that he has to perform? What skills does he need to effectively perform

these functions? What roles does he need to play as a manager? How does he work

with people? In short, John wants to know what it is like to be a new manager so

that he learns what he needs to do to be successful.

THE DEFINITION OF MANAGEMENT

Management is the attainment of organisational goals in an effective and efficient

manner through planning, organising, leading, and controlling organisational

resources.

There are two important ideas in this definition:

1) The four functions of planning, organising, leading, and controlling; and

2) The attainment of organisational goals in an efficient and effective manner.

THE FOUR MANAGEMENT FUNCTIONS A. Planning

Planning is the management function concerned with identifying goals for

future organisational performance and deciding on the tasks and use of

resources needed to attain them. It defines where the organisation wants to be

in the future and how to get there. As an example, Yokogawa, a manufacturer

and supplier of industrial automation control systems, field instruments and

avionic products annually plans its long and short term goals (Spring

Singapore, 2012).



B. Organising

Organising is the management function concerned with assigning tasks,

grouping tasks into departments, delegating authority, and allocating resources

across the organisation. Organising follows planning and reflects how the

organisation prepares its resources to accomplish the plan.

C. Leading

Leading is the management function that involves the use of influence to

motivate employees to achieve the organisation’s goals. It includes motivating

entire departments and divisions as well as those individuals working

immediately with the manager. For example, branch managers in a local bank

are required to lead and motivate employees. They do so by having regular

meetings to discuss issues and allow employees to propose solutions. The

branch manager listens and guides employees towards the best possible

solutions.

D. Controlling

Controlling is the management function concerned with monitoring

employees’ activities, keeping the organisation on track and progressing

towards its goals, as well as making corrections as needed. Trends towards

employment and trust of employees have led many companies to place less

emphasis on top‐down control and more emphasis on training employees to

monitor and correct themselves.

READ: Pages 2 ‐ 8 of the textbook.

REFER TO: Exhibit 1.1 shows the activities of managers.

Exhibit 1.2 describes the process of management.

REVIEW: The activities of managers in Exhibit 1.1. Classify them into the four core

management functions.



ORGANISATIONAL PERFORMANCE An organisation is a social entity that is goal directed and deliberately structured.

Social entity means two or more people.

Goal directed means the organisation is designed to achieve some outcome or

goal such as make a profit.

• Deliberately structured means tasks are divided and responsibility for their

performance is assigned to organisation members. This is commonly seen in

factories where a job is broken into smaller tasks that are then distributed to

different individuals or departments assigned to perform them.

The manager’s responsibility is to coordinate resources in an effective and efficient

manner to accomplish the organisation’s goals.

Organisational effectiveness is the degree to which the organisation achieves a

stated goal, or succeeds in accomplishing what it tries to do. In short,

effectiveness means doing the right things.

Organisational efficiency refers to the amount of resources used to achieve an

organisational goal. It is based on the how much raw materials, money, and

people are necessary for producing a given volume of output. In short,

efficiency means doing things right.

MANAGEMENT SKILLS

A. Conceptual Skills

1. Conceptual skill is the cognitive ability to see the organisation as a whole

and the relationships linking its various parts. For instance, it involves

knowing where one’s team fits within the organisation and how the

organisation fits into its environment. It also means having the ability to

think strategically—to take a broad, long‐term view.

2. Conceptual skill is especially important for top managers.

B. Human Skills

1. Human skill is the manager’s ability to work with and through other

people and to work effectively as a group member. It is demonstrated in the



way a manager motivates, facilitates, coordinates, leads, communicates, and

resolves conflicts. As globalisation, workforce diversity, uncertainty, and

societal turbulence increase, a manager’s human skills become even more

crucial to ensuring that things are getting done.

2. Human skills are important for managers at all levels, and particularly those

who directly work with employees on a daily basis. C. Technical Skills

1. Technical skills refer to the understanding of and proficiency that an employee can demonstrate in the performance of specific tasks. This

includes mastery of the methods, techniques, and equipment involved in

specific business functions such as engineering, manufacturing, or finance.

Technical skills also include specialised knowledge, analytical ability, and

competent use of tools and techniques to solve problems in that specific

discipline.

2. Technical skills are most important at lower organisational levels and

become less important than human and conceptual skills as managers are

promoted.


REFER TO: Exhibit 1.3 shows the relationship of conceptual, human and technical skills to

management.

REVIEW: Think about Toyota’s highly publicised safety problems. One observer said that

a goal of efficiency had taken precedence over a goal of quality within Toyota.

Do you think managers can improve both efficiency and effectiveness

simultaneously? Discuss. How do you think Toyota’s leaders should respond

to the safety situation?

DO: Observe how a manager in your workplace uses human skills to get things

done through people. Identify the actions he/she takes and assess the results

he/she achieves.



WHEN SKILLS FAIL

1. During turbulent times, managers must use all their skills and competencies to

benefit the organisation and its stakeholders.

2. Many companies falter because managers fail to listen to customers,

misinterpret signals from the market, or cannot build a cohesive team because

of poor human skills.

3. The number one reason for manager failure is ineffective communication skills

and practices.

4. Other management missteps include treating people as if they were objects or

instruments instead of individuals; suppressing dissent, and the inability to

build a management team characterised by mutual trust and respect.


DO: Search the Internet for SMRT strike and identify management missteps in

treating the drivers and the gaps in communication. What key lessons can

managers learn from this situation?

MANAGEMENT TYPES

A. Vertical Differences

1. Top managers are at the top of the organisational hierarchy and are responsible for the entire organisation, with titles such as chairperson,

president, managing director, chief executive officer (CEO), and executive

vice president. Top managers are concerned with long‐range planning and

their responsibilities include: a. setting organisational goals;

b. defining strategies for achieving them;

c. monitoring and interpreting the external environment;

d. making decisions that affect the entire organisation;

e. communicating a shared vision for the organisation;



f. shaping corporate culture; and

g. nurturing an entrepreneurial spirit.

2. Middle managers work at the middle levels of the organisation and are

responsible for business units and major departments. They hold titles such

as department head, division head, manager of quality control, and director

of the research lab. Concerned with near‐future planning, middle managers

are mainly responsible for implementing strategies and policies defined by

top managers.

a. Research shows that middle managers play a critical role in facilitating

change and enabling organisations to respond to rapid shifts in the

environment.

b. Successful middle managers are constructively critical of the status quo,

have a significant personal power, are versatile, and rate high in

emotional intelligence.

3. Project managers are responsible for temporary work projects that involve

the participation of people from various functions and levels of the

organisation, and perhaps from outside the company as well. For example,

the lead project manager oversees a factory construction project. Once the

factory has been built, the project is completed and the project team

dissolved.

4. First‐line managers are at the first or second management level and are

directly responsible for the production of goods and services. They hold titles such as supervisor, line manager, section chief, and office manager.

Their focus is squarely on accomplishing the day‐to‐day objectives that

middle managers have set for them and their subordinates. The

responsibilities of first‐line managers include:

a. applying rules and procedures to achieve efficient production;

b. providing technical assistance; and

c. motivating subordinates.

B. Horizontal Differences

1. Horizontal differences in management jobs occur across the different

functional areas of the organisation such as advertising, sales, finance,

human resources, manufacturing, and accounting.

2. Functional managers are responsible for departments that perform a single

functional task and have employees with similar training and skills.



a. Line managers are responsible for employees who make or provide a

product or service.

b. Staff managers are in charge of departments such as finance and human

resource that support line departments. 3. General managers are responsible for several departments that perform

different functions.


REFER TO: Exhibit 1.5 shows the management levels in the organisational hierarchy.

REVIEW: You are a bright, hard‐working entry‐level manager who fully intends to rise

up through the ranks. Your performance evaluation gives you high marks for

your technical skills but low marks when it comes to people skills. Do you

think people skills can be learned, or do you need to rethink your career path?

If people skills can be learned, how would you go about it?

WHAT IS IT LIKE TO BE A MANAGER?

A. Making the Leap: Becoming a New Manager

Becoming a manager involves a profound transformation of one’s personal

identity, i.e. a radical change in the way one think of oneself. This

transformative process involves letting go of deeply held attitudes and learning

new ways of thinking. Specific aspects of this transformation include changing:

a. from a specialist who performs specific tasks to a generalist who

coordinates diverse tasks;

b. from doing things oneself to getting things done through others;

c. from an individual actor to a network builder; and

d. from working relatively independently to working in a highly

interdependent manner.


REFER TO: Exhibit 1.6 shows making the leap from individual performer to manager.



B. Manager Activities

1. Most new managers are unprepared for the variety of activities typical

managers routinely perform.

a. Managerial activity is characterised by variety, fragmentation, and

brevity. As the average time spent on any one activity is less than nine

minutes, managers must be able to accomplish a great deal of varied

tasks and quickly shift their focus from one to other activities. For that

reason, managers must be energetic as they have to perform a great deal

of work at an unrelenting pace.

C. Manager Roles

1. A role is a set of expectations that characterise a manager’s behaviour.

Managers’ activities can be organised into ten roles. The ten roles are

divided into three categories: informational, interpersonal, and decisional.

2. Informational roles include the functions used to maintain and develop an

information network.

a. The monitor role involves seeking current information from many

sources.

b. The disseminator role complements the monitor role. In the disseminator

role, the manager transmits information to others, both inside and

outside the organisation.

c. The spokesperson role pertains to making official statements to people

outside the organisation about company policies, actions, or plans.

3. Interpersonal roles refer to relationships with others and are related to

human skills.

a. The figurehead role involves handling ceremonial and symbolic functions

for the organisation. For example, the Chief Executive Officer of an

company acts as a figurehead when, during a public event or ceremony,

s/he presents a cheque in support of the President Star Charity.

b. The leader role is being fulfilled when the manager develops and

maintains a relationship with his subordinates. It includes influencing,

motivating, and communicating with them.

c. The liaison role concerns the development of information sources both

within and outside the organisation.



4. Decisional roles come into play when managers must make choices. These

roles often require both conceptual and human skills.

a. The entrepreneur role involves the initiation of change. Managers seek

ways to solve problems or improve operations.

b. The disturbance handler role involves resolving conflicts between

subordinates, managers, or even departments. For instance, the line

managers of the sales and customer service departments have to step in

to mediate and negotiate a win‐win solution to resolve the conflicts that

have arisen between the sales and customer service staff.

c. The resource allocator role pertains to allocating resources in order to

attain desired outcomes.

d. The negotiator role involves formal negotiations and collective

bargaining to attain outcomes for the manager’s unit of responsibility.


REFER TO: Exhibit 1.7 describes the ten manager roles.

REVIEW: Review the roles of managers. What type of management skills would be

critical for a manager who assumes an interpersonal role?



INNOVATIVE MANAGEMENT FOR THE NEW

WORKPLACE

A. Turbulent Forces

1. Technological developments, globalisation, shifting social values, changes

in workforce composition and labour markets, as well as other contextual

shifts have all created a challenging environment for organisations. For

most people and organisations, a high‐speed pace of life is the norm. In

general, large and small crises seem to multiply and today’s world is both

turbulent and unpredictable as events in one part of the world can

dramatically influence business all over the globe. The 2008‐2009 financial

crisis in America and Europe has also affected small and middle enterprises

(SMEs) in Singapore and negatively impacted their ability to expand and

grow their businesses in Asian markets.

B. Old & New Workplace Characteristics

1. The old workplace was characterised by routine, specialised tasks, and

standardised control procedures. The organisation was coordinated through

a vertical hierarchy, with decision‐making authority reserved almost

exclusively to upper‐level managers.

2. The new workplace is characterised by free‐flowing work, flexibility, and

flatter structures. Empowered employees make decisions based on widely

available information. The valued worker is one who learns quickly, shares

knowledge, and is comfortable with risk, change, and ambiguity. Work is

often virtual as managers must be able with supervising and coordinating

subordinates who never actually “come to work” in the traditional sense.

3. Teams in organisations may include outside contractors, suppliers,

customers, competitors, and interim managers who work on a project‐by‐

project basis and are not affiliated with any specific organisation. C. New Management Competencies

1. Managers must rethink their approach to organising, directing, and

motivating employees. Instead of “management‐by‐keeping‐tabs,” managers

must develop a leadership style that empowers instead of directs employees.

2. Success in the new workplace depends on a variety of collaborations across

functions and hierarchical levels as well as with customers and other

companies. Team‐building skills are crucial for today’s managers.

3. An important challenge for today’s managers is to build a learning

organisation by creating a climate that values experimentation and risk‐



taking, applies current technology, tolerates mistakes and failure, and

rewards non‐traditional thinking and knowledge sharing.


REFER TO: Exhibit 1.9 describes the transition to a new workplace.

REVIEW: Some of the ways organisations and jobs changed over the past ten years. What

changes do you anticipate over the next ten years? How might these changes

affect the manager’s job and the skills a manager needs to be successful?

DO: Watch a video from YouTube to discover the new skills of new managers today.

Note the key learning points.

For more information, please click here

(Access video via iStudyGuide)



CHAPTER 2: PLANNING AND GOAL‐SETTING

LEARNING OUTCOMES


Differentiate the various types of goals and plans.

Explain the concept of organisational mission and its influences on goal setting

and planning.

Discuss the characteristics of effective goals as well as the benefits and

limitations of planning.

Illustrate four essential steps in the management by objectives (MBO) process.

Explain the importance, for today’s managers, of contingency planning,

scenario building, and crisis planning.



APPLE INC. ‐ The ʹiʹ Company

Initially called Apple Computer Inc., the Cupertino‐based company used to be

known as a personal computer company responsible for the runaway success of the

Apple IIe computers. This is history.

Today, the company is called Apple Inc. after it started venturing beyond PC

manufacturing and successfully launched iTunes, the iPod, the iPhone, the iPad

and the Apple TV. Apple’s success in the first decade of the 21st century has

catapulted it to the very top of the world’s most profitable and valuable companies.

Appleʹs success did not happen overnight. Back in 2001, upon the return of Steve

Jobs, Apple introduced iTunes, an online service offering music downloads at a

fixed price and without a monthly subscription. iTunes was a huge success. In 2008,

Apple overtook Wal‐Mart as the largest seller of music.

One key managerial responsibility is to set long‐term goals for the organisation and

to devise plans detailing how it will get there. The quest for an enduring success

constantly pushes Appleʹs managers to continuously plan ahead so as to position

the company to become the undisputed leader of the entertainment business (Daft,

2012).



OVERVIEW OF THE GOAL‐SETTING AND PLANNING

PROCESS

A goal is defined as a desired future state that the organisation attempts to realise.

Goals are important because they define the purpose of an organisation. A plan is a

blueprint that specifies the resource allocations, schedules, tasks, and other actions

necessary for goal achievement. Goals specify future ends; plans specify today’s

means. The word planning usually incorporates both ideas; it means determining

the organisation’s goals and defining the means for achieving them.

A. Levels of Goals and Plans

Top managers are responsible for establishing strategic goals and plans that

reflect a commitment to both organisational efficiency and effectiveness. Tactical

goals and plans are the responsibility of middle managers. Operational plans

identify the specific procedures or processes needed at lower levels of the

organisation. First line managers and supervisors develop operational plans

that focus on specific tasks and processes and that help to meet tactical and

strategic goals. Planning at each level supports the other levels.

Yogokawa follows this systematic approach to planning. At the start of every

year, the Managing Director attends the annual global strategic meeting held at

the company’s headquarters. He then meets up with divisional centre heads to

review the groupʹs targets that would contribute to the companyʹs performance

and then chart the direction for the upcoming financial year.

At Yogokawa as at most companies, the top management develops strategic

plans and strategic goals and divisional centre heads set tactical plans and

tactical goals that are later translated into operational plans and procedures that

will guide the work of first line managers and supervisors (Spring Singapore,

2012).

B. The Organisational Planning Process

The overall planning process prevents managers from thinking merely in terms

of day‐to‐day activities. The planning process includes five steps: 1) develop the

plan; 2) translate the plan into action; 3) develop operational procedures and

identify resources needed to achieve goals; 4) execute the plan; and 5) monitor

results and review plans when results are below expectations.



GOAL‐SETTING IN ORGANISATIONS

A. Organisational Mission

1. At the top of the goal hierarchy is the mission—the organisation’s reason

for existence—that describes the organisation’s values, aspirations, and

reason for being. The formal mission statement is a broadly stated

definition of purpose that distinguishes the organisation from others of a

similar type. The content of an organisation mission often focuses on its

market and customers and identifies desired fields of endeavour. Some

mission statements also describe company characteristics such as corporate

values, product quality, location of facilities, and attitude towards

employees. For instance, IKEAʹs mission is ʺto offer a wide variety of home

furnishing items of good design and function at prices so low that the majority of

people can afford to buy.ʺ (Daft, 2013). Generally, the mission and core values

are used to guide the planning process. For example, in Yogokawa, senior

management use the company’s mission to unite employees around its core

values and develop a more effective planning framework (Spring Singapore,

2012).

B. Goals and Plans

1) Strategic goals are broad statements describing where the organisation

wants to be in the future. Sometimes called official goals, they pertain to the

entire organisation rather than to specific divisions or departments.

Strategic plans define the steps that the company intends to take to achieve

its strategic goals. A strategic plan is a blueprint that defines organisational

activities and resource allocations. Strategic planning tends to be long‐term.

2) Tactical goals are the results that major divisions and departments within

the organisation intend to achieve. Tactical goals are the concern of middle

management and help identify and describe what major subunits must do

in order for the organisation to achieve its strategic goals. Tactical plans

define what major departments and organisational subunits will do to

implement the organisation’s strategic plan. They tend to be for a shorter

time period. For example, divisional centre heads develop tactical plans and

goals that are aligned with the Managing Directorʹs strategic plan (Spring

Singapore, 2012).

3. Operational goals are the specific results expected from departments, work

groups, and individuals. Operational plans are developed at the lower

levels of the organisation and specify the action plans that should be

implemented to achieve operational goals and support tactical plans.




REFER TO: Exhibit 7.1 shows the levels of goals and plans.

Exhibit 7.2 depicts the organisational planning process.

REVIEW: Categorise and explain the types of goals. Which type of goals is set by middle

managers?

OPERATIONAL PLANNING

A. Criteria for Effective Goals

1. Specific and measurable. Wherever possible, goals should be expressed in

quantitative terms. Vaguely stated and strictly qualitative goals tend not to

motivate employees.

2. Define time period. Goals should specify the time period during which they

must be reached as well as the deadline by which they must be achieved.

3. Cover key result areas. Key result areas are those items that contribute most to

company performance. Key result areas should include both internal and

external customers. For example, Conrad Centennial Singapore’s key

performance areas are defined as five value drivers that include customer

loyalty, brand management, learning and growth, operational effectiveness

and revenue maximisation (Spring Singapore, 2012).

4. Choice and clarity. A few carefully chosen, clear, and direct goals can more

powerfully focus organisational attention, energy, and resources.

5. Challenging but realistic. The best quality programmes start with extremely

ambitious goals that challenge employees to meet high standards. However,

overly challenging goals have an adverse effect on motivation. When goals

are unrealistic, they set employees up for failure and lead to decreasing

employee morale. On the other hand, if goals are too easy, employees may

not feel motivated. Stretched goals are ambitious but realistic goals that

challenge employees to meet higher standards without demoralising or

demotivating them.

6. Linked to rewards. The impact of goals depends on the extent to which they

are linked to outcomes that employees specifically want: salary increases,

promotions, and other rewards.



B. Management by Objectives

1. Management by objectives (MBO) involves managers and employees

jointly defining objectives for every department, project, and person and

later using them to monitor subsequent performance. Four major activities

must occur in order for MBO to be successful.

a. Set goals. Setting goals is the most difficult step in MBO and should

involve employees at all levels. A good goal should be concrete and

realistic, provide a specific target and time frame, and assign

responsibility. Ideally, a mutual agreement about each goal should be

reached between employee and supervisor as it creates the strongest

commitment to achieving goals.

b. Develop action plans. An action plan defines the course of action needed to achieve the stated goals. Action plans are made for both individuals

and departments.

c. Review progress. A periodic progress review is important to ensure that

action plans are working. This review allows managers and employees

to see if they are on target and if corrective actions are needed. Most

organisations hold regular reviews to monitor progress and evaluate

performance. For example, Conrad Centennial Singapore reviews its

operational effectiveness during its monthly service quality meeting

(Spring Singapore, 2012).

d. Appraise overall performance. The final step in MBO is to evaluate whether

annual goals have been achieved both by individual employees as well

as their departments. Success or failure to achieve goals can be part of

the performance appraisal system and the attribution of salary increases

and other rewards.

2. There are many potential benefits to the MBO process. Corporate goals are

more likely to be achieved when they are the result of a mutual agreement

between managers and employees and focus on their efforts. Problems with

MBO occur when a company faces rapid change and MBO is most effective

when the organisational environment and internal activities are relatively

stable as performance can then more predictably be measured against goals.




REFER TO: Exhibit 7.6 shows the Model of the MBO Process.

Exhibit 7.7 depicts the MBO Benefits.

REVIEW: The MBO activities. In your opinion, which activities are more important for

MBO to be effective? Why?

DO: Search the Internet for two local companies that use the MBO process for

planning and goal setting.

C. Single‐Use and Standing Plans

1. Single‐use plans are developed to achieve objectives that are not likely to be repeated in the future. Single‐use plans include both programmes and

projects.

2. Standing plans are used to provide guidance for tasks performed

repeatedly within the organisation. The primary standing plans are

organisational policies, rules, and procedures. Standard Operating

Procedures (SOPs) are common standing plans used in manufacturing and

service organisations. The main benefits of using SOPs are employee

compliance and work consistency. Nowadays, an increasing number of

companies are also discovering a need to develop standing plans regarding

their employees’ use of corporate email accounts.

BENEFITS AND LIMITATIONS OF PLANNING

A. Benefits of Planning

1. Goals and plans provide a source of motivation and commitment. Planning can reduce uncertainty for employees and clarify what they should accomplish.

2. Goals and plans guide resource allocation. Planning helps managers decide

where they need to allocate resources, such as employees, money, and

equipment.

3. Goals and plans are a guide to action. Planning focuses attention on specific targets and directs employee efforts towards important outcomes.

4. Goals and plans set a standard of performance. Because planning and goal setting define desired outcomes, they also establish performance criteria so

managers can measure whether things are on or off track.



B. Limitations of Planning

1. Goals and plans can create a false sense of certainty. Having a plan can give

managers a false sense that they know what the future will be like.

2. Goals and plans may cause rigidity in a turbulent environment. A related problem is that planning can lock the organisation into specific goals, plans,

and time frames that may no longer be appropriate in a changing

environment.

3. Goals and plans can get in the way of intuition and creativity. Success often comes from creativity and intuition, which can be hampered by too much

routine planning.

PLANNING FOR A TURBULENT ENVIRONMENT

A. Contingency Planning

1. Contingency plans define company responses to be taken in case of

emergencies or setbacks. Contingency plans cover such situations as

catastrophic decreases in sales or prices, and loss of important managers.

B. Building Scenarios 1. Scenario building involves looking at trends and discontinuities and

imagining possible alternative futures to build a framework within which

unexpected future events can be managed.

2. With scenario building, a broad base of managers mentally rehearses

different scenarios based on a variety of anticipated changes that could

impact the organisation. Scenarios are like stories that offer alternative vivid

pictures of what the future will look like and how managers will respond in

each situation. Typically, two to five scenarios are developed for each set of

factors, ranging from the most optimistic to the most pessimistic view.

C. Crisis Planning

1. Crisis Prevention

a. Although unexpected events and disasters do happen, managers should

do everything they can to prevent crises. A critical part of the prevention

stage is to build trusting relationships with key stakeholders such as

employees, customers, suppliers, governments, unions, and the

community. Through such favourable relationships, managers can often

prevent crises and respond more effectively to those that cannot be

avoided. Good communication helps managers identify problems early



so they do not turn into major issues. Toyota’s global recall of almost 8.7

million vehicles, including 437,000 of its Prius hybrid cars in February

2010 was an example of crisis management. To reassure and regain trust

and confidence of its stakeholders, Akio Toyoda, President of the

company, launched a top‐bottom review of global operations aimed at

preventing the same problem from recurring and to exceed safety

standards (CNA, 2010).

2. Crisis Preparation

a. Preparation includes designing a crisis management team and

appointing a spokesperson, creating a detailed crisis management plan,

and setting up an effective communications system. Some companies are

setting up crisis management offices, with high‐level leaders reporting

directly to the CEO. In particular, organisations operating in the services

sector such as transport, healthcare and hotel should always put in place

a crisis management team to deal with crises that occur from time to

time.

b. The crisis management team is a cross‐functional group of people who will

be activated when a crisis occurs and who are closely involved in

developing the crisis management plan that they will implement in such

circumstances.

c. The crisis management plan is a detailed written plan that specifies the

steps to be taken, and by whom, if a crisis occurs. The plan should

include the steps for dealing with various types of crises, such as natural

disasters like fires or earthquakes, normal accidents like economic crises

or industrial accidents, and abnormal events such as product tampering

or acts of terrorism. The plan should be a living, changing document

that is regularly reviewed, practised, and updated as needed.






CHAPTER 3: DECISION‐MAKING

LEARNING OUTCOMES


Explain decision making and its importance to effective management.

Distinguish the different types of decisions and the characteristics of certainty

and uncertainty.

Apply the ideal, rational model of decision making as well as the political

model of decision making in the workplace.

Discuss the six steps used in managerial decision making.



DECISION‐MAKING IS TOUGH

When was the last time you made a decision that had a significant impact on you

and your family? What were the key considerations and how did you come to that

final decision? Was it easy for you to make that decision? If you generally find it

difficult to make personal decisions, then you need to know that making

organisational decisions is even tougher. The situation below involving Apex‐Pal

International is a case in point.

Driving at top gear and taking a leap of faith that deliberately overlooked

increasing food costs, Apex‐Pal International made a bold decision in December

2007 to invest $3 million in its first global outlet in Chrysler Building, the iconic

building in New York. It also planned to open another outlet in May 2008 (Khoo,

2008).

Apex‐Pal Chairman and CEO, Douglas Foo, was confident that his decision to

venture into the U.S. market would turn the local brand into a global brand

synonymous to McDonald’s. However, all good plans and intent came to end with

the collapse of Wall Street in September 2008. In the midst of the financial crisis,

Foo had to make a tough decision to close down the New York outlet, write off the

entire U.S. investment and take a loss of $3.8 million. Instead of retrenching

employees, Foo decided to retain them and instead chose to explore other cost

cutting measures to salvage the company (CNBC, 2011).

In an interview with CNBC, Foo shared, ʺThere were a lot of lessons. I think it was a

very valuable lesson for us, particularly how we should have entered a sophisticated

economy like the U.S. We were going into uncharted waters in that sense and so a lot of

things we had to do it in‐house. We had to rely on our network. At the end of the day, you

can plan all you want, but when unforeseen things happen, you need to reassess everything

very quickly. You can imagine youʹre not having cash flow income but you still have to pay

all your expenditures, itʹs scary, scary thoughtʺ (CNBC, 2011).



DEFINITION OF DECISION‐MAKING

A decision is a choice made available alternatives. Decision‐making is the process

of identifying problems and opportunities and to then resolve them. Decision

involves effort both before and after the actual choice. In the Apex‐Pal example, the

CEO made a decision to enter the U.S. market and when events took a turn for the

worse, he had to decide quickly to exit the market.

TYPES OF DECISIONS AND PROBLEMS

A. Programmed and Non‐programmed Decisions

1. Programmed decisions involve situations that have occurred often enough to enable decision rules to be developed and applied in the future. Once

managers formulate decision rules, subordinates and others can make these

decisions, freeing in the process the time that managers can use for other

tasks.

2. Non‐programmed decisions are made in response to situations that are

unique, poorly defined, largely unstructured, and likely to have important

consequences for the organisation. Non‐programmed decisions often

involve strategic planning because uncertainty is great and decisions are

complex. Swedish furniture giant, IKEA recently made a decision to enter

the untapped India retail sector. Investing €1.5 billion to open 25 stores in

India is an example of a non‐programmed decision (Bergen, 2012). B. Facing Certainty and Uncertainty

1. One difference between programmed and non‐programmed decisions

relates to the degree of certainty or uncertainty that managers deal with in

making the decision. In a perfect world, managers have all the information

necessary for making decisions. In reality, some things are unknowable and

some decisions will fail. Every decision situation can be organised on a scale

according to the availability of information and the possibility of failure.

The four positions on the scale are certainty, risk, uncertainty, and

ambiguity.

a. Certainty means that all the information the decision maker needs is

fully available. Few decisions are certain in the real world. Most involve

a certain degree of risk or uncertainty.

b. Risk means a decision has clear‐cut objectives and good information

available. The future outcomes associated with each alternative are

subject to chance; however, enough information is available to allow the

probability of a successful outcome for each alternative to be estimated.

IKEAʹs entry in the Indian retail sector is motivated by the potential



market opportunity and business growth. Without a doubt, IKEA is

willing to take calculated risk, knowing that there are potentially very

attractive returns for the company.

c. Uncertainty means managers know which goals they wish to achieve,

but information about alternatives and future outcomes is incomplete.

Factors that may affect a decision, such as price, production costs,

volume, or future interest rates, are difficult to analyse and predict.

Managers may have to come up with creative approaches to alternatives

and use personal judgement to determine which alternative is best.

Many decisions made under uncertainty do not produce the desired

results, but such decisions are commonly made because managers face

uncertainty every day. Apex‐Pal management still made the decision to

proceed with its international venture despite rising food costs and the

uncertainty of its success in entering the US market.

d. Ambiguity means that the goal to be achieved or the problem to be

solved is unclear, alternatives are difficult to define, and information

about outcomes is unavailable. Ambiguity is a wicked decision problem

as it involves conflicts over goals and decision alternatives, changing

circumstances, fuzzy information, and unclear linkages between the

decision elements. Some managers come up with a “solution” only to

realise that they hadn’t clearly defined the real problem. Ambiguity is

by far the most difficult decision situation that managers must

sometimes face nonetheless.


REFER TO: Exhibit 9.1 depicts the conditions that affect the possibility of decision failure.

REVIEW: Explain the difference between risk and uncertainty. How might decision

making differ for a risky versus an “ambiguous” situation?



DECISION‐MAKING MODELS

Decisions are usually made using the classical, the administrative, or the political

decision making model. The decision making model choice depends on the

manager’s personal preference, whether the decision is programmed or non‐

programmed, and the degree of uncertainty associated with the decision.

A. The Ideal, Rational Model

1. The classical model of decision making is based on assumptions that

managers should make logical decisions that will be in the organisation’s

best economic interests. The four assumptions include:

a. The decision maker operates to accomplish goals that are known and

agreed upon.

b. The decision maker strives for conditions of certainty, gathering

complete information.

c. Criteria for evaluating alternatives are known.

d. The decision maker is rational and uses logic to assign values, order

preferences, evaluate alternatives, and make the decision to maximise

goals.

2. The classical model is normative, defining how a decision maker should

make decisions, and providing guidelines for reaching an ideal outcome for

the organisation. The classical model is valuable because it helps decision

makers be more rational.

3. The classical model represents an “ideal” model of decision making that is

often unattainable by real people in real organisations. It works best when

applied to programmed decisions and to decisions characterised by

uncertainty or risk as relevant information is available and probabilities can

be calculated. For example, new analytical software applications automate

many programmed decisions, such as preventing a credit card customer

from making credit card payments until the outstanding payment is fully

made.

