STUDY PACK ON ADVANCED HUMAN RESOURCE MANAGEMENT ...

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[

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STUDY PACK

ON

ADVANCED HUMAN RESOURCE

MANAGEMENT

PROFESSIONAL I

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STUDY PACK ON

ADVANCED HUMAN RESOURCE MANAGEMENT

PROFESSIONAL I

@CIPM 2018

THIRD EDITION

CHARTERED INSTITUTE OF PERSONNEL

MANAGEMENT OF NIGERIA

CIPM House, 1 CIPM Avenue, Off Obafemi Awolowo Way,

Opposite Lagos State Secretariat, Alausa, Ikeja, Lagos.

P.O.Box 5412, Marina, Lagos.Tel: 08105588421

E-mail: [email protected]

Website: www.cipmnigeria.org

www.twitter.com/CIPMNIGERIA

www.youtube.com/cipmnigeria

All rights reserved, no part of this publication may be reproduced,stored in retrieval system, or

transmitted in any form or by any means, electronically, mechanical, photocoping or otherwise

without permission of CIPM NIGERIA.

mailto:[email protected]

http://www.cipmnigeria.org/

http://www.twitter.com/CIPMNIGERIA

http://www.youtube.com/cipmnigeria

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FOREWORD

This third edition of our study pack has been made available for the use of our professional students to

assist them in effectively accomplishing their HR professional goal as dictated by the Institute from time

to time.

The text is meant not only for Chartered Institute of Personnel Management of Nigeria (CIPM) students,

but also for researchers, HR practitioners and organisations embarking on the promotion of human

capital development in its entirety. It has therefore been written not only in a manner that users can

pass CIPM professional examinations without tears, but also to provide HR professional practitioners

further education, learning and development references.

Each chapter in the text has been logically arranged to sufficiently cover all the various sections of this

subject in the CIPM examination syllabus in order to enhance systematic learning and understanding of

the students. The document, a product of in-depth study and research is both practical and original. We

have ensured that topics and sub-topics are based on the syllabus and on contemporary HR best

practices.

Although concerted effort has been made to ensure that the text is up to date in matters relating to

theories and practice of contemporary issues in HR, we still advise and encourage students to

complement the study text with other relevant literature materials because of the elastic scope and

dynamics of the HR profession.

Thank you and have a productive preparation as you navigate through the process of becoming a

professional in Human Resources Management.

Ajibola Ponnle. REGISTRAR/CEO

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ACKNOWLEDGEMENT

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On behalf of the President and the entire membership of the Chartered Institute of Personnel

Management of Nigeria (CIPM), we acknowledge the intellectual prowess of Dr (Mrs.) Joy O. Ekwoaba

and Dr. Olusegun Ajibewa in writing this well researched text for Advance Human Resource

Management I. The meticulous work of our reviewer, Dr. Kehinde Onijingin has not gone unnoticed and

is hereby acknowledged for the thorough review of this publication.

We also commend and appreciate the efforts of members of the Education Committee of the Institute

for their unflinching support.

Finally, we appreciate the contributions of the National Secretariat staff competently led by the

Registrar/CEO, Mrs. Ajibola Ponnle and the project team, Dr. Charles Ugwu (MCIPM), Mrs. Nkiru

Ikwuegbuenyi, (MCIPM), Miss Charity Nwaigbo, ACIPM and Livina Nwagbara.

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TABLE OF CONTENTS

Page

CHAPTER ONE

PEOPLE MANAGEMENT ROLES 1

1.0. Learning Objectives 1

1.1. Introduction 1

1.2. Personnel Management 2

1.3. Human Resource Management 2

1.4. Differences between Human Resource Management and

Personnel Management 3

1.5. Key elements of Human Resource Management 4

1.5.1. Human Resource Development 4

1.5.2. Compensation management 5

1.5.3. Job analysis & Design 5

1.5.3.1. Job description 6

1.5.3.2. Job specification 7

1.5.3.3. Job design 7

1.5.3.4. Performance Management 8

1.5.4 Competency Based Assessment 9

1.5.5. Participative Management 9

1.5.6. Employee Relationship Management 14

1.5.7. Career Development 15

1.5.8. Talent Management 15

1.5.9. Employee Engagement 17

1.5.10. Knowledge Management 18

1.5.11. Employee Retention 20

1.5.12. Social Entrepreneurship 22

1.6. Summary 23

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Practice Questions 23

CHAPTER TWO

WORKFORCE PLANNING 25


2.1. Introduction 25

2.2. Workforce level audit 26

2.3. Workforce planning process 27

2.4. Determination of manning requirements 27

2.5. Line managers’ role in manpower planning 29

2.6. HR professionals’ role in manpower planning 29

2.7. Executive workforce planning 30

2.8. Workforce plan templates 30

2.9 Spread sheet template of workforce 31

2.10. Business strategy and workforce plan 31

2.11. Summary 32


CHAPTER THREE

CAREER MANAGEMENT 34



3.2. Career management process 34

3.2.1. Employees role in career management 36

3.2.2. Employers role in career management 36

3.3 Stages in career development 36

3.4. Career pathing 37

3.5. Career progression 38

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3.6. Career plateau 38

3.7. Career management practices 39

3.8. Summary 42


CHAPTER FOUR

CHANGE MANAGEMENT 44



4.2. Definitions 45

4.3. Change management policy 45

4.4. Types of change 46

4.5. Roles and responsibilities in change management 46

4.6. Key considerations in change management 47

4.7. Change management process 48

4.8. Change Models 49

4.9. The place of people in change management 50

4.10. Replacement plans in change management 52

4.11. The benefits of change management to the organisation 52

4.12. Communication in change management 52

4.13. Summary 54


CHAPTER FIVE

LEARNING AND DEVELOPMENT 56



5.2. Objectives of learning and development 57

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5.3. Definitions 57

5.3.1. Learning 57

5.3.2. Development 59

5.3.3. Experimental method 69

5.3.4. Industrial Training Fund (ITF) 73

5.3.5. Knowledge management 74

5.5. Measuring Return on Investment for Learning/Training and Development

5.6. Summary 74


CHAPTER SIX

HR BUDGETING 75



6.1.1. Concept clarification 76

6.1.2. Principles of performance management 76

6.1.3. Objectives of performance management 77

6.1.4. Performance management process 77

6.1.4.1. Performance management at the corporate levels 77

6.1.4.2. Performance management at individual levels 78

6.1.5. Performance management cycle 78

6.2. Performance objective setting 78

6.2.1. Understanding the purpose of performance objective 79

6.2.2. Compile your resources 79

6.2.3. Determine the most important aspect of the job 79

6.2.4. Work activities to end results 79

6.2.5. End results to objectives 80

6.3. Review your performance objectives 81

6.3.1. Cascading of performance objectives 81

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6.3. 1.1. Determination of corporate objectives/goals 81

6.3.1.2. Determination of business unit objectives/goals 82

6.3.1.3. Determination of employees’ performance objectives/goal 82

6.3.2. Setting and agreement of key performance indicators (KPIs) 83

6.4. Performance monitoring 85

6.4.1. Performance feedback 85

6.5. Performance measurement and evaluation 86

6.5.1. Performance evaluation/appraisal 86

6.5.2. Performance rating scale 86

6.5.3. Performance Dialogue 87

6.5.4. Performance management reporting 88

6.6. Reward for performance 88

6.7. Performance Remedial Actions 88

6.8. Summary 89

Practice questions 89

CHAPTER SEVEEN

COMPENSATION MANAGEMENT 90



7.2. Theories of compensation 90

7.2.1. Reinforcement and Expectancy Theories 91

7.2.2. Equity Theory 92

7.2.3. Agency Theory 92

7.3. Role of financial compensation 93

7.4. Consequences of pay dissatisfaction 93

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7.5. Job Analysis 95

7.5.1. Terminology used in Job Analysis 95

7.5.2. Job analysis method 96

7.5.3. Benefits Job Analysis 97

7.6. Techniques of job evaluation in public and private sectors 98

7.6.1. Job evaluation techniques or methodologies 100

7.7. Wages and salary administration 105

7.7.1. Objectives of Wages and Salary 106

7.7.2. Principles of Wage and Salary Administration 107

7.8. Employee benefits 110

7.9. Financial incentives 111

7.9.1. Individual incentives 111

7.9.2. Group and team incentives 112

7.93. Organisational –wide incentives 112

7.10. Models of executive compensation 113

7.10.1. The elements of executive compensation 114

7.11. Summary 115


CHAPTER EIGHT

ORGANISATIONAL CULTURE AND CORE VALUES 117


8.1. Definitions 117

8.2. Difference between Culture and Core Value 117

8.3. Components of Organisational Culture 118

8.4. Communication of organisational core values 119

8.5. Implementation of organisational core values 120

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8.5.1. Recruitment and core values 120

8.5.2. Recognition and core values 120

8.5.3. Performance management and core values 120

8.6. Summary 121


CHAPTER TEN

MANAGING WORKFORCE GENERATIONAL DIVIDE 122



9.1.1. Veterans 123

9.1.2. Baby boomers 124

9.1.3. Generation X 125

9.1.4. Generation Y 125

9.1.5. Generation Z 126

9.2. Summary 128


CHAPTER TEN

BUDGETING AND PLANNING (in public and private sectors) 129



10.1. Human resource budget 129

10.2. HR budgeting process 130

10.3. Some samples of human resource budget template 131

10.4. Summary 134


REFERENCES 135

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CHAPTER ONE

OVERVIEW OF PEOPLE MANAGEMENT ROLES

1.0. Learning Objectives

At the end of this chapter, students should be able to:

▪ define Personnel Management and Human Resource Management;

▪ discuss the differences between Personnel Management and Human Resource

Management;

▪ understand the roles of line managers in People Management; and

▪ highlight and explain the key concepts in Human Resource Management Practices,

and their importance to organisational effectiveness.

1.1. Introduction.

In every organisation, ‘‘PEOPLE’’ or what most organisations refer to as employees or staff or

workforce is ‘key’’ to organisational effectiveness. No organisation can achieve its set objectives

and goals without qualified and competent employees or workforce. The people/ employees/staff

are managed in every organisation by those employed as leaders to ensure that their potentials

are harnessed effectively towards achieving the goals and objectives of their organisations.

People Management role covers all the management decisions and actions that influence every

employee, not just as a job holder, but as a family member. People Management function is not

an exclusive responsibility of management team members; the line managers and supervisors

also have key roles to play in managing people at work.

This section discusses those People Management roles carried out (in organisations) by leaders

(management team, line managers, supervisors, unit heads) which help employees to achieve

organisational goals and objectives. Therefore Personnel Management, Human Resource

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Management and practice, often deployed in managing employees into becoming competent

workers that achieves organisational goals and objectives is the focus of the section.

Personnel Management (PM).

Personnel Management is a people management practice that traditionally covers the roles of

hiring and firing, salary and benefits administration, learning/training and development, staff

transfer, redeployment, disciplinary actions, occupational health, safety and environment,

personnel record administration and industrial relations. It builds healthy relationships among

employees and employers by ensuring fair employment terms that give employees satisfaction

and results in organisational goal accomplishment. Personnel Management takes care of

employees’ individual differences in attitudes, skills, experiences, talents, abilities etc. and

maximises their potentials through identification of employees’ strengths and weaknesses and

empowering them to achieve both their individual and organisational goals. Therefore, Personnel

Management can be summarised as the practice by which organisations use to hire employees,

care for their behaviour, interest, abilities, skills and relationship with fellow employees and their

employer, the aim being to make them competent employees who will make good contributions

towards the attainment of organisational goals (Handerson, 2011).

1.2. Human Resource Management (HRM)

Human Resource Management is the management of employees in an organisation and involves

how employees are attracted, selected, trained, appraised and compensated. It also covers the

organisation’s culture and decision making as well as labour and employment laws governing the

day to day running of the organisation’s businesses. Human Resource Management not only

recognises employees as the initiators and determinants of organisational activities but also

recognises every sphere of relationship that affects the employees in an organisation. It goes

beyond the personnel functions of recruiting, training and compensating an employee to cover

employees’ learning and developmental needs, career progression, career pathing, talent

management, human resource business partnering, compensation and benefits management,

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organisational development, organisational culture, management of vision, mission and core

values, ethics, change management and a host of other emerging issues in people management.

It places much emphasis on employees and the business requirements and recognizes that no

organisation can achieve its strategic objectives without the efforts of the employees (Obisi,

2000). Therefore, of all the ‘‘4Ms’’ used by management of organisations that is, money,

machine, materials and man (employee) to achieve organisational goals and objectives; HRM

recognises employees as the most important and central in achieving such goals and objectives.

HRM, simply put, are those activities, policies, strategies, rules, and regulations, used by

supervisors, line managers and HR department and organizational leadership in getting and using

employees to work for the achievement of organisational set goals and objectives.

HRM has three parts or basic facts that it deals with. They are, the Organisation- (that

framework upon which every activity is interrelated); the Job- (manual, intellectual or technical

that an employee performs within an organisation); and Employee- (who mentally or otherwise

helps to carry out all interrelated activities needed in achieving organisational goals).

1.3. Differences between Human Resource Management and Personnel Management.

Personnel Management and Human Resource Management though used interchangeably by non-

professionals, are those functional clear-cut Human Resource Policies and Plans that form the

activities carried out by leaders (Directors, Managers, Supervisors etc.) in an organisation.

Human Resource Management, as the new version of Personnel Management, is the

management of people at work that ensures organisations do not just have the right Human

Resource Policies and procedures; but that Human Resource goals and organisational goals are

properly aligned and achieved. Whereas Personnel Management is the traditional administrative

function of organisation that exists to provide the personnel needed for organisational activities

and to manage the employee /employer general relationship. The major differences that exist

between Human Resource Management and Personnel Management are:

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▪ Personnel Management sees employees as just one of the factors of production that is

used to get designed output while HRM sees employees as valuable resources that need

to be cared for in order to achieve organisational goals.

▪ In Personnel Management, everything done is to satisfy the employee but HRM ensures

both employees’ and employers’ satisfaction by ensuring that organisational goals are

met.

▪ Personnel Management emphasises division of labour while HRM ensures teamwork.

▪ In Personnel Management, the top management makes rules and hands them down to all

but in HRM decisions are collectively made through employer/employee participation.

1.4. Key Elements of Human Resource Management.

Human Resource Management must be positioned as a key enabler with a view to achieving

organisational strategic intents through people. The key elements of effective management of

people are discussed below:

1.5.1. Human Resource Development.

Human Resource Development (HRD), is a key aspect of Human Resource Management

function that deals with the preparation of employees for competence to effectively deliver on

the current or future job or responsibility requirements. It is also a structured tool for

organisations to help employees build their personal and organisational skills, knowledge and

capabilities. The essence of Human Resource Development is to give employees the skills

needed to meet both their present and future job requirements.

1.5.2. Compensation Management

Compensation Management is an important function in the management of human resource,

which is concerned with the art and science of providing and rewarding employees for work

done based on the company’s Human Resource Policy in general and Compensation Policy in

particular. In the ever-changing work environment, it is becoming increasingly challenging to

attract, retain, engage and inspire employees to put in their best in pursuit of organisational

objectives. Under such challenges, formulating a good system of Compensation Management

and strategy is central to maintaining employees’ loyalty and give organisations competitive

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advantage. Compensation Management, simply put, is the tangible and intangible rewards

systems operated by an organisation in line with its business and people strategies, with a view to

attracting, retaining and motivating the right quality and quantity of employees towards the

achievement of its goals and objectives.

Compensation is that integral part of Human Resource Management which helps in motivating

the employees and improving organisational effectiveness. It practices vary significantly across

organisations and jobs. A typical compensation framework includes: base pay, allowances,

incentives, commissions, overtime pay, bonuses, profit sharing, merit pay, stock options, travel,

meals, staff bus arrangement, health management scheme, recognition scheme, product

sampling, social security schemes such as: pension, employees compensation scheme, life

insurance scheme and leaves with pay (such as maternity leave, sick leave, annual leave).

1.5.3. Job Analysis and Design

Job Analysis is the process of determining and recording all the pertinent information about a

specific job, including the tasks involved, the knowledge and skill set required to perform the

job, the responsibilities attached to the job and the abilities required to perform the job

successfully. Job Analysis differentiates one job from another. This term describes the process of

analysing a job or occupation into its various components, that is, organisational structure, work

activities, and informational content so that Managers can better understand the processes

through which they are performed most effectively. It has in it, the elements of some of the

definitions stated above. The process results in a relevant, timely and tailored database of job-

related information that can be used in a variety of ways

Job Analysis is a complete study of every job component and task elements that make up a job.

It is therefore a process of examining a job in order to bring out the duties, major tasks, and

expected output of the job holder as well as the relationships between various jobs in an

organisation. Job Analysis helps in determining specific tasks, operations and requirements of a

job. It takes a critical look at a job, its nature, what it takes to do the job, the qualities of the

would be job holder and the condition under which the job will be performed, in order to find out

what it takes to do a particular job. The essence is to ensure that the right people are put on the

right jobs.

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Job Analysis therefore, takes a holistic look at the skills, knowledge, abilities and responsibilities

required of an employee to successfully perform a job. It helps employers to have information on

(i) Job titles and code numbers (e.g. Administrative Assistant II), (ii). Job location, physical

setting, supervisor etc. (e.g. Apapa branch, #2 Malu Road, Marketing Manager), (iii). Specific

operation and tasks that make up an employee’s assignment, etc. (e.g. word processing and

spreadsheet preparation); (iv) Materials and Equipment the employee will use (e.g. computer,

Metals, plastics), (v). Nature of job operation (e.g. cleaning, washing, feeding) (vi). Employee

job requirements (e.g. experience, skills, educational qualification, ability to communicate,

mental capabilities, knowledge of Microsoft Word, Excel, Power Point). (vii). Job relationship.

(e.g.co-operation/team-work, direction, leadership from and for a job). (viii). Determination of

compensation to be paid, learning, training and development given to an employee.

Job analysis is done through (i). Interview, (ii). Observation, (ii). Questionnaires (iv). Employee

data storage.

The outcomes of Job Analysis are job description and job specification.

1.5.3.1. Importance of Job Analysis.

1. It fosters a clear understanding of the job components.

2. It is a useful tool in the determination of knowledge, skills and experience requirements

of the job.

3. The result of Job Analysis helps in matching the best fit job candidates to the most

appropriate jobs.

4. Job Analysis is the foundation for good job description and job specification

5. An effective Job Analysis brings out the learning/training and developmental

requirements of employees who are to handle the jobs.

6. It provides a good foundation for job evaluation and compensation management.

7. It provides foundation for performance standards setting for the purpose of employees’

appraisal.

8. It determines the overall purpose of the job and what the job holder is expected to

contribute.

9. It creates and classify job titles.

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10. It writes job descriptions.

11. It prepares organizations charts showing to whom the job holder reports and who reports

to the job holder (if any).

12. It determines quality assurance standards.

13. It writes both knowledge and performance-related employee evaluation measures.

1.5.3.2. Job Description

A Job Description is a structured and factual statement of job functions and objectives. It defines the

boundary of the job holder’s authority and includes the job title, department, job site and reporting lines.

Job Description is a written document that specifies the job, its objectives, the reporting lines,

responsibilities, authorities, environment, relationship with other jobs (internal and external), and hazards.

It is the end product of conducting Job Analysis. As a concise statement about a job, it gives an outline of

all that is required to perform a job such as title of a job, location of a job, authority (i.e. who does the job

holder repot to), responsibilities of the job holder and the skills, knowledge, capabilities, attitudes etc.

required of employees in carrying out their jobs.

1.5.3.3. Importance of Job Description

1. It is useful in job comparism within the organisation.

2. It spells out requirements for employees to effectively perform a job task.

3. It provides good guidance in recruitment process.

4. It is useful in identifying learning/training needs, as such helps in learning/training and

development of employees

5. Job Description links to the organisational competency profile makes performance

management to be more effective.

6. It provides better clarity on accountability and who is responsible for what job.

7. It gives employees a good sense of direction on the purpose and expectations of the job.

8. A well-written Job Description gives the job holder and the immediate line manager a

clear overall view of the position.

1.5.3.4. Job Specification

Job Specification details the experience, knowledge, aptitude, skills, attitude, educational and professional

requirement of would be job holder. It is an aspect of Job Analysis that extends from Job Description. It is

about the skills, attitudes, abilities, and other competencies required of an employee to perform a job. It is

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different from Job Description in that it focuses mainly on the human qualities required to perform a job

while job description on both human and non-human qualities required to perform a job

1.5.3.5. Job Design

The essence of Job Analysis is to develop an appropriate job design to ensure employees

efficiency, best fit and job satisfaction. Job Design is the method that decides the contents of a

job in terms of its duties, responsibilities, methods to carry out the job and the relationships that

should exist between employees and their superiors, subordinates and colleagues. Job Design is

an attempt to create a match between job requirements and human attributes which involves

organising the components of job and employees interaction at work. The objective of Job

Design is to help to integrate the needs of employees and the requirements of the organisation.