B. How Managers Actually Make Decisions

1. Bounded Rationality and Satisficing

a. The administrative model is considered to be descriptive, meaning that

it describes how managers actually make decisions rather than how they

should make them. Herbert A. Simon proposed two concepts



instrumental in shaping the administrative model: bounded rationality

and satisficing.

b. Bounded rationality means people have limits, or boundaries, on the

amount of information they can process in making a decision. Because

managers do not have the time or ability to process complete

information about complex decisions, they must satisfice. For example,

managers at Toyota faced a tough decision regarding accelerator

problems that affected some of its car models and that led to serious car

accidents. Rather than admit its production defects, Toyota managers

chose to delay issuing a mass recall until more deaths occurred (Daft,

2012).

c. Satisficing means that decision makers choose the first solution

alternative that satisfies minimal decision criteria. Rather than identify

and analyse all possible alternatives, managers will opt for the first

solution that appears to solve the problem. The decision maker cannot

justify the time and expense of obtaining complete information.

d. When the administrative model is used:

decision goals are vague, conflicting and lack consensus;

rational procedures are not always used, and when they are, they are

confined to a simplistic view of the problem that does not capture

the actual complexity of real events;

managers’ searches for alternatives are limited because of human,

information and resource constraints;

most managers settle for a satisficing rather than a maximising

solution.

2. Intuition

a. Intuition is another aspect of administrative decision making. Intuition

represents a quick apprehension of a decision situation based on past

experience but without conscious thought. Intuitive decision making is

not arbitrary or irrational because it is based on years of practice and

hands‐on experience. For example, policemen rely on their experience to

make decisions by recognising what is typical or abnormal about a loan

shark case.



b. Intuition begins with recognition; when people build a depth of

experience and knowledge in a particular area, the right decision often

comes quickly and effortlessly. Research on the validity of intuition in

decision making is inconclusive, suggesting that managers should take a

cautious approach to it, applying intuition only under the right

circumstances and in the right way.

C. Political Model

1. This model is more appropriate for non‐programmed decisions where

conditions are uncertain, information is limited, and there is disagreement

about the goals to pursue or the action to take.

When making complex organisational decisions, managers often engage in

coalition building. A coalition is an informal alliance among managers who

support a specific goal. Coalition building is the process of forming alliances

among managers. The inability of managers to build coalitions often makes

it difficult or impossible for them to get their decisions implemented. The

political model closely resembles the real environment in which most

managers and decision makers operate. For example, interviews with CEOs

in high‐tech industries found that they attempt to use some type of rational

decision making. However, the way they actually make decisions was

found to be through a complex network of interactions with other managers,

subordinates, environmental factors and organisational events (Daft, 2012).

The political model begins with four basic assumptions.

a. Organisations are made up of groups with diverse interests, goals, and

values.

b. Information is ambiguous and incomplete.

c. Managers do not have time, resources, or mental capacity to identify all

dimensions of the problem and process all relevant information.

d. Managers engage in the push and pull of debate to decide goals and

discuss alternatives.

2. Recent research has found rational, classical procedures to be associated

with high performance for organisations in stable environments.

Administrative and political decision‐making procedures and intuition have

been associated with high performance in unstable environments when

decisions must be made rapidly.




REFER TO: Exhibit 9.2 summarises the characteristics of Classical, Administrative and

Political Decision‐Making Models.

REVIEW: Analyse three decisions you made over the past six months.

Which of these were programmed and which were non‐programmed? Which

model—the classical, administrative, or political—best describes the approach

you took to make each decision?

DECISION‐MAKING STEPS

A. Recognition of Decision Requirement

1. Managers confront a decision requirement in the form of either a problem or

an opportunity. A problem occurs when organisational accomplishment is

less than established goals and therefore, some aspect of performance is

unsatisfactory. An opportunity exists when managers see potential

accomplishments that exceed current goals.

2. Problem or opportunity awareness is the first step in the decision sequence

and requires monitoring the internal and external environment for issues

that merit executive attention. Recognising decision requirements is difficult

because it often means integrating information in novel ways.

B. Diagnosis and Analysis of Causes

1. Diagnosis is the step in which managers analyse the underlying causal

factors associated with the decision situation. Managers make a big mistake

if they jump right into generating alternatives without first exploring the

cause(s) of the problem more deeply. Studies recommend that a series of

questions be asked.

a. What is the state of disequilibrium affecting us?

b. When did it occur?

c. Where did it occur?

d. How did it occur?

e. To whom did it occur?

f. What is the urgency of the situation?

g. What is the interconnectedness of events?

h. What result came from which activity?



C. Development of Alternatives

1. Once the problem or opportunity has been recognised and analysed,

decision makers begin to consider taking action. The next step is to develop

possible alternative solutions that will respond to the needs of the situation

and correct the underlying causes.

2. For a programmed decision, feasible alternatives are often available within

the organisation’s rules and procedures. Non‐programmed decisions

require developing new courses of action that will meet the needs of the

company.

D. Selection of Desired Alternative

1. The best alternative is the solution that best fits the firm’s overall goals and

values and achieves the desired results using the fewest resources. The

manager tries to select the alternative involving the least amount of risk and

uncertainty. Making choices also depends on managers’ personality factors

and willingness to accept risk and uncertainty. Risk propensity is an

individual’s willingness to take risk after considering the increased payoff

of the opportunity considered risky.

E. Implementation of Chosen Alternative

1. The implementation of a chosen alternative involves the use of managerial,

administrative, and persuasive abilities to ensure that the chosen alternative

is carried out. The success of the chosen alternative depends on whether or

not it is translated into action. Sometimes, an alternative cannot be realised

because managers lack the resources or energy needed to implement it.

Communication and leadership skills must be used to see that the decision

is carried out.

F. Evaluation and Feedback

1. In the evaluation step of the decision making process, decision makers

gather information or feedback to determine how well the decision was

implemented and whether it achieved its goals. Feedback is important

because decision making is a continuous, never‐ending process. Feedback

provides decision makers with information that can start a new decision

cycle.

2. By learning from their decision mistakes, managers turn problems into

opportunities.




REFER TO: Exhibit 9.3 depicts the Six Steps in the Managerial Decision‐Making Process.

REVIEW: You are a busy partner in a legal firm and an experienced secretary complains

of headaches, drowsiness, dry throat, and occasional spells of fatigue and flu.

She tells you she believes air quality in the building is bad and would like

something done. How would you respond?

DO: Search the Internet to discover IKEAʹs progress in store opening in India.





SUGGESTED ANSWERS TO REVIEW QUESTIONS

Chapter 1: Introduction to Management

Review the activities of managers in Exhibit 1.1. Classify them into the four

core management functions.

Planning is setting objectives; Organising is organising activities and people;

Leading is motivating, communicating and developing people; Controlling is

setting and measuring targets.

Think about Toyota’s highly publicised safety problems. One observer said

that a goal of efficiency had taken precedence over a goal of quality within

Toyota. Do you think managers can improve both efficiency and

effectiveness simultaneously? Discuss. How do you think Toyota’s leaders

should respond to the safety situation?

Organisational effectiveness is the degree to which the organisation achieves a

stated goal, or succeeds in accomplishing what it tries to do. Organisational

efficiency refers to the amount of resources used to achieve an organisational

goal. It is based on how much raw materials, money, and people are necessary

for producing a given volume of output. The ultimate responsibility of

managers is to achieve high performance, which is the organisation’s ability to

attain its goals by using resources in an efficient and effective manner.

Although efficiency and effectiveness are both important for performance, most

people would probably say that effectiveness is the more important concept.

The reason is that internal efficiency has no value if it does not enable the

organisation to achieve its goals and respond to the external environment. On

the other hand, an organisation that is effective does achieve its goals, by

definition. One of these goals should involve continuously increasing efficiency.

You are a bright, hard‐working entry‐level manager who fully intends to rise

up through the ranks. Your performance evaluation gives you high marks for

your technical skills but low marks when it comes to people skills. Do you

think people skills can be learned, or do you need to rethink your career

path? If people skills can be learned, how would you go about it?

Although some people seem to be naturally more adept at people skills, just as

some are naturally more adept at technical skills or conceptual skills, people

skills can be learned and there is no reason to rethink one’s career path unless

there is an unwillingness to improve in this area. People skills can be learned by

taking behavioural classes, by modelling one’s interactions after a supervisor or

colleague who has excellent people skills, by participating in role playing

exercises, and other activities that improve one’s interactional skills.



Review the roles of managers. What type of management skills would be

critical for a manager who assumes an interpersonal role?

The manager will need human skill if he assumes interpersonal role. As a

leader, he needs to communicate, motivate and influence his team members.

Human skill will enable him to work with and through other people and to

work effectively as a team leader. The manager can use human skill to motivate,

facilitate, coordinate, lead, communicate, and resolve conflicts. As globalisation,

workforce diversity, uncertainty, and societal turbulence increase, the manager

will need human skills to deal with such challenges.

Review some of the ways organisations and jobs changed over the past ten

years. What changes do you anticipate over the next ten years? How might

these changes affect the manager’s job and the skills a manager needs to be

successful?

In the new workplace, work is free‐flowing and flexible to encourage speed and

adaptation, and empowered employees are expected to seize opportunities and

solve problems. The workplace is organised around networks rather than

vertical hierarchies, and work is often virtual. These changing characteristics

have resulted from forces such as advances in technology and e‐business,

globalisation, increased diversity, and a growing emphasis on change and

speed over stability and efficiency. Managers need new skills and competencies

in this new environment. Leadership is dispersed and empowering. Customer

relationships are critical, and most work is done by teams that work directly

with customers. These changes will continue over the next 10 years, driven

largely by the rapidly increasing rate of technological advancement. In the new

workplace, managers must focus on building relationships, which may include

customers, partners, and suppliers. In addition, they must strive to build

learning capability throughout the organisation in order to keep up with

technological developments.



Chapter 2: Planning and Goal‐setting

Categorise and explain the types of goals. Which type of goals is set by

middle managers?

Goals can be strategic, tactical and operational. Strategic goals are broad

statements describing where the organisation wants to be in the future. Tactical

goals are the results that major divisions and departments within the

organisation intend to achieve. Operational goals are the specific results

expected from departments, work groups, and individuals.

Middle managers work at the middle levels of the organisation. They are

responsible for the performance of business units or major departments under

their charge. Middle managers are also involved in implementing business

strategies set by top management. Therefore, they set operational goals to

support the overall business strategy of their business units or departments.

Review the MBO activities. In your opinion, which activities are more

important for MBO to be effective? Why?

Management by objectives (MBO) is a method whereby managers and

employees define objectives for every department, project, and person and use

them to monitor subsequent performance. The four activities of MBO include

setting goals, developing action plans, reviewing progress and appraising

overall performance.

Of the four activities, reviewing progress and appraising performance are more

important. Action plans are documented and remain as a plan unless they are

implemented properly. The effectiveness of the plan can be evaluated by

reviewing progress. This activity indicates if actions are taken timely, carefully

and effectively. At the review stage, corrective actions can be taken to ensure

the plan is on track. There should be an overall appraisal of the overall

performance to ascertain if objectives are fully achieved. This is an important

activity because it serves as feedback to the department and the team.



Chapter 3: Decision‐making

Explain the difference between risk and ambiguity. How might decision

making differ for a risky versus an “ambiguous” situation?

Risk means that the decision maker has most of the necessary information. The

objectives of the decision are clear‐cut, and alternatives can be identified.

However, the future outcome of each alternative is not known for certain,

although the probability of outcomes can be calculated, which is the source of

risk. Ambiguity means the almost complete absence of information pertaining

to a decision. Managers do not agree on the objectives to be achieved by the

decision, alternatives are difficult to find, and outcomes cannot be predicted.

Decision‐making approaches differ considerably for each situation. For

decisions under risk, a rational, calculative approach is preferred. The

managers’ responsibility is to obtain the available information and run

necessary computations in order to predict outcomes and select the best

alternative. Decisions under ambiguity are more difficult. In these cases

managers do not have sufficient information to perform computations. They

must rely on personal judgement and experience to define alternatives and to

anticipate possible outcomes of each alternative. Under ambiguity, managers

have to take a chance and push ahead with decisions, even though they have

poor information and will be wrong a substantial percentage of the time.

Analyse three decisions you made over the past six months. Which of these

were programmed and which were non‐programmed? Which model—the

classical, administrative, or political—best describes the approach you took to

make each decision?

A programmed decision would refer to a situation that has occurred often

enough so that a student can use past experience and similar decision rules over

and over again. Programmed decisions are considered routine. A non‐

programmed decision would refer to a novel, unique, and largely unstructured

decision situation that requires a student to search for possible alternatives and

information and to make a decision that has not been made previously. An

example of a programmed decision might be where to go to lunch or where to

park the car.

A non‐programmed decision could be the choice of a major field of study, a

decision that the student may have made after taking aptitude tests and

investigating a number of career choices. Although the student may already be

studying for the chosen career field, whether the decision was correct still may

not be perfectly clear.

The specific decisions students choose, and the decision‐making processes they

use, will determine their answers to the last part of this question, but they

should be able to explain why they believe a particular model best describes

their approach.



You are a busy partner in a legal firm and an experienced secretary complains

of headaches, drowsiness, dry throat, and occasional spells of fatigue and flu.

She tells you she believes air quality in the building is bad and would like

something done. How would you respond?

Students should apply the decision‐making steps to solve this problem. The

first step is recognition of decision requirement. The manager must determine if

there truly is a problem with the air quality that needs to be solved. Discussions

with others and, if warranted, testing the air quality should help make this

determination. If a problem does indeed exist, the next step is the diagnosis and

analysis of the causes of the poor air quality. The testing may reveal this. If

needed, further tests by experts in the field should be made to determine the

cause. Once the cause has been determined, the development of alternatives to

eliminate the cause should be developed. The selection of desired alternatives is

the next step during which the risk must be considered and the pros and cons of

each alternative must be weighed. After an alternative has been chosen, the

chosen alternative should be implemented. After an appropriate time,

evaluation of the alternative should be made and feedback provided.



REFERENCES

Bergen, M. (2012). IKEA In India: Heading Into Untapped Retail Terrain [online]

Available:

http://www.forbes.com/search/?q=Ikea+in+India%3A+heading+Into+Untapped+

Retail+Terrain [Accessed 29 December 2012].

Channel News Asia. (2010). Toyota announces mass Prius recall [online] Available:

http://www.channelnewsasia.com/stories/afp_world_business/view/1036462/1/

html [Accessed 29 December 2012].

CNBC. (2011). 5 questions with Sakae Holdings CEO [online] Available:

http://www.cnbc.com/id/41882006/5_Questions_With_Sakae_Holdings_CEO

[Accessed 29 Dec 202].

Daft, R. L. (2012). New Era of Management, China, Cengage Learning.

Khoo, L., (2008). Apex‐Pal outlets to hit 100 by year‐end. [online] Available:

http://www.timesdirectories.com/hotel_restaurant_catering/news/xxx/164908


Spring Singapore. 2012. Conrad SQA Executive Summary Report [online]

Available:

http://www.spring.gov.sg/QualityStandards/be/Documents/beaw/SQA_Conrad

_2007_Summary_Report.pdf [Accessed 29 Dec 2012].

Spring Singapore. 2012. Yogokawa SQA Executive Summary Report [online]

Available:

http://www.spring.gov.sg/QualityStandards/be/Documents/BEAW/SQA_Yokog

awa_Electric_2011_Summary_Report.pdf [Accessed 29 Dec 2012].

BUS206

Managing People

STUDY UNIT 2

CHAPTER 1: Leadership

CHAPTER 2: Corporate Culture



CHAPTER 1: LEADERSHIP

LEARNING OUTCOMES


Explain leadership and how it is changing in today’s organisations.

Apply leadership traits to develop your leadership skills.

Compare between task‐oriented behaviour and people‐oriented behaviour and

explain how these categories are used to evaluate and adapt leadership style.

Relate contingency approaches to leadership and their application to

subordinate participation in the workplace.

Appraise how leadership fits the organisational situation and how

organisational characteristics can substitute for leadership behaviours.

Distinguish between charismatic and transformational leadership.

Explain how followership is related to effective leadership.

Identify sources of leader power and the tactics leaders use to influence others.



TO SERVE VERSUS TO BE SERVED

Ask anyone what he/she would prefer – to serve or to be served? Many would like

to be served. It often feels better to have people serving you than to have you

serving people.

Consider a conversation that took place in an interview. The interviewer was a Vice

President (VP) in a logistics company and the interviewee (I) was an applicant for a

job reporting directly to the VP.

I: What is your management style?

VP: I like people to do things for me. When a problem occurs, I expect my staff to say: “VP,

don’t worry. Let me solve the problem for you.ʺ I donʹt need to step in to solve the problem.

Think of what went through the interviewee’s mind after hearing the reply. If you

were the interviewee, would you like to work with this VP if he offered you the

job? Is he a leader who likes to serve or one that prefers to be served?

What does service have to do with leadership? According to Frei and Morriss,

authors of Uncommon Service, leadership is all about the act of serving. It is also

about making other people better as a result of your presence and making sure that

the impact lasts in your absence (Frei and Morriss, 2012). Contemporary leadership

theorists called this servant leadership. Servant leaders are people who use their

influence, drive and skills to serve others. In short, they help others shine.



THE NATURE OF LEADERSHIP

There is probably no topic more important to business success than leadership

because it occurs among people, involves influence, and is used to attain goals.

Influence means that the relationship among people is not passive. Influence is

designed to achieve some end or goal.

Leadership is defined as the ability to influence people towards the attainment of

goals. Leadership is reciprocal, occurring among people. It is dynamic and involves

the use of various kinds of power to get things done.

CONTEMPORARY LEADERSHIP

The turbulence and uncertainty of the environment in which most corporations are

operating in today’s world have had a significant influence on leadership thinking

and styles. Ethical and economic difficulties, corporate governance concerns,

globalisation, changes in technology, new ways of working, shifting employee

expectations, and significant social transitions have contributed to a shift in practice

leadership thinking. During the 1980s and 1990s, leadership became equated with

larger‐than‐life personalities, strong egos, and personal ambitions. In contrast, the

post‐heroic leader’s major characteristic is humility. Humility means being

unpretentious and modest rather than arrogant and prideful.

A. Level 5 Leadership

A key characteristic of Level 5 leaders is an almost complete lack of ego,

coupled with a fierce resolve to do what is best for the organisation. In contrast

to the view of great leaders as larger‐than‐life personalities with strong egos

and big ambitions, Level 5 leaders often seem shy and unpretentious. Although

they accept full responsibility for mistakes, poor results, or failures, Level 5

leaders give credit for successes to other people.

B. Servant Leadership

Servant leaders operate on two levels: for the fulfilment of the subordinates’

goals and for the realisation of the larger purpose or mission of their

organisation. Servant leaders give things away—power, ideas, information,

recognition, and credit for accomplishment. Servant leaders bring the followers’

higher motives to the work and connect them to the organisational mission and

goals. For example, the CEO of a healthcare group gives credit to his team and

employees whenever one of its hospitals won a national award. When that

hospital started an initiative called ʺNo one should die aloneʺ, it was published

in the national newspapers. When people congratulated him, his reply was: ʺI

have nothing to do with this initiative. The nurses started it. They should be

recognised. I only gave them the support.ʺ



Servant leaders often work in the non‐profit sector because it offers a more

natural way to apply their leadership drive and skills to serve others.

C. Authentic Leadership

Authentic leadership refers to individuals who know and understand

themselves, who espouse and consistently act within higher‐order ethical

values, and who empower and inspire others with their openness and

authenticity.

a. Authentic leaders pursue their purpose with passion. When leaders demonstrate

a high level of passion and commitment to purpose, they inspire

commitment from followers.

b. Authentic leaders uphold solid values. People come to know what the leader

stands for, which inspires trust.

c. Authentic leaders lead with their hearts as well as with their heads. They maintain

compassion for others as well as the courage to make difficult decisions. For

example, Michael Sengol, chief executive officer of Meritus Mandarin Hotel

strongly believes in the value of integrity. To him, doing the right thing for

the company and employees is more important than being a likeable CEO.

When he became CEO in 2010, Michael had to make a difficult decision of

letting some people go. He says: ʺI knew my integrity is high. I saw these guys

as torturing the business and the 800 to 1000 employees are struggling to achieve

something and yet these guys are telling them that things cannot be done. I feel that

I was saving the rest of the staff from deterioration”. What about the staff whose

livelihood depends on tomorrowʹs work? He strongly believes: ʺAs a leader,

as long as your heart and mind are in the right place and you are doing things

rationally, there is justification for your actions. The tough decision‐makers appear

ruthless or heartless. The reality is that they have bigger hearts. These leaders are

not concerned with how they are being perceived as they feel they are doing the right

thing.ʺ (Nunis, 2012).

d. Authentic leaders establish connected relationships. They surround themselves

with good people and work to help others grow and develop. For example,

Sengol implemented a Meritus Difference Training to help every employee

reach higher levels of performance (Nunis, 2012).

e. Authentic leaders demonstrate self‐discipline. They avoid excessive or unethical risks that could harm others and the organisation, and openly admit their

mistakes.



D. Gender Differences

1. Some of the characteristics associated with Level 5 leaders and authentic

leaders are also hallmarks of interactive leadership, which has been found to

be associated with female leaders. Interactive leadership means that the

leader favours a consensual and collaborative approach, and derives

influence from relationships rather than position power and formal

authority.

2. According to surveys, women rate higher than men on motivating others,

fostering communication, producing high‐quality work, and listening to

others, while men and women rate about equally on strategic planning and

analysing issues.


REFER: Exhibit 15.1 shows Level 5 Hierarchy, Exhibit 15.2 depicts the Components of

Authentic Leadership.

Exhibit 15.3 summarises the Gender Differences in Leadership Behaviours.

FROM MANAGEMENT TO LEADERSHIP

Management and leadership are both important to organisations. Effective

managers should also be leaders and conversely, leaders also need to be managers

as each one of these two roles requires distinctive qualities that provide different

strengths for the organisation. The distinctive sets of qualities and skills required of

managers and leaders frequently overlap within a single individual. A person may

have a stronger set of managerial or leadership qualities than another, but ideally a

manager should aim to develop a good balance of both managerial and leadership

qualities.

A primary distinction between management and leadership is that management

promotes stability, order, and problem solving within the existing organisational

structures and systems. Leadership promotes vision, creativity, and change. It

means questioning the status quo so that outdated, unproductive, or socially

irresponsible norms and practices can be replaced.

Leadership cannot replace management. Good management helps the organisation

meet current commitments, while good leadership helps the organisation move

towards the future.



LEADERSHIP TRAITS

Early efforts to understand leadership focused on the leader’s personal

characteristics or traits. Traits are the distinguishing personal characteristics of a

leader such as intelligence, values, self‐confidence, and appearance.

Generally, research found only a weak relationship between personal traits and

leader success. Physical, social, and work‐related characteristics of leaders have also

been studied. The appropriateness of a trait or set of traits depends on the

leadership situation and may not be applicable to every situation. For example,

Douglas Foo, Chairman and CEO of Apex‐Pal International is conscientious, goal‐

oriented and is known for his strong drive for success. Growing up in a family with

modest financial means, Foo learnt at a tender age the value of money, hard work

and frugality. These values have guided and helped him become a successful

entrepreneur and an effective leader (Encyclopedia, 2013).

Rather than just understand their traits, the best leaders also recognise and hone

their strengths. Strengths are natural talents and abilities that have been supported

and reinforced with learned knowledge and skills and that provide individuals

with the best tools they need to accomplish their goals and achieve personal

satisfaction.


REFER TO: Exhibit 15.4 compares the qualities of a manager with those of a leader.

Exhibit 15.5 describes the personal characteristics of leaders.

REVIEW: Suggest some personal traits that you believe would be useful to a business

leader today. Are these traits more valuable in some situations than in others?

How do you think traits differ from strengths?

BEHAVIOURAL APPROACHES A. Task versus People

The inability to define effective leadership based solely on traits led to an

interest in looking at the behaviour of leaders and how it might contribute to

leader success. Two basic leadership behaviours that have been identified as

important for leadership are task‐oriented behaviour and people‐oriented

behaviour.



1. Studies of leader behaviour at The Ohio State University identified two

major leadership behaviours called consideration and initiating structure.

Consideration is the extent to which the leader is sensitive to

subordinates, respects their ideas and feelings, and establishes mutual

trust. Considerate leaders are friendly, provide open communication,

develop teamwork, and are oriented towards their subordinates’

welfare. For example, the general manager (GM) of a manufacturing

company holds lunchtime dialogues with his employees who are then

offered an opportunity to bring up to the GM the more difficult issues

that they face at work. This has worked well because employees are

more relaxed and more willing to share their thoughts with the general

manager in an informal setting.

Initiating structure is the extent to which a leader is task oriented and

directs subordinate activities towards goal attainment. Leaders with this

style typically give instructions, spend time planning, emphasise

deadlines, and provide schedules of work activities. For example, a sales

manager expects his sales team to submit a weekly activity and revenue

report so as to monitor their sales performance and goal attainment.

2. Studies at the University of Michigan compared the behaviour of effective

and ineffective supervisors.

Employee‐centred leaders were the effective leaders who established

high performance goals and displayed supportive behaviour towards

their subordinates. Such leaders often set higher goals for high

performers, knowing that the latter can reach them. At the same time,

they motivate and guide these high performers to achieve their goals.

Job‐centred leaders were ineffective and less concerned with goal

achievement and human needs in favour of meeting schedules, keeping

costs low, and achieving efficiency. For example, a general manager of a

division holds weekly meetings with his team. The meeting agenda

focuses more on cost cutting measures, increases in productivity and

less on the employees’ concerns, the challenges they face and the

support or solutions they seek to help them overcome challenges.



B. The Leadership Grid

Researchers at the University of Texas developed the Leadership Grid®, a two‐

dimensional model that measures a leader’s concerns for people and for

production. Each axis on the grid is a nine‐point scale, with 1 meaning low

concern and 9 meaning high concern.

a. Team management (9,9) is often considered the most effective style for all

managers; organisation members work together to accomplish tasks and

reach set outcomes.

b. Country‐club management (1,9) occurs when primary emphasis is given to

people rather than work outputs.

c. Authority‐compliance management (9,1) occurs when efficiency in

operations is the dominant orientation.

d. Middle‐of‐the‐road management (5,5) reflects a moderate concern for both

people and production.

e. Impoverished management (1,1) means the absence of a management

philosophy; managers exert little effort towards interpersonal relationships

or work accomplishment.


REFER TO: Exhibit 15.6 shows the Leadership Grid Figure.

DO: Search the Internet and determine how people perceive Douglas Foo as a

leader. Based on your research, apply one of the behavioural approaches to

leadership to evaluate Fooʹs leadership style.



CONTINGENCY APPROACHES

A. The Situational Model of Leadership

1. The situational model of leadership, developed by Hersey and Blanchard,

is a contingency approach to leadership that describes the relationship

between leadership styles and specific organisational situations. A

situational theory is a contingency approach to leadership that links the

leader’s behavioural style with the task readiness of subordinates.

2. The focus of this theory is that subordinates vary in their readiness level.

People with low task readiness need a different leadership style than those

with high task readiness. People may have low task readiness because of

limited or insufficient skills, lack of training, or insecurity. People with high

task readiness tend to have the abilities, skills, confidence, and willingness

to work. According to situational theory, a leader can adopt one of four

leadership styles, based on relationship (concern for people) and task

(concern for production) behaviours. The four styles include:

a. Telling style—a high concern for tasks and a low concern for people and

relationships.

b. Selling style—a high concern for both people and tasks.

c. Participating style—a combination of high concern for people and

relationships and low concern for production tasks.

d. Delegating style—a low concern for both relationships and tasks.

3. Followers may be at a low, moderate, or high level of readiness.

a. Low Readiness Level. A telling style is appropriate when followers are at

a low readiness level because of poor ability and skills, little experience,

insecurity, or unwillingness. The leader tells followers what to do, how

to do it, and when to do it. For example, a manager would apply the

telling style to a new employee who is fresh out of school and has no

work experience.

b. Moderate Readiness Level. A selling style works best with moderate

levels of readiness when subordinates are unable but willing to follow.

In this case, subordinates might lack some education and experience for

the job. The selling style gives direction but includes seeking input from

others and clarifying tasks. For example, a manager has some ideas on

how to improve service level in the department. However, in a staff

meeting, he seeks suggestions from his team to get inputs.



c. Moderate Readiness Level. A participating style is effective with

moderate levels of readiness when subordinates are able but unwilling

to follow. These subordinates have the necessary education, experience,

and skills. For these followers, the leader provides a general goal,

delegates sufficient authority to do the task, and expects followers to

complete the task as they see fit. For example, a manager gives a quiet

and hardworking supervisor the responsibility to lead a quality

improvement project. The manager gives some direction but empowers

the supervisor to take full charge of the project and complete it within a

deadline.

d. High Readiness Level. When followers have high levels of education,

experience, and readiness to accept responsibility for their own task

behaviour, the delegating style is effective. For example, a team leader

who is able to deputise for his manager when the latter is on leave. The

manager is comfortable using the delegating style because this team

leader is educated, skilful and experienced. He has handpicked this

team leader to be his successor when he moves to another position.

e. The contingency model is easier to understand than Fiedler’s model, but

it incorporates only the characteristics of followers, not those of the

situation.

B. Fiedler’s Contingency Theory

The cornerstone of Fiedler’s contingency theory is the extent to which the

leader’s style is relationship or task oriented. A relationship‐oriented leader is

concerned with people. A task‐oriented leader is primarily motivated by task

accomplishment.

1. Situation: Favourable or Unfavourable?

The suitability of a person’s leadership style is determined by whether the

situation is favourable or unfavourable. Since leadership styles are

considered to be difficult to change, the basic idea is to match the leader’s

style with the situation most favourable for his or her effectiveness. The

favourability of a leadership situation can be analysed in terms of three

elements.

Leader‐member relations refer to the quality of relationships between the

leader and followers.

Task structure refers to tasks performed by the group that are defined,

involve specific procedures, and have clear goals.

Position power refers to the extent to which the leader has formal

authority over subordinates.



2. Matching Leader Style to the Situation

Combining the three characteristics yields eight leadership situations.

The task‐oriented leader excels in the two most favourable situations

because everyone gets along, the task is clear, and the leader has power.

The task‐oriented leader also excels in the two most unfavourable

situations because a great deal of structure and task direction is needed.

The relationship‐oriented leader performs better in the four situations of

intermediate favourability because human relations skills are important

in achieving high group performance.

C. Substitutes for Leadership

1. The contingency leadership approaches considered so far have focused on

the leader’s style, the subordinates’ nature, and the characteristics of the

situation. The final contingency approach suggests that situational variables

can be so powerful that they can substitute, or neutralise, the need for

leadership.

a. A substitute is a situational variable that makes a leadership style

redundant or unnecessary. Highly professional subordinates do not

need a leader to tell them what to do. For example, doctors do not need

to be supervised unless they are under training.

b. A neutraliser is a situational variable that prevents a leader from

displaying certain behaviours. Situational variables include

characteristics of the subordinate, task, and the organisation.

2. Leaders should adopt a style complementary to the organisational situation

to ensure that both task needs and people needs of the work group are met.

For example, in a production plant, production operators follow the

standard operating procedures to deliver a task. Adopting a task‐oriented

style will make the plant manager ineffective. In fact, he should be more

people‐oriented to be more successful.


REFER TO: Exhibit 15.8 shows How Leader Style Fits the Situation.

Exhibit 15.9 outlines Substitutes and Neutralisers for Leadership.

REVIEW: Do you think leadership style is fixed and unchangeable for a leader or flexible

and adaptable? Discuss.



CHARISMATIC AND TRANSFORMATIONAL LEADERSHIP

Research has found that some leadership approaches are more effective than others

for bringing about change in organisations. Two types of leadership that can have a

substantial impact are charismatic leadership and transformational leadership.

These are best understood in comparison to transactional leadership.

A. Charismatic and Visionary Leadership

1. The charismatic leader has the ability to inspire and motivate people to do

more than they would normally do, despite obstacles and personal sacrifice.

2. Charismatic leaders are often skilled in the art of visionary leadership. A

vision is an attractive, ideal future that is credible yet not readily attainable.

Charismatic leaders have a strong vision for the future, almost an obsession,

and they can motivate others to help realise it. Among the charismatic

leaders include Steve Jobs, Barack Obama, Mother Teresa and Aung San

Suu Kyi.

B. Transformational versus Transactional Leadership

1. Transformational leaders are distinguished by their special ability to bring about innovation and change. They recognise followers’ needs and

concerns, help them look at old problems in new ways, and encourage them

to question the status quo.

2. Transformational leaders create significant change in both followers and the

organisation. They have the ability to lead changes in the organisation’s

mission, structure, and human resource management. They focus on

intangibles such as vision, shared values, and ideas to build relationships,

give larger meaning to activities, and enlist followers in change. CapitaLand

CEO, Mr. Liew Mun Leong is a good example of a transformational leader.

Under his leadership, CapitaLand became one of Asiaʹs largest real estate

companies, with a presence in over 110 cities and over 12,000 staff. While

many people scoffed at his strategy to take real estate out of the local market

to venture into China, Liew ignored the naysayers and went ahead with his

plan. Today, about 60% of Capitalandʹs operating profit of $1.05 billion

comes from ventures abroad (Long, 2012).

3. A recent study confirmed that transformational leadership has a positive

impact on follower development and follower performance.

Transformational leadership skills can be learned and are not ingrained

personality characteristics.



4. Transactional leaders clarify subordinates’ role and task requirements,

initiate structure, provide appropriate rewards, and try to meet the social

needs of subordinates. Transactional leaders excel at management functions,

are hardworking, tolerant, and fair‐minded. They stress the impersonal

aspects of performance, such as plans, schedules, and budgets.

READ: Page 92 of the textbook.

REVIEW: What is transformational leadership? Give examples of organisational

situations that would call for transformational, transactional, or charismatic

leadership.

FOLLOWERSHIP Many of the qualities that define a good leader are the same as those of a good

follower. One model of followership involves five follower styles, defined along two

dimensions.

A. The first of these two dimensions refer to the quality of independent, critical

thinking versus dependent, uncritical thinking. Independent critical thinkers

are mindful of the effects of their own and others’ behaviour on achieving

organisational goals. They can weigh the impact of their boss’s and their own

decisions and offer constructive criticism, creativity, and innovation. A

dependent, uncritical thinker does not consider possibilities beyond what he or

she is told, does not contribute to the cultivation of the organisation, and

accepts the supervisor’s ideas without thinking.

B. The second dimension is active versus passive behaviour. An active follower

participates fully in the organisation, engages in behaviours that are beyond the

limits of the job, demonstrates a sense of ownership, and initiates problem

solving and decision making. In contrast, a passive follower needs constant

supervision and prodding by supervisors.

C. The combinations of critical thinker/uncritical thinker and active/passive

behaviour result in five types of followers.

1. The alienated follower is a passive but independent, critical thinker.

Alienated employees are often effective followers who have experienced

setbacks and obstacles, perhaps promises broken by their superiors.

Alienated followers are plentiful at a workplace. You can spot one if this

person wastes time complaining about his/her boss and offering no solution

or suggestion for improvement.



2. The conformist participates actively in a relationship with the boss but

doesn’t use critical thinking skills. A conformist typically carries out any

and all orders regardless of the nature of the request. It is easy to identify a

conformist at a workplace. He is often termed as a ʹYesʹ person who is

happy to take and follow instructions from his/her boss.

3. The pragmatic survivor has qualities of all four extremes – depending on

the followership style that best fits the situation considered. This type of

person uses whatever followership style that is more likely to maximise

benefits that are relevant to his or her own position while minimising the

risks of adversely affecting it. He is someone who believes in the ʹdonʹt fix it

if it isnʹt brokenʹ philosophy and who does not like to ʹrock the boatʹ.

4. The passive follower exhibits neither critical, independent thinking nor

active participation. Being passive and uncritical, such followers show

neither initiative nor a sense of responsibility. A passive follower, on the

other hand, will do what is necessary to get the job done but would not go

the extra mile or put in extra effort to showcase his/her work.

5. The effective follower is a critical, independent thinker who is also active in

the organisation. Effective followers behave the same way towards

everyone, regardless of their position in the organisation. They are confident

and competent and committed people who know their strengths and

weaknesses.


REFER TO: Exhibit 15.10 shows the Styles of Followership.

DO: Identify the five types of followers at your workplace. Note their behaviour,

work performance and interactions with their bosses and colleagues.



POWER AND INFLUENCE

Power is the ability to influence the behaviour of others. Influence is the effect of a

person’s actions on the attitudes, values, beliefs, or behaviour of others. If power is

the capacity to cause a change in a person, influence should be thought of as the

degree of actual change effected in that person. Power results from interactions

between leader and followers.

Sometimes, power comes from a person’s position in the organisation, while other

sources of power are based on personal characteristics. Within organisations, there

are typically five sources of power: legitimate, reward, coercive, expert, and

referent.

A. Position Power

The traditional manager’s power comes from the organisation. The manager’s

position gives him/her power to reward or punish subordinates so as to

influence their behaviour in the direction desired. Examples of position power

include:

a. Legitimate power comes from a formal management position in an

organisation and the authority granted to it. Subordinates accept this source

of power as legitimate, which is why they comply.

b. Reward power stems from the manager’s authority to bestow rewards on

other people. Legitimate power and reward power are most likely to

generate compliance.

c. Coercive power is the opposite of reward power. Here, the manager has the

authority to punish or recommend punishment, which often generates

resistance. Resistance means workers tend to try to avoid carrying out

instructions or will attempt to disobey them.

B. Personal Power

Personal power often comes from internal sources, such as a person’s special

knowledge or personality. Examples of personal power include:

a. Expert power results from a leader’s special knowledge or skill regarding

the tasks performed by followers.

b. Referent power comes from a leader’s personality characteristics with

which subordinates can relate and that command their respect and

admiration to such an extent that they wish to emulate the leader. The

subordinates’ response to referent power is often a dedication and a strong

commitment to enthusiastically carry out their leader’s instructions. Leaders

can increase their referent power when they share power and authority with

employees. A significant trend is to empower lower employees.



C. Other Sources of Power

a. Personal effort results in gaining power when people show initiative, work

beyond what is expected of them, take on undesirable but important

projects, and show interest in learning about the organisation and industry.

b. People who are enmeshed in a network of relationships have greater

power.

c. Information is a primary business resource, and people who have access to

information and control over how and to whom it is distributed are

typically powerful.

D. Interpersonal Influence Tactics

Leaders often use a combination of influence strategies, and people who are

perceived to have greater power and influence typically use a wider variety of

tactics. There are seven principles for asserting influence.

a. Use rational persuasion. Use facts, data, and logical argument to persuade

others.

b. Make people like you. People would rather say yes to someone they like than

to someone they don’t like.

c. Rely on the rule of reciprocity. Take advantage of the exchange of benefits and favours.

d. Develop allies. Develop networks of allies ‒ people who can help you

accomplish your goals.

e. Ask for what you want. Make a direct and personal request.

f. Make use of higher authority. Gain the support of people at higher levels to back you up.

g. Reward the behaviours you want. Use organisational rewards and

punishments to influence others’ behaviour.


REFER TO: Exhibit 15.11 shows Seven Interpersonal Influence Tactics for Leaders.

REVIEW: Which tactics do you think are effective to influence people? Why?





CHAPTER 2: CORPORATE CULTURE

LEARNING OUTCOMES


Explain corporate culture.

Relate organisational symbols, stories, heroes, slogans and ceremonies to

corporate culture.

Differentiate the four types of corporate culture.

Appraise how corporate culture is used to shape organisational performance.



THE CULTURE AT CROTHALL HEALTHCARE

Gostick and Elton are the authors of the New York Times bestselling book ʹAll In:

How the Best Managers Create a Culture of Belief and Drive Big Resultsʹ. They

related the following story about the culture of Crothall Healthcare, a hospital

cleaning company that employs 30,000 employees who generate annual revenues of

more than a billion dollars.

Halfway through Gostick and Elton’s presentation to the senior leadership team of

Crothall Healthcare, a very successful hospital cleaning company, Kutteh, the Chief

Executive Officer (CEO) of the company, made an unexpected dash for the door,

only to come back to the meeting room a few seconds later to hand them the bottles

of water that he had just picked up from the pantry. Gostick and Elton were baffled

as they had never expected to, one day, see a CEO carry out such a simple yet

thoughtful gesture.

Kuttehʹs action symbolises the kind of corporate culture that he created and that

everyone in the organisation followed. He also created a humble, sincere and

service‐oriented environment where people are happy to work and the company is

reaping the fruits from such a different culture. Kutteh has learnt that if his culture

works, then everything works better (Gostick and Elton, 2012)



THE INTERNAL ENVIRONMENT: CORPORATE CULTURE

The internal environment includes: corporate culture, production technology,

organisation structure, and physical facilities. Corporate culture is extremely

important in organisations seeking to develop or maintain a competitive advantage.

The internal culture must fit the needs of the external environment and company

strategy.

Culture is defined as the set of key values, beliefs, understandings, and norms

shared by members of an organisation. Culture is a pattern of shared values and

assumptions about how things are done within the organisation. It can be analysed

at two levels. At the surface level, one finds visible artefacts—all the things one can

see, hear, and observe by watching members of the organisation. At a deeper level

are the expressed values and beliefs, which are not observable but can be discerned

from how people explain and justify what they do. Some values become so deeply

embedded in a culture that members are no longer consciously aware of them.

These basic, underlying assumptions and beliefs are the essence of culture and

subconsciously guide behaviour and decisions.

A. Symbols

A symbol is an object, act, or event that conveys meaning to others. Symbols

associated with corporate culture convey the organisation’s important values.

B. Stories

A story is a narrative based on true events that is repeated and shared among

organisational employees. Stories are told to new employees to keep the

organisation’s primary values alive. Companies with a long‐standing history

often tell new employees how the company started in the orientation

programme. In this regard, the day they start work at IKEA, new employees are

told about the company’s humble beginnings.

C. Heroes

A hero is a figure who exemplifies the deeds, character, and attributes of a

strong corporate culture. Heroes are role models for employees to follow. For

example, the founder of IKEA Ingvar Kamprad is a hero of the company

because he is a role model to his employees.

D. Slogans

A slogan is a phrase or sentence that succinctly expresses a key organisational

value. For example, the slogan of SIA is: ʹA great way to flyʹ.



E. Ceremonies

A ceremony is a planned affair that makes up a special event and is conducted

for the benefit of an audience. For example, hospitals celebrate nursesʹ day to

recognise and honour their contributions to the welfare of the patients and

success of the hospital.


REFER TO: Exhibit 3.6 shows Levels of Corporate Culture.

REVIEW: Cultural symbols are usually noticed through sight, sound, touch, and smell.

Why are symbols important to a corporate culture?

TYPES OF CULTURE

In considering what cultural values are important for an organisation, managers

consider the external environment as well as the company’s strategy and goals.

Studies suggest that the right fit between culture, strategy and the environment is

associated with four categories or types of culture, based on two dimensions: 1) the

extent to which the external environment requires flexibility or stability; and 2) the

extent to which a company’s strategic focus is internal or external.

A strong corporate culture alone does not ensure business success unless that

culture also encourages sufficient flexibility to adapt to the external environment.

Healthy cultures help companies adapt to the environment. A strong, but

unhealthy, culture may encourage the organisation to march resolutely in the

wrong direction.

A. Adaptive Culture

The adaptability culture is characterised by values that support a company’s

ability to rapidly detect, interpret, and translate signals from the environment

into new behaviour responses. This culture emerges in an environment that

requires fast response and high‐risk decision making.

B. Achievement Culture

The achievement culture is a result‐oriented culture that values

competitiveness, aggressiveness, personal initiative, and willingness to work

long and hard to achieve results. It is suited for organisations concerned with



serving specific customers in the external environment but without the intense

need for flexibility and rapid change.

An emphasis on winning and achieving specific ambitious goals is the glue that

holds this organisation together.

C. Involvement Culture

The involvement culture places high value on meeting the needs of employees

and values cooperation and equality. This culture has an internal focus on the

involvement and participation of employees to rapidly meet changing needs

from the environment. Managers emphasise values such as cooperation,

consideration of both employees and customers, and avoid references to status

differences.

D. Consistency Culture

The consistency culture values and rewards a methodical, rational, orderly way

of doing things. This culture has an internal focus and a consistency orientation

for a stable environment.

READ: Pages 80 ‐ 82 of Daft (2012).

REFER TO: Exhibit 3.7 shows the Four Types of Corporate Culture.

REVIEW: General Electric is famous for firing the lowest‐performing ten percent of its

managers each year. With its strict no‐layoff policy, Valero Energy believes

people need to feel secure in their jobs to perform their best. Yet both are high‐

performing companies. How do you account for the success of such opposite

philosophies?



SHAPING CORPORATE CULTURE FOR INNOVATIVE

RESPONSE

Research shows that people, and how an organisation treats them, have the most

impact on a company’s value. Corporate culture has become increasingly important

to managers as they recognise its importance in attracting, motivating, and keeping

good employees. Culture plays a key role in creating an organisational climate that

enables learning and innovative responses to threats from the external

environment, challenging new opportunities, or organisational crises.

A. Managing in A High‐Performance Culture

Companies that succeed in a turbulent world are those that pay attention both

to cultural values and to business performance. Cultural values can energise

and motivate employees by appealing to higher ideals and unifying people

around shared goals. Values boost performance by shaping and guiding

employee behaviour, so that everyone’s actions are aligned with strategic

priorities. Four organisational outcomes are possible based on the relative

attention managers pay to cultural values and business performance.

a. Companies that pay little attention to either values or business results are

unlikely to survive in the long term.

b. Companies that focus on values but pay little attention to business results

are likely to miss important environmental changes, eventually resulting in

market share losses.

c. Companies that focus primarily on business results but pay little attention

to organisational values will find it difficult to survive in times of crisis.

d. Companies that emphasise both values and business performance will

develop a strong organisational culture that gives employees a sense of

identity, holds the company together during tough times, and helps it

respond and adapt quickly to a changing environment. These companies

represent the high‐performance culture that:

is based on a solid organisational mission or purpose;

embodies shared adaptive values that guide decisions and business

practices; and

encourages individual employee ownership of both bottom‐line results

and the organisation’s cultural backbone.

Crothall Healthcare exemplifies an organisation that practises high

performance culture. The company is not well‐known in the marketplace



but every five years, Crothall doubles in size and it is one of the largest and

fastest growing companies in U.S. (Gostick and Elton, 2012).

Cultural Leadership

1. One of the most effective ways for managers to change a company’s obsolete

norms and values in order to build a high‐performance culture is through

cultural leadership. A cultural leader defines and uses signals and symbols to

influence corporate culture by:

a. articulating a vision for the organisational culture that generates excitement

and that employees can believe in, and

b. heeding the day‐to‐day activities that reinforce the cultural vision.

2. Managers widely communicate the cultural values through words and actions.

Value statements that aren’t reinforced by management behaviour are

meaningless. Cultural leaders also uphold their commitment to values during

difficult times or crises. Maintaining consistent cultural values helps

organisations weather the storm and come out stronger after the turbulence has

passed. Cultural leaders let everyone know what really counts. For example, the

credo and motto of Ritz‐Carlton are the cornerstone of its success. Its motto ʺWe

are ladies and gentlemen serving ladies and gentlemenʺ enables and empowers its

employees to deliver its credo of ʺproviding the finest personal service and facilities

for guests who will always enjoy warm, relaxed yet refined ambience.ʺ Ritz‐Carlton

managers consistently apply the credo and motto which are integral to the

hotelʹs gold standards so as to continuously motivate and energise the ladies

and gentlemen that work in Ritz‐Carlton.

READ: Pages 85 ‐ 86 of Daft (2012).

REFER TO: Exhibit 3.8 shows the relationship between culture and performance.

REVIEW: In what ways does culture affect organisational performance?

DO: Do a mini research on Ritz‐Carlton to find out what make its employees tick.






Chapter 1: Leadership

Suggest some personal traits that you believe would be useful to a business

leader today. Are these traits more valuable in some situations than in others?

How do traits differ from strengths?

Students may mention good communication, human relations skills, or other

traits as being valuable traits for a leader. Upon reflection, they may realise that

these traits may not be useful with difficult, immature employees who do not

wish to cooperate. Traits are the distinguishing personal characteristics of a

leader such as intelligence, values, self‐confidence, and appearance. Generally,

research found only a weak relationship between personal traits and leader

success. Strengths are natural talents and abilities that have been supported and

reinforced with learned knowledge and skills and provide each individual with

his or her best tools for accomplishment and satisfaction.

Do you think that a leadership style is fixed and unchangeable for a leader or

flexible and adaptable? Discuss.

The issue of whether leadership style is fixed or flexible has been a fundamental

debate in the literature. Trait theories assume that leadership style is fixed ‒

people with the correct traits will be good leaders. Fiedler’s work on least‐

preferred co‐worker also takes a trait approach by assuming that the situation,

rather than the leader, must be changed to suit the leader’s style. Most other

theories, however, assume that leaders are flexible enough to adopt more than

one type of leadership behaviour. The two‐dimensional theories, the path‐goal

theory, and substitutes for leadership all assume that leaders can tailor their

leadership behaviour to fit the organisational situation. In general, the weight of

evidence suggests that leader behaviour can be flexible. However, it may be

that transactional leadership behaviours can be flexible but that inspirational

leader behaviour is fixed.



What is transformational leadership? Give examples of organisational

situations that would call for transformational, transactional, or charismatic

leadership.

Transformational leadership goes beyond the traditional ideas for influencing

people. Transformational leaders can motivate people beyond what is normally

expected. They motivate people to transcend their own interests for the sake of

the organisation. They have a special ability to bring about innovation and

change because they have visionary ideas that excite and stimulate other people

to work hard and attain the vision. An organisational situation that would call

for transformational leadership would be when an organisation is trying to

change from a hierarchical structure to a team‐based structure, or change from a

directive culture to an innovative, risk‐taking culture. An organisational

situation that would call for transactional leadership would be when a company

is struggling to simply manage its daily operations and to maintain the status

quo. An organisational situation that would call for charismatic leadership

would be a company that is trying to move from being a local or domestic

company to a multinational company. Charismatic leadership primarily

involves the setting forth and vigorous pursuit of an exciting vision for the

future.

Which tactics do you think are effective to influence people? Why?

Leaders use seven primary tactics to influence others.

‐ Use rational persuasion.

‐ Make people like you.

‐ Rely on the rule of reciprocity.

‐ Develop allies.

‐ Be assertive—ask for what you want.

‐ Make use of higher authority.

‐ Reward the behaviours you want.

Perhaps, the most effective tactics used to influence individuals are rational

persuasion, developing allies and making people like you. These tactics are

easily acceptable by most people.



Chapter 2: Corporate Culture

Cultural symbols are usually noticed through sight, sound, touch, and smell.

Why are symbols important to a corporate culture?

Symbols are important to corporate culture because they are tangible objects,

acts, or events that embody deeper values shared by organisation members.

Astute managers create symbols to help reinforce key values. For example,

Mary Kay Cosmetics uses a “golden rule” marble that is given to senior

employees to symbolise that the golden rule will be used in all of their dealings.

Almost anything can serve as a symbol. Thus, stories, heroes, slogans, and

ceremonies all serve their own purpose, but also have symbolic value by

indicating to employees the values and understandings that are especially

significant for the organisation.

General Electric is famous for firing the lowest‐performing 10 percent of its

managers each year. With its strict no‐layoff policy, Valero Energy believes

people need to feel secure in their jobs to perform their best. Yet both are

high‐performing companies. How do you account for the success of such

opposite philosophies?

The most likely answer to this question is that, while the companies have very

different philosophies about the impact of employees’ sense of job security,

both companies probably place strong emphasis on organisational values and

business performance. Their views about employees’ security do not have to be

the same, as long as the culture of each is based on a solid organisational

mission or purpose, embodies shared adaptive values that guide decisions and

business practices, and encourages individual employee ownership of both

bottom‐line results and the organisation’s cultural backbone.



REFERENCES

Bergen, M. (2012). IKEA In India: Heading Into Untapped Retail Terrain [online]

Available:

http://www.forbes.com/search/?q=Ikea+in+India%3A+heading+Into+Untapped+

Retail+Terrain [Accessed 29 December 2012].

Channel News Asia. (2010). Toyota announces mass Prius recall [online] Available:

http://www.channelnewsasia.com/stories/afp_world_business/view/1036462/1/

html [Accessed 29 December 2012].

CNBC. (2011). 5 questions with Sakae Holdings CEO [online] Available:

http://www.cnbc.com/id/41882006/5_Questions_With_Sakae_Holdings_CEO


Daft, R. L. (2012). New Era of Management, China, Cengage Learning.

Encyclopedia. (2013). Leadership at Apex‐Pal [online] Available:

http://www.encyclopedia.com/article‐1G2‐3293500012/leadership‐apex‐pal.html

[Accessed 29 December 2012].

Frei, F. and Morriss A. (2012). Uncommon Service, USA, Harvard Business

Review Press.

Gostick, A. and Elton, C. ʹItʹs the culture, stupid: how getting the culture right

enables transformation and big results,ʹ MWorld (Summer 2012), p.10.

Long, S. ʹAnti‐elite chieftain from the proletariat,ʹ The Straits Times, August 4

2012[online] Available: http://ifonlysingaporeans.blogspot.sg/2012/08/liew‐

mun‐leong‐anti‐elite‐chieftain.html [Accessed 29 December 2012]

Nunis, S. J. ʹChange management needs gutsy leader with integrity,ʹ Todayʹs Manager,

June‐July 2012, p.33.

BUS206

Managing People

STUDY UNIT 3

CHAPTER 1: Motivation

CHAPTER 2: Teamwork



CHAPTER 1: MOTIVATION

LEARNING OUTCOMES


Explain the concept of motivation.

Differentiate between intrinsic and extrinsic rewards.

Apply the content, process and reinforcement perspectives on motivation in the

workplace.

Examine major approaches to job design and how they influence motivation.

Illustrate innovative ideas to motivate employees.



MOTIVATION IN THE EYES OF A CALL AGENT

When John joined a call centre three years ago, he did not expect to stay on the job

for long. He recalls: ʺI was a call agent. My role was to answer calls and pacify

customers. Most calls were unpleasant. I had to deal with complaints all the time.

While most of my colleagues resigned within six months on the job, I was among

the very few who stayed on for more than two years.

The former call centre manager, Tim did not know what to do with the high

turnover of call agents. He tried to help us stay positive but in the end, he gave up

and resigned less than a year after taking on the call centre manager’s position.

Cindy is my current manager. She is quite different from Tim. Although she has

little experience in call centre operations, she is a great leader. When she took over

from Tim, the first thing Cindy did was to conduct one‐to‐one conversations with

every call agent because she wanted to know each one of us and understand our

concerns. She then listed down the top ten concerns and started working with us to

address them. She listened to our suggestions and significantly improved our

situations.

Cindy makes us work hard but she also works hard with us and for us because she

clearly wants to help us shine in our job. Making people feel good about themselves

and bringing out the best in others seem to come naturally to her. For example,

Cindy invited an agent out for coffee and a chat when she learnt that the agent was

feeling miserable. Everyday, she goes around and gives us a pat on the back and

she always gives a sympathetic ear and motivates us when we encounter difficult

customers. To foster teamwork, Cindy organises quarterly get‐together so that we

can get to know one another in a relaxed atmosphere and as a result, people are

happy working together; furthermore, teamwork effectiveness has never been

higher.

Since Cindy took over, the turnover rate has gone down dramatically as most call

agents have more than one year of seniority at the company. It is not surprising: the

call centre is now a fun place to work; we have great colleagues and bosses.

Personally, I love talking with people and helping them. This motivates me.ʺ



THE CONCEPT OF MOTIVATION

Motivation refers to the forces either within or external to a person that arouse

enthusiasm and persistence to pursue a certain course of action. Employee

motivation affects performance. The role of the manager is to motivate employees

to achieve organisational goals. The study of motivation helps managers and

leaders understand what prompts individuals to initiate action, what influences the

action(s) they choose, and why they persist in carrying out such action(s) over time.

There is a wide variety of human needs: need for food, need for achievement, or

need for money for instance. In an organisational context, the rewards that

employees can obtain from their job represent an opportunity to satisfy these needs.

For that reason, individuals tend to exhibit behaviours in their job that are

susceptible of leading to the satisfaction of their needs but in that quest, they want

feedback to better understand whether and to what extent such employee‐related

behaviour will indeed help them fulfil their needs.

Intrinsic rewards are the internal satisfactions a person derives while or after

performing a particular action. Extrinsic rewards, on the other hand, are external

and concrete rewards given, typically by a manager; they usually take the form of

promotions, pay increases, time off and other things that employees value.

Motivation is important to organisations because it leads to behaviours that yield

high work performance. Managers have to apply a combination of motivational

techniques and rewards to keep workers satisfied and productive in a variety of

organisational situations. For example, the management of Ritz‐Carlton, Millenia

Singapore has worked hard to create and develop an environment of trust, honesty,

respect, integrity and commitment where employees feel empowered and their

contribution are recognised. This is an example of intrinsic rewards that employees

value. On the other hand, to recognise star performers, the same managers have

also lined up a number of promotions and pay increases (extrinsic rewards) such as

ʺFirst Classʺ recognition cards, quarterly ʺFive‐Star” awards, and annual ʺGold

Standardsʺ awards (Soon, 2011).


REFER TO: Exhibit 16.1 shows a simple model of motivation.



CONTENT PERSPECTIVES ON MOTIVATION Content theories emphasise the needs that motivate people; people have basic

needs such as food, achievement, or monetary reward. These needs translate into

an internal drive that motivates specific behaviours in an attempt to satisfy the

needs. To the extent that managers understand employees’ needs, they can design

reward systems that meet them direct employees’ energies and priorities towards

attaining organisational goals.

A. The Hierarchy of Needs Abraham Maslow’s hierarchy of needs theory proposes that humans are

motivated by multiple needs, existing in a hierarchical order.

a. Physiological needs. The most basic human physical needs that must be

satisfied to ensure a person’s physical survival. They include oxygen, water,

food, sleep, and excretion. In an organisational setting, some of these needs

can be satisfied by providing employees with adequate air circulation, free

or cheap food, and a base salary sufficient to ensure that they can afford to

satisfy these same basic human needs outside of the workplace as well.

b. Safety needs. These include the needs that humans have for a safe and secure

physical and emotional environment, free from actual as well as threats of

violence. In an organisational workplace, safety needs can be met by

offering jobs that employees can safely carry out, by providing them with

fringe benefits and job security. For example, construction workers want to

be assured of a safe construction site where safety standards are adhered to

and equipment or machines are safe to use.

c. Belonging needs. These needs are the desire to be accepted by one’s peers,

have friends, be part of a group, and be loved. On the job, this translates

into a desire for good and positive relationships with colleagues and

engagement in a work group.

d. Esteem needs. Esteem needs relate to the desire for a positive self‐image and

the need to receive attention, recognition, and appreciation from others.

Managers can help employees satisfy their esteem needs by empowering

them, granting them increased responsibility and higher status as well as by

commending them for their contributions to the organisation. For example,

a manager raises the esteem needs of a staff member by praising him in

public.

e. Self‐actualisation needs. The highest need category in the hierarchy, self‐

actualisation represents an individual’s need for self‐fulfilment ‒ developing

one’s full potential, increasing one’s competence, and becoming a better

person. These needs can be met in an organisational setting by providing



employees a variety of opportunities to grow, encouraging their creativity,

and providing training for challenging assignments and advancement. For

example, an employee’s sense of self‐worth and self‐fulfilment are increased

when his superiors select him for a management trainee programme as this

means that he will eventually be considered for a potential promotion.

As the name implies, Maslow’s hierarchy of needs explains that the lower‐order

needs take priority over the others and must be sufficiently satisfied before

higher‐order needs are activated. The needs are satisfied in sequence; once a

need category is satisfied, it declines in importance in the mind of the

individual who will then start to seek the satisfaction of a higher need. If a

lower‐level need ceases to be satisfied, however, it will re‐emerge and take

precedence over higher order needs until it is once again satisfied.


REFER TO: Exhibit 16.2 shows Maslow’s Hierarchy of Needs.

REVIEW: If you were a plant manager, how would you motivate a group of production

workers to improve their job performance?

B. A Two‐Factor Approach to Motivation Frederick Herzberg asserted that work characteristics associated with

dissatisfaction were different from those pertaining to satisfaction. This

prompted the idea that two different factors influenced work motivation and

employees’ behaviour at work, leading to his development of the two‐factor

theory.

a. Hygiene factors are extrinsic to the job, relate to lower‐order needs and

include things such as working conditions, pay and security, company

policies, supervisors, and interpersonal relationships. When hygiene factors

are poor, work is dissatisfying but on the other hand, good hygiene factors

may decrease and eventually remove job dissatisfaction; they cannot,

however, cause job satisfaction or motivation. In the best of situations where

all the hygiene factors are favourable to them, employees can only be

neutral, i.e. they are neither satisfied nor dissatisfied towards work.

b. Motivators, on the other hand, are intrinsic to the job. They relate to higher‐

order needs and include things such as achievement, recognition,

responsibility, the work itself, and the opportunity for personal growth. For

example, Marriot Singapore provides equal development and training



opportunities to all existing and potential associates to motivate them.

When motivating factors are present, workers are highly motivated and

satisfied. The absence of motivating factors removes satisfaction, but does

not cause dissatisfaction. Instead, employees are neutral towards work.

The manager’s role is to ensure that the job’s hygiene factors are sufficient to

meet the employee’s basic needs and use motivators to meet higher‐level needs

to enhance job satisfaction and propel employees towards higher performance.


REFER TO: Exhibit 16.4 shows Hertzberg’s Two Factor Theory.

REVIEW: What are the hygiene factors if not met would de‐motivate an employee and

cause him/her to leave?

PROCESS PERSPECTIVES ON MOTIVATION

Process theories explain how employees select behaviours that meet their needs

and determine if their behaviour choices were successful. Two basic process

theories of motivation include equity theory and expectancy theory.

A. Equity Theory

Equity theory, developed by J. Stacy Adams, focuses on individuals’

perceptions about how fairly they are treated relative to others. People evaluate

equity through a ratio of outcomes to inputs. Inputs to a job include such things

as education, experience, effort, and ability. Outcomes from a job include such

things as pay, recognition, benefits, and promotions.

The ratio may be compared with another person in the work group or to a

perceived group average. Equity exists in the mind of an employee when he

perceives that the outcome‐to‐input ratio of his work is equal to the outcome‐to‐

input ratio of another person doing the same or equivalent work. In such a

scenario, the employee will conclude that he is fairly treated by his employer.

Conversely, inequity exists when ratios are not equal.