Needs of employees include job satisfaction, appreciation, healthcare etc while organisational

requirements are high productivity, efficiency, profitability etc.

1.5.4. Performance Management

Performance Management is a process that consolidates goals or objectives setting, performance

tracking or monitoring, performance appraisal, performance reporting/result communication, and

remedial action into a single common system, the aim of which is to ensure that the employees’

contribution is in alignment with the strategic objectives of the organization. It refers to all the

formal methods or procedures used to evaluate the personalities and contributions of employees

in an organisation. Performance Management covers employee goal setting, coaching, rewards,

employee development and performance evaluation.

It has elements of planning, monitoring, developing, assessing and rewarding.

Planning is the first element of the Performance Management process. It requires supervisors to

set performance standards and goals in order to help employees channel their efforts towards

achieving organisational or unit objectives. Performance planning culminates in a Performance

Plan.

Monitoring: The supervisor/line manager is required to monitor assignments and projects given

to an employee. It is done continually and involves measuring performance and providing

employees timely and ongoing feedback on their progress towards reaching their goals.

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Developing: this considers and addresses the developmental needs of an employee through

learning/training or assignment of higher responsibilities.

Assessing: the supervisor assesses or appraises the performance of employees in order to

compare their performance over time with the agreed performance standards.

Rewarding: Performance Management recognises employees, individually and as members of

a team, for their performance and contributions to organisational goals and objectives

1.5.5. Competency Based Assessment

Competency Based Assessment (CBA) is an evaluation process that determines the required

knowledge, skills and ability base of employees, to enable them effectively perform their

assigned jobs. Competence Based assessment helps organisations to deduce if an employee is

competent in relation to assigned job standard, that is, if an employee’s current knowledge, skills

and ability match the competency standard that the job requires.

1.5.5.1 Benefits of Competency Based Assessment

CBA is used to:

1. assess performance against standards or expectations.

2. determine if an employee matches the demand of his job role

3. determine the necessity of continuous learning and development with a view to helping

employees contribute to the organizational goals and objectives.

1.5.5.2. Challenges of Competency Based Assessment

1. Difficulty in gaining employee-supervisor confidence in the assessment parameters

2. Difficulty in designing a CBA instrument that can measure all competencies

3. Difficulty in Providing a CBA that will align with industry requirements and gain

employee-supervisor confidence.

1.5.5.3. Methods of Competency Based Assessment:

1. Observation (on- the- job assessment).

2. Project assignment (off- the- job assessment).

3. Written or oral Examination.

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4. Case study /oral presentation.

1.5.6. Participative Management

Participative Management

Participative Management is considered as a significant factor for the effectiveness of the

organisations and their employees. Through it employees feel dignified and honoured to take part

in decision making of the management. It provides sense of goal- achievement, increases morale

and enhances information about organisational policies. Organisations are expected to ensure

that employees get the best from their organisations while maximizing organisational resources.

For this to be achieved, participative management style is vital, strengthen commitment of the

team at every level to make it efficient. Participative Management is therefore a process in which

subordinates share significant degree of decision making power with their immediate superiors.

1.5.6.1. Requirements of Participative Management

A common misconception by managers is that Participative Management involves simply asking

employees to participate or make suggestions. Effective programmes involve more than just a

suggestion box. In order for Participative Management to work, several issues must be resolved

and several requirements must be met. Some of these requirements are:

i. Willingness to relinquish some level of Control

First, managers must be willing to relinquish some level of control to their subordinates; they

must feel secure in their positions in order for participation to be successful. Often managers do

not realise that employees' respect for them will increase instead of decrease when they

implement a participative management style.

ii. Deliberate Planning

The success of Participative Management depends on careful planning and a deliberate lying

phased approach. Changing employees' ideas about management takes time as does any

successful attempt at a total cultural change from an autocratic style of management to a

participative style. Long-term employees may resist change, not believing they will work. In

order for participation to be effective, managers must be sincere and honest in implementing the

programme. Many employees will need to consistently see proof that their ideas will be accepted

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or at least seriously considered. The employees must be able to trust their managers and feel their

views are respected.

iii. Open Mindedness

Successful participation requires managers to approach employee involvement with an open

mind. They must be open to new ideas and alternatives in order for Participative Management to

work. It is important to remember that although the manager may not agree with every idea or

suggestion an employee makes, how those ideas are received is critical to the success of

Participative Management.

iv. Employees Willingness to Participate

Employees must also be willing to participate and share their ideas. Participative Management

does not work with employees who are passive or simply do not care. Many times employees do

not have the skills or information necessary to make good suggestions or decisions. In this case it

is important to provide them with information or training so they can make informed choices.

Encouragement should be offered in order to accustom employees to the participative approach.

One way to help employees engage in the decision-making process is by knowing their

individual strengths and leveraging on them. By guiding employees towards areas in which they

are knowledgeable, a manager can help to ensure their success.

Before expecting employees to make valuable contributions, managers should provide them with

the criteria that their input must meet. This will aid in discarding ideas or suggestions that cannot

be implemented, are not feasible, or are too expensive. Managers should also give employees

time to think about ideas or alternative decisions. As employees sometimes do not do their most

creative thinking on the spot.

v. Integration of Employees' Suggestions into Final Decisions

Another important element for implementing a successful Participative Management style is the

visible integration of employees' suggestions into the final decision or implementation. Offering

employees a choice in the final decision or implementation is important because it increases their

commitment, motivation, and job satisfaction. Sometimes even just presenting several

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alternatives and allowing employees to choose from them is as effective as if they thought of the

alternatives themselves. If the employees' first choice is not feasible, management might ask for

an alternative rather than rejecting the employee’s input. When an idea or decision is not

acceptable, managers should provide an explanation. If management repeatedly strikes out their

ideas without implementing them, employees will begin to distrust management, thus halting

participation. The key is to build confidence so employees’ ideas and decisions become more

creative and sound.

1.5.6.2. Benefits of Participative Management

A participative management style offers various benefits at all levels of the organization. By

creating a sense of ownership in the company, Participative Management in-stills a sense of

pride and motivates employees to increase productivity in order to achieve their goals.

Employees who participate in the decisions of the company feel like they are a part of a team

with a common goal; and find their sense of self-esteem and creative fulfillment heightened.

Managers who use a participative style find that employees are more receptive to change than in

situations in which they have no voice. Changes are implemented more effectively when

employees make contributions to decisions. Participation keeps employees informed about

upcoming events so they will be aware of potential changes. The organizations can then place

itself in a proactive mode instead of a reactive one, as managers are able to quickly identify areas

of concern and turn to employees for possible solutions.

Participation helps employees gain a wider view of the organisation. Through learning/training,

development opportunities, and information sharing, employees can acquire the conceptual skills

needed to become effective managers or top executives. It also increases the commitment of

employees to the organisation and the decisions they make. Creativity and innovation are two

important benefits of participative management. By allowing a diverse group of employees to

have input into decisions, the organisation benefits from the synergy that comes from a wider

choice of options. When all employees, instead of just managers or executives, are given the

opportunity to participate, the chances is increased that a valid and unique idea would emerge.

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Participative Management System is most effective where a large number of stakeholders from

different walks of life are involved coming together to make a decision to benefits everyone.

Some examples are decisions for the environment, health management system, work process and

performance indicators and other similar situations. In this case, everyone can be involved.

Organisations benefit from the perceived motivational influences of employees in Participative

Management System (PMS). When employees participate in the decision making process, they

improve understanding and perceptions among colleagues and superiors, and enhance human

resource value in the organisation

Participatory decision making by the top management team ensures the completeness of

decision-making and increases team members' commitment to final decisions. In a participative

decision making process, each team member has an opportunity to share their perspectives, voice

their ideas and tap their skills to improve team effectiveness. As each member, can relate to the

team decisions, there is a better chance of their achieving the results. There is a positive

relationship between decision effectiveness and corporate/organisational performance.

The implementation of Participative Management System (PMS) techniques has been shown to

have a wide array of organizational benefits. Researchers have found that it may positively

impact the following:

• Job satisfaction

• Organisational commitment

• Perceived organisational support

• Organisational citizenship behavior

• Labour-management relations

• Job performance and organisational performance

• Task productivity

• Organisational profits

• Employee absenteeism

Participative Management has become very important because no one manager or a group of

managers has monopoly of knowledge to address all organisational issues. The problems facing

25

organisations globally require the combined expertise of all the members of the organisation.

Participative Management Style survives better where the physical, emotional and intellectual

abilities and capabilities of employees are used by management in decision making to resolve

business problems and increase performance in such a way that the employees will have

psychological satisfaction of their input.

1.5.6.3 Challenges of Participative Management

1. It takes time to obtain a decision especially if one party is resistant to change.

2. It can bring division and disagreement even among employees due to conflict of

interest

3. It is more costly to bring all employees together for decision making process.

4. It can be used by management to manipulated employees either consciously or

unconsciously.

1.5.7. Employee Relationship Management (ERM)

Employee Relationship Management is an established strategy, approach, programmes and

initiatives to effectively manage how organisations relate to prospective and existing employees.

It offers mutual values for employees and employers; for employees it offers satisfaction of their

individual needs, while for the employers it increases employees’ attraction to the organisation,

helps employee retention and increases job performance of employees. It provides genuine value

for individual employees; organisations can create a satisfied and loyal workforce which in turn

creates organisational value through continuous motivation and performance.

Employee Relationship Management should create organisations with a competitive advantage in

both the relevant labor markets and their generic markets. To avoid serious labor market

shortages, ERM builds relationships with not just the current employees, but also with former

employees and potential employees.

Employee Relationship Management is done through the following processes:

1. Collaborative process: This refers to the interaction between organisation and

employees all through employment life cycle. Employees are encouraged and empowered

to play active role in decision making on activities that affect their terms and conditions

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of service. This provides a link between Employees’ Relationship Management and

Participative Management System.

2. Operational process: This refers to all administrative activities in relation to the

operations of the business in all facets. The relationship between managers and associates

within and across departments is determined by the degree of interaction and relationship

between jobs and reporting lines.

3. Analytical process: This refers to the collection, preparation and provision of in-depth

information required to support decisions in operational and collaborative employees’

relationship management. The information focuses on individual employee preferences,

history of individual operations and collaborations, and future operations and

collaborations.

1.5.8. Career Development (CD)

Career Development is a continuous process through which individual employee progresses

through stages that are characterised by special or unique issues, tasks and theme. Career

Developments involve two separate processes: (1) Career planning: This is the activities

performed by an individual employee under the assistance and supervision of supervisors and

line managers, to assess his or her skills and abilities in order to establish a realistic career plan.

Career plans are implemented through organisation’s training programmes. (2) Career

management: - This is the process or a method taken to achieve the plan, and generally focuses

on all what orgainsations do to foster employee career development. There is a relationship

between career development and learning and development activities. With career management,

employees are provided with opportunities to satisfy their aspirations and develop their abilities.

1.5.9. Talent Management

Talent Management is not a new concept and has in fact been called Human Capital

Management, employee relationship management and workforce management by different

scholars over the years. Talent Management is the process for managing people in organisations,

which ensures the right person is in the right job at the right time. Organisations use it as a

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deliberate and systematic effort to ensure leadership continuity in key positions, thereby

encouraging individual advancement and increasing employee retention.

Talent Management is about developing a pool of skills, giving employees the opportunity to

widen the scope of their expertise and experience, while at the same time providing organisations

with the most appropriate manpower to grow and evolve (Powell, 2008). It is also the people

management initiatives and opportunities that are made available to organisations. Such

processes can be formal or informal, structured or unstructured, explicit or implicit. Whatever the

combination, these processes constitute an organisation’s Talent Management System.

A talented person is an efficient employee with a high potential, who can have a significant

impact on the organisation's efficiency. Talents are key individuals who are competent and being

positioned for higher or top roles in organisations. Therefore, talent is anyone who is able to

contribute to achieving organisation's objectives by exceeding the performance standards and

showing high potential.

1.5.9.1. Benefits of Talent Management

1. Talent Management programmes help organisations in the acquisition, retention,

motivation and development of their people competencies for current and future

organisational success. Talent Management is used in developing the workforce

according to the organisation’s future needs.

2. Talent Management is a useful tool for the employer to strengthen its brand with a view

to attracting and retaining high potential employees.

3. It is also useful as a tool for succession plan for critical roles.

4. Talent Management scheme and initiatives, if properly implemented, result in talented

employees contributing to the fulfilment of organisation’s strategy and reduces the cost of

hiring new employees.

5. It positions the organisation as an employer of choice for current and potential

employees.

6. It promotes internal recruitment and staff motivation, which in turn reduces labour

attrition.

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1.5.9.2 Challenges of Talent Management

1. Creation of positions in organisations that will appeal to talents. Most organisations are

struggling to create roles and opportunities that will appeal to the needs and preferences

of different talents in the organisations.

2. Lack of robust talent pool (internal and external) from which future leaders are selected.

3. High labour turnover of middle level managers whom organisations have invested on

with the hope of future placement in leadership roles.

4. Difficulty in finding employees with global leadership skills (people management,

business breadth, global diversity sensibility etc.) as against getting those with just

technical or functional skills.

5. Difficulty in creating a work place that will accommodate those who are not high flyers.

6. External market forces (wages, bonus, commissions etc.) that influence labour turnover.

7. The challenges of organisations designing talent management programs that will attract,

retain, motivate, develop employees and thus reduce labour turnover.

1.5.10. Employee Engagement.

Every organisation tries to build and maintain a culture that encourages employees to be actively

involved in the business activities through total employee commitment-which helps to deliver a

tangible improvement to organisation performance. For organisations to have Employee

Engagement, they must see their employee as key players in their business growth and

profitability. Employee Engagement is a two-way relationship, with mutual benefits for the

employees and employers, improving employees working lives and enhancing employee

performance and the way they feel and act towards the organisation. Employee Engagement is,

therefore, the emotional commitment and attachment that employees have towards their

organisation and the actions they take to ensure the organisation’s success. Engaged employees

demonstrate care, dedication, enthusiasm, accountability, and are results focused.

Employee Engagement is the level of commitment and involvement an employee has towards

their organisation and its values. An engaged employee is aware of business context, and works

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with colleagues to improve performance within the job for the benefit of the organisation. The

organisation must work to develop and nurture engagement, which requires a two-way

relationship between employer and employee. Thus, Employee Engagement is a barometer that

determines the association of a person with the organisation. The primary behaviours of engaged

employees are speaking positively about the organisation to co-workers, potential employees and

customers, having a strong desire to be a member of the organisation, and exerting extra effort to

contribute to the organisation’s success.

In Employee Engagement, employees must be willing and able to help their company succeed,

using discretionary effort on a sustainable basis. The reason is that employees with enthusiasm

get involved in their job with commitment and positive attitude. Engagement, therefore, means

employees must care and use their discretionary effort to help the organisation succeed. For

Employee Engagement to be effective management must create good working environment and

reward system, two ways communication should be encouraged between management and

employees, the right man must be assigned the right job.

1.5.10.1. Benefits of Employee Engagement

1. Employees who are engaged stay behind to get a job done because they are committed

and feel accountable.

2. They stand up for their company because they are proud to be a part of it.

3. They find solutions to problems facing the organisation and create ideas to improve the

organisation.

4. An organisation’s capacity to manage Employee Engagement is closely related to its

ability to achieve high performance levels and superior business results.

5. Engaged employees will stay with the company, be an advocate of the company and its

products and services, and contribute to bottom line business success.

6. Engaged employees also normally perform better and are more motivated.

7. There is a significant link between employee engagement and profitability.

8. Employee Engagement is critical to any organisation that seeks not only to retain valued

employees, but also increase its level of performance.

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1.5.11. Knowledge Management

An Organisation’s most valuable resource is its employees. Therefore, how well an organisation

performs will depend, among other things, on how effectively its people can create new

knowledge, share knowledge around the organisation, and use that knowledge to benefit the

organisation. Knowledge Management is applying the collective knowledge of the entire

workforce to achieve specific organisational goals. The aim of Knowledge Management is to

ensure availability and usability of required sets of knowledge for the actualisation of

organisational objectives.

Knowledge Management establishes a work environment in which employees are encouraged to

create, learn, share, and use knowledge as a team for their individual benefits, their organisation,

and the organisation’s customers. Therefore, Knowledge Management is a process that

emphasises generating, capturing and sharing information know-how and integrating these into

business practices and decision making for greater organisational benefits (Caroline and De

Brún, 2005).

Knowledge Management, according to Caroline and De Brún, (2005), consists of the following

knowledge activities:

1. Knowledge Acquisition –getting knowledge from human or system experts

2. Knowledge selection- taking only relevant and applicable knowledge for usage

3. Knowledge internalisation-converting acquired knowledge into useful and needed

organisational format.

4. Knowledge utilisation- application of knowledge acquired to solve organisational

problems.

5. Knowledge transfer- transmitting acquired knowledge to others

6. Knowledge creation- formulating new ideas from acquired knowledge.

1.5.11.1. Benefits of knowledge Management:

1. It ensures that people have the knowledge they need, where they need it and when they

need

2. It provides the right knowledge, in the right place and at the right time.

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3. It provides organisations with a history of organisational development and facets of

growth in jobs and structure.

4. It aids organisational continuity and required knowledge is being transferred from one

generation of employees to another.

5. It improves the speed of learning and development among employees.

6. It reduces the error rate in job performance and enhances overall performance of the

organisation.

1.5.11.2. Limitation of knowledge management:

1. Knowledge resides in people’s heads, and managing it optimally may be difficult as some

people may have difficulty in expressing and transferring the acquired knowledge.

2. The absorptive capacity of people is another major challenge to Knowledge Management.

Even when the knowledge is made available and usable, those that are to utilize the

required knowledge may not have the capacity to understand and apply the knowledge.

3. Ability to transfer knowledge on the part of those who are required to impact others may

also be a challenge to knowledge management.

4. Apart from the ability to transfer knowledge, the willingness to do so among some

professional, for reasons best known to them, is another major challenge to Knowledge

Management. This is very common among expatriates who are contractually and

statutorily required to transfer knowledge and skills to the nationals within a specified

period of time.

1.5.12. Employee Retention

Employee turnover is a big concern to employers of labour. Employees are willing to work away

from organisation just for a little better offer/pay. The cost of employee turnover, especially key

employees often has huge impact on business performance and business in general, innovation,

standard and consistency in production or service delivery. Employee Retention is, therefore, of

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importance to management because it is associated with cost of employee turnover and other

non-monetary cost relevant to the organisation.

To retain talented /key employees, concrete actions need to be taken; actions such as more pay,

visible job security, better relation with management, career prospect (career move), comfortable

work environment, recruiting the right employee and placing them on the right job,

learning/training and development of skills etc. As such, organisation retention of employee is

one important factor that helps retain employees in an organisation by giving them opportunity to

learn and try new things. With Employee Retention, employee turnover is reduced.

Employee Retention is keeping the numbers of employees an organisation wants to keep and not

losing them for any reason. Employee Retention is the effort to keep quality employee in

organisation. Organisations should of necessity, do all within their power to encourage

employees to remain in the organisation as long as they want.

1.5.12.1. Benefits Employee Retention

1. It reduces and saves cost of recruitment for organisations.

2. Employee Retention helps to increase profits of organisations.

3. It aids organisations’ career planning for employees.

4. Employee Retention not only helps organisations to attract but also helps build new hire’s

commitment.

5. It helps to increase employees’ loyalty and commitment to the organisations.

1.5.12.2. Determination of employee retention rate

The calculation of retention and turnover rate is used by organisations to determine employee

stability. It can be done monthly, quarterly, or annually by dividing the number of employees

staying in the organisation in a specified period by the number employees at start of that period

and multiplying by 100.

Formula = Number of employees who stayed (in a period) X 100

Number of employees at the start of the period

90 X 100

100 1

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= 0.9 X 100 = 90

Retention Rate therefore, is 90%.

This implied that 90% of the employees were retained during the period under review

1.5.13. Social Entrepreneurship

Social entrepreneurs are people with new ideas to address societal problems. They are relentless

in the pursuit of their vision; simply will not take no for an answer, nor give up until they have

spread their ideas as far as they possibly can. Social entrepreneurs use not –for- profit

professional innovative and systematic approach to resolve social market failure and create

opportunities for organisations. That systematic, innovative and not- for -profit approach used by

social entrepreneur to bring systematic changes that resolve market failures and grasp

opportunities is called Social Entrepreneurship.

Social Entrepreneurship is that process involving the use of initiatives and combination of

resources to pursue opportunities as to create social change and address social needs. With Social

Entrepreneurship, innovative solutions to immediate problems are created; ideas, resources,

capacity and social agreement required for sustainable social transformation are mobilised.

People engaged in Social Entrepreneurship must have entrepreneurial behaviour to achieve

social mission; be able to create a coherent unity of purpose and action that will address moral

complexity; they must be able to recognise social value creating opportunities and be good at key

decision making.