The most common methods used to reduce a perceived inequity are:

For employees:

to change work effort, such as decreasing the level of effort or increasing

absenteeism. For instance, an employee who thinks he earns less than

his colleague who does the same job may decide to put in less effort or

to take more time to complete a task.

to change outcomes, such as by demanding a salary increase or other

benefits or perks. For example, unionised members may ask their Union

to negotiate for a higher salary in the next bargaining agreement.

to leave the job if equity cannot be restored through any of the previous

methods.

For managers:

to change perceptions, such as by artificially increasing the status attached

to one’s job. For example, giving a job holder a managerial title when the

responsibilities can be performed by an administrative officer.

The implication of the equity theory for managers is that employees evaluate

the perceived equity of the rewards they receive for the efforts they put in their

job, when compared to others. An increase in salary or promotion will not

motivate an employee if it is perceived to be inequitable relative to the other

employees with whom he makes a comparison. Smart managers try to keep

employees’ feelings of equity in balance to keep their workforce motivated.


REVIEW TO: If an experienced executive discovered that she made the same amount of

money as a junior officer, how do you think he/she would react? What inputs

and outcomes might she evaluate to make this comparison?

DO: Reflect on an experience or situation in which you perceived you were unfairly

treated. What did you do to reduce the perceived inequity?



B. Expectancy Theory

The expectancy theory, developed by Victor Vroom, suggests that employee

motivation depends on satisfying individuals’ expectations that their efforts

and job performance will lead to rewards that they value. It focuses on the

thinking process individuals use to obtain rewards. Expectancy theory is based

on the individual’s effort, performance, and the desirability of outcomes

associated with that performance.

a. E → P expectancy involves determining whether putting effort into a task

will lead to high performance. The individual must have the ability,

previous experience, and necessary resources and opportunity to perform.

b. P → O expectancy involves determining whether successful performance

will lead to the desired outcome. It is the belief that high performance will

lead to a desired reward.

c. Valence refers to the subjective value that an individual attaches to the rewards he gets for exerting effort, reaching a certain level of performance

and achieving specified outcomes for the company. If an employee does not

value the outcomes available from high effort and good performance,

motivation will be low. If outcomes have a high value, motivation will be

higher. Expectancy theory attempts to establish that needs and rewards

exist and may be different for every individual

The managers’ responsibility is to help subordinates meet their needs and at the

same time attain organisational goals. Managers try to find a match between a

subordinate’s skills and abilities, job demands, and available rewards.

Companies use expectancy theory principles by designing incentive systems

that identify organisational outcomes and give everyone a chance for rewards.

The trick is to design a system that fits employees’ abilities and needs. For

example, managers may assign challenging projects to employees who believe

that if they perform well, they will be given recognition, reward and promotion.


REFER TO: Exhibit 16.5 shows major elements of Expectancy Theory.

REVIEW: What are the keys to Expectancy Theory? In your view, is there a key that is

more important than another?



REINFORCEMENT PERSPECTIVE ON MOTIVATION

A. Reinforcement Theory

Reinforcement theory looks at the relationship between behaviour and its

consequences. The focus is on changing or modifying the employees’ on‐the‐job

behaviour through the appropriate use of immediate rewards or punishments.

Reinforcement Tools

Behaviour modification is a technique that uses reinforcement theory to change

an employee’s behaviour. The basic assumption underlying behaviour

modification is the law of effect, which states that behaviour that is positively

reinforced tends to be repeated, and behaviour that is not reinforced tends not

to be repeated. Reinforcement is defined as anything that causes a certain

behaviour to be repeated or inhibited. There are four common reinforcement

tools.

a. Positive reinforcement is the application of a pleasant and rewarding

consequence following a desired behaviour. Praise for a job well done

increases the likelihood that the employee will repeat the work behaviour

that led to that performance level and earned him the praise. Studies show that positive reinforcement improves performance. For example, Ritz

Carlton shares ʹWowʹ stories with their employees in their daily briefings to

reinforce the service excellence commitment of the hotel (Soon, 2011).

b. Avoidance learning is the removal of an unpleasant consequence following

a desired behaviour, sometimes called negative reinforcement. Employees

learn to avoid unpleasant situations by doing the right thing. For example,

an accounts supervisor stops requesting that his staff stays after working

hour to correct the careless errors he made in accounting reports once the

latter has demonstrated that he now checks his work before submitting it to

the supervisor.

c. Punishment is the application of unpleasant consequences following

undesirable behaviour. The use of punishment in organisations is

controversial because it fails to indicate the correct behaviour. Almost all

managers find the need to impose punishment occasionally, from

reprimands to employee suspensions or dismissal. For example, an

employee who is always late for work is given a warning letter that is kept

in the personal employee file. The employee’s punctuality will be monitored

for a period of time.

d. Extinction is the withdrawal of a positive reward following undesirable

behaviour. Extinction involves withholding pay raises, praise, and other



positive outcomes with the idea in mind that behaviours that are not

positively reinforced will be less likely to occur in the future. For example, a

line manager no longer assigns major projects to a staff member who

constantly fails to meet deadlines even though he may be competent.


REFER TO: Exhibit 16.6 shows the changing behaviour with reinforcement.

REVIEW: One small company recognises an employee of the month, who is given a

parking spot next to the president’s space near the front door. What theories

would explain the positive motivation associated with this policy?

JOB DESIGN FOR MOTIVATION

A job in an organisation is a unit of work under the responsibility of a single

employee. Jobs are important because performance of their components may

provide rewards that meet employees’ needs. Job design is the application of

motivational theories to the structure of work for the purpose of improving

productivity and satisfaction. The following are approaches to job design.

Job Enrichment Job rotation systematically moves employees from one job to another, increasing the

number of different tasks that an employee performs. Job enlargement combines a

series of tasks into one new, broader job. The primary trend is towards job

enrichment, which incorporates high‐level motivators into the work including job

responsibility, recognition, and opportunities for growth, learning, and

achievement.

In job enrichment, employees have control over the resources necessary for the job,

make decisions on how to do the work, experience personal growth, and set their

own work pace. Job enrichment increases employees’ motivation and job

satisfaction. For job enrichment to be successful, managers need to empower staff.

Job Characteristics Model Hackman and Oldham’s research concerns work redesign, defined as altering jobs

to increase both the quality of employees’ work experience and their productivity.

The job characteristics model that Hackman and Oldham developed comprises

core job dimensions, critical psychological states, and employee growth‐need

strength.



Core Job Dimensions

The more a job satisfies the following core characteristics, the higher the

motivation, quality of performance, and satisfaction there will be. A job’s

motivational potential includes:

Skill variety. The number of diverse activities that compose a job and the number

of skills used to perform it.

Task identity. The degree to which an employee performs a job that has an

identifiable and recognisable beginning and end. For example, a management

consultant who single‐handedly completed a major change management project

has more task identity than a member of a project team.

Task significance. The degree to which a job is perceived as important and having

an impact on the company, customers or other people. For example, a medical

social worker helping a patient obtain social medical funding from the

government will feel that his/her job is meaningful because of the significance

of its impact on the lives of patients from humble financial background.

Autonomy. The degree to which the worker has freedom, discretion, and self‐

determination in planning and carrying out tasks. For example, an architect is

given the freedom to design a new hotel.

Feedback. The extent to which doing the job provides information to the

employee about his/her performance.

Critical Psychological States

This model states that core job dimensions are more rewarding when individuals

experience three psychological states in response to job design.

Meaningfulness of work. The work itself is satisfying and provides intrinsic

rewards.

Responsibility. Autonomy influences the experience of responsibility.

Knowledge of actual results. Feedback provides information about results.

Employees know how they are performing and can change work performance to

increase desired outcomes.

Personal and Work Outcomes

The impact of the five job characteristics on the psychological states of experienced

meaningfulness, responsibility, and knowledge of actual results leads to the



personal and work outcomes of high work motivation, high work performance,

high satisfaction, as well as low absenteeism and turnover.

Employee Growth‐Need Strength

Employee growth‐need strength is the final component of the model. It means that

people have different needs for growth and development. If a person wants to

satisfy low‐level needs, such as safety and belongingness, the job characteristics

model has less effect. For situations where a person has a high need for growth and

development and the desire for personal challenge, achievement, and challenging

work, the model is then more effective.


REFER TO: Exhibit 16.7 summaries the Job Characteristics Model.

INNOVATIVE IDEAS FOR MOTIVATING Organisations are increasingly using various types of incentive compensation as a

way to motivate employees to higher levels of performance. Variable compensation

and forms of “at risk” pay such as bonus plans are key motivational tools and are

becoming more common than fixed salaries at many companies. The programmes

can be effective if they are used appropriately and used in combination with

motivational ideas that also provide intrinsic rewards and meet higher level needs.

Many organisations give employees a chance to express their views and preferences

towards the design of pay and incentive systems, an approach that increases

employee motivation by encouraging their involvement. Motivational programmes

that have the greatest impact typically involve much more than money. Two recent

motivational trends are empowering employees and framing work to have greater

meaning.

Empowering People to Meet Higher Needs

Empowerment is power sharing, the delegation of power or authority to

subordinates in an organisation. Increasing employee power heightens motivation

for task accomplishment because people can use their creativity to improve their

own effectiveness by choosing how to do a task. Empowering employees means

giving them four elements that enable them to act more freely to accomplish their

jobs: information, knowledge, power, and rewards.

a. Employees receive information about company performance. In companies where

employees are fully empowered, all employees have access to all financial and

operational information.



b. Employees have knowledge and skills to contribute to company goals. Companies use

training programmes to help employees acquire the knowledge and skills they

need to contribute to organisational performance.

Conrad Centennial Singapore empowers staff to serve their customers well and

provide service recovery when necessary (Insights to Business Excellence, p.16).

Similarly, CapitalLand empowers employees to explore solutions that work

through problem solving, synthesis and reflection. This process not only

energises employees but also motivates them to take charge of their work

(CapitaLand Institute of Management and Business).

Giving Meaning to Work through Engagement Another way to meet higher‐level motivational needs and help people get intrinsic

rewards is to attach to their work a sense of importance and meaning. For example,

people who work for a social cause or mission are often more highly motivated.

Employee engagement means that people enjoy their jobs and are satisfied with

their working conditions, contribute enthusiastically to meeting team and

organisational goals, and feel a sense of belonging and commitment to the

organisation.

Smart managers see that having engaged, motivated employees has less to do with

extrinsic rewards than with fostering an environment in which people can flourish.

The behaviour of managers is what makes the biggest difference in employee

motivation and whether employees flourish at work. The manager’s role is to

organise the workplace in such a way that each person can learn, contribute, and

grow.

a. People experience a sense of meaningfulness when they believe they are working

towards something of importance and have a chance to accomplish something

that provides real value to the world.

b. Engaged employees feel connected to the company, to one another, and to their

managers.

c. To be fully advanced, people need not only feel that they are competent to carry

out the work required of them, but also that they have a chance to learn, grow,

and advance while doing it.

Suzanne Wink, operations director of Chiliʹs, a restaurant chain, best sums up how

the restaurant motivates its staff. Wink said that Chiliʹs motivates their staff by

providing training, having competitions and giving rewards such as delicious

desserts or vouchers. The company continuously seeks to identify employees with

high potential and develop them so that they can rise through the ranks (Nunis,

2012).




REFER: Exhibit 16.8 describes the New Motivational Compensation Programmes.

REVIEW: How can empowerment lead to higher motivation of employees?





CHAPTER 2: TEAMWORK

LEARNING OUTCOMES


Explain the concept of team.

Differentiate between groups and teams.

Discuss the effectiveness of team leadership.

Categorise the types of teams in organisations.

Apply the Work Team Effectiveness Model and Tuckman’s Model of Team

Development to the workplace.

Contrast the types of conflict.

Examine the different conflict management styles.

Discuss team effectiveness.



TEAMWORK MAKES SHIFT LESS LONELY

Many of us think that shift work is lonely and we often perceive that people who

work shifts do not have a choice. However, we would be surprised to learn that

shift work can be enjoyable if there is teamwork.

Ismail Osman is the branch manager of the Times the Bookstore outlets at Marina

Square and Suntec City. He is self‐motivated and positive about shift work. He

feels that it is important for him to be a role model to his staff by showing them that

he enjoys working shifts. His positive energy is then transferred to the team (Nunis,

2012).

Team bonding and fairness are equally important. Osman said: ʺIf team A is

working the afternoon shift and a team member has something personal to attend

to, we encourage him to discuss it with his team mates. They can settle it among

themselves and this is fair to the whole team. The same applies to those who wish

to take leave during the holiday seasonsʺ (Nunis, 2012).

Teamwork is evident at Chiliʹs too. Suzanne Wink, the operations director,

explained that Friday and Saturday nights are busiest at the restaurants. According

to her, Chiliʹs creates a family‐oriented environment and despite the fact that she is

in the management team, she still heads down to the restaurant to give her staff a

boost and a helping hand. The management does not tell staff what to do, managers

coach staff to do the right thing for the guest and management team members often

jump in to help and work alongside the restaurant staff. Ranks and titles are

irrelevant and insignificant, but while guests’ satisfaction is a top priority at Chili’s,

that of the team members is also important (Nunis, 2012).



WHY TEAMS AT WORK?

Much work in organisations is interdependent, which means that individuals and

departments rely on other individuals and departments for information or

resources to accomplish their work. When tasks are highly interdependent, a team

can be the best approach to ensuring the level of coordination, information sharing,

and exchange of materials necessary for successful task accomplishment.

A. What Is a Team?

A team is a unit of two or more people who interact and coordinate their work

to accomplish a specific goal. This definition has three components: two or more

people are required; people in a team have regular interactions; and members of

a team share a performance goal.

Although a team is a group of people, the two terms are not interchangeable.

An employer can put together a group of people and never build a team. The

team concept implies a sense of shared mission and collective responsibility.

B. The Dilemma of Teams

There are three primary reasons teams present a dilemma for most people.

a. They have to give up their independence. When people become part of a team,

their success depends on the team’s success; therefore, they are dependent

on how well other people perform, not just on their own individual

initiative and actions.

b. They have to put up with free riders. The term free rider refers to a team

member who derives benefits from team membership but does not actively

participate in nor contribute to the team’s work.

Teams are sometimes dysfunctional. Many teams have great success, but others

experience significant failure. The way that teams are managed plays the most

critical role in determining how well they function.


REFER TO: Exhibit 18.1 summarises the differences between groups and teams.

Exhibit 18.2 presents five common dysfunctions of teams.



HOW TO MAKE TEAMS EFFECTIVE

A. Model of Team Effectiveness

Work team effectiveness is based on three outcomes: productive output ‒ the

quality and quantity of task outputs as defined by team goals; personal

satisfaction ‒ the team’s ability to meet the personal needs of its members to

maintain their membership and commitment; and capacity to adapt and learn ‒

the ability of teams to bring greater knowledge and skills to job tasks and

enhance the potential of the organisation to respond to new threats or

opportunities.

The factors that influence team effectiveness begin with the organisational

context in which the team operates ‒ the structure, strategy, environment,

culture, and reward systems. Managers define teams within that context.

Important team characteristics are the type of team, the team structure, and the

team composition. These team characteristics influence processes internal to the

team, which affect output and satisfaction. Good team leaders understand and

manage the team development stages, cohesiveness, norms, and conflict to

establish an effective team.

B. Effective Team Leadership

Team leaders play an important role in shaping team effectiveness. They can

contribute to the success of their team in three specific ways.

a. Rally people around a compelling purpose. It is the leader’s responsibility to

articulate a clear, compelling purpose and direction, one of the key elements

of effective teams.

b. Share power. Good team leaders embrace the concept of teamwork in deeds

as well as in words by sharing power, information, and responsibility.

c. Admit ignorance. Good team leaders aren’t afraid to admit that their

teammates know more than they do about some things and ask for their

help.


REFER TO: Exhibit 18.3 shows the Work Team Effectiveness Model.



TYPES OF TEAMS

A. Formal Teams

Formal teams are created by an organisation as part of its formal structure.

a. A vertical team is composed of a manager and subordinates in the formal

chain of command. The team is also called a functional or command team and

may include three or four levels within a single functional department. A

financial analysis department, a quality control department, and an

accounting department are all vertical or command teams. Cross‐functional

teams and committees allow members to exchange information, coordinate

units, develop new ideas and solutions, and help develop new practices and

policies.

b. A horizontal team is composed of employees from about the same

hierarchical level but from different areas of expertise. The most common

horizontal teams are cross‐functional teams and committees.

A cross‐functional team, or task force, is a group of employees from

different departments formed to deal with a specific task, existing only

until the task is completed. For example, Teckwah uses cross‐functional

teams to pursue breakthrough improvement projects, continuous

improvement projects and company events such as Company Day

celebrations (Spring Singapore, 2012).

A committee is generally long‐lived and may be a permanent part of the

organisation’s structure. Committees typically are formed to deal with

tasks that recur regularly. At Teckwah, Staff Committees are set up to

implement staff engagement strategies (Spring Singapore, 2012)

c. Special‐purpose teams, also called project teams, are created outside the

formal organisation structure to undertake a project of special importance

or creativity. Companies use special‐purpose teams to speed up

development of a special project. These fast‐cycle teams are given the

freedom and resources to complete projects. For example, Tata Motors of

India formed a special project team to design the new World Truck (Harish,

et al., 2010, p.223).

B. Self‐directed Teams Employee involvement through teams increases the participation of lower‐level

workers when decisions are made about their jobs, with the goal of improving

performance. Initial employee involvement techniques include sharing



information with employees and asking them for suggestions to improve work

and work processes.

Self‐directed teams consist of five to 20 multi‐skilled workers who rotate jobs

and produce an entire product or service. The team works with minimum

supervision, perhaps electing one of its own as the team supervisor, either on a

permanent or on a rotation basis. The most effective self‐directed teams are

those that are fully empowered.

Self‐directed teams typically have the following characteristics:

• The combined team members’ skills are sufficient to perform a major

organisational task.

• The team has access to the resources necessary to perform and complete the

assigned task.

• The team is given decision‐making authority to complete the task.

• The team assumes managerial duties such as work scheduling, ordering

materials, and hiring new members.


REVIEW: Volvo went to self‐directed teams to assemble cars because of the need to attract

and keep workers in Sweden, where pay raises are not a motivator (high taxes)

and many other jobs are available. Are these factors good reasons for using a

team approach?

DO: Search the Internet and find out how Microsoft uses self‐directed teams in

software design.



TEAM CHARACTERISTICS

The next issue of concern for managers is designing the team for greater

effectiveness. One factor is team characteristics, which affect team dynamics and

performance. Characteristics of concern include team size, diversity, and member

roles.

A. Size

Numerous studies have found that smaller teams perform better than larger

ones, although most researchers also say it’s impossible to specify an optimal

team size. Teams need to be large enough to incorporate the diverse skills

needed to complete a task, enable members to express good and bad feelings,

and aggressively solve problems. However, they should also be small enough

to allow each member to feel like an intimate part of the team and to

communicate effectively and efficiently. In general, as a team increases in size, it

becomes harder for each member to interact and influence the others.

B. Diversity

Research shows that diverse teams are more innovative. In addition, diversity

may contribute to a healthy level of conflict that leads to better decision making.

Recent research also shows that both functional diversity and gender diversity

can have a positive impact on work team performance.

Racial, national and ethnic diversity can also be good for teams although in the

short term, these differences might hinder team interaction and performance.

Teams of racially and culturally diverse members tend to have more difficulty

learning to work well together, but with effective leadership, such problems

tend to fade.

C. Member Roles

For a team to be successful, it must maintain its members’ social well‐being

while they accomplish their tasks. The requirements for task performance and

social satisfaction are met when some of the team members can assume two

types of roles: the task specialist role and the socio‐emotional role.

People who play the task specialist role help the team reach its goal by making

the following contributions:

a. Initiate ideas

b. Give opinions

c. Seek information

d. Summarise e. Energise



Employees who adopt a socio‐emotional role support team members’ emotional

needs and tend to do the following:

a. Encourage

b. Harmonise

c. Reduce tension

d. Follow

e. Compromise


REVIEW: When you are a member of a team, do you adopt a task specialist or socio‐

emotional role? Which role is more important for a team’s effectiveness?

TEAM PROCESSES

A. Stages of Team Development

1. Forming

The forming stage of team development is a period of orientation and

getting acquainted. Uncertainty is high at this stage, and members usually

accept whatever power or authority is offered by either formal or informal

leaders. The team leader should provide time for members to get acquainted

with one another and encourage them to engage in informal social

discussions.

2. Storming

During the storming stage, individual personalities emerge and conflict and

disagreement create a general lack of unity. People may disagree over their

perceptions of the team’s mission, members may jockey for position, or

coalitions and subgroups based on common interests may form. The leader

should encourage participation by each team member.

3. Norming

During the norming stage, conflict is resolved, team harmony and unity

develop, and team norms and values evolve. Consensus develops about

who has the power, who is the leader, and members’ roles. Members come

to accept and understand one another. Leaders should emphasise unity

within the team and help clarify team norms and values.



4. Performing

During the performing stage, the major emphasis is on problem solving and

accomplishing the team task. Members are committed to the team’s mission.

They are coordinated with one another and handle disagreements in a

mature way. They confront and resolve problems in the interest of task

accomplishment. The leader should concentrate on managing high task

performance.

5. Adjourning

The adjourning stage occurs in teams that have a limited task to perform

and are disbanded upon task completion. The emphasis is on wrapping up

and gearing down. Task performance is no longer a high priority. The

leader may wish to disband the team with a ritual or ceremony, perhaps

giving out plaques and awards to signify closure and completeness.

The five stages of team development typically occur in sequence. In teams under

time pressure or that exist for a short period of time, the stages may occur rapidly.


REFER TO: Exhibit 18.6 depicts the five stages of team development.

REVIEW: Suppose you are the leader of a team that has just been created to develop a new

registration process at your college or university. How can you use an

understanding of the stages of team development to improve your team’s

effectiveness?

B. Team Cohesiveness Team cohesiveness concerns the extent to which members are attracted to the

team and motivated to remain in the team. High cohesiveness is normally

considered a positive feature of teams.

Determinants of team cohesiveness

a. Team interaction. The greater the contact among members, the more cohesive

the team will be.

b. Shared goals. Agreeing on purpose and direction binds the team together.



c. Personal attraction to the team. Members have similar attitudes and values

and enjoy being together.

d. Presence of competition. This causes the group to want to win.

e. Team success. Success is a favourable evaluation of the team by outsiders.

Microsoft is a success story on team cohesiveness. In the early days, it organised

itself in small teams. Every team shared a common goal and members

interacted and collaborated with one another. Each team member was proud to

be in the team as it signified importance. As Microsoft hires smart people, there

was strong competition among teams and each competed strongly for resources

and attention from the then CEO, Bill Gates. Undoubtedly, team cohesiveness

resulted in team success as evident in its strong financial performance as well as

market share in the early years of Microsoft. Today, Microsoft is still deemed

one of the most successful companies in the world (Cusumano and Selby,

pp.73‐96).

Consequences of Team Cohesiveness

a. Morale is higher in cohesive teams.

b. Productivity tends to be more uniform. Productivity depends on the

relationship between management and the team; cohesive teams attain their

goals and enforce norms that can result in very high or very low

productivity.

C. Team Norms

A team norm is a standard of conduct that is shared by team members and

guides their behaviour. Norms are informal and valuable because they define

boundaries of acceptable behaviour. They make life easier for team members by

providing a frame of reference for what the team considers to be right and

wrong behaviour. Norms identify key values, clarify role expectations, and

facilitate team survival.

Norms begin to develop in the first interactions among members of a new team.

Norms that apply to daily behaviour, employee output, and performance do

evolve, letting everyone know what is acceptable and directing his/her actions

towards expected performance. Four common ways that norms are developed

for controlling and directing behaviour include:

a. Critical events. Critical events establish precedent and lead to the creation of

a norm. For instance, one critical event occurred when an employee at a

forest products factory was injured. This led to the norm that team members

regularly monitor one another.



b. Primacy. Primacy means that the first behaviours that occur in a team often

set team expectations. The team leader at a company raised an issue and

then “led” team members until he got the solution he wanted. This became

a pattern of unproductive behaviour.

c. Carryover behaviours. Carryover behaviours bring norms into the team from

outside. An example is the strong norm against smoking in many teams,

which is a carryover behaviour developed outside the team.

d. Explicit statements. With explicit statements, team leaders or members

establish norms. This can be a highly effective way for leaders to influence

or change team norms.


REFER TO: Exhibit 18.7 depicts four ways team norms develop.

REVIEW: Some people argue that the presence of an outside threat correlates with a high

degree of team cohesion. Would you agree or disagree? Explain your answer.

MANAGING TEAM CONFLICT

Conflict refers to antagonistic interactions during which one party attempts to

block the intentions or goals of another. Of all the skills required for effective team

management, none is more important than handling the conflicts that inevitably

rise among team members. When people work together in teams, some conflict is

inevitable; conflict can arise among team members or between teams. Competition,

which is rivalry among individuals or teams, can have a healthy impact because it

energises people towards higher performance.

A. Types of Conflict Task conflict refers to disagreements among people about the goals to be

achieved or the content of the tasks to be performed. Relationship conflict

refers to interpersonal incompatibility that creates tension and personal

animosity among people.

In general, research suggests that task conflict can be beneficial because it leads

to better decision making and problem solving. On the other hand, relationship

conflict is typically associated with negative consequences for team

effectiveness.



B. Balancing Conflict and Cooperation

A healthy level of conflict helps to prevent groupthink, which is the tendency

for people to be so committed to a cohesive team that they are reluctant to

express contrary opinions. However, conflict that is too strong and focused on

personal rather than work issues, or not managed appropriately can be

damaging to the team’s morale. Too much conflict can be destructive, tear

relationships apart, and interfere with the healthy exchange of ideas and

information that is the hallmark of an effective team.

Team leaders have to find the right balance between conflict and cooperation.

Too little conflict decreases team performance because there are no mixed

opinions. Too much conflict prevents the team from cooperative efforts and

decreases employee satisfaction and commitment, hurting team performance.

C. Causes of Conflict

a. Scarce resources. Resources include money, information, and supplies. When

employees or teams must compete for scarce resources, conflicts will occur.

b. Goal differences. Conflicts often occur because people are pursuing

incompatible goals. Goal differences are natural in organisations. Individual

salespeople’s targets may put them in conflict with one another or with the

sales manager.

c. Communication breakdown. Faulty communications result in

misunderstandings among teams. Poor communication results in

misperceptions and misunderstandings of other people and teams. In some

cases, information is intentionally withheld, which can jeopardise trust and

lead to a long‐lasting conflict.

d. Trust issues. If team members believe they are being left out of important

communication interactions, conflict can arise due to a perceived lack of

trust.

D. Styles to Handle Conflict

Teams as well as individuals develop specific styles for dealing with conflicts,

derived from the desire to satisfy their own concern versus the other party’s

concern. The major dimensions are the extent to which individuals are assertive

or cooperative in their approach to conflicts and their resolution. The following

are styles to handle conflict:

a. Competing style. Reflects assertiveness to get one’s own way. It should be

used when quick, decisive action is vital on important issues or unpopular

actions such as during emergencies or urgent cost cutting.



b. Avoiding style. Reflects neither assertiveness nor cooperativeness. It should be used when the issue is trivial, there is no chance to win, a delay is

needed, and a disruption would be very costly.

c. Compromising style. Reflects a moderate amount of both assertiveness and

cooperativeness. It should be used when goals on both sides are equally

important, opponents have equal power and want to split the difference,

and each side needs a temporary or expedient solution.

d. Accommodating style. Reflects a high degree of cooperativeness. It should be

used when people realise they are wrong, an issue is more important to

others than to oneself, and one is building social credits for use in later

discussions. Maintaining harmony is important.

e. Collaborating style. Reflects a high degree of assertiveness and

cooperativeness. It should be used when both parties need to win, both sets

of concerns are too important to be compromised, and insights from

different people need to be merged. Commitment of both sides is needed for

a consensus.

Research suggests that several techniques can be used as strategies for resolving

conflict.

a. Superordinate goals. Superordinate goals require the cooperation of the

conflicting parties for team effectiveness and achievement. They are goals

that cannot be reached by a single party. Conflicting parties realise they

must work together to achieve the goal; a powerful future vision of the

organisation compels people to resolve conflict.

b. Mediation. Mediation is the process of using a third party to settle a dispute

or conflict. If a solution satisfactory to both sides cannot be reached, the

parties may be willing to turn the conflict over to a mediator and abide by

the decision.

E. Negotiation

Types of negotiation

Negotiation means that the parties engage in give‐and‐take discussions and

consider various alternatives to reach a joint decision that is acceptable to both

parties.

a. Integrative negotiation is based on a win‐win assumption that implies that

all parties want to come up with a creative solution to the conflict that can

benefit all of them. People look at the issues from multiple angles, consider

trade‐offs, and try to “expand the pie” rather than divide it.



b. Distributive negotiation assumes the “size of the pie” is fixed and the

parties attempt to get as much of it as they can. This win‐lose approach is

competitive and adversarial rather than collaborative, and does not

typically lead to positive long‐term relationships.

Rules for reaching a win‐win solution

a. Separate the people from the problem. Stay focused on the problem and don’t attack

each other.

b. Focus on interests, not current demands. Demands are what the parties want;

interests are why they want those things.

c. Generate many alternatives for mutual gain.

d. Insist that results be based on objective standards. Successful negotiation focuses on

objective criteria rather than subjective judgements.


REFER TO: Exhibit 18.8 shows balancing conflict and cooperation.

Exhibit 18.9 depicts a model of styles to handle conflict.

REVIEW: If you were the leader of a special‐purpose team developing a new computer

game, and conflicts arose related to power and status differences among team

members, what would you do? How might you use the various conflict

resolution techniques described in the chapter?

WORK TEAM EFFECTIVENESS

The positive outcomes of team effectiveness include the following:

A. Productive Output

One aspect of effectiveness relates to whether the team’s output meets the

requirements of customers or clients in terms of quality, quantity, and

timeliness. Effective teams unleash enormous energy and creativity from

workers. Social facilitation refers to the tendency for the presence of others to

enhance one’s motivation and performance. This team benefit is often lost in

virtual and global teams because people are working in isolation from their

teammates.



B. Satisfaction of Members

Effective teams provide multiple opportunities for people to satisfy their

individual needs and to develop both personally and professionally.

Participative teams can also reduce boredom, increase individuals’ feelings of

dignity and self‐worth, and contribute to skill development because the whole

person is employed. People who have a satisfying team environment cope

better with stress, enjoy their jobs, and have a higher level of organisational

commitment.

C. Capacity to Adapt and Learn In effective work teams, members can anticipate one another’s actions and

respond appropriately. Over time, effective teams learn from experience and

use that learning to revitalise and regenerate themselves, smoothly adapting to

shifting organisational and competitive demands.


REVIEW: One company had 40 percent of its workers and 20 percent of its managers

who resigned during the first year after reorganising into teams. What might

account for this dramatic turnover? How might managers ensure a smooth

transition to teams?

DO: Observe how team effectiveness is demonstrated in your workplace. What key

performance indicators are used to measure team effectiveness?






Chapter 1: Motivation

If you were a plant manager, how would you motivate a group of production

workers to improve their job performance?

Production workers may be motivated through extrinsic rewards such as pay

increases or performance bonus. The manager may provide a safe and pleasant

work environment for production workers. To improve performance,

production workers may be given relevant training such as operating a new

machine for production. Appropriate recognition for job well done is another

consideration by the managers.

What are the hygiene factors if not met would de‐motivate an employee and

cause him/her to leave?

Basic hygiene factors include good working conditions, job security, reasonable

salary and friendly interpersonal relationships with colleagues. If these needs

are not met, an employee will experience job dissatisfaction and eventually

leave the company.