With Social Entrepreneurship employees have opportunities to challenge, ask questions and

rethink concepts and assumptions in their organisation’s business management. Social

Entrepreneurship promotes social values and development that captures economic values. Social

Entrepreneurship as a not- for-profit initiative uses alternative funding strategies or management

scheme to create social value which integrates both economic and social values in an

organisation. It is used mainly as a social practice of commercial business by those engaged in

cross sector partnership; and has the characteristics of innovativeness, pro-activeness and risk

taking. In all, Social Entrepreneurship is close to people and communities and are embedded in

economy of states for the general good of the society.

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1.5.13.1. Benefits of Social Entrepreneurial skill to organisations.

a. It helps organisations to increase their activity scales and grow their resources.

b. It increases and makes efficient the service deliver and operations of organisations.

c. The innovation and creativity associated with social entrepreneurial skill increases the

revenue of organisations.

d. It also helps in building the brand or image of organisations.

1.6. Summary

People management practices have gone through evolutions to arrive at today’s Human Resource

Management and Practices. The reason is not farfetched; people are the most valuable, i.e.

greatest assets of any organisation. Human Resource Management places high emphasis on

employees becoming competent and achieving organisational goals. These competencies are

achieved through building the skills, knowledge and abilities of the employees. For Human

Resource Management not to fail in achieving its objectives of making employees competent to

drive organisational objectives; all elements of Human Resource Management practices must be

brought in to play their role in People Management.

Practice Questions.

1. Identify the differences between Personnel Management and Human Resource

Management Practices.

2. One of the outcomes of Performance Management System is reward; identify clearly

relationship between Compensation Management and Performance Management.

3. Demonstrate your understanding of the differences between Human Resource

Development and Human Resource Management.

4. Explain how Career Development aids Employee Retention in organisations.

5. In your own words, write short notes on the following:

a. Employee Engagement.

b. Participative Management.

c. Competency Based Assessment.

d. Employee Relations Management.

e. Knowledge Management.

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CHAPTER TWO

WORKFORCE PLANNING



▪ carry out workforce audit;

▪ manage workforce planning processes;

▪ apply workforce planning techniques and instruments; and

▪ identify workforce requirements and benefits to both employees and organisation.

2.1. Introduction.

Every organisation wants to be successful and profitable. To achieve success and profitability,

organisations need to maintain their most efficient employees, make profits, and generally meet

their objectives and goals of being in business. For organisations to be able to do these,

workforce planning becomes very important. Workforce Planning is the method used by

organisations in analysing and evaluating the human resource available to the organisations.

Their competencies in terms of knowledge, skills and abilities are reviewed to ensure the right

people are placed on the right jobs, in the right number. Workforce Planning is used by

organisations to know the number and type of people who meet present and future people

requirements of their businesses. Effective Workforce Planning must align the needs of the

organisation to that of its employees because the success of any organisation depends on its

having good employees. Workforce Planning, therefore, is the method that places right

employees with right skills and education on the right jobs and time to meet the organisation’s

strategic plan and objectives.

Workforce Planning is also a process of forecasting future human resource requirements of an

organisation to ensure that the organisation has the required number of employees with the

necessary skills to meet its strategic objectives. It is a proactive process that anticipates and

influences an organisation’s future by forecasting the supply of and demand for employees, and

developing plans and activities to satisfy the needs of the organisation. It helps an organisation

36

achieve its strategic goals and objectives by recruiting new employees, avoiding shortages and

surpluses of employees, as well as controlling or reducing labour costs. The process of workforce

planning includes: analysing forecasted labour supply, forecasting labour demands and then

planning and implementing HR programmes to balance supply and demand. Lack of Workforce

Planning within an organisation can result in high labour’ costs. This chapter addresses strategies

that organisations must use to have effective Workforce Planning.

2.2. Workforce Audit.

Workforce Audit is a system or method used by organisations to identify and analyse

organisations’ needs and requirements from their employees to meet organisational goals and

objectives. These needs could be in terms of types, qualities and quantities of employees. The

essence of workforce auditing is to ensure that the right people are on the right job, in the right

number and at the right time. Workforce Audit only succeeds, when the qualities and quantities

of employees needed are understood by all, as the obtained information is used by organisations

to plan for present and future development of the organisations. Failure of any organisation to

understand the qualities and quantities of the employees means that the organisation will find it

difficult to get useful information needed for its development and growth.

Workforce Audit is done using the following steps:

1. Review the approved and operational organogram of every business unit and department

to gain good level of understanding of manpower requirements for every unit of the

business.

2. Review the approved and operational workforce plan to ascertain alignment with

Management’s expectations.

3. Review the existing HR policies and procedure to ascertain the level of compliance.

4. Review the current manning level against the approved manning level.

5. Review employees’ personal employment records to confirm the eligibility of each

employee to their assigned jobs.

6. Compare job description to actual job performed. This aids job description updates.

7. Carry out a competency analysis of the workforce to determine their levels of knowledge,

skills and abilities to effectively deliver on their current assignments.

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8. Review payroll records and other benefits packages to see the appropriateness of pay

packages. This not only helps to see that employees are properly placed but also ensures

equal packages for equal or similar jobs.

9. Review departmental employees’ models, to know the functionality of each department

and its employees and their contributions to the general organisational goals and

objectives.

10. Engage relevant supervisors and line managers in the process with a view to gaining first-

hand information.

11. Make out the workforce audit report highlighting the purpose, methods, findings and

recommendations for management review, discussion and decision.

2.3. Workforce Planning Levels and Process.

The Workforce Planning Process helps organisations to assess the composition and diversity of

employees (i.e. assess employees’ jobs /skills, strengths and weakness). It organises programmes

and policies that help to make employees work better. In all, Workforce Planning helps

information gathered to be analysed and presented to management for both present and future

use.

Workforce Planning Process involves the following levels:

1. Strategic planning level: here the environment of the organisation, its mission,

strategies, weakness and strengths are scanned through with a view to having vast

idea of what the needs of the organisations are.

2. Operational planning level: the business process should be engineered, resources

planned and strategies employed.

3. Forecasting requirement level: future programmes to be used should be planned,

future strengths and weakness should be envisaged and planned for.

4. Action plan level: need gaps noticed should be reconciled through learning/training

and development, recruitment, staffing, promotion, succession planning etc.

5. Feedback and evaluation level: evaluation of all programmes is done and feedback

taken.

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Workforce Planning Process involves doing the following:

1. Study the organisational goals and objectives for the period under consideration.

2. Review the short, medium and long term plans or strategies of the organisation to

understand the workforce requirements.

3. Review the current organisational structure from all units and departments.

4. Review the current manning level in very unit and department.

5. Establish a template for the workforce plan to highlight job role, job level/grade.

incumbent, competency level, cost, number required, actual number, variance (positive or

negative), action plan, time line for the action, responsibility by, and remarks.

6. Engage the relevant supervisors and line managers to analyse the manpower requirements

for every role, unit and department for the short, medium and long term.

7. Constitute a cross functional workforce review committee to objectively appraise the plan

from every department.

8. Identify the sources of workforce supply to bridge the identified gaps.

9. Populate the established workforce plan template and check for completeness.

10. Present the workforce plan for management’s consideration and approval.

11. Communicate the approved plan to all business unit leaders.

12. Monitor the implementation of the plan to ensure that business workforce requirements

are optimally met.

2.4. Determination of Manning Requirements.

The manning process starts with the consideration of organisational objectives and strategies;

and then the assessment of both external and internal human resource needs. The supply sources

must be determined and forecasts developed to identify the mismatch between human resource

supply and human resource demand. Forecasting the future supply of human resource is

predicting the availability of employees both present and potential, their skills, abilities,

experiences and other capabilities obtain from organisations’ employees past records gotten from

human resource information system of the organisation. The forecasting is done to address the

imbalance in both short and long term, and to develop workforce plan.

Forecasting requirements involves the use of mathematical projections to make an inventory of

present manpower resource and assess the extent to which the human resource is employed

39

optimally. Forecasting considers the nature and conditions of external labour market and how

qualified the persons who will fill available vacancies in procuring competent personnel.

Anticipating manpower problems by projecting present resources into the future and comparing

them with the forecast of requirements to determine their adequacy, both quantitatively and

qualitatively is next. Last to be done is planning the necessary programmes of requirement

(selection, training, development, utilisation, transfer, promotion, motivation and compensation).

2.5. Line Managers’ Role in Workforce Planning

Line managers occupy central positions in realising core organisational objectives and therefore

have a more direct impact on their team-mates in terms of motivation, commitment and

discretionary behaviour. Line managers perform such responsibilities as recruitment,

performance management and appraisals, learning/ training, supporting and consulting

subordinates about important decisions with sole aim of influencing employee attitudes and

behaviour with regards to their working lives. The line managers are primarily responsible for

day-to-day management of employees’ activities such as employees’ disciplinary action,

coaching, performance management, and promotion decisions.

The following are roles of line managers in Workforce Planning:

1. They identify and discuss workforce requirements.

2. Line managers should not only show interest in the identified requirements gaps but also

support their employees to bridge the gaps.

3. They develop learning/training programmes, train and coach employees.

4. Line managers should actively participate in their organisation’s manpower strategy and

development process.

2.6. HR Professionals’ Role in Manpower Planning

In most organisations, HR Professionals are not just primarily responsible for activities that

involve governance or regulatory issues (industrial relations, compensation, remuneration and

benefits) but are also involved in monitoring the workforce (human resource planning, diversity

management). The responsibilities of HR Professionals in respect of Workforce Planning

include:

1. Assisting and counseling line managers to plan and set objectives.

40

2. Collect and summarise workforce data, keeping long-term objectives and broad

organisational interests in mind.

3. Monitor and measure performance against the plan, and keep top management informed

about it.

4. Providing empirical data for effective workforce and organisational planning

2.7. Executive Roles in Workforce Planning

To avoid an organisation’s inability to accomplish short-term operational plans or long-range

strategic plans as a result of ineffective Workforce Planning, top-level executives are saddled

with responsibility to champion Workforce Planning that will influence the success of the

organisations. The plans are usually prepared by the Human Resource Division in consultation

with other corporate heads. The executives take the responsibility and accountability for

manpower of various divisions with concrete aim of providing organisation-wide forecasting and

planning. The executives also offer counsel and advice to heads of departments and coordinate

the various manpower estimates from time to time.

2.8. Workforce Plan Templates

Most of the time, organisations engage in Workforce Planning annually using various documents

they generated. The documents include: Annual budget, Strategic plan, Funding proposals etc.

Based on an organisation’s unique planning cycle, the following methods should be used to

determine Workforce Planning:

1. Identifying business strategy and needs: this involves considering pressures and

opportunities that come from competition, technology, increase in product demand, and

workforce change.

2. Conduct a job analysis by reviewing the current workforce: do a description of what

is needed of the employees in terms of skills, experience, and knowledge needed to

function. Identify any skill, ability, and knowledge gap noticed. Then find out what the

current employees want and what they think the position would involve.

41

2.9. Spreadsheet Template of Workforce Plan

43

2.10. Business Strategy and Workforce Plan.

Workforce Plan does not occur independently of business strategy within an organisation. The

Workforce Plan of any organisation must align with the overall goals and objectives of such an

organisation. Workforce Plan must also align with both the long-term and short-term strategic

plans set by the organisation. Any organisation’s strategic decision to either expand, redirect,

diverge, divest, partner, or merge will have an associated effect on workforce expectations and

plans of the organisation. Organisations that do not link their strategic decisions with workforce

plan will struggle with its short and long term goals and objectives.

The Workforce Plan is divided into the following resultant business or operational plans/strategy:

1. Recruitment plan- this shows the number and type of employees required and when

they are required.

2. Redeployment plan – this shows the way for future movement in terms of

learning/training and transfers.

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3. Redundancy plan – this shows who is redundant, when and where they are is redundant,

the learning/training plan, and where retraining will hold. It also shows plans for golden

handshake, retrenchment, lay-off, etc.

4. Learning/Training plan – this shows the learning/training required the beneficiaries, the

benefits, where it will hold and total cost.

5. Productivity plan- indicates reasons for employee productivity and reasons for reducing

employees’ costs. It is done through work simplification studies, mechanisation,

productivity bargaining, incentives and profit sharing schemes, job redesign, etc.

6. Retention plan - indicate reasons for employee turnover and indicate strategies to avoid

wastage through compensation policies, changes in work requirements, and improvement

in working conditions.

7. Check/reviews points - make constant reviews and changes to take care of important

things (costs, compensation, retrenchment, etc.).

Benefits of Workforce Planning

1. With Workforce Planning, organisations have the right number of people with the right

knowledge, skills, and abilities, in the right positions and at the right time.

2. It aligns human resources planning with strategic planning of organisations to ensure that

employees are aligned with organisational goals and objectives.

3. It aids the understanding how employees are changing in terms of skills, interests, and

performance; how well current employees are prepared for future job requirements, and

identifying potential gaps in their capabilities.

4. It develops strategies in terms of recruitment, retention, learning/training, etc. to solve

human capability problems.

5. It reduces personnel costs, gives better basis for planning employee development, and

improves the overall organisation’s strategic plan

2.11. Summary

Management of organisations helps the line managers and supervisors to tackle workforce issues,

and align their workforce requirements with the objectives and goals of the organisation through

the development of clear workforce plan. The workforce plan identifies employee’s capacity

45

gaps and ways of filling them. The process of getting a workforce plan is called Workforce

Planning. Workforce Planning helps to guide mangers/supervisors on how best to organise and

deploy effective and strong human resource. Another way of tackling the workforce issues is

through the use of succession planning. Succession planning helps organisations to address

issues that will drive employees change, identify and overcome barriers to accomplish strategic

employees’ goals.

Workforce Planning is distinct from Succession Planning, in that it focuses on the talent of

present employees of the organisation and what the organisation will need from the employees as

talents in the future. Succession planning on its part addresses the development of employees’

leadership capabilities within the organisation or recruiting new employees that will step up as

key managers retires. Workforce Planning therefore is the systematic process that helps

organisations to identify and address the gaps between the workforce of today and their

tomorrow human resource requirements. It lays the foundation for strategic human resource

decisions, and requires strong management leadership and employees cooperation to support

employees’ efforts.

Practice Questions

1. Justify the need for workforce planning in HR management.

2. Demonstrate your understanding of workforce planning process.

3. Highlight the linkages between workforce planning and business strategy.

4. Attempt to design a comprehensive template for workforce plan for your organisation.

5. In your own words, explain the role of Line Managers and Top Management in a

workforce planning exercise.

46

CHAPTER THREE

CAREER MANAGEMENT



▪ define career management;

▪ state the different levels of career progression in an organisation;

▪ discuss categories of job and career management processes;

▪ state the career practices; and

▪ explain the benefits of career management to both the employee and the employer.

3.1. Introduction:

Career is a sequence of jobs or activities whether planned or unplanned involving employees’

advancement, commitment and personal development over a period of time. It is a pattern of

work -related experiences that an employee will have in the course of their work-live.

In today’s world, businesses operate in a rapidly evolving environment characterised with scarce

talent hence it is difficult to retain talents within organisation without a well cut-out career

management policy and practice in place. Employees look forward to jobs that keep them highly

engaged and fulfilled.

Career Management is an aspect of Talent Management that allows employees’ to pursue those

courses of actions in their working life that give them the needed career fulfilment. Lack of

proper Career Management within an organisation gives an employee reasons to move to other

organisations where the achievement of career fulfilment may be obtainable.

The objective of Career Management is to give employees the much-needed job fulfilment that

will motivate them to achieve the objectives of the organisation. Career Management can be

defined as an organisational process which integrates the career needs of employees to career

needs of the organisation. It is focused on shaping the career progression of employees in line

with the business needs and objectives, employee’s performance potential and preferences. It

involves activities such as employee profiling, career counselling and career development.

47

3.2. Career Management Process

Career management process from organisational perspective has the following steps:

1. `Career management policy: determines the career management policy - how

employees are recruited, developed and retained in line with the business

objectives and the employees’ potential performance interest. It answers the

questions: should recruitment strategy be internal or external? Should employees

be high performers or not. What learning/training and development should be

given to employees?

2. Talent audit: this involves taking stock of the available talents in an organisation

and making forecast of needed potential talents. It gives the basis for succession

planning and career planning.

3. Performance and potential assessments: evaluate performance and potential

with a view to identifying learning/training and developmental needs of

employees, giving individual employee career guidance and identifying

employees’ with potential for growth within the organisation.

4. Career planning: defines the career paths that employees can take to advance

within an organisation. It can be defined in terms of the competencies required to

perform and progress on the career ladder. This is a very critical step as it informs

the developmental plan of employees within the organisation.

The steps in career management process from the perspective of employees are:

1. Self –assessment: this process involves employees being able to determine their career

interests, values, aptitudes and behaviour

2. Reliability check: this process involves employees evaluating their skills and knowledge,

and where they fit into the organisation.

3. Goal-setting: this process involves employees developing short and long term career

objectives.

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4. Action plan-employees at this level determine how they will achieve their long and

short term career goals by mapping out a personal development plan.

3.2.1. Employees’ Role in Career Management

1. Employees are responsible for assessing themselves.

2. Creating plans within the context of organisational realities and,

3. Carrying out certain development activities that will enable them progress in their

career.

3.2.2. Employers’ Role in Career Management

1. Employers play coaching and facilitation roles in the career management process.

2. Employers use career counselling, workshops, self-development materials, and

assessment programmes to support the career management and career

development of employees.

3. Managers support their employees and play crucial roles in helping them

understand the organisation’s needs and requirements.

4. The employer provides tools, resources and structures to support the career

management process.

3.3. Stages of Career Development.

These are the various phases employee goes through in the course of their career, of

which there are basically five (5) stages as highlighted below:

1. Exploration: this is the stage at which one transits from formal educational

institution to a work environment. At this stage, individuals are unclear about what

career they want for themselves, hence the decision of what career choice to make is

usually influenced by parents, environment, peers or financial resources. This is a

period when individuals develop certain expectations about their careers; these

49

expectations are usually unrealistic because at this stage they have little or no

knowledge about where they are headed.

2. Establishment: this is the stage where individuals get a job and begin to learn about

what the job entails as well as getting a real taste of success or failure in the work

environment. It is a period characterised with anxieties, uncertainties, risks, making

mistakes, and learning from them.

3. Mid- Career: at this stage, individuals may continue to improve their performance on

the job or begin to deteriorate. At this point, the individual is expected to have moved

from an apprentice status. Those who make successful transition are given greater

responsibilities and rewards. For some others, it might be a time for re-evaluation, job

change, realigning priorities and pursuit of other goals.

4. Late Career: at this stage, individuals have attained a position where they are being

looked up to by younger employees. They assume the position of coaches, mentors,

sharing the knowledge and experience they have gained over the years. It is a stage

when individuals have little need for career mobility, and start looking forward to

retirement and exploring the opportunities of doing something else.

5. Decline: this is the final stage in one’s career. It is the point at which an individual

retires from active service. It is as critical as any of the other stages highlighted

above, hence it needs to be properly managed by the organisation.

3.4. Career Pathing

Career Path is a sequence of job positions and experiences that lead to specific career goals. It

sets out a sequence of positions/posts to which employees can be promoted, transferred and

rotated. Career Paths give employees job progression opportunities with which to pursue their

career goals. Career Pathing is informed by the career goals set by individual employees during

the Career Planning phase, the career progression structure, and career development

opportunities available to employees in an organisation. Career Paths communicate to

employees’ specific competencies and the required level needed for each job role. These

50

competencies form the basis for career development, career progression and succession planning

within an organisation.

3.5. Career Progression

Career Progression is a sequence by which employees make progress in their career ladder.

Beyond the organisation, employees are principally responsible for their careers and what

becomes of it.

3.6. Career Plateau

Employees at some point in their career can experience ‘Career Plateau’ which limits movement

up the career ladder. This can be as a result of either professional or personal reasons or either.

Most times organisations pyramidal structures have fewer positions for the numerous employees’

aspiring for the positions. This career plateau limits promotion, advancement, improvement;

allows professional stagnation, and is accompanied by a feeling of boredom, frustration, tension,

loss of enthusiasm, lack of team effort or lack of commitment. A career plateau does not

necessarily mean the end of the line for employees, as long as such employees know that they are

responsible for their own career path

3.6.1. Types Of Career Plateau:

1. Structural Plateau: Here, the organisational structure limits an employee from further

progression due to non-availability of vacancies in higher positions. This is very common

at Senior Management Level. (e.g. there can only be one Managing Director’s position in

an organisation).

2. Content Plateau: Here, the employee has become an expert on his current job role that it

is no longer challenging.

3. Contribution Plateau: this happens when the employees stops growing because they are

no longer adding value to the organisation due to a failed need to continue exploring

learning opportunities in order to develop job specific competencies (e.g. an employee

who refuses to change with technological changes in this age will decline fast in an

organisation).

51

4. Damaged Reputation Plateau: this happens when an employee’s behaviour puts a

temporary stall on their progression. This can be corrected with change in behaviour.

5. Life Plateau: this is when employees loses their identity, direction, self-esteem, or

undergoes self-doubt in their lives, not just on the job. It is the most serious, and kills

career progression faster.

6. Glass Ceiling: this is the invisible yet previously unbreakable barrier that keeps people

(usually women and minorities) from rising above certain levels on the career ladder

irrespective of their qualifications and achievement.

3.6.2. Strategies for managing Career Plateau:

1. Restructuring of success view: employees should not just view success in terms of

upward movement or promotion, but also in lateral movements like taking on new roles,

and increased responsibilities.

2. Manage expectations: employers should concentrate on job satisfiers like assigning

special projects, secondments, to make the job more enriching and exciting for employee.

3. Seek a career move: employees can do the following: move to different departments

within an organisation, move to another branch or geographical region, move to a new

organisation, go for learning/training course, or do any other movement that can

challenge and excite them.

4. Explore learning opportunities: employees can acquire new skills and knowledge,

which will help them stay relevant in the organisation.

5. Manage your reputation: assess behaviour and identify how far it has damaged their

reputation. Confront and deal with it by putting up a positive behaviour.

6. Find your balance: find new experiences and other things that make them happy and

focus on them. This helps in self-reassessment and adjustment.

3.7. Career Management Practices

When organisational needs require filling a position immediately, the position can be filled on an

acting, temporary or interim basis. A person appointed to an acting, temporary or interim

managerial position only stays for a specific period of time, as determined by the management of

the organisation.

52

1. Acting appointments are used by organisations to fill a vacancy or new position when

time does not permit organisations to search for a candidate for that position. Acting

appointments are used to perform the duties of an employee who has been granted a leave

of absence. It is also used perform the duties under a vacant position while recruitment

process takes place. In some cases, persons on acting appointment in addition undertake

duties associated with their substantive position. Acting appointment is, therefore, the

appointment of an employee to another position, on a temporary basis, due to the absence

of an incumbent. Acting appointments may be made when an employee is required to

temporarily perform duties classified at a higher level. The opportunity to act in a higher

position may be utilised as a mechanism to reward exceptional work performance by an

employee. It assists and enhances an individual employee's career and professional

development through the opportunity to acquire advanced knowledge, skills and abilities

2. In the case of temporary appointments, the person appointed has a specified start and

end date (e.g. January 1st-30th May).

3. Interim appointments are used to perform the duties of a vacant job position or a job

position which has not previously existed, while recruitment is underway. It is usually for

one year or less period but may be extended in unusual circumstances. Interim

appointments, often made from either internal or external candidates, is a temporary

appointment of an employee to another position for which no regular incumbent exists

due to the needs of the business.

4. Transfer is the movement of an employee from a job location to another without

necessarily changing job role. Transfer may be used by organisations to avoid a potential

redundancy situation by moving an employee prior to selection for redundancy.

5. Redeployment is the movement of an employee from one position to another position

within the same organisation, or the movement of an employee, or an employee and a

position from one unit or department to another due to the need to utilise an employee’s

competencies for greater effectiveness in another unit or department, and to ensure there

is no service breakdown in the organisation.

53

Transfers and redeployment can only take place where the management has a contractual right to

transfer and redeploy the employee and where a transfer and redeployment could have taken

place regardless of whether or not there is a redundancy situation. Where there is no contractual

right to transfer or redeploy the employee, a transfer may take place on a voluntary basis, if

acceptable to all parties. Transfers and redeployment will only take place between positions of

the same grade/range, unless the employee volunteers for a transfer or be redeployed to a lower

grade and salary. The transfer and redeployment management of employees in any organisation

is to sustain job security, while ensuring successful matching of skills and financial viability of

the organisation.

3.8. Career Counseling

Most employees are unaware of the career option available to them, hence it is imperative for

organisations to have career counseling programmes in place for employees. This should be

made part of an employee’s annual performance review by putting in place a Personal

Development Plan (PDP) for employees. The Personal Development Plan highlights the

employee’s goals, aspirations, expectations and plans for a specified period of time (usually 3-

5years) and the needed resources to achieve those goals. The purpose of a Career Counseling

session with employees is to help match the employees’ aspirations with the opportunities

available within the organisation as well as putting a well laid out development plan to ensure

that employees achieve their career goals.

3.9. Succession Planning

Succession planning is concerned with identifying positions that are critical to the success of an

organisation, and how best to satisfy future requirements of such positions. It is also concerned

with developing strategies to determine the optimum mix of internal and external recruitment.

Succession planning is a conscious decision by an organisation to foster and promote the

continual development of employees; and ensure that key positions maintain some measure of

stability, thus enabling an organisation to achieve its business objectives. The management of

succession planning is the process of assessing and auditing the talent pool in the organisation to

take up critical roles in the future

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3.9.1. Succession Planning Framework:

1. Identify critical positions for both current and future needs: this involves the analysis of

criticality, retention risk, and other workforce data.

2. Identify competencies for the role: succession planning provides an opportunity to review

the competencies traditionally associated with critical jobs roles, particularly with respect

to current goals and objectives.

3. Identify and assess potentials of prospective successors: A minimum of two prospective

successors are to be identified as well as their readiness level to take up the roles with

regards to current competencies.

4. Plan learning/training and development initiatives: Once the relevant candidates have

been identified, based on their interest and potential for success in a key position, the

organisation must ensure that these employees have access to focused learning/training

and development opportunities.

5. Implement strategy and evaluate effectiveness of strategy: Evaluating Succession

Planning efforts, for instance, will help to ensure the effectiveness of the process.

3.10. Other Career Management Practices include:

. 1. Career workshops and seminars

2. Mentoring and coaching programmes

3. Lateral moves and cross-functional experiences

4. Project assignment

5. Promotion

6. Focused learning/training and development initiatives.

3.11. Benefits of Career Management

1. It helps in retaining an organisation’s talent.

2. It boosts employee engagement and productivity.

3. It strengthens the succession pipeline.

4. It helps to create a positive employer brand.

5. It leads to job satisfaction.

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3.12. Summary

Career is a sequence of jobs or activities, whether planned or unplanned, involving employees’

advancement, commitment and personal development over a period of time. It is a pattern of

work- related experiences that employees will have over the course of their stay in an

organisation. Career goals and strategies of employees are developed, implemented and

monitored using career management. Career Management gives employees opportunity to

develop their career and abilities; this in turn ensures the flow of talent within organisations to

meet organisational objectives and goals.

Career Planning is the most important aspect of Career Management. It defines employees’

successes in terms of performance, states their potentials, and preferences with the aim of

ensuring the progress of the employees and continuous flow of talent in an organisation. Career

Management helps organisations to have and maintain a pool of talent; gives employees the

support they need for successful career. Career Management assists employees to improve their

performance, clarifies available career options, and aligns the aspiration of employees with

organisational objectives.

Practice Questions

1. How would you explain career management to a fresh graduate?

2. State the benefits of career management to both the employer and the employee.

3. Explain in details at least 5 career management practices carried out in an organisation.

4. Outline the process of succession planning in an organisation.

56

CHAPTER FOUR

CHANGE MANAGEMENT

4.0. Learning Objective

At the end of this chapter, student should be able to:

▪ define change management;

▪ state the types of change management;

▪ discuss the issues involved when applying change management in an organisation;

▪ explain the change management processes and the role of employees in change

management; and

▪ state the benefits of change management to employees and employers.

4.1. Introduction:

Change is about adopting new ways of doing things. Change is inevitable because the world of

business today is constantly evolving and businesses operate in a fast-paced environment.

Change may occur as a result of an identified threat or opportunity outside the organisation. In

order to remain competitive and stay relevant, organisations constantly need to review their

processes, structures and procedures.

Change is difficult to implement in organisations because employees are naturally reluctant to

move away from familiar jobs due to the fear and risks of failure.

Change in organisation may take any of the following forms:

1. reviewing/redesigning/redefining/constructing/implementing new policies,

2. reviewing/redesigning/redefining/constructing/implementing procedures,

3. reviewing/redesigning/redefining/constructing/implementing processes,

4. reviewing/redesigning/redefining/constructing/implementing products or services,

5. reviewing/redesigning/redefining/constructing/implementing technology etc.

6. Change initiatives may involve huge financial investment and other resources, hence

should be undertaken as a product.

To this end, the same process of initiating, planning, executing, monitoring, and evaluating

used in project measurement should be adopted.

57

Change Management is the systematic process of helping employees’ transition from their

current state to a new one in order to drive organisational success and outcomes. For

organisations and employees, Change Management is geared towards preparing and supporting

employees to successfully adopt change initiatives

The primary goal of Change Management is to increase awareness and understanding of the

proposed change initiatives in order to ensure a smooth transition and minimise resistance as

much as possible. Organisations that have failed to institutionalise a change management culture

have recorded a lot of failed attempts at initiating change. For change initiatives to be successful,

buy-in at all levels and employee involvement is needed.

4.2. Definitions

1. Change: this is the process of making something different from what it used to be or

currently is.

2. Organisational Change; this occurs when an organisation makes a transition from its

current state to some desired future state in order to remain competitive. It could involve

altering, reviewing or modifying work processes, structure, system, procedures,

products/service offering etc.

3. Change Agent: this is an individual or group that is responsible for instigating change

and managing the change process, within an organisation. Change Agents constantly

change status quo, and always seek opportunities for change especially in areas of

innovation, organisational effectiveness and advancement.

4.3. Change Management Policy.

Change management policy is a statement of intent which communicates to all members

of an organisation the formal process for making change within the organisation. It is

designed to help create awareness and improve employees’ understanding of proposed

changes and the formal process for adopting those changes within the organisation.

Like every other policy document, the major elements contained in a change management

policy are:

1. Title: This should be apt and capture the content

58

2. Background: This is a historical statement stating what led to the need to have the

policy in place.

3. Conceptual Clarification: Clarifies terms and concepts used

4. Purpose Objective: This is a brief statement explaining the need to have this policy

5. Scope: This defines who or what the policy applies to.

6. Roles and Responsibilities: This highlights the roles, units or departments that are

responsible for enforcing this policy and their individual responsibilities.

7. Policy Statements: These are the guiding principles in change management.

8. Procedure: This includes the steps necessary to comply with the policy. It should be

detailed enough to help end users readily understand how to comply with the policy

guidelines.

4.4. Types of Change

1. Incremental change: These are changes that occur slowly. This is to improve the

functioning of an organisation but in small increments. It is done in such a way

that does not significantly threaten or alter the current state of things.

2. Transformation change: This is a drastic change made in order to completely

reshape the business strategy and processes. It is a major deviation from the

current strategies, and is designed to be organisation-wide and enacted over a

period of time. It usually occurs as a response to external threats such as

unexpected market changes (e.g. technological change, new product or service

offerings etc).

3. Evolutionary change: this is a gradual change process that happens over time to

ensure the survival of the organisation. It is typically a change brought about as a

business unfolds and discovers itself

4. Revolutionary change: this is a type of change initiated by senior leadership in

response to either a change in leadership or a crisis in order to keep the

organisation competitive. It is also referred to as change-by-mandate (e.g.

downsising or re-engineering).

5. Developmental changes: these are changes made to improve current business

procedures and processes.

59

6. Transitional change: Any change made to replace existing processes with new

processes.

4.5. Roles and Responsibilities in Change Management

In change management, it is imperative that roles are assigned and responsibilities are clearly

communicated and understood to ensure accountability. There are typically four (4) major roles

that are needed to drive change process as listed below:

1. Sponsor: This is a critical role which is assumed by the executives and senior

leaders within an organisation. The success of the change initiatives is dependent

on this role. It is important to begin the buy-in of leadership before embarking on

change initiatives because they possess the authority and the ability to influence

change as they are the ultimate decision makers.

2. Change Champion: Any individuals within an organisation who volunteers or is

selected to facilitate and implement change process. Change Champions are

advocate of the change process; they are driven by the vision and are passionate

about change, and bring about the desired behaviour. It is advisable that the

Change Champion should come from across all functions at varied levels.

3. Change Agent: Any key individual at the grassroots level of the organisation who

is responsible for entrenching the changes across all levels of the organisation.

4. Employees: these are organisational members across all levels who are expected

to have a shared understanding of the change objectives and benefits while

providing support for the achievement of the change objectives.

Change intervention approaches can be effective, depending on the situation, and highlights the

importance of leadership, communications and employees involvement in the change process.

4.6. Key Considerations in Change Management

In change management, the following are to be considered:

1. Vision of the organisations.

2. Goals and objectives of the organisations.

3. Culture of the Organisation.

4. Organisational structure.

60

5. Employees (people) of the organisation.

6. Existing processes.

7. Practices and procedures as well as production and information system of the

organisation.

8. Nature of the business.

4.7. Change Management Process

This is the sequence of activities needed to be followed in a change process in order to ensure

smooth transition and successful outcomes from the change initiatives.

John Kotter (1995) identified an 8-step approaches to the Change Management Process as

highlighted below:

1. Create a sense of urgency: This is the most critical step in a successful Change

Management Process. It involves creating a compelling story around the need for change

in order to get stakeholders to buy-in. Some ways of creating a sense of urgency include:

examining competitive realities and market channels, identifying potential crisis or

threats as well as major opportunities.

2. Form a Coalition: This involves bringing the right people together who are fully

committed to the change initiatives to lead the change programmed of the organisation.

These people should be well respected in the organisation and should possess the power

and influence to drive the change at all levels.

3. Create a Vision for change: This involves creating a vision that will steer people in the

right direction. It also involves developing strategies that will help in achieving that

vision.

4. Communicate the Vision: Sending clear credible messages about the direction of change

stimulates genuine interest in employees and make it easy to get their buy-in. It is

important to have a well laid-out communications strategy which will outline the most

effective communication channels that will achieve the desired result.

5. Empower Action: This step places emphasis on removing all obstacles or barriers that

may impede the change process. This is done by recognising the reward system that build

and inspire optimism in the change initiative.

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6. Create Short Term Wins: This is focused on rewarding employees’ achievement of

visible short term goals.

7. Build on the Change: This step focuses on building on the change that has occurred by

evaluating the change process in order to identify areas of improvement.

8. Make it Stick: This final stage involves connecting new behaviours to the success of the

change initiatives. It reinforces the need to continually exhibit the desired behaviour

brought about by the change initiatives.

In summary, steps 1, 2 and 3 focus on creating the climate for change, steps 4,5,6 focus on

engaging and enabling the organisation, while steps 7 and 8 focus on implementing and

sustaining change.

Listed below are different activities that should be carried out sequentially in order to ensure a

successful change outcome.

1. Develop a change action plan and articulate the vision and objectives of the change

initiatives.

2. Nominate selected managers as change sponsors.

3. Develop employee change terms.

4. Get senior management buy-in.

5. Communicate every step of change plan to all stakeholders.

6. Identify change champions who believe in the vision of the change initiatives.

7. Translate the vision for change into reality.

8. Involve people from across all functions and levels within the organisation.

9. Educate all stakeholders.

10. Modify organisational structures so that they will sustain the change.

11. Evaluate the results of the change initiative periodically.

4.8. Change Models

According to Kurt Lewin (1940s), the Model of Change is divided into three basic stages:

1. Unfreezing: This is the first stage of change which is directed at helping employees

understand what has necessitated the change. The goal of this stage is to create a

compelling vision that will motivate people to accept change.

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2. Changing/Moving: This is the second stage which focuses on helping employees to

demonstrate new behaviours, values and attitudes. It is the point at which employees’

transition from their current state to the desired state, in line with the objectives of the

initiative.

3. Re-freezing: This is the stage at which the new state of change is solidified with the aid

of supporting structures. This is a critical stage that must be taken to prevent employees

from reverting to the old ways of doing things.

4.9. The Place of People in Change Management

In the Change Management Process, the need to involve employees cannot be over-

emphasised because they are a critical factor to the success or failure of the change initiative.

Getting employees’ buy-in and commitment to the change process will eliminate resistance to

change which is a major factor that determines the success or failure of the change initiatives.

Resistance to change may be defined as the action taken by individuals and groups when they

perceive that the change about to occur is a threat to them.

The major reasons employees resist change are:

1. Fear of the unknown

2. The need for change is unknown or unclear

3. Low trust level in management

4. Poor communication

5. Lack of employee involvement/participation

In order to effectively overcome resistance to change in employees, Kottler and Schlesinger

(1985) outlined six (6) strategies that can be deployed as stated below.

STRATEGY + APPLICATION ADVANTAGES DISADVANTAGES

Education +

Communication

Usually when there

is lack of

information or

inaccurate

information.

Help to get

employees buy-in.

Time consuming

Participation +

Involvement

Assumes that the

source of resistance

Used when the

initiator does not

have all the

information needed

High level of

commitment to

the change

process.

Time consuming

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lies in

misinformation or

lack of

communication

to design the

change and when

others have

considerable power

to resist.

Additional

information that

will be useful to

the change

initiative can

easily be gotten.

Facilitation +

Support (provision

of various support

to facilitate

adjustment)

Used when the

change process will

introduce

something new or

different from what

the employees are

already used to.

Aid smooth

transition

Time consuming,

Expensive

Negotiation +

Agreement

(Exchanging

something of value

for less resistance)

Used when an

individual or group

who possess

considerable power

to resist will lose

out due to the

change initiative.

Easy way to avoid

resistance

Expensive

Might put the

change initiative in

jeopardy if the

demands are too

high

Time consuming

Manipulation +

Co-option

(Twisting and

distorting of facts

to make them

appear more

attractive)

Used when other

strategies are too

expensive to use

Quick

Easy to

implement

Inexpensive

Might lead to more

problems like lack

of trust.

Explicit coercion +

Implicit Coercion

(the use of direct

threats or force on

resisters)

Used when the

change is to be

implemented

speedily and the

initiator possess

considerable

power.

Speedy May result in

negative outcomes.

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4.10. Replacement Plans in Change Management

Replacement Plan in Change Management is an alternate plan aimed at minimising the risk

associated with implementing a change within an organisation. It is a proactive approach that is

used to balance the expectations and outcomes of a change initiative

4.11. The benefits of Change Management to the organisation are as follows:

1. It allows the organisation to assess the overall impact of a change initiative

2. It reduces/eliminates resistance to change.

3. It increases the success rate of change initiatives

4. It provides a way to anticipate challenges and respond to these efficiently.

5. It lowers the risk associated with changes

6. It ensures a smooth transition from old to the new state while

maintaining/improving morale, productivity, and even company image.

7. It improves cooperation, collaboration and communication.

8. It reduces stress and anxiety when carefully planned, and helps foster trust.

9. An efficient change management process creates the correct perception of the

need for the change.

4.12. Communication in Change Management

The importance of Communication in Change Management Process cannot be over-emphasised

when embarking on a change initiative. Effective Communication is important in preparing an

organisation for change as it gives all stakeholders a fair say in the change process and helps in

providing timely and accurate information to them. This in turn helps in getting them involved

thereby building loyalty and commitment to the change, and helping initiators overcome any

form of resistance which may have arisen.

In communicating change, it is critical to have a Communication Strategy. The purpose is to

define the overall effective methods that will be deployed in communicating the change to

stakeholders.

An effective Communication Strategy should have the following components:

1. Objective

2. Principles

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3. The audience

4. The message content

5. Communication channels: this is also very key as it defines the best way.

Objectives

These are brief statements detailing what the Communication Strategy is designed to achieve (to

ensure that messages are consistently communicated to stakeholders at all levels in a timely

manner).

Principles

These are the guidelines that ensure all forms of Communication are consistent, timely and

align with the objectives (e.g. Communication Strategy is designed to identify, analyse and

utilise effective Communication Channels for the distinct audience group).

Audience

This defines the primary audience the Communication is aimed at. The audience should be

classified and grouped based on the degree of impact the change will have on them. This is very

important as the message and medium of communication will vary across different group.

Message Content

The message content should be designed to send different messages that are relevant to each step

of the change process. At every point, the message should be clear and consistent made to be

relevant to identified audience, and have an emotional tone in order to get the buy-in of the

different stakeholders.

It should focus on addressing the following questions that employees may want to ask:

• Why change? How does it affect what employee currently does?

• What does it want an employee to do differently?

• How will an employee be measured and what are the consequences?

• What tools and support will the employee get?

• What is in it for the employee?

Communicating Channels

The Communication Channels to be used may vary across the different identified target

audience. In order for the message not to be lost on the audience or wrongly interpreted, it is

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important to be able to identify the appropriate channels of communication that will appeal to the

different audience groups. The different channels of communication are electronic mails, internal

memorandum, newsletters, town hall meetings, desktop screen savers etc.

The objective of what the Communication is expected to achieve will determine the

communication. For example, to feel the pulse of employees and give them a platform to air

their views, town hall meetings or any other form of face to face meeting will be an effective

communication channel.

To communicate a major policy or process change, it is paramount that it is documented, hence

an effective communication channel will be the internal memorandum or/and electronic mails.

The choice of this communication channel is to ensure that the message of the communication is

not misconstrued or lost on the audience.

To reinforce communication, desktop screen savers will be an effective communication channel.