If an experienced executive discovered that she made the same amount of

money as a junior officer, how do you think he/she would react? What inputs

and outcomes might she evaluate to make this comparison?

This comparison is based on equity theory, in which people compare the inputs

they bring to a job and the outcomes they receive from it with those of others

doing the same or a similar job. Chances are the executive will react negatively

to the comparison. The junior officer is newly hired and may have less

experience than the executive. The executive may have more education and

bring greater training and ability to the job. The executive may have certain

outcomes unavailable to the junior officer, such as a pleasant office, more

satisfying work, and a more prestigious position. However, these outcomes

probably will not offset an identical salary, which will create a perceived

inequity. If the perceived inequity is great, the executive might be expected to

change her inputs by exerting less effort, attempting to change outcomes by

seeking a salary increase, or by perhaps even leaving the job.

What are the key elements of the Expectancy Theory? In your view, is there a

key element that is more important than the others?

The key elements of the Expectancy Theory are reliability of the expectancy that

an employee can have over the relationships between his effort, the resulting

performance and job as well as personal outcomes and the subjective value that

the individual places on these personal outcomes.



The importance or significance of one key expectancy over another varies

according to the individual’s motivation level. For example, if the individual is

motivated by valence or the attraction of the outcome, he/she may probably

place high value to this key. It is important to note that the Expectancy Theory

does not define specific types of needs or rewards but only to establish that they

exist and may differ from individual to individual.

One small company recognises an employee of the month, who is given a

parking spot next to the president’s space near the front door. What theories

would explain the positive motivation associated with this policy?

Using Maslow’s theory, this is an appeal to the higher‐level need of esteem.

Herzberg would call it recognition. It could also be called positive

reinforcement. In expectancy theory language, the valued reward of the

reserved parking space increased motivation. Linking performance to the

reward increased the probability of high performance.

How can empowerment lead to higher motivation of employees?

Empowerment means the delegation of power or authority to subordinates in

an organisation. Increasing employee power heightens motivation for task

accomplishment because people improve their own effectiveness by choosing

how to do a task and using their creativity. Most people within an organisation

have the desire to do a good job, and empowerment releases the motivation that

is already there.

Chapter 2: Teamwork

Volvo went to self‐directed teams to assemble cars because of the need to

attract and keep workers in Sweden, where pay raises are not a motivator

(high taxes) and many other jobs are available. Are these factors good reasons

for using a team approach?

This seems to be a valid reason for using a team approach. The team approach

can provide a motivator by giving workers satisfaction for participating in the

team. Social facilitation as a team will provide motivation and lead to higher

performance. Participation on a team can also improve self‐esteem, resulting in

improved work quality. People enjoy being part of an effective team, and this

may help to attract and keep workers in Sweden.

When you are a member of a team, do you adopt a task specialist or socio‐

emotional role? Which role is more important for a team’s effectiveness?

You may see yourselves as adopting either role or both. As to which role is

more important, you may argue that the task specialist role makes a greater

contribution to the team than the socio‐emotional role because the task



specialist actually accomplishes the task of the team by initiating solutions,

giving opinions, and stimulating the team into action. The socio‐emotional role

often seems secondary because it is used to reconcile team conflicts, reduce

tension, and help maintain team harmony. The best answer is that the task

specialist role is more important for helping the team attain one type of

outcome, which is productive output. The socio‐emotional role is more effective

for helping the team attain another type of outcome, which is personal

satisfaction of team members.

Suppose you are the leader of a team that has just been created to develop a

new registration process at your college or university. How can you use an

understanding of the stages of team development to improve your team’s

effectiveness?

As a leader of an employee group charged with development of a new

registration process would be challenging. As a leader of this project, it will be

important to initiate and complete the “forming” stage by ensuring that the

team members get to know one another and that their questions about the

purpose of the team and the project are clarified. In stage two “storming”, the

group members will each start to find their niche and whenever a position is

solicited by more than one member, the leader should expect clashes,

disagreements and political manoeuvring. By end of stage three “norming”, the

team members know their respective place and role, they start to participate

actively to the discussion, share ideas, agree and disagree on issues relating to

student registration but come together and seek innovative ideas to solve

problems and improve the student registration process. In stage four

“performing”, the team members are fully collaborating with one another, they

work very well together and functioning as an effective team, they deliver their

highest levels of performance. Recommended operating procedures are

forthcoming to improve the effectiveness of student registration. Finally, in

stage five “adjourning”, this team is disbanded once it has accomplished its

purpose of recommending strategies for improving the registration process.

Some people argue that the presence of an outside threat correlates with a

high degree of team cohesion. Would you agree or disagree? Explain your

answer.

You will probably agree that an outside threat does correlate with a high degree

of team cohesiveness. The reason is that people tend to draw together when

threatened by an outside force, just as with family members who may fight

among themselves but stand together to fight someone from outside the family

who threatens them.

As a general rule, team cohesiveness is associated with higher performance.

However, an interesting finding from research is that a cohesive team can

define high but also low performance. If the goal of a cohesive team is to reduce

performance because of a poor relationship with management, the cohesive



team will perform terribly. When teams have a good relationship with

management and the performance norms are high, then highly cohesive teams

will outperform teams that are lower in cohesiveness.

If you were the leader of a special‐purpose team developing a new computer

game, and conflicts arose because of power and status differences among

team members, what would you do? How might you use the various conflict

resolution techniques described in the chapter?

The leader of a special purpose team tasked with creating and developing an

innovative new computer game would evolve from the creativity of this group.

The intuition and idea generation would come from individuals whose brain

has a particularly productive right hemisphere. Team members will have

different views and ideas and a power struggle may result among the team.

Conflicts are a natural consequence of that situation. The healthy method of

managing conflict is a challenge to management. A manager may be required to

stimulate conflict when the team is complacent. However, conflict must be

resolved when there is a power struggle or status given to certain members of

the team. The way to resolve this conflict is either to force, accommodate,

compromise, and/or collaborate with the members of the team. The means of

reducing conflict will vary, based on the situation or environment the leader is

exposed to.

One company saw 40 percent of its workers and 20 percent of its managers

resign during the first year after reorganising the entire workforce into teams.

What might account for this dramatic turnover? How might managers ensure

a smooth transition to teams?

One of the difficult experiences for companies that begin the revolution towards

empowerment and teamwork is that many employees are not comfortable with

the new team‐based culture. Approximately one‐third of employees embrace

the change enthusiastically, one‐third will go along, and one‐third will resist.

Resisters typically are employees who do not have the social and personal skills

to work in partnership with others on teams, and who want narrowly defined

jobs with little decision‐making responsibility. These employees prefer working

alone within the vertical hierarchy to working in a team. Companies that spend

too much time trying to convert the resisters threaten the smooth transition

process; instead, they should accept that the resisters may have to leave, as a

natural part of the change process.



REFERENCES

Cusumano, M. A. and Selby, R. W., 1995, “Microsoft Secrets”, The Free Press,

United States of America, pp.73‐96.

CapitaLand Institute of Management and Business,

http://www.capitaland.com/people/lnd/climb.php?&sub=1, accessed 31 August

2011.

Harish, M., Singh, S., and Singh K., 2010, ‘Tata Motors (B): Integration of

Daewoo Commercial Vehicle Company’, Business Strategy in Asia: A Casebook,

Cengage Learning Asia Pte Ltd, Singapore, p.223.

Insights to Business Excellence, Spring Singapore,

http://www.spring.gov.sg/QualityStandards/be/Documents/Insights_to_Busine

ss_Excellence.pdf, accessed 31 August 2011.

Nunis, S.J. ʹMisconceptions about shift work,ʹ Todayʹs Manager, Dec 2011‐Jan 2012,

pp.44‐46.

Soon, J. ʹConcept of motivation and the role of rewards,ʹ Todayʹs Manager, August‐

September 2011 [online] Available:

http://www1.sim.edu.sg/mbs/pub/gen/mbs_pub_gen_content.cfm?ID=3059&m

nuid=92 [Accessed 29 December 2012].

Spring Singapore, 2012, Teckwah SQA Executive Summary Report [online]

Available:

http://www.spring.gov.sg/QualityStandards/be/Documents/beaw/SQA_TeckW

ah_2006_Summary_Report.pdf [Accessed 29 December 2012].

BUS206

Managing People

STUDY UNIT 4

CHAPTER 1: Designing Adaptive Organisations

CHAPTER 2: Quality and Performance



CHAPTER 1: DESIGNING ADAPTIVE ORGANISATIONS

LEARNING OUTCOMES


Explain organisation, organisational structure and organisational chart.

Apply the fundamental characteristics of organising, including concepts of

work specialisation, chain of command, span of management and centralisation

versus decentralisation in an organisation.

Distinguish the different types of organisational structures and summarise the

advantages and disadvantages of each type.



BEST‐FIT STRUCTURE

When BreadTalk opened its first outlet in Bugis Junction in 2000, its organisational

structure was fairly simple as there was one owner and a few operation employees.

By 2002, BreadTalk had expanded to 20 outlets and the management came to realise

that the simple structure of its humble beginnings needed to change as it was no

longer relevant nor effective to support the company’s growth. The question then

was: what type of structure would be the most suitable for a growing enterprise?

Many suggested that a functional structure with tight controls exercised through

clear and specific rules and procedures was the most appropriate. This, in fact, may

have appeared logical as product quality was one of BreadTalk’s key success factors

and following standard operating procedures would certainly help production and

ensure both product consistency (for instance, a cheese bread at outlet A would

taste the same as a cheese bread sold at outlet B) and standardisation of products.

Fast forward to today and one realises that BreakTalk Group is no longer a single

business but rather a multi‐brand company with diversified businesses primarily in

the food and beverage (F&B) industry. With a network spanning 16 countries,

including Singapore, Mainland China, Hong Kong and Indonesia, BreadTalk now

employs 6000 employees worldwide and manages 500 F&B outlets. In its current

state, would a functional structure be able to support the size and the growth of the

Group? Operating in different countries increases complexity and diversity and

that suggests that BreadTalk may need to re‐structure its organisation to ensure it is

both adaptable and flexible. But then again, what type of organisation structure

would best fit BreakTalk given its ambition to scale even higher heights?

(Source: BreadTalk Annual Report 2011)



ORGANISING THE VERTICAL STRUCTURE

Organising is the deployment of organisational resources to achieve strategic goals.

It is important because it follows from strategy. Strategy defines what to do, and

organising defines how to do it. The process of organising leads to the creation of an

organisational structure, which defines how tasks are divided, resources are

deployed, and departments are coordinated.

Organisational structure refers to:

• Formal tasks assigned to individuals and departments;

• Formal reporting relationships including lines of authority, decision

responsibility, number of hierarchical levels and span of managersʹ control; and

• Design of systems for coordination across departments.

The organisational chart is the visual representation of an organisationʹs structure

that portrays the characteristics of vertical structure. It delineates the chain of

command, indicates departmental tasks and how they fit together, and provides

order and logic for the organisation.

There are several important features of the vertical structure:

A. Work Specialisation

a. A fundamental organising principle is that work can be performed more

efficiently if employees are allowed to specialise. Work specialisation,

sometimes called division of labour, is the degree to which organisational

tasks are subdivided into separate jobs. Production is efficient because

employees perform small, well‐defined tasks.

b. Organisations are moving away from this principle because too much

specialisation leads to employees being isolated and doing only a single

boring job. Many companies are enlarging jobs to provide greater challenges

or assigning teams to tasks so employees can rotate among the jobs

performed by the team.

B. Chain of Command

a. The chain of command is an unbroken line of authority that links all persons

in an organisation and shows who reports to whom. It is associated with

two underlying principles: unity of command that stipulates that each

employee should be reporting to one and only one supervisor. For example,

30 refinery workers report to one team leader in the shift. The scalar



principle, the second underlying principle of the chain of command, refers to

a clearly defined line of authority in the organisation that includes all

employees.

Authority, Responsibility, and Delegation

a. The chain of command illustrates the authority structure of an organisation.

Authority is the formal and legitimate right of a manager to make decisions,

issue orders, and allocate resources to achieve organisational outcomes.

Authority is distinguished by three characteristics.

Authority is vested to organisational positions, not people. Once an

individual no longer occupies a position, s/he loses the authority that is

attached to it and the latter is taken over by his/her replacement.

Authority flows down the vertical hierarchy. Positions at the top have

more formal authority than those at the bottom. For example, a line

manager has authority to hire and fire his subordinates, but he cannot

do that for his own superior.

Authority is accepted by subordinates. The acceptance theory of authority

argues that a manager has authority only if subordinates choose to

accept the commands. For example, a line manager may have the

authority to delegate work to subordinates; but the subordinate may not

be willing to do the work.

Responsibility is the duty to perform the task or activity an employee has

been assigned. Managers are assigned the authority commensurate with

responsibility.

Accountability is the mechanism through which authority and

responsibility are brought into alignment. Those with authority and

responsibility are subject to justifying task outcomes to those above them in

the chain of command.

Delegation is another concept related to authority; it is the process

managers use to transfer authority and responsibility to positions below them in the hierarchy. For example, a line manager may assign projects to

his/her team members.




REFER TO: Exhibit 10.1 shows the organisation chart for a water bottle plant.

REVIEW: Sandra Holt, manager of Electronics Assembly, asked Hector Cruz, her senior

technician, to handle things in the department while she worked on the budget

as she needed peace and quiet for at least a week to complete her figures. After

ten days, Sandra discovered that Hector had hired a senior secretary, not

realising that Sandra had promised interviews to two other people. Evaluate

Sandra’s approach to delegation.

Line and Staff Authority

a. Line departments perform tasks that reflect the organisationʹs primary goal

and mission. In a software company, line departments develop software

applications and sell them. Line authority means that managers have

formal authority to direct and control immediate subordinates. For example,

a sales manager who line manages a team of sales executives has authority

to either coach or discipline his staff, depending on the situation. Coaching

is required when a sales person lacks selling skills. Disciplinary action is

needed when, for instance, the sales person is rude to customers, is aware of

it and refuses to change his ways despite receiving feedback about it.

b. Staff departments include all those who provide specialised skills in support

of line departments. The finance department of software firm has staff

authority. Staff authority is narrower than line authority and includes the

right to advise, recommend, and counsel in the staff specialistsʹ area of

expertise. Human resource managers are given staff authority because they

play an advisory role in providing human resource services to line

managers.

C. Span of Management The span of management, or span of control, is the number of employees

reporting to a supervisor. This characteristic of structure determines how

closely a supervisor can monitor subordinates.

Factors that determine the span of management include:

a. Work performed by subordinates is stable and routine;

b. Subordinates perform similar work tasks;



c. Subordinates are concentrated in a single location;

d. Subordinates are trained and need little direction in performing tasks;

e. Rules and procedures defining task activities are available;

f. Support systems and personnel are available for the manager;

g. Little time is required in nonsupervisory activities such as coordination with

other departments or planning; and

h. Managersʹ personal preferences favour a large span.

The average span of control used in an organisation determines whether the

structure is tall or flat. A tall structure has an overall narrow span of

management and more levels in the hierarchy. For example, the span of control

of a consultancy team can be seven to 10 members. A flat structure has a wide

span, is horizontally dispersed, and has fewer hierarchical levels. The trend is

towards wider spans of control as a way to facilitate delegation. For example,

the span of control for a plant manager is 30 factory workers.

D. Centralisation and Decentralisation

Centralisation and decentralisation pertain to the hierarchical level at which

decisions are made. Centralisation means that the authority to make decisions

is located at or near the top of the organisation. Small and medium enterprises

and family‐owned businesses are likely to adopt centralised decision making.

With decentralisation, decision authority is pushed down the chain of

command to lower organisation levels.

The trend is towards decentralisation, especially in situations where a quick

response is needed, well‐informed people are available internally to relieve top

managers from the task of making most decisions and workers can be

empowered as they have the skills to make lower level decisions. For example,

Ritz Carlton allows its frontline staff to make decisions that enhance the service

delivery and standards of the hotel.

Factors that influence the decision of an organisation to centralise or

decentralise include:

a. Greater change and uncertainty in the environment are usually associated

with decentralisation.

b. The amount of centralisation or decentralisation should fit the firm’s

strategy.



c. In times of crisis or risk of company failure, authority may be centralised at

the top.

DEPARTMENTALISATION Departmentalisation is the basis for grouping individuals into departments,

departments into divisions and ultimately, divisions into the entire organisation.

Managers make choices regarding the use of the chain of command to group people

together to perform their work. Five approaches to structural design reflect

different uses of the chain of command in departmentalisation.

A. Vertical Functional Approach

What It Is

a. Functional structure refers to grouping positions into departments based on

similar skills, expertise, and resource use. People, facilities, and other

resources representing a common organisational resource are grouped

together into a single department.

How It Works

a. The major departments under the president are groupings of similar

expertise and resources, such as accounting, human resources, production

and marketing. Each of the functional departments is concerned with the

organisation as a whole. The functional structure is a strong vertical design.

Information flows up and down the vertical hierarchy, and the chain of

command converges at the top.

b. People in a department communicate primarily with others in the same

department to coordinate work and accomplish tasks or implement

decisions. On the technical side, managers and employees are compatible

because of similar training and expertise. Finance and Information

Technology departments are good examples of a functional structure.

Employees in these departments have special skills and knowledge and

they can communicate well with one another.

B. Divisional Approach

What It Is

a. The divisional structure occurs when departments are grouped together

based on organisational outputs. Diverse departments are brought together

to produce a single organisational output. The divisional structure is

sometimes called a product structure, programme structure, or self‐contained



unit structure. Most large corporations have separate divisions that perform

different tasks, use different technologies or serve different customers. Most

banks would use divisional structure. Multi‐national corporations such as

Apple, Sony and Microsoft adapt divisional structure.

How It Works

a. Divisions are created as self‐contained units with separate functional

departments for each division. For example, separate engineering

departments are created within each division, and each department is

similar and focuses on a single product. The primary difference between

divisional and functional structures is that the chain of command from each

function converges lower in the hierarchy. Differences of opinion would be resolved at the divisional level rather than by the president.

Geographic‐ or Customer‐Based Divisions

a. Grouping company activities by geographic region is an alternative for

assigning divisional responsibility. In this structure, all functions in a

specific country or region report to the same division manager. The

structure focuses company activities on local market conditions; competitive

advantage comes from selling a product adapted to a given country.


REFER TO: Exhibit 10.3 shows the five approaches to structural design.

REVIEW: The divisional structure is often considered almost the opposite of a functional structure. Do you agree? Briefly explain the major differences in these two approaches to departmentalisation.

C. Matrix Approach

What It Is

The matrix approach combines aspects of both functional and divisional

structures simultaneously in the same part of the organisation. The matrix has

dual lines of authority. The functional hierarchy of authority runs vertically,

providing traditional control within functional departments. The divisional

hierarchy runs horizontally, providing coordination across departments. The

matrix structure provides a formal chain of command for both the functional



(vertical) and divisional (horizontal) relationships. Multi‐national corporations

apply the matrix approach where dual reporting is necessary. For example, the

marketing manager may report to the marketing director in Singapore as well

as the Business Director in Asia Pacific.

How It Works

The dual lines of authority make the matrix structure unique. The success of the

matrix structure depends on the abilities of people involved in key matrix roles.

• Two‐boss employees report to two supervisors simultaneously and must

resolve conflicting demands from the matrix bosses.

• The matrix boss is the product or functional boss who is responsible for one

side of the matrix.

• The top leader oversees both the product and functional chains of command

and is responsible for the entire matrix.


REFER TO: Exhibit 10.6 shows the dual‐authority in matrix organisation.

REVIEW: Some people argue that the matrix structure should be adopted only as a last resort because the dual chains of command can create more problems than they solve. Do you agree or disagree with their position? Defend your position as well as the opposite position.

D. Team Approach What It Is The team approach is probably the most widespread trend in

departmentalisation. The vertical chain of command is a powerful means of

control, but passing all decisions up the hierarchy takes too long and keeps

responsibility at the top. Managers can delegate authority, push responsibility

to lower levels, and be more flexible and responsive in the competitive global

environment.



How It Works a. Cross‐functional teams consist of employees from various functional

departments, responsible to meet as a team and resolve mutual problems.

Team members report to their functional departments, but also to the team.

These teams provide the horizontal coordination needed to complement

existing functional or divisional structures.

b. Permanent teams are groups of employees brought together in a way

similar to a formal department. Emphasis is on horizontal communication

and information sharing because representatives from all functions

coordinate to complete a specific task. Authority is pushed down to lower

levels, and front‐line employees are given the freedom to make decisions

and take action on their own.

c. With a team‐based structure, the entire organisation is made up of

horizontal teams that coordinate activities and work with customers to

accomplish the organisation’s goals.

E. The Virtual Network Approach

What It Is

a. The most recent approach to departmentalisation extends the idea of

horizontal coordination beyond the boundaries of the organisation.

Outsourcing, which means farming out certain activities, has become a

significant trend. For example, many organisations outsourced their call

centres to a third party that has the expertise to perform the function more

competently and cost effectively. Partnerships, alliances and other

collaborative forms are now the leading approaches that companies take to

accomplish strategic goals.

b. Some organisations take this networking approach to the extreme to create a

new kind of structure. The virtual network structure disaggregates major

functions to separate companies that are brokered by a small headquarters

organisation.

How It Works

a. The organisation may be viewed as a central hub surrounded by a network

of outsider specialists. Services such as accounting are outsourced to

separate organisations that are connected electronically to the central office.

Networked computer systems, collaborative software, and the Internet

enable organisations to exchange data and information rapidly and

seamlessly. Networks allow a company to concentrate on what it does best



and contract out other activities to companies with distinctive competence

in those areas.

b. In a similar networking approach called the modular approach, a

manufacturing firm uses outside suppliers to provide large chunks of a

product, which are then assembled into a final product by a few workers.


REFER TO: Exhibit 10.8 shows the network approach to departmentalisation.

REVIEW:

What is the virtual network approach to structure? Is the use of

authority and responsibility different compared with other forms of

departmentalisation? Explain.

F. Advantages and Disadvantages of Each Structure

Functional Approach

a. Grouping employees by common task permits efficient resource use and

economies of scale. Departments enhance in‐depth skill specialisation and

development, and centralised decision making at the top provides unified

direction.

b. Disadvantages include barriers that exist across departments resulting in

poor communication and coordination and slow response to changes.

Innovation and change require the involvement of several departments, and

a delay occurs as decisions pile up at the top of the hierarchy.

Divisional Approach

a. The organisation is flexible and responsive to change because each unit is

small and tuned in to its environment. Concern for customerʹs needs is high

and coordination across functional departments is better because employees

are grouped and committed to a product.

b. Coordination across divisions is often poor. The organisation loses

efficiency and economies of scale, and there may be a lack of technical depth

and specialisation.

Matrix Approach

a. The matrix can be highly effective in a complex, rapidly changing

environment in which flexibility and adaptability are important. Conflicts

and frequent meetings allow new issues to be raised and resolved. The

matrix makes efficient use of human resources because specialists can be

transferred from one division to another.



b. Frustration and confusion arising from the dual chain of command can be a

significant problem, as there can be high conflict between the two sides of

the matrix, and time lost in meetings. Managers spend a great deal of time

coordinating meetings, taking time away from core work activities.

Team Approach

a. The team approach reduces barriers across departments, increases

cooperation and compromise, and enables the firm to quickly adapt to

requests and changes. Another advantage is better morale and enthusiasm

as a result of increased employee involvement.

b. Disadvantages include dual loyalties and conflict, time and resources spent

on meetings, and too much decentralisation. Team members can often lose

sight of the big picture of the organisation.

Virtual Network Approach

a. The biggest advantages are flexibility and competitiveness on a global scale,

drawing on resources and expertise worldwide. The virtual network

structure is the leanest of all because little supervision is required. There

may be only two or three levels of hierarchy, compared with ten or more in

traditional firms.

b. Lack of hands‐on control is a significant disadvantage. Each partner in the

network acts in his/her own self‐interest. Weak and ambiguous boundaries

create higher uncertainty and greater demands on managers for defining

shared goals, coordinating activities, managing relationships, and keeping

people focused. Employee loyalty can weaken; employees may feel

concerned that they can be replaced by contract services.


REFER TO: Exhibit 10.9 summarises the advantages and disadvantages of structural

approaches.

DO: Select a travel agency, bakery or an SME in Singapore and design a relevant

organisation structure that best fits the company. Justify why the structure is

most suitable.

Organisational Structure and Design (Part 1), please click here

Organisational Structure and Design (Part 2), please click here




CHAPTER 2: QUALITY AND PERFORMANCE

LEARNING OUTCOMES


Explain the meaning of control.

Use the balanced scorecard to track performance and control the organisation.

Discuss the feedback control model.

Apply financial statements, financial analysis and budgeting as management

control.

Distinguish between hierarchical and decentralised approaches to control.

Describe the concept of total quality management and major TQM techniques.



CONTROL IS GOOD AND NECESSARY

Tan Jin Yee is a newly promoted branch manager at a local bank and in his new

responsibilities, he oversees the branch operations and is accountable for the

branchʹs results.

The bank uses the balanced scorecard to measure the performance of each branch.

It relies on such key performance indicators as revenue, number of new customers

and new accounts, customer satisfaction, productivity to evaluate outcomes.

The headquarters implemented a number of control mechanisms at all branches to

ensure results would conform to set plans and objectives. As a branch manager, Jin

Yee is given the authority to approve payments, staff leave applications, training

and special incentives for selected customers. Given the limited staff budget he is

given, Jin Yee also has to manage the financial and human resources allocated to his

branch. Like all organisations, the bank continually looks at new ways to cut

operating costs and Jin Yee always tries to ensure that the money the branch spends

does contribute to increasing revenues.

To measure his staff performance, Jin Yee sets clear targets and expects his team to

meet them. For instance, last year, the branch received the highest number of

complaints and fared poorly in customer satisfaction. To correct the situation, Jin

Yee decided to hold regular dialogues with his staff and to set up work

improvement teams to figure out new ways to improve customer satisfaction at the

branch. He also put in place a feedback system that monitors his team performance

and sends customer feedback directly to him. The feedback is valuable because it

identifies the service lapses and helps the team close them.

Jin Yee knew that any control measure he implemented could initially generate a

negative reaction from the team members. However, once Jin Yee explained the

rationale behind it, the staff accepted the measures and began to work with him to

improve customer satisfaction at the branch. They were convinced in particular

when Jin Yee explained that well implemented, control measures lead to a fairer

way of assessing employee performance and to reward them accordingly.

Six months after implementing the new control measures, Jin Yee realised that his

team had made notable improvements: they were now much more concerned about

ensuring good customer service at all touch points throughout the banking service

delivery process, including in their face‐to‐face and telephone interactions.

Comparing the current situation with what it was when he was first promoted to

the bank manager position, Jin Yee felt very proud of his team.



THE MEANING OF CONTROL

Control, including quality control, also involves office productivity, such as

improved customer service, elimination of bottlenecks, and reduction in paperwork

mistakes. Lack of effective control can seriously damage an organisation’s health

and threaten its future.

Organisational control is the systematic process through which managers regulate

organisational activities to make them consistent with the expectations established

in plans, targets, and standards of performance. To effectively control the various

activities, processes and outcomes of an organisation, managers (or workers)

require information about performance standards, actual performance, and actions

to correct deviations from the standards.

A. Choosing Standards and Measures

Most organisations focus on measuring and controlling financial performance,

but managers increasingly recognise the need to measure other intangible

aspects of performance to manage the value‐creating activities of the

contemporary organisation. Key performance indicators such as customer

satisfaction, turnaround time, response time and productivity metrics are used.

B. The Balanced Scorecard

The balanced scorecard is a comprehensive management control system that

balances traditional financial measures with operational measures relating to a

company’s critical success factors. A balanced scorecard contains four major

perspectives:

a. The financial performance perspective reflects a concern that the

organisation’s activities contribute to improving short‐ and long‐term

financial performance. Net income and return on investment are common

key performance indicators used to measure financial performance.

b. Customer service indicators measure such things as how customers view the

organisation, as well as customer retention and satisfaction. The number of

complaints and compliments, and response time are key indicators of

customer service.

c. Business process indicators focus on production and operating statistics. Key performance indicators such as cost per order, accuracy and timeliness are

used to measure business process.

d. Potential for learning and growth indicators focus on how well resources and

human capital are being managed for the company’s future. Employee



retention and the number of new products launched are indicators for

measuring learning and growth.

Managers focus on various elements of the scorecard to set targets, evaluate

performance, and guide discussion about what further actions to take. The

balanced scorecard is not right for every organisation. The apparent simplicity

of the system often makes managers underestimate the time and commitment

needed to implement it. A key to its successful implementation is a performance

management orientation rather than a performance measurement orientation.

Many organisations, such as Conrad Centennial Singapore, use the balanced

scorecard to measure their performance (Spring Singapore, 2012).


REFER TO: Exhibit 19.1 shows the balanced scorecard.

REVIEW:

Describe the advantages of using a balanced scorecard to measure and

control organisational performance. Suppose you created a balanced

scorecard for NTUC FairPrice. What specific customer service measures

would you include?

FEEDBACK CONTROL MODEL

Managers set up control systems to measure performance against standards. A

useful control system follows these steps:

A. Steps of Feedback Control

1. Establish Standards of Performance

Within the organisation’s overall strategic plan, managers define goals for

organisational departments in specific, operational terms. These include

standards of performance against which organisational activities can be

compared.

To effectively reward employees for the achievement of standards,

managers need clear standards that reflect activities that contribute to the

organisation’s strategy. Standards should be defined clearly and precisely

so employees know what they need to do and can determine whether their

activities are on target. For example, sales staff are rewarded for achieving

sales targets. The reward can be in monetary or non‐monetary forms such as

a paid holiday for the staff and his family.



2. Measure Actual Performance

Most organisations prepare formal reports of quantitative performance

measurements that managers review daily, weekly, or monthly. These

measurements should be related to the standards set in the first step of the

control process. Managers should not rely exclusively on quantitative

measurements; they should also observe for themselves whether employees

are participating in decision making and have opportunities to share their

knowledge and add to the collective learning of the organisation.

3. Compare Performance to Standards

The third step in the control process compares actual activities to

performance standards. When performance deviates from a standard,

managers must interpret the deviation, dig beneath the surface and find the

problems causing the deviation. Effective management control involves

subjective judgement and employee discussions, as well as objective

analysis of performance data.

4. Take Corrective Action

Managers also determine what changes are necessary; managers may

encourage employees to work harder, redesign the production process, or

fire employees. Managers in a participative control approach collaborate

with employees to determine the corrective action necessary. Managers may

take corrective action to change performance standards. Performance

standards may need to be altered to make them realistic and provide

motivation.


REFER TO: Exhibit 19.2 shows the feedback control model.

DO: Examine the control mechanism in your company and explain how it works.

B. Application to Budgeting

1. Budgetary control sets targets for an organisation’s expenditures, monitors

results, compares them to the budget, and makes changes as needed. As a

control device, budgets are reports that list planned and actual expenditures

for cash, assets, raw materials, salaries, and other resources. Budget reports

usually list the variance between the budgeted and actual amounts for each

item. A budget is normally created for every division or department within



an organisation, as long as it performs a distinct project, programme, or

function.