4.13. Summary

The essence of Change Management is to increase the efficiency and effectiveness of

organisations and move such organisations to greater height. Organisations make changes to alter

their environment, structure, culture, technology, or people. Change Management is that constant

force and organisational reality that addresses every opportunity or threat found in an

organisation. Change Management is a planned approach to integrating changes found, and

includes formal processes for assessing the impact of the change on both the people it affects and

the way they do their jobs. Change Management helps determine how people will react to

changes, and therefore, ultimately transform the vision, knowledge and responsibility of the

entire workforce. For Change Management to be successful, there must be open Communication

on changes; trust must exist among members of the organisation, and knowledge must be shared.

The phases of change include shock and surprise, refusal and denial, rational understanding,

emotional acceptance, exercising and learning, realisation and integration.

Practice Questions

1. Outline the benefits of change management to you as an employee

2. Discuss the roles of change management drivers in change management process.

3. Briefly explain the types of change known to you.

4. Write short notes on the following

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a. Change management process

b. Change model

c. The place of people in change management

d. Communication in change management.

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CHAPTER FIVE

LEARNING/TRAINING AND DEVELOPMENT

5.0. Learning/Training and Development Objectives


➢ define the concepts of learning/training and development;

➢ list some theories that guide learning/training and development;

➢ state the different types of learning/training and development programmes; and

➢ discuss knowledge transfer.

5.1. Introduction

Learning/Training and Development are critical to the success of any organisation, big or small.

Learning/Training and Development equips employees with the required knowledge, skills and

attitudes to be able to perform on their job, which translates into success for the organisation.

The terms learning/training and development, and education are often used interchangeably, but

they have varied meanings. Learning/Training is associated with acquiring job related skills,

while education is seen as relating to more formal academic background which focuses on

general concepts. Learning/Training on the other hand, is a change in behaviour which manifests

as a result of acquisition of new knowledge, skills and attitudes while development is focused on

equipping employees with new knowledge, skills and attitude for a more holistic view in

preparation for the future.

Learning/Training and Development are strategic human resource activities because they play a

major role in determining the effectiveness and efficiency of an organisation, hence should be

linked with the organisation’s goal and strategy. Learning/Training and development activities

do not take place in isolation as they are linked to other human resource activities such as

Performance Management, Career Management, and Workforce Planning etc.

Effective learning/training and development programmes achieve the following benefits:

1. improve the quality of goods and services,

2. reduce the number and cost of accidents,

3. reduce the cost of re-work,

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4. boost employee morale and impact on productivity,

5. improve organisational performance and help an organisation to remain competitive in

the market,

6. improve the quality of the workforce; and

7. Increase higher employee retention rates.

5.2. Objectives of Learning/Training and Development

The objectives and purpose of learning and development can be explained as follows:

1. improve the quality of the workforce and work done by them,

2. enhance the career growth of employees professionally and otherwise,

3. assist employees to get acquainted with new methods of work (e.g. technology),

4. expedite acquisition of knowledge, skills and abilities that employees required to

perform a job; and

5. promote health and safety awareness in the organisations.

5.3. Definitions

Learning/Training and development equip employees with knowledge and skills needed to

perform on the job which translates into success for the organisations. Learning/Training and

development in organisations may take the following forms:

• knowledge management,

• industrial learning and development,

• self –directed learning,

• E-learning, coaching and mentoring,

• blend learning,

• on the job training seminars/workshops,

• conferences, and management development.

5.3.1. Learning/Training.

Learning/Training can be defined as a relatively permanent change in behaviour of an/all

individual based on their experiences and or discoveries.

Theories of Learning/Training

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Learning/Training theories are coherent explanation of how learning/training happens and what

motivates learning. These theories explain why individuals behave the way they do and how new

behaviours are acquired.

Some learning/training theories are:

1. Operant Conditioning/Reinforcement Theory: B.F. Skinner (1953) asserts that

individuals exhibit changes in behaviours as a result of their response to events (stimuli)

that occur in the environment. Reinforcement is a key element in Skinner’s theory and

refers to anything that strengthens the desired response.

2. Stimulus Response Theory: Gagne (1977) asserts that learning/training and

development process is a function of drive to learn, stimulation to learning, responses that

help to develop skills, knowledge and attitudes needed for effective performance and

effective feedback that brings learning/training.

3. Cognitive Learning Theory: Jean Jacques Piaget (1896-1980) asserts that knowledge is

gained by absorbing and internalizing all principles and facts.

4. Experimental Theory: Roggers (1983) asserts that experiences enhance facilitation, and

that the environment stimulates people to think and act in ways that will help them make

good use of their experiences.

5. Social Learning Theory: Wenger (1998) asserts that effective learning/training and

development requires social interaction.

6. Psychological Theory: Erick Erickson (1902-1994) asserts that environmental factors

affect learning/training and development.

Learning Styles

Learning/training styles are individuals’ natural or habitual pattern of acquiring and processing

information in learning/training. The idea refers to the variations in one’s ability to accumulate

as well as assimilate information.

People differ in their preferred style of learning. There are basically three (3) styles of learning:

1. Visual Learning: individuals in this category typically learn through what they are able

to see with their own eyes. Visual learners have a tendency to describe everything that

they see in terms of appearances. These learners learn best through the use of visual aids

such as photos, videos, diagrams, maps and graphs.

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2. Auditory Learning: this category of learners is classified as very good listeners. They

learn best by listening to lectures, discussions and audio tapes.

3. Kinesethic Learning: Learners in this category learn best by doing, touching or acting it

out. Hands-on projects are an effective way of transferring knowledge to this category of

learners.

5.3.2. Training

Training is the process of developing the skills, knowledge and capabilities of an employee in

order to increase their effectiveness in doing jobs. Training involves the application of a formal

process to impart knowledge and helps employees to acquire the skills necessary to perform jobs

satisfactorily. Training is important in managing people at work and is based on the needs of

both employees and their organisations. It is that planned and systematic instruction-led activities

that mangers of organisations sometime use to promote learning.

Training can take two (2) forms as follows:

1. On the Job Training

This is the process of developing the skills, knowledge and capabilities of semi-skilled or

unskilled employees. The employee learns on the job through personal observation and on the

job practice. Training is done by supervisors using either demonstration or simulation exercises,

or through apprenticeship. It is an unorganized form of training with less qualified supervisors; is

very monotonous and thereby affects motivation of the trainee/employee.

2. Off the Job Training

This form of training is also called classroom method of training. It takes place outside

the work environment (e.g. company training centers or any other training facilities). It

can take the form of lectures, conferences and group discussions, case study or role

playing. Off- the job training place emphasis on theories, concepts and problem- solving.

Most times it is used for large audience, to create interest in participants and encourages

networking and experience sharing.

Training Policy

This is a document which gives the guidelines on the approaches an organisation will take to

facilitate the training of their employees. It usually contains the following elements:

1. Background

2. Objective of the policy

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3. Scope of the policy

4. Policy statement

5. Roles and responsibilities

6. Training needs identification

7. Forms of training

8. Self-training initiatives

9. Evaluation

10. Appendices: Relevant forms

Training Cycle

Training is the process which ensures that employees acquire and develop their knowledge,

behaviour, skill, attitudes and capabilities. It is very important to organisations because it helps

them have employees that are knowledgeable, skilled, experienced, and committed to their jobs

and the organisation a whole.

The Training Cycle is as shown in figure 5.1.

Figure 5.1.

The ADDIE Model outlines the training cycle as:

1. Analyse the need (Gather data and identify the gap between actual and desired

performance)

2. Design the objective and strategy (training objectives, course content, delivery methods)

Identification of Training

Needs

Evaluation

TRAINING

CYCLE

Programme

Implementation Programme

Design

Setting

Objectives

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3. Develop the training programme (e.g. training materials)

4. Implement training.

5. Evaluate the training to know if the objectives were met.

Training Need Analysis (TNA)

Training needs are the gap between knowledge, skills and attitudes that the job demands, and

those already possessed by trainees. Training needs are assessed to determine the knowledge,

skills and attitudes that employees need to perform their jobs.

Training needs assessment is a systematic process which assists in identifying a gap in the

knowledge, skills, attitudes and performance of employees. Need analysis gathers information

on training needs so as to develop training programmes that can assist the organisations to meet

its objectives. Analysing needs is one of the most significant parts of developing training

programmes because it diagnoses present problems and future challenges can be addressed

through training.

Training Needs Analysis occurs mostly at three (3) levels:

1. Organisational Analysis: This involves identifying a general weakness within an

organisation which may prevent it from achieving its goals.

2. Task Analysis: This involves identifying what is needed in terms of skills, knowledge and

abilities to carry out a job.

3. Individual Analysis: The objective is to examine how well individual employees are

performing on their jobs. It is a careful examination of each individual employee’s skill

and abilities in order to identify gaps that could be correct through training. Competency

model provides useful information that can be used to identify knowledge and skill gaps.

There are various ways of assessing training needs but the most reliable methods are listed

below:

1. Surveys/questionnaires.

2. Interview

3. Performance appraisal

4. Observations

5. Group discussion

6. Occurrence of specific incidents (e.g. accidents reports).

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Setting the Training Objectives

A training objective is a statement of intent stating what the outcome of the programme will be.

It describes the focus of training and defines what the trainee should expect from a session or

programme. The training objective is done by designing a frame of reference which helps

trainees to know what they should expect to learn, and helps the organisation to evaluate the

effectiveness of the training with respect to the return on investment (ROI).

Training objectives transform broad programme goals into sets of particular actions that can be

observed and assessed to provide evidence of specific employee training and skill development.

Training objectives are to be brief, clear and focus on statements of specific intended training

outcomes. Each objective can be linked directly to one or more programme goals. Each objective

should be stated in an action verb form and combined with a description of a very specific ability

to help translate objectives into observable abilities. Training objectives must be designed to be

SMARTER (i.e. Specific, Measurable, Achievable, Relevant, Time-bound, Evaluate and

Rewarding)

Training Programme Design

A training programme is a plan of how training is to be implemented. It specifies the key

requirements and activities in a training programme, including programme objectives, contents,

methods, resources, budgets and implementation.

Listed below are key considerations in designing a training programme:

1. Identify training needs

A training need exists when improvement in knowledge, skills, and attitudes will lead to

improved performance. It is regarded as performance gap or problem which is amendable

by training solutions. Training needs exists at three levels: individual, occupational and

organisational.

2. Audience Analysis

Knowing your audience is an important aspect of analysis that determines the outcome of

the training programme. Audience analysis is done by:

• Asking and finding out how many people will attend the training.

• Finding out their background (i.e. knowing where they work and what positions they

occupy at workplace).

• Finding out what would be of interest to them.

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• Finding out how familiar they are with the subject of training.

3. Determine existing capabilities

In designing a training programme, the knowledge, skills and experience of the

participant must be considered. Participants for a programme should have almost similar

background (education, profession, skill, job responsibilities, status etc.)

4. Develop programme objectives

The programme objectives may be general or specific. In selecting training objectives, the

needs of the organisation and the participants expected to attend it should be considered.

Training objectives may be designed to address the following:

• solving specific problems,

• developing or improving specific skills,

• changing attitudes etc.

Objectives should be specific, measurable, achievable, relevant, feasible, and observable, hence

the verbs that meet these characteristics should be used in articulating training objectives.

Examples of such verbs include: explain, list, demonstrate, identify, apply, use, measure etc.

5. Develop programme curriculum

The curriculum forms a significant part of a training programme design and is usually

referred to as the programme content. Factors which inform the choice of programme

content are:

• objectives,

• participants,

• time available and

• the training budget.

It is often necessary to group contents into topics and sub-topics which ensure logical

sequencing and flow.

6. Selecting training methods

The choice of training methods depends on the objectives of the training and the

participants. Training methods can be classified into two broad categories namely:

Lecture or Pedagogical Methods. These methods are effective for knowledge giving

training situations, and are often less effective in an adult learning and skill training

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programme. Lecturing is a teaching method that involves, primarily an oral presentation

given by an instructor to a group of people.

Presentation and course facilitation skills

Facilitation is taking responsibility of factors which enable people to learn. Presentation and

course facilitation is about helping a group to gain skills and knowledge. They are not about

being in charge or being an expert in training topics (although it can often help). The key to good

presentation and facilitation is that the facilitator and the participants are equal - they all share

responsibilities to create a good learning experience. Presentation and facilitation involve a range

of different responsibilities: that is how to get knowledge skill across (the facilitator sets up

activities that enables people to learn from each other and build on their own knowledge). To

make presentation and facilitation engaging, content needs to be revisited periodically so as not

to make training repetitive.

Good presentation and facilitation skills include the following:

1. Active listening- it is looking and listening proactively to what someone else is trying to

communicate, while trying not to project their own though and expectation onto them.

2. Summarising- it is closely related to active listening. It means showing people that

you’ve heard them properly, and have understood their points by rephrasing the core of

what they said and offering it back to them. It is important not to repeat what was a said

word for word, but to show that key concepts expressed were understood. It also shows

participants that facilitators listened and understood them.

3. Asking questions- questioning is a technique often used by facilitators during training as

an alternative to presenting information and giving answers. Asking the participants

question or series of questions can enable them to find their own solution and put them in

control of their own learning, effective, well planned questioning can support people to

reflect on and learn from their experiences.

4. Giving feedback- feedback helps people to learn from their experiences. Sometimes

participants offer feedback to each other but the facilitator’s contribution can be vital.

Many lectures today are accompanied by some sort of visual aid such as a slideshow, a

word document, an image, a video, a whiteboard or a chalkboard to emphasize important

points.

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Slide Presentation

Slides are visual aids that help to communicate key business messages. When used correctly, the

increase learning, clarify what is described, and engage the audience. Slides allow organisations

to reach both visual and auditory learners. Power Point is the mainstay of current slides

presentations: the presentation of slides in power point format is for ease of access and delivery.

Where there is no access to multi-media equipment (computers, projectors, or even

power/electricity), slide presentation should be turned into points using flip chart paper. Slides

presentation should be used creatively through the use of a design process that provides slides as

a resource. Facilitators need to use their good judgment and assessment of the group to priortise

which slides to use in presentation and which ones to leave out or run through quickly.

Benefits of Slides Presentation

1. Audience appreciates dynamic and interesting slides presentations.

2. It helps the audience to better retain the information-especially visual learners.

3. Slides enhance facilitators oral presentation.

4. Slides are supposed to support the live presentation, nothing else.

Audience Engagement

The audiences who are emotionally engaged throughout the duration of any presentation are

more likely to buy the trainer’s ideas than those who aren’t. Audience engagement is so crucial

to the success of a presentation. Having a strategy for audience engagement should be top-of-

mind for every trainer: how trainers should engage their audience, when to engage them, and

how to re-engage them when their attention wanes. Trainers should plan their presentations

around the words they are going to say and the content of their slides. Audience engagement and

interaction should not be left to chance. Audience engagement should be able to inspire a change

in behaviour in the audience. Therefore, finding ways to engage and interact with the audience

should be part of the presentation planning process. The planning should take into account how

the audience will pay attention, where and when trainers need to re-engage the audience, and

what tools they have available to do so.

Effective Presentation Skills

1. Understand the message to be passed across to the audience.

2. Speak with a strong, clear and varied voice (strength, clarity and tone).

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3. Avoid annoying mannerisms.

4. Observing and actively listening to participants.

5. Emotionally connect with the audience and make presentation memorable.

6. Summarising presentation to participants.

7. Asking participants questions.

8. Giving feedback to participants.

9. Clarify concepts with examples.

5.3.3. Development

This is a continuous systematic procedure in which managerial staffs are able to enhance

their conceptual and theoretical knowledge in order to deliver their job effectively and

efficiently. Development is not only limited to a particular job role. It aims to improve their

all-round development in order to be able to take up higher responsibilities in future. Some

development initiatives are;

• coaching,

• mentoring,

• counselling,

• job-rotation,

• role playing,

• case study,

• conference training; and

• special project.

Development Policy

This is a document which gives the guidelines on the approaches an organisation will take to

facilitate the learning and developments of their employees. It usually contains the following

elements:

1. Background

2. Objective of the policy

3. Scope of the policy

4. Policy statement

5. Roles and responsibilities

6. Training needs identification

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7. Forms of training and development

8. Self-development initiatives

9. Evaluation

10. Appendices: Relevant forms

Development Cycle

Development is the process which ensures that employees acquire and develop their knowledge,

behaviour, skill, attitudes and capabilities. It is very important to organisations because it helps

them have employees that are knowledgeable, skilled, experienced, and committed to their jobs

and the organisation a whole

The Development Cycle is as shown in figure 5.2.

Figure 5.2.

The ADDIE Model outlines the developing cycle as:

1. Analyse the need (Gather data and identify the gap between actual and desired

performance)

2. Design the objective and strategy (developing objectives, course content, delivery

methods)

3. Develop the developing programme (e.g. developing materials)

4. Implement developing.

5. Evaluate the developing to know if the objectives were met

Identification of Training

Needs

Evaluation

DEVELOPM

ENT CYCLE

Programme

Implementation Programme

Design

Setting

Objectives

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Coaching

Coaching is a form of development in which a person called “A Coach” supports a learner in

achieving a specific career goal by providing training, advice and guidance. The focus is on

meeting very specific objectives within a period of time. Coaching is mainly concerned with

performance and the development of certain skills within a short period. It is usually a ‘one-on-

one’ interaction in which the learning goals are already pre-determined.

When to Consider Coaching

• When an organisation is seeking to develop its employees in specific competencies.

• When an organisation has a number of talented employees who are not meeting

expectations.

• When an organisation is introducing a new system or program or service.

• When an organisation has a small group of individuals in need of increased competence

in specific areas.

• When a leader or executive needs assistance in acquiring a new skill as an additional

responsibility.

The Key Steps in Coaching are:

1. Determine the specific area for coaching.

2. Agree on the overall objectives.

3. Identify realistic outcome and devise an action plan to achieve the desired result.

4. Design a coaching programme. This might include: a secondment, job shadowing or

supervised working.

5. Agree on a suitable time scale.

6. Agree on criteria for evaluation, standard and assessment of the programme.

Mentoring

Mentoring is a long- term relationship oriented process, that seeks to provide a safe environment

where the mentees (employees) share whatever issues are affecting their professional and

personal success. It covers specific learning goals or competencies used for creating the

relationship as well as other areas such as work-life balance, self-confidence, self-perception etc.

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Mentoring requires that both the mentor and mentee have time to learn about each other and

build a climate of trust that creates an environment in which the mentee feels secure to share real

issues that impact their success.

Successful mentoring relationships are development driven and last between nine months to one

learning/ year. Mentoring is not the same as training, teaching or coaching; and a mentor does

not need to be a qualified trainer or even an expert in the role that the mentee carries out.

However, a mentor needs to be able to listen effectively and ask questions that will challenge

mentee to identify the course of action they needs to take in regards to their own development.

When to Consider Mentoring:

• When organisations are developing leaders as part of succession planning.

• When organisations seek to develop employees and remove barriers that hinder their

success.

• When organisations seek to give employees additional skills and competencies.

• When organisations desire to retain its internal expertise for future gains.

• When organisations want to have a workforce with a balanced professional personal life.

Job Shadowing

Job shadowing is a structured work-base learning/training experience which allows learners to

shadow an employee during specific event or activity in order to gain greater awareness of the

scope of the job. Job shadowing is a short term educational experience that introduces an

individual to a particular job or career by pairing the learner with an employee of an

organisation. It helps the learners to become familiar with the duties associated with that

occupation, the physical setting of the occupation, the job –related characteristics of the specific

job or career, and the compatibility of the occupation with their own career goals. It also enables

them to have the opportunity to discuss areas of interest or concern with the employees. It

provides relevant experiences outside the class room and contributes to the development of

individuals for future career opportunities.

Steps for Planning and Implementing Job Shadowing

1. Develop the goals, policies and selection criteria of the job shadowing programme.

2. Have a ‘Form’ for the application, evaluation and monitoring of the programme.

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3. Ensure that organisations have Parental Permission Form(s) to be signed by parents, and

developed awareness activities for students, parents and employers.

4. While having selected instructional employees to work with the shadowing programme,

do a survey of employers shadowing sites.

5. Recruit, select and orient individual students and faculty to participate in the programme.

6. Identify time, place and transportation needs of shadowing for each student.

7. Review safety precautions to be followed during the experience, and instruct students as

to expectations during the shadowing experience.

8. Design certificates for employers and also determine methods of rewarding students who

have successfully completed the shadowing experience.

Apprenticeship

Apprenticeship is a structured training program that provides employees with the opportunity to

begin learning an occupation using learning and related instruction methods. It is targeted at new

employees who are made to work under more senior workers for a fixed period of time.

Apprenticeship has evolved with government’s involvement in the development of employees’

skills.

The criteria for running an apprenticeship are as follows:

1. Employee must be between ages 16-24.

2. Use alternatively “On –the- Job and Off -the –Job” experiences and learning/training.

3. The framework developed and adopted must meet local needs.

4. It must allow possible progress to higher education pursuits.

Challenges of Apprenticeship

1. It does not consider employee’s pre-apprenticeship skill and learning rate.

2. Senior employees are reluctant to train the apprentices for fear of future job post

competitions.

3. Lack of sufficiently skilled senior employees to work with and train the apprentices.

5.3.4 Experimental methods: (for adult learning): These are most effective when the goals of

training are improvement in skills and change in attitudes. They include Case study, Role Play,

Discussions, Brain Storming, Simulation, Business Games, Exercise, Syndicate exercise etc.

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Case Study

Case studies are typically used to apply to several problems-solving concepts and skills to a

detailed situation with lots of supporting documentation and data. A case study is usually

complex, detailed, involves a real-life well documented situation and the solutions are compared

to what was done in the actual case. It generally includes dialogue which creates identification or

empathy with the main characters. It is best if the situations are recent, relevant, have a problem

or dilemma to solve and involve principles that apply broadly.

Case studies can be Structured or Unstructured:

1. Structured Case Study – the problem and scenarios can be simple or complex, or

anything in-between that has optimal solution, and in which only relevant information is

given.

2. Unstructured Case Study - problems and scenarios can also be simple or complex

although they tend to be complex. They have relevant and irrelevant information in them.

The major work here is deciding what is relevant, how it is relevant and how to devise an

evidence-based solution to the problem that is appropriate to the context, and can be

defended.

An example of a Case Study:

Kunle Folarin who works with IGBOHA Plc is beginning to dread coming to work. His manger

Miss Ozioma has bought a Windows 15 HP computer with several complicated features. She

gave him the system with a claim that it would help increase his typing and calculating job skills

against the old Windows 7 HP computer. Kunle who is finding it difficult to operate the Window

15 is not happy as it is taking him a long time to learn how to use and operate the new Window.

The person who installed the new System just left the manual for him to go through and learn

how to use and operate it. Kunle could not find a solution to his problem, and all efforts to get his

manager to teach him how to operate the Window fail as she kept referring him back to the

manual. The situation has lowered Kunle’s confidence. His skills have not increased and Miss

Ozioma is irritated by his slow progress in learning how to operate the Window. His skills are far

from increasing and he wishes Window 15 is not in existence. To boost his confidence again, he

is thinking of leaving the company, and to save his job, he is thinking of going back to his old

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Window 7. As a HR manager, advise Kunle’s boss on what type of learning method she should

use to help Kunle regain his confidence and save his job.

Role play

Role play is an active and collaborative teaching technique which is effective for the deep

learning needed to remember and apply concepts after a course has been taught. It can be a short

or long, and more complex form of learning, but without a lot of documentation. Role play

enables employees to experience what it may be like - to see a problem from many different

perspectives as they assume a role they may not typically take, but see others do the same. It is

used for higher level learning, require application synthesis and evaluation. Role play increases

employees’ interest and involvement, and have them practice applications and give feedback.

Role play provides the following benefits:

1. It allows application of concepts in real life situations through practice of analytical

skills, procedural experience, and decision making skills.

2. It allows deep learning and appreciation of all of different perspective of concepts.

3. It increases empathy for others and gives greater insight into challenges faced by others.

4. It increases motivation, interest and longer retention of what is learnt.

5. It allows for a better understanding of complexity of situations.

6. It provides good feedback on what is learnt and not learnt.

Brain Storming

Brain storming method is a technique that is used by trainers to generate ideas from participants.

The technique is based on the fact that every participant in the group has ideas about an issue,

situation or problem at hand. It provides an opportunity for everyone in the group to express their

thought or idea on the issues or situations.

Discussions

It refers to the method of instruction which give participants an opportunity to express their

views or opinions verbally on issues. It does not always involve the presentation of new

information or concepts. It also involves sharing of ideas and experiences about solving

problems. The discussion method uses two-way communication between the trainer and the

trainees to increase learning opportunities. It could be among the trainees and between the

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trainees and the trainer. This method helps to support, reinforce and expand upon the information

presented during lectures.

Decide on Resource Person

The quality of resource person can largely affect the quality of training programmes. Efforts

therefore, should be made to source for qualified persons. It is necessary to avoid the monotony

of having one resource person to cover several sessions on a programme. Resource persons

should be properly briefed about programme and session objectives, and on the desired training

methods.

Select Training Material

This involves selecting appropriate training materials such as lecture notes, reading texts, flip

charts, stationery items, workshop bags, folders etc.

Prepare Budget

The cost implication for all resources, including human and material resources required for the

programme should be carefully calculated and submitted for management or sponsor’s approval.

Training budget could be either preliminary budget or operating budget. Preliminary budget is

usually prepared at the outset along with a proposal to provide training services. Operating

budget is more detailed, based on the actual expenses of the training programme.

Training budget should take into consideration the following costs:

1. Participants cost and their travel cost

2. Cost of facilitator/resource person

3. Travel cost of the facilitators

4. Material cost (manual or printed hand- outs, visual aids)

5. Venue rental

6. Accommodation rental

7. Refreshment cost

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Schedule Programme

This takes into cognisance the duration of the training, the number of hours per day and time of

the day as well as an appropriate venue (venue should be free from interruption and should have

suitable facilities). The seating arrangement is also fundamental. The expected numbers of

participants are a key consideration in determining the venue and the sitting arrangement.

Decide on method of evaluation

Evaluation of training provides feedbacks on the effectiveness of training. Training evaluation

has two primary purposes. The first is to improve the effectiveness of training and to demonstrate

its result. Therefore, evaluation of training provides useful information about effectiveness of

training as well as inputs which will help the design of future training programmes. The

effectiveness of training is attributed to achievement of specific training objectives.

To evaluate the impact of training, two basic forms of evaluation are used. First, the formative

evaluation which focuses on improving the training proccess and the effectiveness of training,

and second summative evaluation which focuses on assessing the impact of complete training

programme to determine whether they met their goals and their relevance in future.

The Kirk Patrick Model of evaluating learning should be used. He identified four (4) levels of

learning as stated below.

1. Reaction: The degree to which participants find the training favourable, engaging and

relevant to their jobs.

2. Learning: The degree to which participants acquired the intended knowledge, skills,

attitude based on their participation in the training.

3. Behaviour: The degree to which participants will apply what they learned during training

when they get back to their jobs.

4. Result: The degree to which targeted outcomes occur as a result of training and the

support received post- training.

Hence, in designing a training evaluation instrument, each level of learning should be captured in

order to measure the training effectiveness in totality.

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5.3.5. Industrial Training Fund (ITF)

The Industrial Training Fund (ITF) was set up under Act No 47 of 1971 to promote and

encourage the acquisition of skills in industry and commerce with a view to generating a pool of

indigenous trained manpower sufficient to meet the needs of the Nigerian economy. Section 6 of

the Industrial Training Fund Amended Act (2011), stipulates that every employer having five (5)

or more employees or having turnover N50 million and above annually are liable to make

contribution to the Fund. The contribution is 1% of payroll as stated in the Act and is to be paid

at a prescribed date not later than 1st of April of every year. Reimbursement is paid to

contributing employers not employees.

Reimbursement Requirement

Organisations incurred costs in form of authenticated training expenses records for internal or in-

plant training programmes. The Act also provides that the Industrial Training Fund Governing

Council (“the ITF Council”) may make a refund of up to fifty per cent (50%) of the employer’s

contribution to the IT Fund if the ITF Council is satisfied that the training programmes of the

employer are in accordance with the ITF reimbursement schemes, the Acts further states, there

must be Industrial Training Fund approval documents for all courses for which reimbursement

are to be made in compliance with approved or modified Fund programme reimbursement

guidelines. Finally, the relevance of the training to the needs of the trainees, the needs of

organisation effectiveness of the training is also a requirement for reimbursement.

.

5.4. Knowledge Management

The ability to manage knowledge is crucial in today’s world of business in order to gain

competitive edge. Globally, knowledge is being viewed as an intellectual asset; hence the need to

effectively manage it like other assets of an organisation is managed.

Knowledge management is the systematic management of an organisation’s knowledge assets

for the purpose of creating value in order to meet its strategic and operational needs. It comprises

the initiatives, processes, strategies and systems that sustain and enhance the creation, storage

and transfer of knowledge.

The major objectives of Knowledge Management are:

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• To facilitate a smooth transition to successors.

• To minimise loss of organisational knowledge due to attrition and retirement.

• To transfer knowledge and skill in a cost- effective and concise way.

• To provide timely information.

5.5. MEASURING RETURN ON INVESTMENT FOR LEARNING/TRAINING

AND DEVELOPMENT

It is important to determine if the learning/training achieved the business impact that the

learning/training was intended to achieve. This will establish the value of the company

investment in learning/training and development programme.

The following steps should be taken to calculate the Return On Investment (ROI):

1. Clearly define the business need: The business challenge or issue the learning/training

is to address should be clearly defined.

2. Establish if the learning/training is appropriate for the business need: It is important

to make sure that learning/training is the right solution to the issue or challenge you want

to address.

3. Define the outcomes of the learning/training: Identify the outcomes that the

learning/training should achieve, and make sure they are directly related to the business

need identified in step 1.

4. Design the learning/training programme: The type of learning/training that will be

appropriate for the target audience and the outcome to be achieved must be determined.

The design should confirm if the existing learning/training programme will meet the

learning/training requirements; type of activities and experiences that will enable trainees

to implement their learning/training in the workplace; and what type of support will be

required after the learning/training to make sure that new knowledge and skills are

transferred into the workplace.

5. Define the metrics to be used: Based on the outcomes identified in Step 3; determine

how success of the learning/ training programme will be measured.

6. Conduct the learning/training and measure your return on investment: Following

the completion of the learning/training programme, the identified metrics should be

tracked. It is important to realise that some time will be required for the trainees to apply

their new knowledge and practice their new skills. Prior performance before the

learning/training must be measured and it is good to measure the metrics immediately

following the learning/training. Also, monitor the changes in performance at regular

intervals (e.g. monthly) to determine the success of the learning/training over time.

The ROI is measured by the difference in the metrics. If the metrics improve, and this

improvement is worth more than the total cost of the learning/training, then there is a

positive Return On Training Investment.

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In mathematical terms:

Return On Investment (ROI) = Change in Cost of Activity divided× 100%

Total Cost of learning/Training

If the ROI is above 100%, then the learning/training is considered a success and has

achieved the intended outcomes.

For example, three months after a learning/training programme, the time spent on a

particular task improves. Based on the average wage paid per hour, there was a saving of

N 6,000,000; the total cost of the learning/training including facilitators fees, cost of

venue, learning/training materials, staff time to complete the learning/training, etc. was N

3,600,000.

ROI = N 6,000,000× 100%

N 3,600,000

= 166%

Therefore, there is a positive Return On Investment.

Another approach for measuring Return on Investment (ROI) on learning/training and

development is drawn from Kirkpatrick’s Learning Evaluation Model and Phillips

ROI Methodology. The model is about building a chain of impact to create a link

between the specific learning/training activity and the impact or ROI.

These approaches look at five levels of impact for the ROI Model:

1. Engagement: Checking that trainees feel the learning/training is worthwhile.

2. Learning/training: Checking/testing that the trainees have developed new

knowledge, skills, attitudes and that they have the confidence to apply it. It could be

through a pre – and post skills audit or a scenario/simulation test of their new skills.

3. Application and Implementation: Are they demonstrating changes in behaviour?

This could be done through pre-and post-learning/training feedbacks or evidence that

they have completed the planned actions from the learning/training.

4. Business Impact: The measures are agreed with the business before the

commencement of the learning/training programme.

5. Return On Investment is calculated: Total costs of the programme are collated and

Net Programme benefits are calculated (Benefits minus Costs) × 100.

5.6. Summary

Organisations in present day turbulent environment need knowledgeable employees to overcome

their challenges. Human resource represent intellectual capital of an organisation’s resources,

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and the organisation could increase them only through learning, training, development and

motivation of employees. Learning, training and development of employees are a continuous

procedure that removes knowledge obsolescence, brings dynamic changes and increases product

and service innovations. Learning, training and development of employees give the organisation

competitive advantage. Without employees’ learning/training and development, it will be

difficult for organisations to implement changes and adjust to changes in the environment. It will

be difficult to create innovations and guarantee the success of organizations, as well as the

success of the individuals within the organization.

Practice Questions

1. Briefly discuss the following:

a. Job shadowing

b. Mentoring

c. Job coaching

d. Knowledge transfer.

2. Outline the benefits of slide presentation as it relates to learning, training and development.

3. Discuss the skills and tools involved in presentation programme.

4. Critically evaluate knowledge transfer in an organisation.

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CHAPTER SIX

PERFORMANCE MANAGEMENT



▪ define the concept of performance management;

▪ . discuss the performance management cycle;

▪ set SMARTER performance objectives; and

▪ measure performance using effective performance feedback methods.

6.1. Introduction

Performance Management is a process geared towards measuring and improving job

performance. It involves defining work goals and standards, reviewing performance against these

standards, actively managing all levels of performance, and maximising learning/learning and

development. This process helps organisations to create and sustain a workplace environment

that:

1. Values continuous improvement

2. Adapts well to change

3. Strives to attain stretch goals

4. Encourages creativity and innovation

5. Promotes learning and professional development

6. Is engaging and rewarding for employees

6.1.1. Conceptual Clarification

Performance Management is both a strategic and integrated approach to delivering successful

result in organisations by improving the performance and developing the capabilities of

teams and individuals (Armstrong & Baron, 2002).

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Brumbach (1988) defined performance as behaviour that accomplishes result. He stated that,

“Performance means both behaviours and results. Behaviours emanate from the performer and

transform performance from abstraction to action. Not just instruments for result, behaviours are

also outcome in their own right- the product of mental and physical efforts applied to task and

can be judged apart from results”. He also observed that because of the significance of behaviour

there was more to success or failure than whether results were achieved: ‘‘success is not always

positive nor failure always negative’’. The concept of performance leads to the conclusion that

when assessing and rewarding the performance of individuals, a number of factors have to be

considered including outputs (results) and inputs (behaviour). Managing performance is highly

complicated.

Campbell (1990) suggested that performance is the outcome of three determinations:

1. Knowledge about facts and things (termed declarative knowledge);

2. Knowledge about how things are done and skills to do them (terms procedural

knowledge and skills);

3. Motivation to act, to expend effort and to persist (termed motivation)

6.1.2. Principles of Performance Management

1. It translates corporate goals into divisional, departmental, team and individual

goals.

2. It is a continuous process which strives to improve performance.

3. It creates a shared understanding of what needs to be done in order to achieve the

corporate objectives.

4. It encourages a two-way communication between line managers and subordinates.

5. It encourages continuous feedback.

6. It encourages employee growth and development.

7. It rewards performance.

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6.1.3. Objectives of Performance Management System

The objectives of performance management include the following:

1. To improve organisational performance.

2. To align the goals of individuals to that of the business.

3. To promote the career growth and advancement of employees.

4. To create a basis for decision making related to succession planning, promotions,

learning and development, and rewards.

5. To motivate and reward employees.

6. To promote a high-performance culture within the organisation.

6.1.4. Performance Management Process

Performance management is cascaded from the corporate level (first tier) to the

business level (second tier) and to the individual level (3rd tier)

Traditionally, Performance Management in an organisation context has been divided

into three levels: strategic, operational and individual performance management

(Brudan, 2010).

6.1.4.1. Performance Management at the Corporate Level (First tier)

This is the highest level of performance. It deals with the achievement of the overall

organisational objectives. Practitioners refer to it as corporate, business, organisational or

enterprise performance management. Strategic management is a key driver of performance

management at this level, as the key process related to performance management systems are

strategy formulation and implementation.

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6.1.4.2. Performance Management at the Business Level (second tier)

This level is linked to operational management, as its focus is on the achievement of

operational objectives at divisional or departmental levels. Although aligned with corporate

strategy, the focus here is more functional and tactical.

6.1.4.3. Performance Management at the Individual Level (third tier)

This is the third level by which Performance Management is used in organisations. At the

individual level, performance management is represented by an integrated and planned

system for continuously improving the performance of all employees.

6.1.5. Performance Management Cycle.

Performance Management is a continuous cycle as shown in figure 6.1 below

Figure 6.1.

Objective Setting

Reward

Performan

ce

Manageme

nt Cycle

Reporting Evaluation

Mentoring

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6.2. Performance Objective Setting

Performance objective setting starts with understanding what performance objectives are and

how they align with and support the organisation’s goals, objectives, and priorities. It starts by

following six steps.

1. Understand the purpose of performance objectives: A performance objective is a specific

end result that contributes to the success of the unit or organisation and that an employee is

expected to achieve within a specified period. Performance objectives provide focus to an

employee’s work to ensure that his or her actions are directed towards achieving important

mission-related outcomes. They are not work activities, task descriptions, or responsibilities

listed in a job description. A work activity is the action that an employees’ takes when

performing their jobs, while a performance objective specifies the outcome or end result of a

work activity.

2. Compile your resources: gather information that will help you to set SMARTER

performance objective that are aligned with the corporate objectives. Examples of such

information include: job descriptions, standard operating policies and procedures, vision and

mission statements of the company, the company’s strategic plan document, organisational goals,

objectives and priorities, departmental objectives, supervisor’s performance objectives etc.

3. Determine the most important aspects of the job: Make a list of the most important work

activities for the job. Consider work activities that are:

1. critical for supporting the organisational mission.

2. key to supporting other jobs in the organisation.

3. performed most often by the individual.

4. Work activities to end results: Choose about five of the most important work activities on

your list, and for each one, write down what the end result of performing that activity should be.

5. End results to Objectives: Make your “End Result” SMART

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Each of the end results is to be turned into a “SMARTER” performance objective. SMART

means S= Specific, M= Measurable, A = Achievable, R= Realistic or Relevant, T = Time bound,

E= Evaluate, R= Reward

Specific: The performance objective should clearly define expected results.

Measurable: The performance objective should specify how to measure success (i.e. provide a

verifiable standard for evaluation).

Types of measurement include:

1. Quality: how well the work is performed (e.g. accuracy, effectiveness, or usefulness).

2. Quantity: amount produced (e.g. raw numbers, percentages, level of productivity).

3. Timeliness: how quickly the work is completed (e.g. a certain time period or by a certain

date).

4. Cost effectiveness: how efficiently the product or service was produced and/or outcomes

that result in a saving of time or money (e.g. Naira amount saved by creating an efficient

method of performing a duty).

Achievable: The performance objective should be within your control and not be overly

dependent on external factors which are not within your control.

Relevant: The performance objective should have a direct and obvious link to your job, the

manager’s objectives, the work unit’s goals, and most importantly the organisational goals. It

should be job- specific and impact on the organisation’s success.

Time-bound: The performance objective should specify a time frame associated with production

of the goods or services. Such time frame helps clarify performance expectations and ensure the

work gets done in a timely manner. Time frames can be within a certain period of time or by a

certain date and must be within the performance cycle.

Evaluate: the performance objective should give room for periodic evaluation in order to

measure progress towards achieving the goal. This characteristic gives room to re-adjust the

goals if need be. This is not about changing the goal post rather it is about exploring various

alternatives that can help you achieve your goals.

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Reward: the performance objectives should be linked to reward. Reward here has to do with a

feeling of accomplishment to the employee and the outcome of achieving that goal to the

organisation. Every performance objective met in any little corner brings the organisations closer

to achieving their corporate objectives.

In writing a SMARTER objective, it is important to use action verbs to explain employee’s role

in achieving the objective. Example of action verbs are Complete, Direct, Lead, Coordinate,

Evaluate, Prepare, Develop, Facilitate, Produce, Support, Grow, Sustain etc.

6. Review your performance objectives

6.3. Cascading of Performance Objectives

The objectives have to be cascaded from the corporate level to business unit level and to the

employees’ level. Cascading performance objectives enables employees to align with the

organisational objectives and goals.

6.3.1. Determination of corporate objectives/goals:

The strategic objectives of the organisation established begin with the vision and mission

statements. The mission of the company is used to determine the strategic focus of the company.

All the six steps mentioned above have to be followed.

At this level, the business owners get inputs from the business and individual levels which they

use in developing the performance goals they hope to achieve in line with the organisational

vision. These performance goals form the basis for which the organisational performance for a

particular period is measured. These objectives are then cascaded to different business units,

which extract what is applicable to their functions.

An example of corporate strategic objective: “To achieve N10 billion Revenue in 2017 Financial

Year”

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6.3.2. Determination of business unit objectives/goals:

The business unit may be subsidiary companies or departments within the organisation. The

business unit objectives should align with the corporate objectives. The aim is to ensure that the

business units focus on activities that support the achievement of the corporate objectives/goals.

At this level, the business unit heads cascade the departmental performance goals to various unit

heads within their business units. These unit heads extract and craft various performance

objectives that apply to their various job functions.

Example: The sales/marketing unit objective could be “To achieve N10 billion Sales by 31

December, 2017”

This objective could be further cascaded to the various units within the sales/marketing

department.

Example: Assuming there are different sales outlets: Ikeja, Lagos Island and Ibadan.

The business unit objective for Ikeja could be “Achieve N 3 billion sales by 31 December, 2017”

The business unit objective for Lagos Island could be “Achieve N 5 billion sales by 31

December, 2017”

The business unit objective for Ibadan could be “Achieve N 2 billion sales by 31 December,

2017”

6.3.3. Determination of employees’ performance objectives/goal:

At this level, unit heads cascade their unit objectives to their team members who work towards

the accomplishment of these goals.