2. The fundamental unit of analysis for a budget control system is called a

responsibility centre. A responsibility centre is any organisational

department or unit under the supervision of a single person who is

responsible for its activities. The types of budgets that managers use may

include expense budgets, revenue budgets, and capital budgets.

a) Expense budget. An expense budget includes anticipated and actual expenses for each responsibility centre and for the total organisation. It

may show all expenses or focus on a particular category such as

materials or research and development expenses. When actual expenses

exceed budgeted amounts, the difference signals the need for managers

to identify whether a problem exists and if so, take action.

b) Revenue budget. A revenue budget lists forecasted and actual revenues of the organisation. Revenues below the budgeted amount signal a need

to investigate the problem to see whether the organisation can improve

revenues. Revenues above the budget require determining whether the

organisation can obtain the resources to meet the higher demand for

products.

c) Cash budget. A cash budget estimates receipts and expenditures of

money on a daily or weekly basis to ensure that an organisation has

sufficient cash to meet its obligations. It shows the level of funds flowing

through the organisation and the nature of cash disbursements. If the

cash budget shows that the firm has more cash than necessary to meet

its needs, the company can invest the excess funds. If the cash budget

shows a payroll expense that exceeds the amount of money in the bank,

the organisation must borrow cash to meet the payroll.

d) Capital budget. A capital budget lists planned investments in major

assets such as buildings, trucks, and heavy machinery, often involving

expenditures over more than a year. A capital budget is necessary to

plan the impact of these expenditures on cash flow and profitability.

Budgeting is an important part of organisational planning and control.

Many traditional companies use top‐down budgeting, meaning that the

budgeted amounts for the coming year are imposed on middle‐ and

lower‐level managers. Others are beginning to adopt bottom‐up

budgeting, in which lower‐level managers anticipate their departments’

resource needs and pass them up to top management for approval.



FINANCIAL CONTROL

A. Financial Statements

1. Financial statements provide the basic information used for financial control

of an organisation. Two major financial statements—the balance sheet and

the income statement—are the starting points for financial control.

a) The balance sheet shows the firm’s financial position with respect to

assets and liabilities at a specific point in time. It provides three types of

information: assets ‒ what the company owns ‒ include current assets and

fixed assets; liabilities ‒ the firm’s debts ‒ include both current debt and

long‐term debt; and owners’ equity ‒ the difference between assets and

liabilities ‒ is the company’s net worth in stock and retained earnings.

b) The income statement, also called a profit‐and‐loss statement or “P &

L,” summarises the firm’s financial performance for a given time

interval, usually one year. The bottom line indicates the net income ‒

profit or loss ‒ for the given time period.


REVIEW: What types of analysis can managers perform to help them diagnose a

company’s financial condition? How might a review of financial statements

help managers diagnose other kinds of performance problems as well?

A. Financial Analysis: Interpreting the Numbers (Exhibit 19.5)

1. Financial analysis allows managers to evaluate financial reports that

compare their organisation’s performance with earlier data or industry

norms. The most common financial analysis focuses on ratios, which express

the relationships between performance indicators such as profits and assets,

sales, and inventory. Managers decide which ratios reveal the most

important relationships for their businesses.

a) A liquidity ratio indicates an organisation’s ability to meet its current

debt obligations. The current ratio (current assets divided by current

liabilities) tells whether there are sufficient assets easily convertible in

cash to pay off debts, if needed.

b) An activity ratio indicates an organisation’s ability to meet its current

debt obligations. Inventory turnover is calculated by dividing the total

sales by average inventory; this tells how many times the inventory is

used to meet the sales figure. The conversion ratio is purchase orders



divided by customer inquiries; this ratio measures the sales force

effectiveness in converting customer inquiries into actual sales.

c) A profitability ratio expresses profits relative to a source of profits, such

as sales or assets. The profit margin on sales is calculated as net income

divided by total sales. The gross margin is the gross (before‐tax) profit

divided by total sales.

Another profitability measure is return on total assets (ROA), a

percentage representing company earnings from assets, computed as

net income, divided by total assets. ROA is a valuable yardstick for

comparing a company’s ability to generate earnings with other

investment opportunities. A company should earn more by using its

assets than it could by putting its investment in the bank.

d) Leverage refers to funding activities with borrowed money. A company

uses leverage to make its assets produce more than they could on their

own. Too much borrowing can put the organisation at risk such that it

will be unable to keep up with its debt repayment. Managers track the

debt ratio, or total debt divided by total assets, to make sure that it does

not exceed a level they consider acceptable.

THE CHANGING PHILOSOPHY OF CONTROL

A. Hierarchical versus Decentralised Approaches (Exhibit 19.6)

1. Hierarchical control involves monitoring and influencing employee

behaviour through rules, policies, hierarchy of authority, written

documentation, and reward systems. Hierarchical methods define explicit

rules, policies, and procedures for employee behaviour. Controls rely on

centralised authority, the formal hierarchy, and close personal supervision.

The responsibility for quality control rests with quality control inspectors

and supervisors rather than with employees. Hierarchical control

techniques can enhance organisational efficiency and effectiveness.

2. Decentralised control relies on shared values and goals to control employee

behaviour. Managers operate on the assumption that employees are

trustworthy and willing to perform effectively without extensive rules and

close supervision. The organisation places great emphasis on the selection

and socialisation of employees to ensure that workers have the values

needed to influence behaviour that contribute to meeting goals. With

decentralised control, the culture is adaptive, and managers recognise the

importance of culture for uniting individual, team, and organisational goals

for greater overall control.



B. Open‐Book Management

1. Open‐book management allows employees to see the financial

condition of the company for themselves through charts, computer

printouts, meetings, and so forth. Open‐book management shows the

individual employee how his or her job fits into the big picture and

affects the financial future of the organisation. In addition, it ties

employee rewards to the company’s overall success. The goal of open‐

book management is to get every employee thinking and acting like a

business owner rather than like a hired hand.

2. In some countries, managers have trouble running an open‐book

company because the prevailing national attitudes and standards foster

confidentiality and secrecy. Many business people in countries like

China, Russia, and South Korea are not accustomed to publicly

disclosing financial details.

3. The Opacity Index indicates the degree to which various countries are

open regarding economic matters. The higher the rating, the more

opaque, or hidden, is the economy. The U.S. has an opacity rating of 36,

which is fairly low. In countries with higher ratings, financial figures are

typically closely guarded and managers do not share information.

Globalisation has an impact on economic opacity by encouraging a

convergence towards global accounting standards that supports

accurate collection, recording, and reporting of financial information.


REFER TO: Exhibit 19.6 shows the hierarchical and decentralised methods of control.

TOTAL QUALITY MANAGEMENT (TQM)

One of the more popular decentralised control approaches is total quality

management (TQM). TQM infuses quality into every activity in a company. The

TQM philosophy focuses on teamwork, increasing customer satisfaction, and

lowering costs. Organisations implement TQM by encouraging managers and

employees to collaborate across functions and departments, as well as with

customers and suppliers, to identify areas for improvement, no matter how small.



A. TQM Techniques

1. Quality Circles (a.k.a. Work Improvement Teams ‐ WITs)

A quality circle is a group of 6 to 12 volunteer employees who meet

regularly during working hours to discuss and solve problems affecting the

quality of their work and find solutions to them. Managers use quality

circles or WITs to push decision making down to the level where quality

improvement recommendations are most likely to be accepted and hence

implemented by those who do the job. The National Library Board is an

advocate of WITs. It uses them to engage staff as well as measure the staff

performance, especially in the area of quality and service improvement


2. Benchmarking

Benchmarking is the continuous process of measuring products, services,

and practices against the toughest competitors or those companies

recognised as industry leaders. The key to successful benchmarking lies in

analysis. A company must honestly analyse its current procedures and

determine areas for improvement. A company carefully selects competitors

worthy of copying and emulates their internal processes and procedures.

Conrad Centennial Singapore uses guest comment cards (GCC) to get guest

feedback. The GCC is used to measure guest satisfaction. The hotel

benchmarked its GCC scoring with other Conrad sister hotels in Asia


3. Six Sigma

Six Sigma is a highly ambitious quality standard that specifies a goal of no

more than 3.4 defects per million parts. Six Sigma has become a generic term

for a quality control approach that takes nothing for granted and

emphasises higher quality and lower costs. The discipline is based on

DMAIC (Define, Measure, Analyse, Improve, and Control). This

methodology provides a structured way for solving problems. Effectively

implementing Six Sigma requires a major commitment from top

management because it requires that widespread and significant changes be

made.

4. Reduced Cycle Time

Cycle time refers to the steps taken to complete a company process, such as

teaching a class, publishing a textbook, or designing a new car. The focus is

on improved responsiveness and acceleration of activities into a shorter

time. Reduction in cycle time improves overall company performance as

well as quality.



5. Continuous Improvement

Continuous improvement is the implementation of a large number of

small, incremental improvements in all areas of the organisation on an on‐

going basis. All employees are expected to contribute by initiating changes

in their own job activities. There is no end to the process. Innovations can

start simply, and employees can build on their success. For example, the

National Library Board uses staff suggestion scheme and WITs projects to

reinforce and strengthen the innovation culture of the organisation (Spring

Singapore, 2012).

B. TQM Success Factors

Many organisational contingency factors influence the success of a TQM

programme. Some of these factors include:

Quality circles are most beneficial when employees have challenging jobs.

TQM is most successful when it enriches jobs and improves employee

motivation.

When participation improves employees’ problem‐solving skills,

productivity is likely to increase.

Quality programmes have the greatest chance of success in corporate

cultures that value quality and stress continuous improvement as a way of

life.


REFER TO: Exhibit 19.9 quality programme success factors.

REVIEW: Why is benchmarking an important component of total quality management

(TQM) programmes? Do you believe a company could have a successful TQM

programme without using benchmarking?

DO: Search the Internet to find out how Xerox implemented benchmarking in 1979.






Chapter 1: Organisational Structure and Design

Sandra Holt, manager of Electronics Assembly, asked Hector Cruz, her senior

technician, to handle things in the department while Sandra worked on the

budget. She needed peace and quiet for at least a week to complete her

figures. After ten days, Sandra discovered that Hector had hired a senior

secretary, not realising that Sandra had promised interviews to two other

people. Evaluate Sandra’s approach to delegation.

An evaluation of Sandra’s approach to delegation can be made by using the

Manager’s Shoptalk box entitled “How to Delegate.” The guidelines provided

there include delegating the whole task. It appears that Sandra did not want to

delegate the hiring of the senior secretary, which violates this guideline. The

second guideline of selecting the right person seems to have been complied

with, since Sandra chose her senior technician who was apparently capable and

not afraid of making decisions. The requirement of Delegating responsibility

and authority seems to have been met as well, since Hector had no problem in

completing the hiring process. Giving thorough instructions seems to have been

lacking in this situation however. If Sandra wanted the other two people

interviewed before the decision was made, she should have told Hector.

Feedback seemingly has not been maintained, since Sandra did not find out

about the hiring until some time later. There is no mention of how well Sandra

evaluated and rewarded Hector’s performance.

The divisional structure is often considered to be the almost complete

opposite of the functional structure. Do you agree? Briefly explain the major

differences in these two approaches to departmentalisation.

The focus of a functional structure is on similarity of skills, expertise, work

activities, and resource use. Human resources are grouped together in large

functional departments to achieve economies of scale and in‐depth skill

specialisation and development. The underlying purpose of the functional

structure is the efficient use of resources and a concern to avoid their

duplication. The divisional structure is not necessarily the opposite of a

functional structure, but its focus is on the product and division goals rather

than functional skills and expertise. The divisional structure does, however,

make use of functional departments within each division, hence duplicating

these functions. Efficiency and economy of scale are less important than

coordination across departments and effectiveness in serving customers’ needs.

The functional structure provides great internal efficiency but poor

responsiveness, and the divisional structure provides excellent responsiveness

but poor internal efficiency.



Some people argue that the matrix structure should be adopted only as a last

resort because the dual chains of command can create more problems than

they solve. Discuss. Do you agree or disagree? Why?

Many experts would agree that the matrix structure should be adopted only

after other structures have been considered. If the organisation has a functional

structure that doesn’t work and reorganises into a divisional structure that

doesn’t work either, a matrix structure may be appropriate. The matrix

structure requires extensive training to help people understand the dual

hierarchies, and it may take one or two years to complete the implementation.

Often, after the matrix structure has been implemented, it evolves back into

either a functional or divisional structure if one side of the matrix becomes more

powerful than the other. Dual chains of command create more problems than

they solve if the matrix structure is not suited to the situation. The situation

must demand equality along the two lines of authority, the sharing of

functional resources across divisions, and a rapid response to a changing

environment. Recent thinking on organisation structure suggests that the matrix

is appropriate in only a few situations. Most organisations can get by with other

forms, such as a functional structure with lateral relationships, to meet the

needs for coordination.

What is the virtual network approach to structure? Is the use of authority and

responsibility different compared with other forms of departmentalisation?

Explain.

In the virtual network approach, the organisation becomes a small central

broker, electronically connected to other organisations that perform vital

functions. Each department is an independent contracting service to the broker

for a profit and can be located anywhere. The central broker, or headquarters,

has only contractual arrangements with the departments and, therefore, very

little authority. Total responsibility for the component of the product or service

is given to each department, and each has complete authority over its own

operation. The major difference is that the headquarters have very little control

over the departments and cannot exercise authority over them very well.



Chapter 2: Quality and Performance

Describe the advantages of using a balanced scorecard to measure and control

organisational performance. Suppose you created a balanced scorecard for

NTUC FairPrice. What specific customer service measures would you

include?

The balanced scorecard is a comprehensive management control system that

balances traditional financial measures with operational measures relating to a

company’s critical success factors. A balanced scorecard contains four major

perspectives: financial performance, customer service, internal business

processes, and the organisation’s capacity for learning and growth. Within these

four areas, managers identify key performance metrics the organisation will

track.

The financial perspective reflects a concern that the organisation’s activities

contribute to improving short‐ and long‐term financial performance. It includes

traditional measures such as net income and return on investment. Customer

service indicators measure such things as how customers view the organisation,

as well as customer retention and satisfaction. Business process indicators focus

on production and operating statistics, such as order fulfilment or cost per

order. The final component looks at the organisation’s potential for learning

and growth, focusing on how well resources and human capital are being

managed for the company’s future. Metrics may include such things as

employee retention, business process improvements, and the introduction of

new products. The components of the scorecard are designed in an integrative

manner. The balanced scorecard helps managers focus on key performance

measures and communicate them clearly throughout the organisation. It has

become a core management control system for many organisations today, and

can be applied to almost any business.

Some specific customer service measures in relation to NTUC FairPrice include

length of wait in cashier lines, ease of finding desired products, availability of

desired products, store cleanliness, and in‐store services.

What types of analysis can managers perform to help them diagnose a

company’s financial condition? How can a review of financial statements

help managers diagnose other kinds of performance problems as well?

Managers can perform a financial analysis of an income statement and balance

sheet of a company to ascertain its strengths and weaknesses. The balance sheet

shows the firm’s financial position with respect to assets and liabilities at a

specific point in time. The balance sheet provides three types of information:

assets, liabilities, and owners’ equity. Assets are what the company owns, and

they include current assets (those that can be converted into cash in a short time

period) and fixed assets (such as buildings and equipment that are long term in



nature). Liabilities are the firm’s debts, including both current debt (obligations

that will be paid by the company in the near future) and long‐term debt

(obligations payable over a long period.) Owners’ equity is the difference

between assets and liabilities and is the company’s net worth in stock and

retained earnings.

The income statement, sometimes called a profit‐and‐loss statement or “P&L”

for short, summarises the firm’s financial performance for a given time interval,

usually one year. The income statement shows revenues coming into the

organisation from all sources and subtracts all expenses, including cost of goods

sold, interest, taxes, and depreciation. The bottom line indicates the net

income—profit or loss—for the given time period. Financial statements are

indicators of performance problems. For example, a sales decline may signal

problems with products, customer service, or sales for effectiveness.

Managers need to be able to evaluate financial reports that compare their

organisation’s performance with earlier data or industry norms. These

comparisons enable them to see whether the organisation is improving and

whether it is competitive with others in the industry.

Why is benchmarking an important component of total quality management

(TQM) programmes? Do you believe a company could have a successful

TQM programme without using benchmarking?

Benchmarking is an important component of total quality management because

it is defined as “the continuous process of measuring products, services, and

practices against the toughest competitors or those companies recognised as

industry leaders.” Benchmarking is a major TQM component and without it the

programme is not going to be successful. The key to successful benchmarking

lies in analysis. Starting with its own mission statement, a company should

honestly analyse its current procedures and determine areas for improvement.

As a second step, a company carefully selects competitors worthy of copying.

Companies can emulate internal processes and procedures of competitors, but

must take care to select companies whose methods are compatible. Once a

strong, compatible programme is found and analysed, the benchmarking

company can then devise a strategy for implementing a new programme.



REFERENCES

BreadTalk Annual Report 2011 [online] Available:

http://breadtalk.listedcompany.com/misc/ar2011.pdf, [Accessed: 14 January

2013]

Spring Singapore, 2012 Conrad SQA Executive Summary Report [online]

Available:

http://www.spring.gov.sg/QualityStandards/be/Documents/beaw/SQA_Conrad

_2007_Summary_Report.pdf [Accessed 29 December 2012].

Spring Singapore, 2012 National Library Board SQA Executive Summary Report

[online] Available:

http://www.spring.gov.sg/QualityStandards/be/Documents/BEAW/SQA_NLB_

2011_Summary_Report.pdf [Accessed 29 December 2012]

BUS206

Managing People

STUDY UNIT 5

CHAPTER 1: Nature of Human Resource

Management

CHAPTER 2: Recruiting Human Resources

CHAPTER 3: Selecting Human Resources



CHAPTER 1: NATURE OF HUMAN RESOURCE

MANAGEMENT (HRM)

LEARNING OUTCOMES


Explain human resource management (HRM) and human capital and its

importance.

Categorise HRM activities.

Differentiate between the operational and strategic roles of HR.

Discuss the challenges of HRM.



DEFINITIONS OF HRM AND HUMAN CAPITAL

HRM is the act of designing management systems to ensure that human talent is

used effectively and efficiently to accomplish organisational goals. The goal of

effective HRM is to have productive, creative people working in a flexible, effective

organisation that provides rewarding work with an earned reputation as an

excellent employer.

An excellent example is McDonald’s Singapore, a winner for Best Employers in

Asia Pacific 2011. The organisation found out that people want to work in a job

where they feel valued so it created a work environment that is both energising and

enjoyable where employees are given learning opportunities to learn, grow and

develop a fulfilling career (Dobrian, 2011).

Human capital is the collective value of capabilities, knowledge, skills, life

experiences, and motivation of an organisational workforce. It also refers to the

intellectual capital that reflects the thinking, knowledge and creativity that people

bring to the organisation.

HUMAN CAPITAL IN ORGANISATIONS

A. Organisational Assets

Organisations have four types of assets. They are:

Physical: Buildings, land, furniture, computers, vehicles, equipment, etc.

Financial: Cash, financial resources, stocks, financial securities, etc.

Intangible: Specialised research capabilities, patents, information systems,

designs, operating processes, etc.

Human: Individuals with talents, capabilities, experience, professional

expertise, relationships, etc.

B. Measuring Human Capital Value

Is human capital a strategic asset to an organisation? Does it build superior

business performance and shareholder value? These are questions that

organisations ask. Research by Watson Wyatt affirms that better human capital

practices are a leading indicator of increased shareholder value. It further

advocates that hiring the right people, supporting creative thinking and

productivity and leveraging on the right technology bear positive performance

results and enhance shareholder value.



Although chief financial officers recognise that human capital is a key success

factor for business growth, very few measure its value. This can be explained by

the fact that human resources are traditionally viewed as operating costs to an

organisation rather than an asset that appreciates in value if properly harnessed

and exploited.

C. Human Resources as a Core Competency

Core competency is a unique capability that creates high value and

differentiates an organisation from its competition. Citibank N.A. is one such

example. Hiring the right people with the right job‐ability and person‐

organisation fit is just the beginning. Putting in place HRM practices of

leveraging talent and continually developing people differentiate Citibank from

its competitors. Every new relationship manager undergoes extensive training

and assessment before being allowed to advise or sell financial products.

Working in Citibank is demanding, but the satisfaction and rewards that

bankers gain are what keep them motivated and charged up.

Federal Express (FedEx), a global packaging company openly acknowledges

that people strategies have always been a major competitive advantage. The

company strongly believes that motivated, committed team members providing

the highest level of service is what separates FedEx from its competitors.

Following the founder, Fred Smith’s maxim of “Putting people first makes good

business sense and is the right thing to do”, FedEx translates this into action. Its

people philosophy of People‐Service‐Profit (PSP) has worked well for the

company and it has gained international recognition for outstanding customer

satisfaction and experience (Kaur, 2009).


REVIEW:

What is HRM? What is the goal of HRM?



HR ACTIVITIES

Successful organisations invest in human capital and gain most out of their

people’s contributions. All HRM activities are centred around a strategic fit

between people and performance, and HRM activities are designed and

implemented to adapt to the external environment which includes changes in

economic, political, social, technological and global forces.

HRM can be categorised into seven interlinked activities.

Strategic HR Management: This is about maintaining organisational

competitiveness, HR effectiveness, use of HR measurement and HR technology.

It also involves HR planning which forecasts the demand for future employees.

HR retention is critical to strategic HR management as human talent is rare and

not always easily available.

Legal Framework and Practices: This set of activities is about complying with

employment laws, managing the challenge of workforce diversity and dealing

with negative perception of free flow of foreign talent, who is seen as competing

with and taking away jobs of local talent.

Staffing: Staffing is concerned with matching talents with the relevant

competencies to positions in the organisation. This is done through job analysis,

recruitment and selection.

Talent Management and Development: It begins with staff orientation for new

employees. Existing employees are trained to improve performance. Line

managers assess employee performance through performance management.

Organisations retain and motivate employees by offering different career paths.

These are activities of talent management and development.

Total Rewards: Total rewards take a holistic approach to designing an

attractive and fair recognition and reward system. The system looks into basic

compensation, incentives and benefits to motivate and retain talent.

Risk Management and Worker Protection: Health and wellness of employees

is a major concern of employers because it affects productivity. Providing a safe

and secure workplace for employees is another activity. In recent times,

employers pay careful attention and put in effort to ensure they have in place a

disaster and recovery planning mechanism to prepare for unforeseeable

circumstances.

Employee and Labour Relations: This set of activities focuses on addressing

rights and privacy of employees, and having robust HR policies that help to

deal with such issues. In addition, fostering harmonious relationship between

union and management is another key activity to ensure workers’ concerns are



well represented and presented to management by unions. Similarly,

management works alongside unions to resolve problems and negotiate win‐

win outcomes.


REFER TO: Figure 1‐1 shows HR Management Activities.

HRM Roles

The type of role HRM takes on is dependent on the expectations of management

team. Primarily, HRM can assume three roles:

A. Administrative Role

The administrative role focuses on HR clerical administration and record

keeping. For example, at Nokia Siemens Networks (NSN), the HR department

is divided into two functions, HR connection and HR consulting. HR

connection is transactional and serves the administrative needs of the

employees. It deals mostly with issues related to payslips, benefits and leave

(Shukla‐Pandey, 2011).

People perceive that the administrative role of HR adds little value to the

organisation because such a role can be easily outsourced. However, technology

and outsourcing have transformed this role significantly.

Technology Transforming HR

Technology allows HR to more efficiently carry out the administrative tasks

of HR. For example, job application, leave, payroll and expense claims can

be done through web‐based technology. To a great extent, technology is

replacing the work of low‐level HR employees and over time, very little

manpower is needed to perform HR administration.

Outsourcing of HR

Outsourcing of HR has become a common practice particularly in

organisations which see it cost‐effective to engage a third party to carry out

administration activities of HR. While outsourcing has its merits, there are

issues relating to cost‐savings which may not materialise. The NUS case

cited in the textbook is one example.



B. Operational and Employee Advocate Role

The operational and employee advocate role focuses on aligning HR activities

to strategy and serving as the voice and champion of employees. The aim is to

ensure a fair and equitable treatment of all levels of employees.

The operational role requires the HR professional to cooperate with line

managers to identify and implement policies and programmes needed in the

organisation. For instance, the operational HR role is responsible for the wide

spectrum of activities including recruitment, selection, compensation and

benefits and training and development of employees for line managers.

C. Strategic Role

The strategic role of HR is different from the administrative and operational

roles. Strategic HR partners are interested in teaming up with line managers to

deliver business results in the strategic business unit (SBU), as well as

contribute to organisational goals and objectives. In this way, they take on a

strategic and proactive approach to understand the business strategy of the

SBU, and develop HR strategies, practices and policies susceptible of

supporting it. When assuming a strategic role, HR professionals contribute most

value to the stakeholders of the organisation.

For example, in NSN, the HR professionals provide strategic HR consulting

services such as education, consulting and advisory to line managers. They deal

mostly with issues related to personal development, incentives and promotions

(Shukla‐Pandey, 2011).

Some examples of the strategic foci that HR professionals can assume may

include:

Evaluating mergers and acquisitions for organisational “compatibility,”

structural changes, and staffing needs.

Conducting workforce planning to anticipate the retirement of employees at

all levels and identify workforce expansion in organisational strategic plans.

Leading site selection efforts for new facilities or transferring operations to

international outsourcing locations based on workforce needs.

Instituting HR management systems to reduce administrative time and

staff.

Working with executives to develop a revised sales compensation and

incentives plan as new products/services are rolled out to customers.




REFER TO: Figure 1‐4 shows operational to strategic transformation of HR.

REVIEW: What are the differences between operational HR and strategic HR roles?

CURRENT HRM CHALLENGES

The external environment poses challenges to HRM. For instance, globalisation of

business and economic and technological changes are forces from the environment.

HRM practices and strategies have to be reviewed and revamped so that they are

relevant and robust to meet the demands of the external environment.

As more countries open their doors to foreign talents, the need to manage

workforce diversity has become critical to HRM. HR professionals also have to deal

with the pressure of cost cutting and restructuring.

A. Globalisation of Business

The globalisation of business has shifted from trade and investment to

integration of global operations, management and strategic alliances which

affect HRM significantly.

As it is increasingly common for organisations to consider offshoring, in‐

shoring and outsourcing whichever that fits well with the organisation’s cost

structure and cost‐savings plan, moving operations to lower cost countries,

such as China, India, and Vietnam, is also considered. HRM professionals need

to know how to handle the complexity of recruitment, selection, compensation

and reward and other HRM activities in countries other than the host country..

Offshoring: Singapore businesses contracting out activities to unaffiliated

companies or their affiliates in another country.

In‐shoring: Foreign businesses shifting activities to Singapore.

Outsourcing: Businesses contracting out activities to unaffiliated companies

either at home or abroad.



B. Economic and Technological Changes

Several changes are discussed as follows:

Occupational composition: More people are working in the service sector

than in the manufacturing sector. This is in line with the shift towards

service industries in developed economies such as the U.S. and most of

Western Europe.

Workforce Availability and Quality Concerns: As Singapore progresses,

the standard of living improves and job attitudes change. Singaporeans shy

away from jobs that are dirty, dangerous or demeaning and foreign workers

who are low skilled are willing to take on these jobs.

At the same time, highly skilled labour is not easily available locally. For

instance, Singapore lacks climate change expertise and thus has to engage

foreign talents to fill up these jobs. With jobs created at the higher level of

the value chain, Singaporeans need to acquire the skills set to fill up these

jobs.

Growth in Contingent Workforce: The emergence of temporary labour and

independent contractors forms the contingent workforce. Contingent

workforce is flexible and less costly to an organisation and can be made

available just in time. While contingent workforce works well for

organisations, it may not be to the advantage of the workers. Workers may

not get a fair deal, especially when they are constantly dependent on

organisations to offer them jobs. Also, these workers do not enjoy benefits

from the organisation.

Technological Shifts and the Internet: The use of technology and Internet

has driven changes in jobs and organisations of all sizes. With easy access to

technology, employees are now working 24/7. They are easily available and

accessible. This does not sit well with organisation that emphasises work‐

life balance.

Technology also allows people to work from home. It has been observed

that people who work from home tend to be more productive than those

who work at the office. The challenge is for HRM professionals to manage

virtual employees who generally work off‐site .

C. Workforce Demographics and Diversity

The demographic composition of workers evolves over time. HR managers

need to appreciate the diverse workforce and know how to manage their

expectations.



Racial/Ethnic Diversity: Singapore is both a multi‐racial and a multi‐ethnic

society. The local government is taking steps to maintain racial harmony. It

also sets out guidelines for recruitment practices that provide equal

opportunity to all races.

Women in the Workforce: More women are entering or re‐entering the

workforce. The government encourages this move. For HRM, it means HR

policies have to be family‐friendly and flexible. Child care facilities are

available either at the workplace or near to the workplace, and family leave

and job sharing can be arranged.

Ageing Workforce: The local workforce is ageing. To stay relevant, workers

are to invest in lifelong learning and receive training to upgrade their skills

and knowledge. This will enable them to take on new jobs that are created. D. Organisational Cost Pressures and Restructuring

Cost cutting and restructuring are always in the minds of management.

Pressures from global competition have forced firms to close their facilities and

move to countries that are labour intensive and have low cost of operation.

China, India and the Philippines are preferred countries that organisations are

likely to shift their operations to.

As part of organisational changes, organisations have “right‐sized” by

eliminating layers of managers, closing facilities, merging with other

organisations and outplacing workers. Job redesign is an initiative which can

help reduce costs and increase productivity. Some banks are restructuring

themselves. They close branches that are unprofitable but expand their presence

in the Asia Pacific region where they see potential growth opportunities.


REVIEW: What are the current challenges of HRM?





CHAPTER 2: RECRUITING HUMAN RESOURCES

LEARNING OUTCOMES


Explain recruitment and strategic recruitment.

Identify the components of labour markets.

Discuss key strategic recruitment decisions HR managers make.

Examine the different internal recruitment methods.

Discuss major external recruitment sources.

Explain the popularity of internet recruitment and how employers use it.

Discuss recruitment evaluation and metrics.



DEFINITIONS OF RECRUITMENT AND STRATEGIC

RECRUITMENT

Recruitment is the process of generating a pool of qualified applicants for

organisational jobs. It is about matching qualified applicants to the job. Often, it is a

straightforward approach that focuses on replacing normal workforce attrition.

Strategic recruitment starts with human resource planning and decisions about

organisational recruitment responsibilities. It is about aligning HR strategies with

business strategies. For example, service excellence is a strategic goal of SIA. The

company will select people who have a service mindset and a passion to serve.

Strategic recruitment goes beyond just filling up jobs. It actively focuses on

discovering talent and exploring creative ways to attract people to join the

organisation. This is a more deliberate approach that requires more effort to finally

engage the best talent to the organisation.


REFER TO: Figure 7‐1 shows strategic recruitment stages.

LABOUR MARKETS

Labour markets are the external supply pool of potential workers from which

employers attract employees. Labour markets are made up of three components.

They are:

Labour Force Population: This is made up of all individuals who are available

for selection if all possible recruitment strategies are used. Employers use media

sources, job fairs, internet job boards, corporate websites and word‐of‐mouth to

reach out to potential employees. For example, an organisation places a job

advertisement on JobStreet.com, its corporate websites and in local newspapers

to fill in several job openings.

Applicant Population: This is a subset of the labour force that is available for

selection using a particular approach. For example, an organisation might limit

its recruitment for management trainees to MBA graduates from major

universities.

Applicant Pool: The applicant pool consists of all persons who are actually

evaluated for selection. For example, six applicants were shortlisted from a



labour force population for the job of a particular position in an organisation.

The organisation will select the most suitable applicant from the pool of six

candidates.


REFER TO: Figure 7‐2 shows labour market components.