Let us assume that we have 3 Sales Managers in each of the business units. Their individual

performance objectives for Ikeja Sales Manager could be: “Achieve N2 million sales by 31

December, 2017”. For the Assistant Manager in Ikeja the performance objective could be:

“Achieve N1 million sales by 31 December, 2017”

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With these examples, if individual employees achieve their performance objective, the business

unit will achieve its objective; and if all the business units achieve their performance objectives,

then the corporate performance objectives/goals will be achieved.

6.4. Setting and Agreement of Key Performance Indicators (KPIs)

These are the set of quantitative measures that a company uses to gauge its performance over

time. These metrics are used to determine a company’s progress in achieving its strategic and

operational goals, and also to compare a company’s finance and performance against other

businesses within the industry. Each objective should have its measures or key performance

indicator. The objectives will be evaluated against the agreed Key Performance Indicators.

During the performance planning process, the employees should agree with their supervisors on

the Key Performance Indicators in order to have clarity on the set objectives and to avoid

divergence during evaluation of performance.

Below is an example of the KPI of an HR Assistant.

1. Financial 15%

OBJECTIVE MEASURE TARGET

DATE

1. Ensure effective bill management to

vendors • Processing of canteen bills within 3

working days

• 100% accuracy in bills processing

Dec. 2017

2. Learning Growth 30%


DATE

1. To effectively demonstrate knowledge and

competence on the job

Maximum of 10 incidents of error in outputs

within the FY

Dec. 2017

Internal Process 300%

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DATE

1 Ensure prompt submission of HR activity

reports • Submission of monthly activity

reports by the last working day of

every month

Dec. 2017

2 Ensure effective management of all

employees’ records. • All documents to be properly filed

within 24 hours of receipt

• Zero tolerance for loss of

documents/files

• 100% documentation of all files

moved out of the department

• All staff request form are up-to-

date and 100% available for use.

Dec. 2017

3 Ensure effective and prompt internal

communications to staff. • Distribute all communication

materials within 4 hours from the

date of receipt.

3. Customer 25%


DATE

1 Ensure hitch free company events • List of birthday celebrants of each

month to be published on the

notice boards by 1st working day of

each month

• Designated venue for events should

be ready for use at least 30 minutes

before scheduled start time

• Zero complaint arising from poor

preparation

2 Ensure effective operations of all

employee welfare scheme • Maximum 10 complaints on

employee welfare services

• Preparation and dissemination of

approved leave letters within 48

hours from date of receipt

• Submission of schedule of staff

payroll deduction on HMO private

scheme, meal ticket and leave

allowance payment not later than

the 15th day of every month

• Issuance of meal ticket in line with

agreed guidelines with zero

Dec. 2017

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tolerance for any deviation

• Process all loans requests within 5

working days from date of receipt

• Process all HMO registrations not

later than 5th working day of every

new month

• Other employee requests such as

ID card, complimentary cards are

processed within 48 hours from

date of receipt

3 Ensure effective support of employees

induction and on-boarding processes • All stakeholders are notified of the

induction/on-boarding programme

at least 48 hours before scheduled

date

Dec. 2017

6.5. Performance Monitoring

This is the process of monitoring progress on the performance objectives. It is a process by

which supervisors ensure that employees are making progress towards the achievement of the

goals that have been set earlier in the year. It is a process which ensures that continuous

feedback is given to employees on their performance, areas of improvement and

developmental needs. It provides an opportunity for the supervisor and the employee to

evaluate the set goals and readjust where necessary.

6.6. Performance Feedback

Performance Feedback process should be ongoing discussion between managers and

employees. The exchange of information revolves around performance expected and actual

performance. Feedback should be given in a constructive manner and should be fact-based so

that it does not produce counter-effective result. Having a face-to-face interaction can

provide direction to help solve performance problems.

It is essential to give prompt feedbacks. Confidentiality is also important in providing

performance feedback to employees. For feedback to have a positive outcome, it should be

specific rather than general.

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6.7. Performance Measurement and Evaluation

Performance objectives have to be measured and evaluated regularly. To achieve this,

performance measure or standard should be established when setting objectives. Performance

measure or standard defines what will indicate the acceptable level of performance, which will

be achieved through evaluation or appraisal.

6.7.1. Performance evaluation/appraisal

Performance appraisal is the systematic evaluation of the performance of employees and the

abilities of a person for future growth and development. Performance appraisal period differs

across organisations but mostly done annually, half-yearly or quarterly.

The objectives of performance appraisal include:

1. To identify the strengths and weaknesses of employees

2. To maintain and assess the potentials in a person for future growth and development

3. To provide a feedback to employees regarding their performance.

4. To identify developmental needs.

5. To determine employees’ reward for performance

6. To re-evaluate career plan

6.8. Performance rating scale

This involves assigning numerical scores to the level of performance against the measurement or

standard of performance. The rating is usually on a scale of 1 to 5 and a score is awarded based

on the defined level of performance. For instance:

5 = Exceptional: Performance far exceeded expectation due to exceptionally high quality of work

performed in all essential areas of responsibility, resulting in an overall quality of work that was

superior.

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4 = Exceeds expectation: Performance consistently exceeded expectations in all essential areas of

responsibility, and the quality of work overall was excellent. Annual goals were met.

3 = Meets expectation: Performance consistently met expectations in all essential areas of

responsibility, at times possibly exceeding expectations, and the quality of work overall was very

good. The most critical annual goals were met.

2 = Improvement needed: Performance did not consistently meet expectations – performance

failed to meet expectations in one or more essential areas of responsibility, and/or one or more of

the most critical goals were not met. A professional development plan to improve performance

must be attached, including timelines, and monitor to measure progress.

1 = unsatisfactory: Performance was consistently below expectations in most essential areas of

responsibility, and/or reasonable progress toward critical goals was not made. Significant

improvement is needed in one or more important areas. A plan to correct performance, including

timeliness, must be outlined and monitored to measure progress.

6.9. Performance Dialogue

This is a periodical discussion between an employee and his supervisor, to discuss what is going

well with respect to the job, areas that need improvement, employee goals, and to explore

development opportunities and training. The performance dialogue process creates a platform for

candid feedback to be exchanged and agreed on a plan for achievement and job satisfaction. It is

important that both the employee and the supervisor recognise that performance dialogue is a

mutually beneficial discussion and that the outcome impacts both of them. It should be a fact-

based dialogue between employees and line managers.

6.10. Performance Management Reporting

Performance management outcomes must be reported to show an employee’s level of

performance, strengths and weaknesses, training and developmental needs, career plan and

reward associated to the level of performance. The Human Resource Manager should be

responsible for the preparation of the report which should be reviewed by the appraisal

committee of the organisation and thereafter presented for executive approvals. The outcome of

the employees’ performance must be communicated to the employees in writing.

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6.11. Performance Result Calibration

This is a process in which managers come together to discuss the performance of employees and

achieve agreements on performance appraisal ratings and reward. Performance calibration refers

to the steps taken to make sure that managers apply a consistent set of standards by which all

employees are evaluated and rewarded. The key objectives of this process is to ensure that

performance rating of employees are accurate and fair.

The process ensures:

1. A fair and objective performance appraisal of a past performance is made for each

employee in relation to another in similar roles and/or job levels, and

2. Managers apply similar standards to all employees.

6.12. Reward for performance

Pay for performance should be adopted in order to promote excellent performance in an

organisation. Employee’s level of performance should determine the amount of reward he or she

gets. Merit increase is usually given by companies based on level of performance. Both monetary

and non-monetary incentives should be adopted in rewarding performance. Monetary incentives

include increase in salary, commission, bonus payment, profit sharing while non-monetary

incentives include praise, recognition, special training opportunity, promotion etc.

6.13. Performance Remedial Actions

The following remedial actions could be taken when performance falls below expectation:

1. Counselling and coaching.

2. Learning/Training and development.

3. Monitoring of employee’s performance regularly.

4. Issuing warning letters.

5. Moving employees to a role they have competence for.

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6. Continuous non-performers should be out-placed in order to discourage poor performance.

6.14. Summary

Managing performance is crucial to an organisation’s success and achievement of its

objectives/goals. These objectives/goals must be SMART and should be cascaded from the

corporate level to the business unit level and to the individual employee. These objectives/goals

should be agreed on by the managers and their subordinates, and should be continuously

monitored throughout the performance cycle.

Standards for measurement and evaluation of performance outcomes should be clearly defined

and communicated to ensure performance effectiveness. It is essential to establish a two-way

performance feedback mechanism and performance outcomes should be appropriately reported.

Performance outcomes should attract “rewards”; positive reward for good performance and

reprimand/punishment for poor performance. Finally, performance results should be calibrated.

Practice Questions

1. Briefly discuss the importance of performance management to organisations.

2. Discuss the processes involved in setting performance objectives and how they can be

entrenched in an organisation.

3. Discuss the process of performance measurement and evaluation.

4. Demonstrate your understanding of performance management cycle

5. Why do you think performance dialogue is necessary in the performance management

process?

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CHAPTER SEVEN

COMPENSATION MANAGEMENT



• define the concept of compensation management;

• discuss the relevant theories of compensation management;

• apply job evaluation results in compensation administration;

• discuss the different forms of employee benefits; and

• design an executive compensation.

7.1. Introduction

Compensation is the remuneration earned by employees in exchange for the work they do for the

organisation. It comprises both financial and non-financial rewards. This implies that employees

are entitled to both the financial and non-financial benefits in return for their contributions to the

organisation.

Financial compensation refers to monetary remuneration or other things in economic value given

to employees in exchange for their contributions. Financial compensation takes two forms: direct

and indirect. Non-financial compensation has no monetary value. It can be defined as the

satisfaction employees derive from their jobs and work environment.

7.2 Theories of Compensation

Designing an effective compensation system is critical in helping an organisation compete

successfully. The greatest competitive advantage an organisation can boast of is its people, hence

it is imperative to take cognizance of the conceptual framework or theories of remuneration

when designing effective compensation management system. The theories include the

following:

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7.2.1. Reinforcement and Expectancy Theories

B.F Skinner’s reinforcement theory postulates that a behaviour which is rewarded is most likely

to reoccur in the future. This indicates that high employee performance followed by a monetary

reward will make an employee’s performance better or higher in future more likely. In the same

vein, high performance not followed by a reward will less likely re-occur in the future. This

theory emphasises negative recurrence unlikely in future. The theory emphasises the importance

of a person actually experiencing reward.

7.2.2. Expectancy Theory

Victor Vroom’s Expectancy Theory, postulates that reward can be a major motivation to

employees if they establish a well-defined relationship between effort, performance and reward.

The idea behind this theory is that employees’ motivation stems from the outcomes they expect

to occur as a result of their actions. The level of effort an individual is willing to exert is

dependent on three (3) major factors as stated below:

• the perceived relationship between effort and performance – Expectancy,

• the perceived relationship between performance and outcome - Instrumentality; and

• the value of the outcomes – Valence.

In other words, effort is a function of expectancy, instrumentality and valence. This theory is

useful for designing performance based incentive pay.

Formula: E=f(e.i.v)

Where:

E= Effort

I= Instrumentality

V= Valence.

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7.2.3. Equity Theory

Adam’s equity theory postulates that an employee compares his input and rewards to the inputs

and reward of others. In other words, people’s attitude towards pay is influenced by their

rewards, what they did to earn it and the fairness of their pay to work ratio in comparison to that

of others. When employees perceive inequity in their rewards, they may seek to restore it by

doing any of the following:

• alter their input,

• alter their outcomes,

• cognitively distort their perception on the input or outcomes of others,

• cognitively distort their perception on their input or outcomes,

• may change object of comparison, and

• may leave the situation.

This theory places emphasis on equity in the pay structure of employees’ remuneration.

Employee’s perception of how they are being treated by their employers in comparison to their

peers is of prime importance to them. The dictum “a fair day’s work for a far day’s pay”,

provides a sense of equity felt by employees. When employees perceive inequity, it may result in

lower productivity, high absenteeism, and increase in labour turnover.

.

7.2.4. Agency Theory

Jensen and Meckling Agency’s Theory states that the principal must choose a contracting

scheme that helps align the interest of the agents with the principal’s own interest. This theory

focuses on the divergent interests and goals of the organisation’s stakeholders and the way that

employee remuneration can be used to align these interests and goals. Employers and employees

are the two stakeholders of a business unit, the former assuming the role of principals and the

latter the role of agents. The remuneration payable to employees is the agency cost. It is natural

that the employees expect high agency costs while the employers seek to minimise it. These

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contractual relationship between employees and their employers can be classified as either

behaviour-oriented (e.g. merit pay) or outcome oriented (e.g. stock option schemes, profit

sharing, and commission).

7.3. Role of financial compensation

Money is an important motivator of employee performance to a certain extent, while at the same

time recognising that money cannot be the only motivator. Money can be effective as a motivator

to some, but this will only happen if it is perceived as a reasonably certain means of achieving a

goal. There has to be a definite link between effort and reward. This is why money is such an

important factor in attracting people to join an organisation and, to a lesser extent, in dissuading

them from leaving. To some people money seems to represent social respectability; to others it

may mean recognition for achievement; to others still it stands for worldliness, materialism, and

the root of all evil (Gellerman, 1968:65).

Generally, the role of financial compensation in organisations include the following:

1. Attracting employee: The reward package on offer must be adequately attractive compared to

that of its labour market competitors.

2. Retaining employee: Retaining effective performers should be the central aim of a reward

strategy.

3. Driving Change: Pay can be used specifically as one of the tools supporting change

management process.

4. Corporate reputation: Establish a positive corporate reputation.

Money cannot satisfy all the needs of people, hence to ensure satisfaction of employees, non-

financial compensation is also important. Non- financial compensation includes the following:

1. Job security: No/low risk of retrenchment, demotion and termination.

2. Recognition: Efficient people like recognition for their skills and excellence in their work.

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3. Participation: Employees feel more satisfied when they are given an opportunity to voice their

opinion in handling the affairs of the organisation. If they actually take part in the decision

making, their cooperation is assured.

4. Pride in the job: Employees must be made to have a sense of pride in their jobs. Techniques to

achieving this include: good products, dynamic leadership, fair treatment, ethical conduct. All

these can effectively stimulate such sense of pride in employees, their jobs and their

organisation.

5. Delegation of responsibility: Delegation of rights and responsibilities to execute a given task

often proves to be a strong motivating factor. Through delegation, a superior trusts his employees

and stimulates them to show better results.

7.4. Consequences of Pay Dissatisfaction

The desire for more pay has the potential to lead employees to reduced productivity, increased

levels of grievances, strikes, employee search for other jobs, resignation, sabotage, increased

levels of absenteeism and job accidents, pilfering, sick leaves and psychological withdrawal.

To avoid all these, the following objectives must be considered when designing a pay structure:

• Be legal: Must be consistent with the relevant laws

• Be adequate: Must be enough to attract and retain qualified employees

• Be motivating: Should provide sufficient incentives to encourage employees to perform

• Be equitable: Employees should feel that their monetary compensation is internally

equitable relative to other employees within the organisation and externally equitable-

relative to other employees doing similar work in other organisations

• Provide security: Employees like to feel that their pay is somewhat insulated from

changes which may arise as a result of personal health, profitability, performance etc.

• Be cost-benefit effective: An organisation must design a compensation structure which

its financial resources can accommodate in a sustainable way.

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7.5. Job Analysis

Job Analysis is the systematic study of jobs within an organisation. It involves the process of

collecting and analyzing data about the duties, responsibilities, required skills, work aids and

work conditions under which jobs are carried out.

An important concept of Job Analysis is that the analysis is focused the jobs, not on persons. The

Job Analysis data may be collected from incumbents through interviews or questionnaires or

observation. The result of Job Analysis is a Job Description or Job Specification.

Job Analysis is usually carried out when:

• The organisation is newly established

• A new job is created; and

• A job is modified either as a result of new processes or technology.

7.5.1. Terminologies used in Job Analysis

Task: A task is a distinct work activity carried out for a specific purpose.

Position: A position refers to the rank or status of an individual within an organisation.

Job: A job is a group of defined tasks or activities to be carried out or duties to be performed by

an employee.

Role: The terms “job” and “role” are often used interchangeably but are quite different. A Role

is a prescribed set of behaviour associated with a particular position in an organisation.

Occupation: An occupation is a number of similar jobs existing in different companies and at

different times. Examples of occupations are carpentering and civil engineering.

Job family: A job family is a group of jobs that have similar work characteristics.

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Job Description: this is a written document that outlines the elements of a job as gathered from

the Job Analysis. These elements include job title, objective of the job, reporting line,

supervision, working conditions, work aids, knowledge, skills and experience required.

Job specification: This focuses on the minimum acceptable qualifications required for an

employee to perform the job adequately. It typically outlines the knowledge, skills and abilities

needed to perform the job effectively.

7.5.2. Job Analysis Methods.

1. Observation Method

This method involves observation of individuals at work and taking note of the activities

performed. What they do, how they do it and how much time it takes to do it are some of the

things to observe.

This method is most appropriate for routine administrative and manual roles. The limitation here

is that employees behave differently when they know that they are being observed, hence this

method might not give an accurate picture of what the job entails.

2. Interview Method

Job analysis information can be derived by interviewing the job incumbents and their

supervisor. This method is mostly adopted for professional and technical jobs that mainly

involve thinking and problem solving. The structured interview has been adjudged the

most effective. Group interview method could also be used for a group of employees

performing the same job. In conducting interviews, the following checklist serves as a

general guide.

1. what is the title of your job?

2. to whom are you responsible?

3. Who is responsible to you?

4. What is the main purpose of your job: what are you expected to contribute?

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5. What are the key activities you have to carry out in your role?

6. What are the results you are expected to achieve in each of those activities?

7. What are you expected to know to be able to carry out your job?

8. What skills should you have to carry out your job.

3. Structured Questionnaire

Most of the questions used in the interview are applicable in a structured questionnaire.

The questions are written. The advantage of the questionnaire is that they produce

information quickly and cheaply for a large number of jobs. They can save interviewing

time. However, the accuracy of the result will depend on the willingness and ability of

job holders to complete questionnaire.

The Position Analysis Questionnaire developed by Ernest McCormick and his associates

is one of the frequently used job analysis questionnaire. It measures six (6) major

categories of a job as stated below.

1. Information input: where and how the worker gets the information required to

carry out the task

2. Mental process: the planning and information processing activities required to

perform the job

3. Work output: the physical activities carried out as well as work tool/aids needed

4. Relationship: relationship with other people needed to carry out the job

5. Job context: the physical context in which the job is carried out

6. Other jobs: other characteristics than those described above

7. 5. 3. Benefits of Job analysis

1. To define the overall purpose of the job and what the job holder is expected to do.

2. To create and classify job titles.

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3. To write job descriptions.

4. To determine training needs.

5. To evaluate job and compensation management as a whole.

6. To select procedures.

7. To manage performance.

8. To determine quality assurance standards.

9. To prepare organisation charts showing to whom the job holder reports and who reports to the

job holder if any.

10. To conduct time and motion studies.

7.6. Techniques of Job Evaluation in Public and Private Sectors

Compensation management starts with Job Evaluation. Job Evaluation is the systematic process

of determining the relative worth of jobs in an organisation. The basic purpose of evaluation is to

promote equity and design a structure that aligns different pays for different job based on the

value added to the organisation. This enables the organisation to establish a hierarchical

alignment of jobs based on a common set of criteria. These evaluation criteria are generally

presented in the form of “Compensable Factors” defined as components of job content or work

demands that are felt to provide the basis for compensation.

The four commonly used broad Compensable Factors are:

1. Skill

2. Effort

3. Responsibility

4. Working conditions

Some organisations also use Point-Factor Plans or Factor Comparison approaches typically

similar to sets of Compensable Factors. Other commonly used factors are:

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1. Knowledge required

2. Supervisory controls

3. Complexity

4. Scope and effect

5. Personal contacts

6. Purpose of contacts

7. Guidelines

8. Physical demands

9. Work environment

Jobs in the organisation may be rated according to their relative “importance”. Each job might be

given its individual rating, or jobs of comparable importance may be grouped into a single salary

classification, or pay grades. Job evaluations compare positions in an organisation with respect to

such factors as effort, skill, working conditions, responsibility, and so on. For job evaluations to

be meaningful, a detailed list of compensable factors needs to be articulated. To increase the

objectivity of job evaluation, employees may be asked to participate in the process of evaluating

the organisation’s jobs. Employees can add valuable insight into the essential job attributes for

various positions.

Thereafter, job evaluations will reflect the relative value or contribution of different jobs to an

organisation. Once a job evaluation has been completed, market comparisons for a few key jobs

need to be used as benchmark for market reality. In theory, other jobs in the evaluation can be

adjusted correspondingly. In practice, results of job evaluations are often compromised by

market considerations. For example, no matter what the organisation’s job evaluation may

indicate, it is unlikely that the firm will be able to pay salary drastically lower (or higher) than

the going rate.