REVIEW: You are the HR manager for a MNC. The marketing manager wants you to fill

up a marketing analyst position in his department. The person does not need to

have marketing experience but he/she needs to have knowledge in marketing

research and statistics as well as strong analytical skills. The line manager is

prepared to coach the right person. Which labour market component would you

tap on to find potential candidates for that position? Why?

STRATEGIC RECRUITMENT DECISIONS

An employer has to make key strategic recruitment decisions based on the needs

identified in the HR planning. The key strategic recruitment decisions are

discussed.

A. Organisation‐Based vs. Outsourced Recruitment

Organisation‐based recruitment is performed by the employer. Outsourced

recruitment occurs when the employer engages a search firm to undertake the

entire recruitment process. However, the decision need not be an ‘either‐or’

decision entirely.

Some organisations prefer to use their HR staff to handle the entire recruitment

process, while others may choose to handle the selection interview and leave

the job advertisement, initial screening of resumes, shortlisting of candidates for

interviews to a search firm. This frees up the HR staff time to focus on other HR

activities. Given the expertise of a search firm, outsourcing recruitment has the

advantage of filling up positions more quickly and it is more cost‐effective than

organisation‐based recruitment.

B. Recruitment Presence and Image

Recruitment efforts can be continuous or intensive. Organisations that put in

continuous efforts in recruitment want to be perceived as active recruiters in the

job market. For example, Shell Eastern Petroleum (a.k.a. Shell) participates



regularly in campus recruitment exercises in major universities in Singapore

and overseas to recruit the best talent.

Organisations that need to fill a number of positions within a short period of

time may resort to intensive recruitment efforts. Hospitals and the Ministry of

Education (MOE) are examples of such organisations. To fill up a large number

of nursing positions, hospitals organise job fairs to attract potential applicants

who wish to shift to a nursing career. Similarly, the MOE encourages people to

join the teaching profession by having recruitment drives that promote teaching

as a noble career. TV advertisements have also been used to strengthen this

message during the recruitment period.

The brand and image of an employer are paramount to potential applicants.

People like to work in reputable and respected organisations. If employers want

to attract talented employees, they have to invest time, money and effort

towards building a strong brand. Shell is no stranger to branding. It enjoys a

formidable reputation when it comes to attracting the people it wants. Shell is

also widely accepted as a leading employer of choice. To attract outstanding

talent, it offers a compelling employee value proposition to hire and keep the

best and brightest talent (Hyett, 2009).

C. Training Recruiters

The competency of recruiters is critical to the success of an interview. Thus, the

employer needs to decide the amount and nature of the appropriate training

that recruiters need to become effective interviewers. Ideally, interviewers

should be trained on interviewing techniques and communication skills. They

should also have a good knowledge of the job being filled and must also be able

to answer questions relating to it.

One of the best interview practices is to avoid asking sensitive or discriminatory

questions. For example, age, religion and marital status are not asked during

the interview. Equal opportunities employers often apply evidenced‐based

interview to determine the fit and competency of potential candidates.

D. Regular vs. Flexible Staffing

Another strategic decision relates to the proportion of regular full‐time and

part‐time employees who should be recruited to satisfy the staffing needs of the

organisation. In recent times, employers are very careful about increasing

headcount unless it is absolutely necessary. Relying on a pool of flexible staff is

an alternative approach to filling positions. Flexible staffing uses workers who

are not traditional employees. This approach is cost saving as employers do not

have to pay full‐time benefits to flexible employees. Temporary staff and

independent contractors form the bulk of flexible staff.



E. Recruitment and Diversity Considerations

Employers do their utmost to conform to fair employment practices. To be

perceived as a fair and inclusive recruiter, employers have to take into account

these considerations:

Employment Advertising: The Ministry of Manpower (MOM), the National

Trades Union Congress (NTUC) and the Singapore National Employers

Federation (SNEF) have jointly issued the Tripartite Guidelines on Non‐

Discriminatory Job Advertisement for employers in Singapore. Although

not legally binding, the Guidelines have been endorsed by the three parties

as good practice. The Guidelines advise employers to hire individuals based

on job‐ability fit and not on other factors that are irrelevant to the job.

Recruiting Non‐traditional Workers: Employers increasingly find it

difficult to attract and retain talented individuals who fit the traditional

profile of an employee. They are now more open to hiring non‐traditional

workers. These include the elderly and retirees, stay‐at‐home moms, single

parents, workfare workers, ex‐convict/substance abuse individuals and

people with disabilities. Thai Express, a nationally‐recognised employer

brand in the food and beverage industry is one employer who has no

qualms about hiring non‐traditional workers.

In the midst of competition, Thai Express experienced a high attrition rate of

50% almost every year. Given the pervasive labour shortage it faced, Thai

Express decided to employ people from all walks of life including senior

citizens, ex‐convicts and people with disabilities. People in these categories

were often rejected by employers. Thai Express not only employed them but

provided equal training opportunities to help them improve job

performance and retain them. The hiring of non‐traditional workers has

helped Thai Express reduce its attrition rate. More importantly, it gives

senior workers, ex‐convicts and disabled workers a sense of purpose and

worthiness (Selvaretnam, 2010).

Recruitment Source Choices: Internal vs. External

The dilemma of recruiting from within or outside of the organisation has to

be considered. The final decision is made in accordance to the recruitment

strategy and policy of the organisation.

Recruiting from within or outside of the organisation presents advantages

and disadvantages. It is seen as an advantage if internal recruitment is used

for promotion and motivation. But, on the other hand, those who did not

get promoted will be demoralised and may perceive such decision as

favouritism. Recruiting from outside the organisation is generally

considered to be a good alternative as it brings in new blood and new ideas.



On the flip side, the new employee may take a long time to fit into the

culture and the organisation. Figure 7‐5 lists down the advantages and

disadvantages of internal and external recruitment sources.

Generally, organisations tend to bring in new blood if they operate in a

highly competitive and unstable environment. At the same time, they also

develop internal staff to sharpen their skills. Some organisations have a

policy of promoting from within, unless there is no suitable candidate

available internally.


REFER TO: Figure 7‐3 shows the typical division of HR responsibilities: Recruitment.

Figure 7‐4 outlines the recruitment and diversity consideration.

Figure 7‐5 lists the advantages and disadvantages of internal and external

recruitment sources.

REVIEW: What are the benefits of hiring non‐traditional workers?

INTERNAL RECRUITMENT METHODS

Commonly used internal recruitment methods include organisational databases,

job postings, promotions and transfers, current‐employee referrals and the re‐

recruitment of former employees and applicants.

A. Internal Recruitment Processes

The use of databases, job postings, promotions and transfers are means to retain

and motivate employees. Organisations find these methods valuable.

Employee Databases: HR management systems store information on

existing employees. HR staff can access this information to match job

opening with candidates who meet the requirements. The advantage of

using databases is that they can be linked to other HR activities. The hiring

manager can review these activities which may include the projects the

existing employee undertook, the types of training he/she participated, the

contributions he/she made to the organisation. This is useful information as

it helps the hiring manager determine the suitability of the existing

employee.

Job Posting: Job posting is a system that an employer uses to post notices of

job openings and through which employees respond by applying for a



specific job. Most organisations announce job openings on their intranet and

invite existing employees to apply. Using notice boards to post job openings

may seem old‐fashioned but it is actually very effective. The intent of a job

posting is to provide opportunities for existing employees to move to other

jobs either laterally or vertically.

For a job posting system to be effective, the following questions have to be

addressed:

‐ What happens if no qualified candidates respond to the postings?

‐ Must employees inform their supervisors that they are applying for

another job?

‐ Are there restrictions on how long an employee must stay in a job before

applying for another job?

‐ How much notice should an employee be required to give before being

transferred to a new department?

‐ What types or levels of jobs will be posted?

When an employee’s application is rejected, it is necessary for the hiring

manager together with the HR manager to explain and advise the employee

about the knowledge, skills and abilities that s/he lacked and that would be

needed for the next job opening opportunity.

Promotions and Transfers: Whenever possible, most organisations prefer to

promote from within or to transfer existing employees to jobs becoming

vacant recently. It makes sense because promotions help to motivate

employees. Transfers help to expose employees to different roles and

responsibilities. Both present new challenges for employees who may want

to take them. When existing employees take up a new job, their jobs have to

be filled either internally or externally depending on HR strategy and

policy.

B. Employee‐Focused Recruitment

Current‐employee referrals and re‐recruitment of former employees and

applicants are two methods of employee‐focused recruitment.

Current‐Employee Referrals: It is a practice for employers to encourage

existing employers to recommend their friends and relatives to apply for

jobs. Using this source of recruitment has proven to be efficient and effective

because suitable and qualified applicants are invited to apply.



In a tight labour market, employers offer incentives to get existing

employees to refer potential applicants to fill up jobs. Incentives can be

monetary or in other forms.

Re‐recruitment of Former Employees and Applicants: Former employees

and applicants are another source of recruitment. The employer knows

something about these two groups of people and feels comfortable re‐

recruiting them without having to waste time looking for new people who

are not familiar with the organisation. Also, if the employer needs to fill up

the position urgently, it prefers to use this source of recruitment.

Employers can look into the records of former applicants who were

unsuccessful in their applications. Re‐contacting these former applicants is

inexpensive and less time consuming. Moreover, the former applicant may

be happy to know that he/she has been considered for a different post in the

same organisation where he/she had previously submitted an application.


REVIEW: What are the internal recruitment methods organisations can use to fill up

their job vacancies?

EXTERNAL RECRUITMENT SOURCES

A number of external recruitment sources are available to employers. The major

sources are discussed below.

A. College and University Recruitment

Every college and university provides career services to its students. Employers

can partner with the university to tap on the talent of undergraduates or

graduates. There are a number of considerations that potential employers have

to think about when tapping on college and university recruitment:

Current and anticipated job openings

Reputation of colleges and universities

Experiences with career services and previous graduates

Organisational budget constraint

Market competition for graduates



Cost of available talent and typical salaries

University recruitment can be expensive and as such, employers should

consider whether the benefits of recruiting a fresh graduate are significantly

more important than those of filling up a specific job opening with a non‐

graduate.

University recruitment can also be competitive. This happens when more than

one employer is aggressively recruiting from the same universities. Under‐

graduates who are keen to join the workforce have several options to choose

from.

When an employer builds strong relationships with faculty members, the latter

will recommend good students to that employer and in that scenario, the

success of university recruitment is high.

Some employers such as Bayerishe Motoren Werke AG (BMW) set up graduate

trainee programme targeted at the recruitment of top university and college

graduates. BMW is keen to find young management trainees who have rare

talents and intercultural skills, language skills, high level of commitment and a

natural sense of social responsibility. This may represent a tall order for many

other employers but thanks to this programme, BMW Group is perceived by

young graduates to be an attractive employer with exciting entry‐level and

career opportunities (Mukherjee, 2010).

B. Employment Agencies and Headhunters

For a fee, a private employment agency can offer recruitment services.

Depending on the agreed arrangement, the private employment agency may do

some preliminary screening and connect the shortlisted candidates with the

employer.

A headhunter is sometimes known as an executive search firm. Its role is

targeted in that it is engaged to help employers recruit a specific candidate for a

specific role. Generally, an employer uses headhunters to fill up middle and

senior level management positions.

A dedicated search consultant works closely with the employer to understand

its needs and expectations. Thereafter, the search consultant accesses the

executive search firm and other databases to search for potential candidates

who may fit the profile sought. It then undertakes other activities to ensure the

right candidate fills up the specific position.



C. Competitive Sources

Professional and trade associations, trade publications and competitors are

other sources for recruitment. Many professional societies publish newsletters

and magazines and have websites to advertise their job vacancies. Such sources

are useful for recruiting specialised professionals needed in the industry.

If the labour market is tight, employers may consider extending their

recruitment efforts towards their own customers. It is common to see customers

join a supplier firm and vice‐versa.

D. Media Sources

A wider reach represents the main advantage of using paid advertisements in

various media .Some firms have used direct mail to reach their target audience.

When mass media is used for advertisements, recruiter must always evaluate

the advertisement before it goes to print or on air. In addition, the recruiter

should also track the response rate to the specific advertisement.

E. Job Fairs and Special Events

Employers in a tight labour market use job fairs and special events to fill a large

number of positions. As part of their recruitment drive, the two integrated

resorts in Singapore organised job fairs at various locations prior to their official

openings. If they are planned properly, job fairs and special events can be

effective in attracting the right people to the right job. People who are employed

or unemployed are attracted to job fairs to explore suitable job opportunities.


REFER TO: Figure 7‐6 offers tips on what to include in an effective recruitment

advertisement.



INTERNET RECRUITMENT

The Internet has become the primary means for employers to search for job

candidates and for job seekers to apply for jobs.

A. E‐Recruitment Places

The popular sites used for Internet recruitment include Internet Job boards,

professional/career websites and employer websites.

Internet Job Boards: JobStreet.com, JobsDB.com, Monster, Yahoo! And

HotJobs provide places for employers to post job openings or search for

suitable candidates. This form of internet recruitment may not be highly

successful because candidates may just be checking out the site and are not

too serious in wanting to leave a job. Despite this, HR professionals find

general job boards useful for generating responses.

Professional/Career Websites: Professional/career websites are a useful

source of internet recruitment. Job opportunities are industry‐specific and

candidates from the industry are more likely to apply for the job. For

instance, Certified Public Accountants are more likely to join a professional

body and through the latter’s website, they will be able to view the job

vacancies that are directly linked to their profession and qualifications.

Employer Website: This is by far the most effective Internet recruitment

approach. On the landing page of most company websites, employers have

included a tab that says, ‘Join Us’ or ‘Careers’ to encourage potential

candidates to submit their résumés online. Many employers also include

other useful information such as career paths and details about their

recruitment process to inform and better market to potential employees the

job vacancies that need to be filled.

One major advantage of Internet recruitment is cost and time savings. Since

everything is done online, individuals can submit their applications anytime and

from anywhere, without requiring the attention or time of an HR officer in the

process.

One disadvantage of Internet recruitment is that potential candidates may have

limited access to Internet. Some applicants may not feel comfortable submitting

their résumés online for fear of releasing confidential information that is

accessible to people they do not know. Other less tech‐savvy or older applicants

may not be familiar or are reluctant to use the Internet while others still may not

have access to it at all or at least not from a convenient place such as their home.



RECRUITMENT EVALUATION AND METRICS

How does a firm know if its recruitment methods and sources have been effective?

The best way to find out is by evaluating the recruitment process and its outcomes.

One could evaluate it using specific criteria such as: quantity of recruited

applicants, quality of recruited applicants, time required to fill a vacant position,

cost per unit recruited and satisfaction of parties involved.

A. Evaluating Recruitment Quantity and Quality

Metrics used for evaluating the quantity and quality of recruitment include the

following:

Quantity of recruited applicants: The more applicants apply for a specific,

the more options the employer has to select among them the best candidate

for the job. The basic measure is whether the number of recruits is sufficient

to fill job vacancies or not.

Quality of recruited applicants: Another key evaluation consideration is

whether the applicants are qualified to fill the specific job. In other words,

do applicants have the skill set to perform the specific job well? Will these

applicants do well once they have been selected to join the organisation?

The measures that can be used include performance appraisal scores,

months until promotion, output, and sales volume for each sales hire.

B. Evaluating the Time Required to Fill Job Openings

The time required to fill an opening is an evaluation criterion used to measure

the effectiveness of a recruitment exercise. Generally, it is useful to calculate the

average amount of time it takes from contact to hire. If an agency takes 25 days

from contact to hire, compared to 7 days for walk‐ins and 12 days when the

recruitment is done via Internet, the hiring company can safely say that the

walk‐in approach is the most productive and effective recruitment approach of

the three considered.

C. Evaluating the Cost of Recruitment

Yearly recruitment expenses divided by the number of hired recruits will

provide the cost of recruitment. This may look like a straightforward formula

but an accurate assessment of recruitment costs is far from being an exact

science simply because not everyone agrees as what should be counted as a

recruitment expense.



D. Evaluating Recruitment Satisfaction

When employers get the right candidates and the latter are very happy in their

job, then we can safely conclude that the two parties are satisfied with the

recruitment outcome. Another way of evaluating recruitment satisfaction is to

examine the quality of the talent pool and whether the timeline for each activity

was respected after taking into account the various problems faced during the

recruitment process. It would also be worthwhile to ask the candidates how

they were treated throughout the process.

E. General Recruitment Process Metrics

Employers can use yield ratios, selection rate, acceptance rate and success base

rate to evaluate recruitment efforts.

Yield Ratios: Yield ratios compare the number of applicants at the

beginning of one stage of the recruitment process with the number of

applicants remaining at the beginning of the next stage.

Selection Rate: Selection rate refers to the percentage of applicants finally

hired from a given group of candidates.

Acceptance Rate: Acceptance rate refers to the percentage of the number of

applicants finally hired divided by the total number of applicants offered

jobs.

Success Base Rate: The success base rate can be determined by comparing

the number of past applicants who have become successful employees

against the number of applicants who competed for their jobs, using

historical data.


REFER TO: Figure 7‐7 shows the sample recruitment evaluation pyramid.





CHAPTER 3: SELECTING HUMAN RESOURCES

LEARNING OUTCOMES


Explain selection and placement.

Diagram the sequence of a typical selection process.

Discuss the key responsibilities and activities of the selection process.

Identify three types of selection tests and concerns about their use.

Examine major types of interviews and key concerns about their use.

Relate the key concerns derived from interviews to background investigations.

Explain methods of making job offer.



SELECTION AND PLACEMENT

Selection is the process of choosing individuals with qualifications needed to fill

jobs in an organisation. Effective selection anchors on two beliefs – “Hire hard,

manage easy” and “Good training will not make up for bad selection”.

Placement is fitting a person to the right job. Placement of human resources should

be conducted with care as it can affect different employment outcomes. If there is a

good fit between the job and the person selected and hired to do it, that individual

will perform well and his/her morale will be high. However, if the fit is poor, the

individual will not be able to perform at his/her optimum capability and this will,

in turn, dampen his/her morale.

Selection and placement activities focus on applicants’ knowledge, skills and

abilities (KSAs). An effective recruiter should consider the applicant’s attraction to

the work and the intention to accept or reject the job. Additionally, the recruiter

should also take into account the relationship between personal and job

characteristics. Two important concepts are person/job fit and person/organisation

fit.

Person/job fit is important because it matches the individuals’ KSAs with the

characteristics of the job they are hired to perform. A good fit implies that the

individual has what it takes to perform the job well.

Person/organisation fit looks at the congruence between individuals and

organisational factors. For example, are the applicant’s personal values aligned

with the organisational values? If indeed they are aligned, then there is a high

probability that the individual will blend well in the organisation.


REVIEW: If you are the hiring manager of a company, what factors or criteria should you

consider to find the most suitable applicant? Explain your answer.



SELECTION RESPONSIBLITIES

The HR manager and line managers each have responsibilities in the selection

process.

Line managers want to hire the right candidates because they are fully aware of

their impact on the people they will work with and on the overall the performance

of the department that hired them as well as, ultimately, the performance of the

organisation as a whole. The line manager takes personal responsibility to select the

most suitable applicant to fill the role.

Figure 8‐3 describes the respective responsibilities of the HR Unit and the Line

Manager in the selection process.

In general, the HR Unit in any organisation may be concerned with some or all of

the following activities:

Receiving applications

Interviewing the applicants

Administering tests to applicants

Conducting background investigations

Arranging for physical examinations

Placing and assigning new employees

Following up with these employees

Conducting exit interviews

Maintaining appropriate records and reports

A. The Selection Process

Figure 9‐4 outlines the activities typically found in a selection process. They are

listed as follows:

Applicant Job Interest

Pre‐Employment Screening

Application Form

Test and Interview

Background Investigation

Additional Interview, if necessary

Conditional Job Offer

Medical Exam/Drug Test

Job Placement.



B. Applicant Job Interest

Applicants can express their interest in a job opportunity by submitting

résumés either electronically or by completing the résumé online. Prior to

submitting the job application, the applicant may conduct a realistic job

preview. This is a process through which a job applicant receives an accurate

picture of a job. At this stage, the employer is expected to project a positive

image by being helpful, polite and non‐discriminatory to the applicant.

C. Pre‐Employment Screening

Employers conduct pre‐employment screening to shortlisted applicants. The

minimum requirement for the job is often used as a baseline criterion.

Employers use electronic screening software to sift out applicants. Only the

most suitable applicants are invited for an interview.

D. Application Forms

Applicants may be asked to complete an application form before attending an

interview. A duly and neatly completed application form serves four purposes:

It is a record of the applicant’s desire to obtain a position.

It provides the interviewer with a profile of the applicant that can be used

during the interview.

It is a basic employee record for applicants who are hired.

It can be used for research on the effectiveness of the selection process.

Employers may use different application forms for different levels and

categories of jobs. For example, the application form used for management staff

is different from the one used for technical staff.

Application forms should contain disclaimers and notices so that appropriate

legal protections are clearly stated. For example, the “references” section found

on application forms should explicitly state that any references or past

employers that the applicant indicated can be contacted by the prospective

employer who is then allowed to seek their confirmation, input and/or feedback

about the candidate’s period of employment, attitude, overall performance, etc.

Employers must ensure that the employee they intend to hire has the legal right

to work in Singapore. This applies specifically to foreign applicants who must

have a valid employment pass / work permit and/or other work‐related

documents to work in the Republic. Otherwise, it is illegal to hire them.



The application form and the selection process as a whole should observe fair

employment practices. This means that employers should treat all applicants in

the same manner regardless of their age, race, religion, language, gender and

marital status. In fact, the Tripartite Guidelines on Non‐Discriminatory Job

Advertisements the Ministry of Manpower issued in 1979 discourage employers

from asking sensitive questions that make an applicant uncomfortable.

Employees submit their résumés together with the application at their own

initiative. The employer should dutifully and diligently check the validity of the

information provided in the résumé and the application form to ensure it is

true. Hence, if an applicant stated in his/her résumé that he/she is a scholar,

then the employer must check with the respective authority or organisation that

such a claim is accurate.


REFER TO: Figure 8‐3 describes the typical division of HR responsibilities: Selection.

Figure 8‐4 shows the selection process flowchart.

REVIEW: What is the purpose of conducting pre‐employment screening?

SELECTION TESTING

Employees use different tests to assess the suitability of applicants for a particular

position. When they are both reliable and valid, employment tests also allow

employers to predict which applicants will likely be successful in their job. The

major types of tests conducted are designed to assess the ability, personality and

honesty/integrity of an applicant.

A. Ability Tests

Tests that measure an individual’s ability to perform in a specific manner fall in

the ability test category. These are further differentiated into aptitude tests and

achievement tests.

Ability tests can be grouped into five categories:

Cognitive Ability Tests: These are tests measuring an individual’s thinking,

memory, reasoning, verbal, and mathematical abilities. Managers

administer these tests to assess job‐related cognitive abilities.



Physical Ability Tests: These are tests that measure an individual’s abilities

such as strength, endurance and muscular movement. Managers administer

these tests to assess the physical strengths of an applicant that are needed to

perform the job.

Psychomotor Tests: These are tests that measure dexterity, hand‐eye

coordination, arm‐hand steadiness and other factors.

Work Sample Tests: These are tests that require an applicant to perform a

simulated task that is a specified part of the target job. For example, a

secretary may be asked to take minutes of meeting because it is part of the

job.

Situational Judgement Tests: These are tests that measure a person’s

judgement in work settings.

Employers may use assessment centres in the selection process to fill managerial

job openings. An assessment centre is composed of a series of evaluative

exercises and tests that are used for selection, career development and

promotion. Multiple raters evaluate the candidates’ performance on the various

exercises and tests they take. The results can subsequently be used as a road

map for the individual development of the newly hired candidate.

B. Personality Tests

Employers use personality tests to gauge the degree to which an applicant’s

attributes match specific job criteria and how a person interacts with his/her

work environment. Myers‐Briggs Type Indicator (MBTI) and the ‘Big Five

Personality Traits’ are common personality tests.

It is worth nothing that personality test results may not be accurate because

applicants may fake the answer. Employers should be mindful of the potential

flaw in using personality tests as applicants may not answer truthfully but

provide answers that make them look good and suitable to fill the job vacancy.

C. Honesty/Integrity Tests

Companies value applicants with a high level honesty and integrity. They use

honesty/integrity tests as a screening mechanism to weed out applicants who

are weak on these values. However, these tests present shortcomings. For

example, it may put an applicant off because some questions can be considered

as overly invasive, insulting and not job related. The accuracy of

honesty/integrity tests is also challenged because a genuinely honest person

may be found to be “dishonest” by these tests.




SELECTION INTERVIEWS

The purpose of selection interviews is to obtain additional information that is

missing and clarify the information that the applicant provided in his/her résumé

and/or application form. Two levels of interviews take place. The first is to

determine if the person meets the minimum requirements. The second is an in‐

depth interview involving the HR manager and the hiring manager.

Interviews can take various forms. They can be structured, less structured and

stressed.

A. Structured Interviews

A structured interview uses a set of standard questions asked of all

interviewees. This type of interview is useful because it allows the interviewers

to prepare job‐related questions. It is also useful in the initial screening process

because many applicants can be compared, evaluated and eliminated.

Structured interviews can be flexible in that they allow applicants to provide

information that is not found in the résumé or application form. Interviewers

can also ask probing questions to seek clarification. In this way, structured

interviews can be seen as reliable.

There are several forms of structured interviews, namely, biographical

interview, behavioural interview, competency interview, and situational

interview.

Biographical Interview: It focuses on a chronological assessment of the

candidate’s past experience.

Behavioural Interview: Interviewees give specific examples of how they

have performed a certain task or handled a problem in the past. This helps

the interviewer ascertain how the interviewee will handle similar tasks in

the future and determine his/her suitability for the job.

Competency Interview: Competency interview is similar to the behavioural

interview, except that the questions are designed to provide the interviewer

with something to measure the applicant’s response against a competency.

A competency profile or framework is used in such interviews.

Situational Interview: Situational interview contains questions pertaining

to the way applicants might handle specific job situations. This type of

interview is highly recommended because of its predictive capabilities,

reliability and accuracy.



B. Less‐Structured Interviews

An unstructured interview is usually conducted by line managers. No pre‐

prepared questions are set but broad questions are asked throughout the

discussion.

Less‐structured interviews can be non‐directive. A non‐directive interview uses

questions developed from the answers to previous questions. One disadvantage

of using non‐directive interview is that it is difficult to focus on job‐related

questions and getting comparable data on various applicants. As a result, the

comparison and ranking of candidates may be subjective.

C. Stress Interview

A stress interview is designed to create anxiety and put pressure on the

candidates and then see how they respond in that context. Employers use this

type of interview to assess the suitability of candidates to fill highly stressed

jobs. They want to see how the applicant copes with and handles stress in a job

situation. Stress interviews can be a turn‐off for the interviewee who, in turn,

may develop a negative opinion of the company. As a result, the interviewee

may turn down the job offer.

D. Who Conducts Interviews?

Interviews can be conducted individually or in a group. Panel interviews and

team interviews are conducted by a group of interviewers.

Panel interviews are interviews where a group of interviewers meet with an

interviewee at the same time. They hear the same responses to questions and

they make judgement about the interviewee’s performance.

In a team interview, the interviewee is interviewed by the team members with

whom he/she will work. This approach can improve team success. However,

team members must be trained to ask relevant questions and build consensus

over the hiring decision and the criteria supporting it.

E. Effective Interviewing

Effective interviewing requires skills, practice and experience. Training can

develop one’s interviewing skills. Below are suggestions to make interviewing

effective:

Plan the interview

Control the interview

Use effective questioning techniques



Interviewers should avoid asking:

Closed questions such as “yes/no” questions

Obvious questions

Leading questions

Inappropriate questions

Non‐job related questions

F. Interview‐Related Problems

Line managers and sometimes HR managers who are not adequately trained in

selection interviewing skills may create problems during or after the interview.

These problems include:

Making snappy judgements about an interviewee within the first few

minutes.

Placing an unnecessary emphasis on unfavourable information over

positive or favourable information.

Developing an halo effect, a phenomenon that occurs when the interviewer

allows a positive characteristic of the interviewee such as agreeableness to

overshadow other less favourable evidence.

Being biased and stereotype an interviewee. For example, an interviewer

stereotypes a mature interviewee if s/he immediately concludes that

because of his age, the latter must be slow and unwilling to learn.

Being unable to handle cultural noise that arises from what applicants

believe is socially acceptable rather than what is factual.


REFER TO: Figure 8‐7 presents the big five personality characteristics.

Figure 8‐8 shows the types of selection interviews.

Figure 8‐9 depicts questions commonly used in selection interviews.

REVIEW: What type of interview would you use to select an engineer? Which form of

interview would you adopt and why do you think it is suitable as a selection

tool for an engineering position?



BACKGROUND INVESTIGATION

Background investigation may take place either before or after the in‐depth

interview. Sources of background information may include the following:

Previous employment records

Criminal records, if any

Credit history

Honesty tests

Education/degree documentation

Professional certifications/licences

Workers’ compensation records

Military records

A. Legal Constraints on Background Investigations

Employers must be mindful of legal constraints when conducting background

investigations. They have to seek permission from the applicant before

conducting it. The employer must also respect the decision of an applicant who

does consent to a background investigation. An applicant may not want the

potential employer to reference check his/her former employers about his/her

performance.

Besides looking into their prior employment, prospective employers may also

check the credit history of applicants. The rationale is that a poor credit history

may signal either correctly or incorrectly a certain level of irresponsibility.

Credit history should be checked for candidates applying for jobs where access

to and/or management of money is an essential job duty.

B. Medical Examinations and Inquiries

Medical examinations and further enquiries pertaining to the overall health of

applicants may be warranted. Generally, employers perform two medical

checks, one health screening and two, drug testing before making a job offer.

Medical Inquiries: Once a conditional offer of employment has been made,

an applicant is asked to complete a pre‐employment health checklist or the

employer pays for a physical examination of the application. Upon giving a

clear health check, the applicant is then offered the job.



Drug Testing: Drug testing may be conducted as part of the medical

examinations. Employers are careful not to employ applicant who is a drug

addict or drug abuser. However, some employers are open to employ ex‐

drug addicts who have gone through successful drug rehabilitation.

MAKING THE JOB OFFER

The final step of the selection process is the job offer. This can be done over the

telephone and followed by an official appointment letter. The appointment letter is

a legal document stipulating the terms and conditions of employment.

Some employers give an employment handbook to the applicant and this forms the

complete contract of employment. The employment handbook contains contract‐

related rules and procedures that the applicant must observe and follow if he/she

accepts the job offer.

The applicant is given some time to review the appointment letter and other

documents before accepting the job offer. Once the appointment letter is signed and

returned to the employer, a legally‐binding employment contract is formed.


REFER TO: Figure 8‐10 shows the sources of background information.

REVIEW: How do you conduct a background check on an applicant?






Chapter 1: Nature of Human Resource Management (HRM)

What is HRM?

HRM is the act of designing management systems to ensure that human talent

is used effectively and efficiently in the accomplishment of organisational goals.

What is the goal of HRM?

The goal of HRM is to have productive, creative people working in a flexible,

effective organisation that provides rewarding work and has earned the

reputation of being an excellent employer.

What are the differences between operational HR and strategic HR roles?

Students should refer to Figure 1‐4 as it gives a concise explanation of the

differences between operational HR and strategic HR roles.

What are the current challenges of HRM?

Globalisation of business, economic and technological changes, workforce

demographics and diversity and organisational cost pressures and restructuring

are current challenges of HRM.

These challenges are explained on pages 239 to 245 of the textbook.



Chapter 2: Recruiting Human Resources

You are the HR manager for a MNC. The marketing manager wants you to

fill up a marketing analyst position in his department. The person does not

need to have marketing experience but he/she needs to have knowledge in

marketing research and statistics as well as strong analytical skills. The line

manager is prepared to coach the right person. Which labour market

component would you tap on to find potential candidates for that position?

Why?

Considering the requirements stated by the marketing manager, the HR

manager is more likely to recruit from the applicant population.

The marketing manager is not looking for an experienced marketing analyst but

rather for someone with strong analytical skills and competent knowledge of

marketing research and statistics. As coaching will be provided to the right

person, this implies that the job is an entry level position. Thus, the HR

manager is more likely to work with career services of major universities to

recruit potential candidates. In addition, the HR manager may advertise this job

opportunity on the corporate website to attract applicants.

What are the benefits of hiring non‐traditional workers?

Non‐traditional workers such as senior citizens, ex‐convicts and disabled

people are seen as the least preferred workers in the workplace and they have

difficulty getting hired. Employers who hire them benefit because these

workers are usually more hardworking, more loyal and more willing to learn

and more importantly, they are grateful to be given an opportunity to

demonstrate their ability to deliver results. They are more likely to take their

jobs seriously and remain in the job for a long time.

What are the internal recruitment methods that organisations can use to fill

up their job vacancies?

The internal recruitment methods include the use of employee databases, job

posting, promotions and transfers from within. Other internal recruitment

methods are current‐employee referrals and re‐recruitment of former

employees and applicants. As each method has its advantages and

disadvantages, employers must decide which works best for them in a given

situation.



Chapter 3: Selecting Human Resources

If you are the hiring manager of a company, what factors or criteria should

you consider to find the most suitable applicant? Explain your answer.

A hiring manager should consider the following factors to find the most

suitable applicant:

‐ Knowledge, skills and abilities (KSAs). In a nutshell, these form the

overall competencies of the individual which are important to determine if

he/she is able to perform the responsibilities required of the job and deliver

the desired outcomes. This is the attempt to determine the person/job fit

which matches the KSAs of the applicant with the job characteristics.

‐ Person/organisation fit is equally important. Person/organisation fit looks

at the congruence between individuals and the organisational factors. For

example, a hiring manager should find out as much about the individual’s

beliefs and values and ascertain if they match with organisational values

and principles. If there is a close match, then it is more likely that the

applicant can blend well in the organisation setting. If it does not match,

there is a high probability of a misfit and the applicant if selected will

struggle to fit in the organisation.

What is the purpose of conducting pre‐employment screening?

The purpose of conducting pre‐employment screening is to determine if

applicants meet the minimum job requirements. It is useful to employers,

particularly to sift out unqualified applicants from those who are qualified. Pre‐

employment screening is an effective method for shortlisting potential

applicants. Therefore, employers do not need to interview applicants who do

not meet the minimum requirements of the job.

What type of interview would you use to select an engineer? Which form of

interview would you adopt and why do you think it is suitable as a selection

tool for an engineering position?

Structured interviews can be used to select an engineer. In a structured

interview, the interviewer poses standardised questions to all applicants. S/he

compares and evaluates fairly the quality of the answers presented by each

candidate. Also, questions in structured interviews are job‐related, leaving no

room for inappropriate questions.

The interviewer may use behavioural, situational and competency interviews.

These formats are suitable because each is designed to assess the suitability of

the applicant in given contexts and situations. For example, in behavioural

interviews, the applicant is assessed on how he/she handled a problem in the

past. In competency behaviour, the applicant has to demonstrate his/her ability



to perform a task that is job related. In a situational interview, the applicant is

given different situations to test how he/she might hand specific job situations.

How does an HR Manager conduct a background check on an applicant?

Background checks can be conducted by telephone or through email. For

example, the HR manager can contact the referees provided by the applicant to

verify the information given on his/her résumé, the application form or during

the interview. A checklist should be used to verify facts such as employment

dates, salary history, type of job responsibilities, and attendance records.

Sensitive information such as reason for leaving the previous job and

disciplinary actions received by the applicant may be included as part of the

reference check.

Alternatively, written methods of reference checking may be used. For instance,

an employer may send pre‐printed reference forms to referees of the applicant.

The referees complete the form and return it to the employer within a given

period.



REFERENCES

Dobrian, J., 2011, ‘Good managers put top priority on engaging their people and

creating opportunities’, The Wall Street Asia Journal, June 23 2011, sponsored

section.

Hyett, S., 2009, ‘HR to the rescue’, HRM, issue 7.9, p.15.

Kaur, B., 2009, ‘FedEx: People first’, HRM, issue 9.1, p.43.

Mukherjee, A., 2010,’The people who steer the ultimate driving machine’, HRM,

issue 10.9, p.15.

Selvaretnam, S.V., 2010, ‘HR express’, HRM, issue 10.11, pp.14‐16.

Shukla‐Pandey, S., 2011, ‘Uniting communities’, HRM, issue 11.5, p.26.

BUS206

Managing People

STUDY UNIT 6

CHAPTER 1: Training and Developing Human

Resources CHAPTER 2: Compensating Human Resources and

Managing Employee Benefits

CHAPTER 3: Managing Employee Relations



CHAPTER 1: TRAINING AND DEVELOPING

HUMAN RESOURCES

LEARNING OUTCOMES


Explain training and development.

Categorise the types of training.

Relate strategic training to organisational competitiveness.

Distinguish between development and training.

Discuss options for developing specific capabilities and competencies of

individuals.



NATURE OF TRAINING

Training is a process through which people acquire capabilities to perform jobs.

Training can seek to develop hard skills or soft skills. Hard skills are typical

technical skills that are directly related to the job. Soft skills refer to interpersonal

and people management skills and include communicating, mentoring, managing a

meeting and working as a team.

A. Training Categories

Training is designed to meet a number of objectives and falls under a number of

categories: required and regular training, job/technical training, interpersonal

and problem solving training and developmental and career training.

Required and Regular Training: Courses comply with various legally‐

mandated requirements such as Singapore’s Workplace Safety and Health

Act.

Job/Technical Training: These are specific job‐related courses that enable

employees to perform their jobs well. For example, all staff members at

Amara Singapore attend in‐house and external customer service training

programmes to improve the quality of their service delivery.

Interpersonal and Problem‐Solving Training: This type of training

addresses operational and interpersonal problems. It aims to improve

organisational working relationships. Examples of courses falling in that

category include communications skills, interpersonal skills and

managerial/supervisory skills courses.

Developmental and Career Training: Such training is long‐term focused

and aims to enhance individual and organisational capabilities for the

future. Examples include training on business trends, strategic thinking,

leadership and change management. NTUC First Campus recognised early

that people expect more than just pay and benefits to stay on the job; they

also want a career. The organisation also acknowledged that it needs to

develop its centre principals to be effective leaders. The ‘Growth With Us’,

programme was set up to meet these expectations by seeking to equip

teachers and principals with leadership and business skills so that they can

take on more challenging roles in the future (HRM, p.50).

B. Legal Issues and Training

Companies must consider legal issues when designing and delivering training.

Employers must ensure that all their employees receive the training mandated

by law or they may be found guilty of non‐compliance. Mandatory training

includes safety training for construction workers and other industries such as



shipbuilding, oil and petrochemical where the work environment tends to be

prone to safety hazards.

Some employers invest heavily in staff training, specialised training in

particular, although it is expensive and only benefits a smaller number of

selected employees. To prevent the latter from leaving the company after

receiving the training, employers make them sign a training contract that may

include a bond period requiring the trained employee to work for the company

for a specific period of time immediately following the end of the specialised

training. Employers should ensure that such bonds are legally‐binding in

Singapore.


REFER: Figure 9‐1 shows the types of training.

TRAINING AND ORGANISATIONAL STRATEGY

Traditionally, training has been viewed as an expenditure that adds little value to

organisational goals and objectives. Even if it is valuable, training is often seen as a

tactical and not as a strategic tool, and that relegates it to the status of a minor

contributor to business results and organisational success.

A. Strategic Training

The contemporary view of training has changed significantly in recent time.

Training which is referred to as learning is becoming strategic because of its

linkage to business strategy. In other words, HR and training professionals have

reinvented themselves. They are strategic business partners who work

alongside with line managers to help them solve problems and achieve their

business goals.

Brady Corporation manufactures facility identification products like signs, tags,

labels and printers. During the financial crisis of 2009, the Brady’s training

manager decided to revise all of the company’s training and development

programmes. Even with limited resources, the training manager came up with

innovative ways to tailor Brady’s training programmes to cater to employees

from all levels. The company sees training and development as a strategy to

nurture employees and improve their competencies to enable them to deliver

positive business results for the organisation in both good and bad times (HRM,

pp.42‐45).



B. Organisational Competitiveness and Training

Training helps to build up the organisation core competency and creates

competitive advantage. Companies that see human talents as a strategic asset

continue to invest in them in good or bad times. For example, Brady spent

US70,000 in a five‐day course called ‘Effective Brady Programme’ to upskill its

managers during the 2009 financial crisis (HRM, p.43). And Singapore Airlines

spends S$215 million a year to train its workforce. Global and local companies

including Microsoft, General Electric, NTUC First Campus, Amara Singapore,

Thai Express emphasise the importance of training and recognise that human

talent development is a key factor for long‐term success.

Training is integral to strengthening organisational competitiveness as evident

in Carlson Wagonlit Travel (CWT). The company takes a holistic approach to

training by embracing an interactive learning strategy that delivers the right

solutions to consistently achieve profitable business results. Apart from

addressing the training needs of individuals, CWT also focuses on its

developmental needs as well so as to retain the more talented employees.

Development needs are identified through regular talent as well as performance

reviews (Mukherjee, pp.59‐60).

Tangible assets such as physical capital used to be a measure for competitive

advantage. However, at the turn of the century, strategic thinkers and business

leaders recognised that ‘knowledge is power’ and from that realisation, the

concept of knowledge management (KM) was born. KM is the way an

organisation identifies and leverages on knowledge to stay competitive. This

capability can be developed as seen in CWT, a company that set up “CWT i‐

win”, a global repository of corporate knowledge and memory that employees

can access through a wide range of tools. Resources available in “CWT i‐win”

include corporate presentations, industry benchmarks, research papers, case

studies and training manuals (Mukherjee, pp.59‐60).

Training can be a revenue generator. Microsoft, Cisco, Hewlett‐Packard and

IBM bundle training with the products and services that they sell to their

customers. Manufacturers of heavy equipment do likewise. In that context,

training is both a source of revenue and a measure of customer satisfaction.

Customer training helps users learn how to use a company’s product and when

they are properly trained, their perception and experience of the company’s

product quality increases and along with it, their satisfaction. In the long run,

customer loyalty and retention can be achieved.




REFER TO: Figure 9‐2 shows the linkage between organisational strategies and training.

REVIEW: How do organisations link training to competitive advantage? Give an

example.

DEVELOPING HUMAN RESOURCES

In an organisational context, development refers to efforts to improve employees’

abilities to handle a variety of assignments and to cultivate employees’ capabilities

beyond those required by the current job.

Organisations and individuals benefit from development. Highly developed

employees and managers enhance organisational competitiveness. They are flexible

and adaptable. Developed employees have a higher chance of pursuing different

career paths either laterally or vertically.

A. Development vs. Training

Development is different from training. Development aims to build employee

capabilities and competencies and prepare them to take on bigger challenges. It

has a long‐term focus and to be effective, it requires continuous investments in

time, effort and money. Developmental needs cover areas such as leadership,

decision making and judgement, problem solving and analytical skills,

management skills, corporate governance and ethics. Development is tied to

strategic plans.

Training, on the other hand, is job‐related and aims to help employees learn

specific behaviours and take specific actions. Employees who are trained are

able to apply specific techniques and processes in their current jobs. In most

cases, training is seen as a solution to narrowing skills and performance gaps. It

is focused on the short term, i.e. on meeting the immediate needs of an

employee who has to perform better in the tasks s/he is assigned to do. For that

reason, management expects to see immediate improvement after training.

Because of its short‐term focus, training is linked to operational or tactical plan.

Figure 10‐6 distinguishes between development and training. Students should

refer to it.



B. Developing Specific Capabilities/Competencies

How do employers help people remain relevant and competitive so that they

continue to deliver results? The answer is learning and development. To retain

human talent, employers invest in developing the capabilities/competencies of

their employees.

Employees should take the initiative and invest in themselves as while their

skills, knowledge and abilities are valuable, they should be aware that the KSAs

have an expiry date. Thus, many embark in lifelong learning and re‐

development.

Lifelong Learning: Lifelong learning may mean meeting continuing

education requirements to retain one’s educational and/or professional

qualification. For example, doctors, lawyers, teachers, certified public

accountants and nurses need to attend a certain number of continuing

education sessions and workshops in order to continue practising their

professions. For other professions, learning and development may mean

getting additional qualifications to expand their skills set and prepare

for new career moves and promotions.

Re‐Development: People may shift jobs in mid‐life or mid‐career and

re‐developing themselves will allow for that shift by giving them the

relevant capabilities to effect it. For example, people above 35 years old

are more likely to return to school to pursue a degree. Similarly, child

care centres are willing to recruit and develop mid‐career individuals

and home‐makers who want to join this employment sector. Re‐

development provides options for people to venture into growing

industries that are in need of manpower. The healthcare industry is one

example. With the raise of ageing population, hospitals and healthcare

providers are actively recruiting people to join the industry.


REFER TO: Figure 10‐6 outlines the key differences between development and training.

REVIEW: What are the areas of capabilities/competencies that you should develop to stay

relevant and competitive? Why do you think those areas to be more important

than others?





CHAPTER 2: COMPENSATING HUMAN

RESOURCES AND MANAGING EMPLOYEE

BENEFITS

LEARNING OUTCOMES


Explain total rewards and benefits.

Differentiate the three general components of total rewards.

Discuss two basic compensation philosophies.

Identify the different benefit costs to an organisation.

Debate how benefits can be used as a competitive advantage to attract and

retain a talented workforce.



NATURE OF TOTAL REWARDS AND COMPENSATION

Total rewards are monetary and non‐monetary rewards provided to employees in

order to attract, motivate and retain them.

Because total rewards represent a significant expenditure, organisations need to

ensure that the total compensation package meets the following objectives:

It complies with all appropriate laws and regulations.

It is cost effective for the organisation.

It respects internal, external and individual equity for all employees.

It enhances performance throughout the organisation.

It serves to recognise employee performance and help manage their talent.

Employers must recognise and reward talents based on the skills, knowledge and

abilities that employees bring to the organisation. World at Work, a leading

professional association, has developed a simple framework to categorise the

components of total rewards. Broadly, they are grouped into compensation,

benefits as well as performance and talent management. Figure 12‐1 provides

details relevant to each of these components.

A. Types of Compensation

Rewards can be intrinsic and extrinsic. Intrinsic rewards are intangible and

may include praise, compliments for a job well done or for meeting

performance targets. On the other hand, extrinsic rewards are tangible and can

be in monetary or non‐monetary form. One tangible component is direct

compensation such as base pay and variable pay whereas indirect

compensation consists of benefits.

Base Pay: This is the basic compensation that an employee receives, usually

as a wage or a salary. Base pay can be hourly or salaried. Hourly calculated

pay is often called wages. They are payments directly calculated on the

amount of time worked. Contractual workers receive wages for the number

of hours they work. Salaries are consistent payments made each period

regardless of the number of hours worked. People prefer to receive salaries.

Variable Pay: This is compensation linked directly to individual, team or

organisational performance. Common types of variable pay include bonuses

and incentive programme payments. Stock options are offered to

management staff members to attract, motivate and retain them.



Benefits: Benefits are indirect rewards given to an employee or a group of

employees not for performance but as a result of organisational

membership. They include health insurance, vacation pay, educational

assistance and retirement pension.

B. Compensation Philosophies

How should employees be compensated fairly and equitably? This is a main

concern of HR professionals. Two opposing compensation philosophies surface

in the deliberation. The first is the entitlement philosophy and the second is the

performance philosophy.

Entitlement Philosophy: The entitlement philosophy assumes that

individuals who have worked for a year are entitled to pay increases, with

little regard for performance differentials between employees.

Organisations that automatically increase their employee pay every year

practise this philosophy and the pay increase is usually consistent from year

to year. They do this to take inflation into account, i.e. the cost‐of‐living

increases. The entitlement philosophy is not a true measure of employee

performance and does not motivate employees to work hard.

Performance Philosophy: The pay‐for‐performance philosophy requires

that compensation changes reflect performance differences. With this

philosophy, employees are given performance bonuses only if they

achieved business objectives or set targets agreed at the beginning of the

year. Also, the amount of bonus varies according to performance levels.

Thus, employees who perform satisfactorily maintain or advance their

compensation levels more than marginal performers, but less than top

performers. Bonuses and incentives can be based on individual, team or/and

organisational performance. For example, civil servants receive two and half

month performance bonus for achieving outstanding economic growth.


REFER TO: Figure 12‐1 shows total rewards components.

Figure 12‐2 shows the continuum of compensation philosophies.

REVIEW: What are the two compensation philosophies employers can use? Which is

more appropriate for motivating sales teams and why?



BENEFITS AND HR STRATEGY

Figure 14‐1 shows a sample of breakdown of an employer’s total compensation and

benefit costs. These benefit costs are rising and can be a burden to employers.

However, this should not deter them from incentivising employees for good

performance. Employers now have to think of innovative ways to use benefits to

attract, motivate and retain human talent.

The approach that a total rewards strategy should take towards employee benefits

depends on factors such as workforce competition, the life cycle stage of the

organisation as well as its corporate strategies. For example, Microsoft may provide

competitive salaries and benefits to attract the best talent in the market. On the

other hand, Motorola Electronics and OCBC may choose to put in place more

family‐friendly benefits so working mothers can experience a better work‐life

balance. For instance, OCBC introduced two‐days of ‘Family Leave’ for employees

who are not eligible for childcare leave. The intent is to provide employees with

opportunities to spend quality time with their families (Shukla‐Pandey, p.43).

A. Benefits as Competitive Advantage

In bad times, organisations review and reduce benefits as part of their cost

cutting measures. They view such measures as necessary because benefits often

represent a significant component of their operating costs. On the other hand,

others argue that companies should maintain their benefits programme because

they serve as a competitive advantage to attract, motivate and retain employees.

Employers who offer attractive benefits are generally perceived positively by

their employees when they compare to other organisations that do not offer

competitive benefit packages. For example, an employer decides to cut medical

benefits because of a recession will be perceived as not taking care of its

employees welfare. Furthermore, the lack of competitive benefits may result in

recruitment difficulty. In a survey conducted by an international consulting

firm, 48% of executives saw benefits as being extremely important to a

company’s competitive effectiveness and another 41% saw benefits as

somewhat important. This survey and others confirm that benefits are viewed

by employers and employees as a part of being an “employer of choice” when

attracting and retaining individuals.

B. The Role of Benefits for Workforce Attraction and Retention

Benefits are a competitive advantage because they have the power to attract and

retain human talent. The weight that employees allocate to the significance of a

specific benefit may vary according to their individual needs. For instance, a

young employee who just entered the workforce value flexible and portable

benefits which can be transferred. Senior employees may see retirement and



medical benefits as being more important to them because these more closely

meet their foreseeable needs.

In order to attract and retain the right calibre of employees, companies have to

design benefit programmes and packages that meet the expectations of all levels

of employees. It is also worthy to note employees sometimes prefer receiving

benefits than cash because the former is tax‐free and the latter is subject to

taxation.


REFER TO: Figure 14‐1 shows a sample breakdown of an employee’s total compensation

and benefits costs.

REVIEW: Why are benefits seen as a competitive advantage to an organisation?





CHAPTER 3: MANAGING EMPLOYEE RELATIONS

LEARNING OUTCOMES


Differentiate between statutory rights and contractual rights.

Discuss the rights affecting the employment relationship.

Recommend different dispute resolution alternatives.



EMPLOYEE RIGHTS AND RESPONSIBILIITES

Rights are powers, privileges or interest that belongs to a person by law, nature or

tradition. Rights are sensitive and are subject to interpretation and arguments. For

example, does an employee have the right of freedom of speech in the workplace?

And the question of “what constitute a ‘freedom of speech’” is an issue that has

drawn much debate and interests in the past. Moreover, legal rights may or may

not correspond to certain moral rights and vice‐versa.

Responsibilities are obligations to perform certain tasks and duties. Employment

is a reciprocal relationship in which both sides have rights and responsibilities. For

example, employees have the right to expect a safe working environment and the

employer has the responsibility to provide it for them. Similarly, an employer has

the right to expect employees to put in 40 hours of quality work in a week and the

employee has the contractual responsibility to meet this obligation. The reciprocal

nature of rights and responsibilities implies that both parties to an employment

relationship should regard the other as having rights and should treat the other

with respect.

A. Statutory Rights

Employees’ statutory rights are rights based on laws or statutes passed by

federal, state, or local government. Various laws have granted employees

certain rights at work such as minimum employment conditions, collective

bargaining and workplace safety.

B. Contractual Rights

Contractual rights are rights based on a specific contract between an employer

and an employee. For example, an employment contract for a sales person

should stipulate his/her responsibilities, expected timeline to deliver results and

specific details concerning his/her compensation package. It should also spell

out if the employment relationship is for an indefinite period, a specific period

of time only or whether it is subject to renewal near its expiry. In addition, the

employment contract may spell out the terms of a severance agreement,

continuation of benefits and other issues that need to be addressed when an

employee leaves an organisation. Employment contract may include non‐

compete agreements.

Non‐Compete Agreements: These are agreements that prohibit individuals

who leave an organisation from competing with an employer in the same

line of business for a specified period of time. For example, Star Cruises

paid its ex‐executive director Colin Veitch S$10 million in exchange for his

agreeing not to engage, for a five‐year period, in a business venture or be

employed by an existing or new company competing with Star Cruises.



Employment contracts may also contain non‐piracy agreements, i.e. specific

clauses that bar past employees from soliciting business from former

customers and clients for a specified period of time. This is a common

practice in the banking as well as the telecommunication industries. For

example, DBS Bank paid its ex‐chief executive officer, Jackson Tai

S$1 million for non‐solicitation.

Employers may also include clauses requiring non‐solicitation of current

employees in the employment contract. These clauses prevent a former

employee from contracting or encouraging co‐workers at their former firm

to join a different company, often a competitor.

Intellectual Property: Companies want to protect their intellectual property.

They can include a clause that prevent employees from “stealing” their

intellectual property during the employment period as well as when they

leave the company. Beyond contractual clauses to that effect, local laws also

protect companies against intellectual property theft from existing or former

employees but also from any other party.

C. Implied Contracts

Implied contracts are rights and responsibilities that are not written but deem to

exist and are equally enforceable. The rights and responsibilities of an employee

may exist only as unwritten employer expectations about what is acceptable

behaviour or performance on the part of the employee. For example, an

employer cannot accept employees to use vulgarity at the workplace. Although

this is not written in the employment contract, it is implied that employees are

expected to uphold the value of respect in the workplace. The use of vulgarity is

seen as disrespectful to the organisation as well as to colleagues.


REVIEW: Explain the difference between statutory rights and contractual rights.



RIGHTS AFFECTING THE EMPLOYMENT RELATIONSHIP

Several concepts from law and psychology influence the employment relationship.

A. Employment‐at‐Will (U.S.) and Contract of Service (Singapore)

Employment‐at‐Will (EAW) is an American common‐law doctrine stating that

employers have the right to hire, fire, demote, or promote whomever they

choose, unless there is a law or contract to the contrary.

In Singapore, an individual employment relationship is governed by a contract

of service between an employer and employee. For a unionised sector, a group

of employees represented by a labour union can enter into a collective

agreement with their employer. A contract of service operates on the common‐

law principle and it allows the employee to sell his/her “labour and/or skills”

and “work time” to the employer for a consideration in the form of wages and

benefits.

For individuals that are covered by the Employment Act of Singapore, a contract

of service can be written, oral or implied. The notice of termination can be

incorporated in the contract of service. However, if it is not, the Act provides

that the notice of termination shall be one day for less than 26 weeks of service;

one week for between 16 weeks and less than two years of service; two weeks

for between two years and less than five years of service; and four weeks for

five years or more of service.

If an employee covered by the Act feels that he/she is unjustly dismissed, he/she

can complain to the Ministry of Manpower or sue the employer in a civil court.

It is less costly to use the former than the latter.

B. Wrongful Discharge/Dismissal

When an employer dismisses an employee to avoid paying compensation to the

latter, the court may hold that the employee is wrongfully

discharged/dismissed. To help avoid wrongful discharge/dismissal lawsuits,

the employer should have a well‐written employee handbook; he should also

train managers and maintain an adequate documentation of all disciplinary

procedures and actions taken against an employee. Figure 16‐2 offers

suggestions for preparing a defence against wrongful discharge/dismissal

lawsuits.

Constructive discharge is closely related to wrongful discharge. Constructive

discharge is a process of deliberately making conditions intolerable to get an

employee to quit. In a normal situation, an employee who resigns on his/her

accord cannot later claim damages for violation of his/her legal rights.

However, an exception to this rule exists and will be upheld when the courts



find that the working conditions were made so intolerable as to force a

reasonable employee to resign. There are a number of factors that may amount

to constructive discharge. They include:

Intolerable working conditions

Dangerous duties

Demeaning assignments

Failure to provide work to do

Conditions under which a “reasonable employee” would quit.

C. Just Cause

Just cause is reasonable justification for taking employment‐related action. A

“good reason” or just cause for disciplinary actions such as dismissal can

usually be found in union contracts. The overall concern of just cause is fairness.

No employee wants to be unfairly dismissed.

D. Due Process

Due process is also about fairness. It is the requirement that the employer uses a

fair process to determine employee wrongdoing and that the employee has

been given an opportunity to explain and defend his or her actions. Figure 16‐3

shows the criteria that are used to evaluate whether just cause and due process

have been respected in a given situation. How HR managers address these

criteria determines whether the courts perceive employers’ actions as fair.

The perception of fairness or justice in the treatment that organisations extend

to their employees depends on two factors, distributive justice and procedural

justice.

Distributive justice is the perceived fairness in the distribution of

outcomes. It questioned whether the outcomes were distributed fairly.

Procedural justice is the perceived fairness of the process used to make

decisions about employees. It questioned whether the decision making

process was fair.

Due process is a key procedural justice when making promotion, pay, discipline

and other HR decisions.




REFER: Figure 16‐2 shows keys for preparing a defence against wrongful

discharge/dismissal: “The paper trail”.

ALTERNATIVE DISPUTE RESOLUTION

Three alternative dispute resolution methods are used by companies to resolve

disputes quickly and cheaply.

A. Arbitration

Arbitration is a process that uses a neutral third party to make a decision in a

conflict situation involving two or more parties. In Singapore, unions can refer

to the Industrial Arbitration Court to resolve grievances and disputes that

employees may have against their employer. However, non‐unionised sectors

may need to engage an independent law firm with lawyers proficient in

arbitrating employment cases to act for them. The Singapore International

Arbitration Centre could also be the place to start a search for an effective

arbitrator.

B. Peer Review Panels

Employers may allow employees to appeal disciplinary actions taken against

them to an internal committee composed of existing employees. This panel

reviews the actions and makes recommendations or decisions. Panel members

are specially trained volunteers who, after signing confidentiality agreements,

are empowered by their company to hear such appeals.

Peer review panels use fellow employees and a few managers to resolve

employment disputes. The advantages of using review panels are:

Fewer lawsuits

Provision of due process

Lower costs

Management and employee development

Basic “how‐to” considerations include the following:

Recruit and train volunteers who are interested in serving on the panel.



Use a five‐ or seven‐person panel with no more than one or two

management members.

When dealing with a bias issue, members of the affected protected group

must be on the panel.

The panel must be objective – either side should be able to remove any

individual believed to be biased.

Management must not attempt to alter or appeal the decision.

Peer review panels can serve as the last stage of a formal complaint process for

non‐union employees. The use of peer review panels has reduced the number of

lawsuits.

C. Ombuds

Ombuds are individuals outside the normal chain of command who act as

problem solvers for both management and employees. Organisations use

ombuds to ensure a process of fairness in resolving disputes and grievances.

Ombuds address employees’ complaints such as unfair treatment, conflicts

between employee and supervisors with a high degree of confidentiality. Any

follow‐up to resolve problems is often handled informally.


REVIEW: What are the three alternative methods of resolving disputes and grievances.

Suggest the appropriateness of use for each method.






Chapter 1: Nature of Training

How do organisations link training to competitive advantage? Give an

example.

Figure 9‐2 provides a good overview of how organisational strategies are linked

to training activities. For example, an organisation that operates in a highly

dynamic and unstable environment would want its employees to embrace

change and encourage them to do things differently. Training can support this

outcome with courses targeted at helping people adapt to change, enabling

managers to lead and manage change.

Many organisations undergo change, and students can give examples of global

or local companies.

What are the areas of capabilities/competencies that you should develop to

stay relevant and competitive? Why do you think those areas to be more

important than others?

Managers need to have higher level skills. These may include leadership and

management skills, business skills, problem solving and decision making and

team management skills, and critical thinking skills. These skills are tacit in that

you can bring with you even if you leave your current employer. These skills

are valuable and applicable in all organisations and business environment.

Thus, if you want to stay relevant and competitive, you need to start developing

these capabilities/competencies.



Chapter 2: Compensating Human Resources and Managing Employee

Benefits

What are the two compensation philosophies employers can use? Which is

more appropriate for motivating sales teams and why?

The two compensation philosophies are entitlement philosophy and pay‐for‐

performance philosophy.

The entitlement philosophy assumes that individuals who have worked for a

year are entitled to pay increases, with little regard for performance differences.

The pay‐for‐performance philosophy requires that compensation changes

reflect performance differences.

The pay‐for‐performance is most appropriate to motivate sales teams because it

is a fair approach for recognising and incentivising sales personnel who meet

and exceed sales targets. Also, the pay‐for‐performance compensation

philosophy encourages marginal performer to work hard to achieve sales

performance.

Why are benefits seen as a competitive advantage to an organisation?

Benefits are indirect rewards given to an employee or a group of employees for

organisational membership.

Benefits are viewed as a competitive advantage because they can be used to

attract, motivate and retain human talent. Human talent is a strategic asset

which is not easily available or replaceable. This is one reason why successful

organisations leverage on benefits to recruit and retain employees. To them,

benefits are not costs but investments in the organisational success.



Chapter 3: Managing Employee Relations

Explain the difference between statutory rights and contractual rights.

Statutory rights are rights based on laws or statutes passed by federal, state, or

local government. On the other hand, contractual rights are rights based on a

specific contract between an employer and an employee.

What are the three alternative methods of resolving disputes and grievances.

Suggest the appropriateness of use for each method.

Arbitration, peer review panels and ombuds are three alternative methods for

resolving disputes and grievances in a workplace.

Arbitration is used in union contracts. Peer review panels are commonly used

in resolving employment disputes such as decisions in recruitment and

promotion. Ombuds are commonly used to address employee complaints about

unfair treatment, employee/supervisor conflicts and other workplace behaviour

issues.



REFERENCES

‘Developing the ranks’, HRM, issue 11.5, pp.42‐45.

‘Training to care’, HRM, issue 9.1, p.50.

Mukherjee, A., 2009, ’Dynamic training’, HRM, issue 9.1, pp.59‐60.

Shukla‐Pandey, S., 2010, ‘Family first’, HRM, issue 10.9, p.43.

BUS206_StudyGuide

Documents

Transcript of BUS206_StudyGuide