In the public sector, in particular, minimum salary legislation may affect organisations

compensation despite job evaluation results. In setting salary structure, it is essential to reconcile

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market information, through salary or remuneration survey and job evaluation results rather than

rely on only one or the other.

7.6.1. Job Evaluation Techniques or Methodologies

There are many methodologies that can be used for job evaluation. These are classified as non-

quantitative and quantitative techniques. Non-quantitative techniques are Job Ranking and Job

Grading/Classification method while the quantitative techniques are the Factor Comparison and

Point System methods.

Job Ranking

In job ranking, each job is ranked subjectively according to its importance in comparison with

other jobs in the organisation. However, overall rankings of jobs frequently fail to differentiate

between the relative importance of the jobs. For example, a ranking system may fail to show that

the value of a number two ranked job is essentially the same as that of the number one ranked

job (and, consequently, worth almost as much in terms of compensation), whereas the number

three ranked job may contribute not nearly as much value to the organisation (and, consequently,

be worth substantially less in terms of compensation).

The advantages of Job Ranking are that:

1. It is in accord with how people instinctively value jobs.

2. It is simple and easily understood.

3. It is quick and cheap to implement, as long as agreement can be reached on the rank order of

the jobs without too much argument.

4. It is a way of checking the results of more sophisticated methods to indicate the extent to

which the hierarchies produced are ‘felt fair’ – but this may simply reproduce the existing

hierarchy and fail to eliminate gender bias. The question is ‘felt-fair by whom?’

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The disadvantages are that:

1. There are no defined standards for judging relative worth – and therefore no rationale to

defend the rank order – It is simply a matter of opinion (although it can be argued that even

analytical schemes do no more than channel opinions in certain directions).

2. Ranking is not acceptable as a method of determining comparable worth in equal-value cases.

3. Evaluators need an overall knowledge of every job to be evaluated, and ranking may be more

difficult when a large number of jobs are under consideration.

4. It may be difficult, if not impossible, to produce a felt-fair ranking for jobs in widely different

functions where the demands made upon them vary significantly.

5. It may be hard to justify slotting new jobs into the structure or to decide whether or not there is

a case for moving a job up the rank order – i.e. re-grading.

6. The division of the rank order into grades is likely to be somewhat arbitrary.

Job Grading or Job Classification

In the Job Grading Method, each job is assigned a grade according to its match with a standard

description. Each job description is compared with the standard “grading” description. Job

Grading or Job Classification is based on an initial definition of the number and characteristics of

the grades into which jobs are to be placed. The grade definitions refer to such factors as the key

tasks carried out (skill, competence, experience, initiative and responsibility). Each grade level

usually has a clear distinction in the demands made by the job being evaluated. Each grade

therefore represents a threshold that must be crossed before regrading occurs.

Example of job grade standard descriptions:

Grade 1 – Work is simple and highly repetitive; with close supervision, requiring minimal

training and little responsibility or initiative.

Grade 2 – Simple and repetitive work done under close supervision and requiring some training

or skill. Employee is expected to assume responsibility or exhibit initiative only rarely.

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Grade 3 – Work is simple, with little variation; done under general supervision. Training or skill

required. Employee has minimum responsibilities and must take some initiative to perform

satisfactorily.

Advantages of Job Grading or Job Classification

1. It takes into consideration training, experience, level of responsibility, and specific duties

demanded by a job in comparison with other jobs.

2. Jobs can quickly be slotted into the structure because the existing grading structure is not

dependent on the jobs.

3. It is easy and cheap to develop, implement and sustain.

4. Its simplicity means that it is easily understood.

Disadvantages of Job Grading or Job Classification

1. It cannot cope with complex jobs that do not fit neatly into one grade

2. The grade definitions tend to be so generalized that they may not be much help in evaluating

border-line cases, especially at more senior levels.

3. It often fails to deal with the problem of evaluating and grading jobs in dissimilar occupational

or job families, when the demands made on job are widely different – e.g. technical and

administrative job families.

4. Grade definitions tend to be inflexible and unresponsive to technological and organisational

changes that affect role and job content.

5. Because it is not an analytical system it is not effective as a means of establishing comparable

worth and is unacceptable in equal-value cases.

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Factor Comparison

The factor comparison methods require jobs to be compared on critical job components. Critical

job components are those factors common to all jobs in the organisation being evaluated. In

general, these factors can be grouped into four broad categories:

• Skill

• Effort: mental and physical

• Responsibility

• Working conditions

A Step-by-Step Approach to factor Comparison

Step 1: Determine the key jobs: the key jobs are known positions that are equally rewarded

across all organisations and serve as the benchmark against which other jobs are evaluated.

Step 2: Determine the compensable factors: these factors are common and important over a

broad range of jobs. The factors highlighted above are most commonly used.

Step 3: Apportion present wages for key jobs: Allocate a part of each key job’s wage rate to each

critical factor; the allocation depends on the importance of that factor to the job in question.

Step 4: Place key jobs and jobs to be evaluated on factor comparison chart.

- Rows: key jobs

- Columns: critical factors

- An Example of Factor comparison method

Key job Daily

Wage

Rate

Physical

Effort

Mental

Effort

Skill Responsibility Working

Condition

Electrician 60 11(3) 14(1) 15(1) 12(1) 8(2)

Fitter 50 14(1) 10(2) 9(2) 8(2) 9(1)

Welder 40 12(2) 7(3) 8(3) 7(3) 6(3)

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Cleaner 30 9(4) 6(4) 4(5) 6(4) 5(4)

Labourer 25 8(5) 4(5) 6(4) 3(5) 4(5)

Assuming the job a plumber is found to be like electrician in skill (15), fitter in mental effort

(10), welder in physical effort (12), cleaner in responsibility (6) and labourer in working

condition (4). The wage rate for this job would be (15+10+12+6+4) is 47.

Step 5: Evaluate other jobs

- Use key jobs as benchmarks

- Compare other jobs as the basis of critical factors

- Assign monetary value of the basis of this comparison

Advantages of Factor Comparison

1. It is analytical in the sense that it compares jobs on factor –by-factor- basis.

2. Rankings are made by comparing jobs direct with others in respect of a defined factor. This

avoids the need to produce level definitions which are often imprecise and can be understood

only by reference to benchmark jobs.

3. It leads directly to a price for the job: It is not necessary to convert points into money.

Disadvantages of factor comparison

1. It depends absolutely on selecting benchmark jobs that are believed to be properly paid – but

(a) how can anyone be certain that this is the case? and (b) how is it possible to avoid simply

reproducing the existing pecking order, which may contain serious inequities?

2. It is complex and difficult to understand.

3. Although analytical, it still requires a considerable amount of subjective judgement on where

jobs slot in.

4. It could be held to be discriminatory in an equal-value case.

Point System

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The point system involves an evaluation of critical factors with an allocation of points instead of

monetary value to ascertain the relative worth of a variety of jobs to the organisations.

Step 1: Determine critical factors – brainstorm with department heads to determine which job

factors are critical across a broad range of jobs within the organisation.

Step 2: Determine levels of factors – extent of responsibility for factors varies from job to job.

Step 3: Points allocated to various levels for each critical factor (e.g. a total of 100 points).

Advantages of Point-Factor Methods

1. Evaluators are forced to consider a range of factors which, as long as they are present in all the

jobs and affect them in different ways, reduce the danger of the oversimplified judgements that

can be made when using non-analytical methods.

2. Point system provides evaluators with defined yardsticks which should help them to achieve

some degree of objectivity and consistency in making their judgements.

3. They at least appear to be objective (even if they are not), and this quality makes people feel

that they are fair.

4. They provide a rationale which helps in the design of graded pay structures.

5. They can assist in matching jobs when making external comparisons for market pricing

purposes.

6. They can be acceptable in equal-value cases as long as the factor plan is not discriminatory

7. They adapt well to computerisation.

Disadvantages of Point-Factor Method

1. They are complex to develop, install and maintain.

2. They give a spurious impression of scientific accuracy – it is still necessary to use judgement

in selecting factors, defining levels within factors, deciding on weightings, and interpreting

information about the jobs in relation to the definitions of factors and factor levels.

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3. They assume that it is possible to quantify different aspects of jobs on the same scale values

and then add them together. But the attributes and job characteristics cannot necessarily be added

together in this way.

7.7. Wages and Salary Administration

The main objective of wage and salary administration is to establish and maintain an equitable

wage and salary system. It is only a properly developed compensation system that enables an

employer to attract, obtain, motivate and retain people of required competencies and

qualifications.

7.7.1. Objectives of Wages and Salary Administration

1. Organisational objectives: the compensation system should be aligned with an organisation’s

need and should also be flexible enough for modification in response to change. The objectives

should be to:

1. Enable an organisation to have the required quantity and quality of employees.

2. Retain employees in the organisations.

3. Motivate employees for good performance.

4. Maintain equity and fairness in compensations for similar jobs.

5. Achieve flexibility in the system to accommodate organisational changes as and when these

take place.

6. Make the system cost-effective.

2. Individual objectives: From the individual employee’s point of view, the compensation

system should have the following objectives:

1. Ensure a fair compensation.

2. Provide compensation according to the employee’s worth.

3. Boost employee morale and motivation.

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3. Collective objectives: From the employer’s and employee’s perspective, the objectives should

include:

1. Compensation that is ahead of inflation.

2. Matching with market rates.

3. Increase in compensation reflecting increase in the prosperity of the company.

4. A compensation system free from management discretion.

In summary, wages and salary administration has five broad objectives:

1. To attract and retain talented employees.

2. To effectively manage pay-rolls.

3. To satisfy people, and reduce the incidence of turnover, grievances, and conflicts.

4. To motivate people to perform better; and

5. To maintain a good reputation.

7.7.2. Principles of Wage and Salary Administration

Three main principles govern wage and salary administration:

1. External Equity: This principle admits that factors/variables external to an organisation

influence the levels of compensation in the organisation. These variables include: demand and

supply of labour, the market rate, etc. These variables are considered when fixing wage and

salary levels. This can be determined through salary surveys.

2. Internal Equity: This is to ensure that the relative worth of various jobs within an

organisation are considered in fixing wage and salary levels. In other words, the various jobs in

an organisation are competitive. The relative worth of a job in an organisation is determined with

Job Evaluation.

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3. Individual Worth: This principle posits that individuals should be paid based on their

performance. Thus, the compensation system, as far as possible, enables the individual to be

rewarded according to his contribution to organisation.

7.8. Payroll Management

Payroll is the total compensation a business pays to its employees for a period of time on a given

date. It details wages/salaries and all forms of deductions accrued by an employee over a period

of time.

An employee’s salary is typically made up of the following: Basic Salary, Housing Allowance,

and Transport Allowance. These are called an “Employee’s Total Emoluments”. It forms the

basis for which some statutory payments are made on behalf of the employees.

Gross Pay: The total of an employee’s remuneration including allowances, overtime pay,

commission and bonuses, and any other amounts before any deductions are made.

Net Pay: The amount an employee receives after deductions such as taxes and pensions have

been made.

The deductions usually made are backed by statutory laws, such as:

• Personal Income Tax: This is the tax imposed on individuals who are in employment.

Employers deduct the tax payable by an employee to the government before making

payment to the employee. The total gross pay of employees is what is taxed: gross pay

here, refers to total emoluments and other allowances. The tax rate varies across different

pay bands and is from 7% to 24%. However, there are some exemptions to the tax rule as

stated in the amended Personal Income Tax Act (2011). These include: National Housing

Fund Contributions, National Health Insurance Contributions, Gratuities, Life Assurance

Premium and Pension Contributions. An employee’s personal income tax is payable to

the tax authority of the state of residence. It is, therefore, the duty of the employer to

deduct and remit it to the tax authority where the employee is resident.

• Pension Contributions: These are amounts deducted from the total emolument of an

employee contributed to a Pension Fund Administrator (PFA) on a monthly basis. The

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Pension Reform Act (2014) mandates employers to make a contribution of 10% of an

employee’s total monthly emoluments to the pension scheme, and deduct 8% of an

employee’s monthly total emolument as the employee’s contribution to the scheme.

Other deductions which can also be made from an employee’s pay include:

• National Housing Fund: This is a contributory fund scheme which facilitates the

mobilisation of funds for the provision of houses for Nigerian workers at an

affordable cost. An employer whose employees earn a basic salary of N3,000 and

above per annum shall deduct 2.5% of the monthly salary of the employees as a

contribution to the fund.

• Additional Voluntary Contributions: These are extra funds employees can opt

to add to their mandatory pension contribution or simply set aside as retirement

savings. These funds would be deducted from their monthly emoluments by the

employer and remitted into their respective Pension Retirement Savings Account

(RSA) along with the regular pension contribution.

Employers are also mandated by law to make other contributions which are

hinged on the payroll but are not deducted from employees pay. These include:

• Group Life Assurance: The Pension Reform Act 2004 (The Act) requires every

employer to which the Act applies to maintain a Life Insurance Policy in favour

of their employees for a minimum of three times the annual total emolument of

the employee.

• ITF (Industrial Training Fund) Contributions: The ITF Amendment Act

(2011) maintains that every employers having either five (5) or more employees

in their establishments or having less than 5 but with a turnover of N50m and

above per annum, shall in respect of each calendar year and on a prescribed date

contribute to the Fund 1% of its total annual payroll. “Payroll” has been defined

to mean the total basic pay, allowances and other entitlement payable within and

outside Nigeria to any employee in an establishment, public or private.

“Employees” mean all persons whether or not they are Nigerians employed full

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time in any establishment in return for salary, wage or other considerations, and

whether employed full-time or part-time and includes temporary employees who

work for periods not less than 30 days.

• Employee Compensation Act (ECA) (2010) Contributions: The major aim is to

provide a fair, guaranteed and adequate compensation for all insured employees in

case of injury, disease, disability or death arising out of or in the course of

employment. An employee here is defined as a person employed by an employer

under oral or written contract of employment whether continuous, part-time,

temporary, apprenticeship or casual basis. The scheme is funded by employers’

contributions which is at the rate of 1% of total payroll.

6.9. Employee Benefits

Employee benefits are some elements of compensation other than cash provided by an

organisation to motivate performance. In general, they are indirect and non-salary compensation

paid to an employee. Some benefits are mandated by law (such as pension, workmen

compensation), others vary from organisation to organisation or industry to industry (such as

health insurance, life insurance, medical plan, paid vacation, gratuity). Benefits are provided in

addition to salary to create a competitive package for the potential employee.

Advantages of Employee Benefits:

For Employers:

1. It makes it possible to recruit and retain qualified employees.

2. It provides benefits to employees, which is seen as managing high-risk coverage at low costs

and easing the company’s financial burden.

3. It has been proven to improve productivity because employees are more effective when they

are assured of financial security for themselves and their families.

For employees:

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1. Employees can experience peace of mind which leads to increased productivity and

satisfaction by being assured that they and their families are protected in any mishap.

2. Employees with personal life and disability insurance can enjoy additional protection

including income replacement in the event of serious illness or disability.

3. Employees can feel a sense of pride in their employer if they are satisfied with the coverage

they receive.

7.10. Financial Incentive

Incentive compensation is critical to increasing organisational effectiveness. In a bid to increase

productivity and stay competitive, organisations have become creative in designing a

compensation strategy. One of such creativity has brought about the emergency of “Pay –For-

Performance”. This is a type of compensation structure in which financial rewards are linked to

productivity.

Financial incentives plan can be either individual, group or company-wide. Some organisations

do a combination of all the three,

7.10.1. Individual Incentive

1. Merit Pay: this is the most popular method of “Pay – for- Performance”. It is focused on

giving pay increase which commensurate with employee performance. It could be paid as

a one-time bonus or included in the base pay. For this method to be effective there must

be an objective performance management system in place. Since the emphasis is on

performance, high performers receive larger merit increases than low performers.

2. Bonus: This is a one-time payment made to employees for exceeding or meeting certain

performance or productivity goals. This payment is a form of variable pay because it does

not constitute part of the employees’ base pay. This method of compensation is

dependent on both the performance of the employees and the performance of the

company.

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3. Piece –Rate Incentive: With this method, workers are paid a fixed sum for each item

produced. This incentive method is ideal where employees work independently and their

productivity is easily measurable.

4. Commission: This is usually a company’s way of remunerating sales people for meeting

or exceeding targets over a period of time. The purpose is to motivate individuals towards

achieving previously agreed set target such as revenue. It is usually calculated as a

percentage of the sales value.

5. Overtime: This is the payment due to employees for hours worked in excess of the

agreed work hours. The Labour Act in Nigeria stipulates that unless exempt, employees

must receive overtime pay for hours worked in excess of 40hours in a workweek

6. Shift Pay: To make shift duties attractive to employees, some organisations pay a shift

allowance.

7. Hazard Pay: Employees who work under hazardous conditions are usually compensated

by some organisations for the added risk they face on the job.

8. Weekend and Holiday Pay: This is a pay system designed for employees who are

usually required to work on weekends and holidays, especially if they do not receive

overtime.

9. Skill and Knowledge Based Pay: With this pay system, employees are rewarded for

their ability rather than actual result. Pay increases are dependent on the acquisition of

additional skills and knowledge related to the job they perform.

7.10.2. Group and Team Incentives

With the evolution of the work environment being characterised by work teams, group and team

incentives have gained some popularity over the years. It is similar to the individual incentive

scheme but the payout is given to the team for working together towards achieving a set goal.

This incentive system fosters team spirit. It is most useful for interdependent jobs rather than

independent jobs.

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7.10.3. Organisation –Wide Incentives

This pay system is driven by the performance of the organisation. The most common

organisation-wide incentive plans are:

1. Profit Sharing: Just as the name implies, this is an incentive plan in which

employees share in the profit of an organisation during a particular period. The

major types of profit sharing plans are: Cash Plan and Deferred Plan. Under a

Cash Plan, employees receive payment at the end of a particular period. With the

Deferred Plan, employees are paid at a later date usually at retirement or upon

disengagement from the organisation.

2. Gain Sharing: This is an organisation-wide incentive plan which is quite similar

to profit sharing, but employees are rewarded based on improved productivity

over a relatively shorter time frame than the profit sharing scheme.

7.11. Models of Executive Compensation

Executive Compensation applies to the employees in top management positions such as

executive directors. A number of factors determine their compensation which is usually different

from other categories of employees.

The basic principles guiding Executive Compensation are:

1. Remuneration should be adequate to attract, motivate and retain directors with the quality

required to effectively manage the organisation, but not more than is necessary for this purpose.

It is important to link a significant proportion of executive directors’ rewards to corporate

performance and individual performance.

2. The Establishment/Remuneration Committee of the Board of Directors of the organisation

should evaluate where to position their organisation relative to other companies. It is important

to note the risk of a ratchet of remuneration levels with no corresponding improvement in

performance.

3. The performance-related elements of remuneration should form a significant proportion of

total remuneration package of executive directors, and should be designed to align their interests

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with those of shareholders and to give those directors attractive incentives to perform at the

highest levels.

4. The Establishment/Remuneration Committee should consider whether the directors should be

eligible for annual bonuses. If annual bonuses are considered, performance conditions must be

relevant, stretching and designed to enhance shareholder value.

5. All forms of incentives to executive directors should be tied to their individual and corporate

performance.

6. Pension consequences and associated costs to the organisation should be considered in

determining the remuneration of executive directors.

7.11.1. The Elements of Executive Compensation

The main elements of executive compensation are basic pay, short-term bonus or incentive

schemes, share option and share ownership schemes, benefits and service contracts. The salary is

usually a one-off, negotiated rate, and commonly incorporates a “golden hello or golden

parachute or pay-off deal”. It should be set through Establishment/Remuneration Committee of

the Board of Directors’ that meets good practice guidelines.

Executive Pay: This is determined by the views about the market worth of the individuals

concerned. Remuneration on joining the organisation is commonly settled by negotiation, often

subject to the approval of the Establishment/Remuneration Committee. In most cases, bonuses

are expressed as a percentage of base salary; share options may be allocated as a declared

multiple of base pay and, commonly, pension will be a generous proportion of final salary.

Bonus Schemes: Bonus schemes provide executive directors with cash sums or shares based on

the measures of an organisation’s performance as well as individual performance. They are often

paid annually but can be deferred for a longer period.

Some problems associated with bonus schemes for executives include:

1. Possibility of executives manipulating reported profits in order to drive up the share price and

also to shoot up their bonus packages. They may go for high returns in risky short-term projects,

ignoring the possible downside of longer-term losses.

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2. Executives may benefit by receiving bonuses for performance that meets objectives, but they

do not usually lose pay when their objectives are not achieved. They only gain, they never lose.

Long-Term Bonuses: This is usually done through share ownership to provide longer-term

rewards. Longer-term bonus scheme is preferred since cash bonus schemes focus on short-term

results.

Deferred Bonus Schemes: Some organisations have adopted deferred bonus schemes under

which part of the executive’s annual bonus is deferred for, say, two years. The deferred element

is converted into shares, each of which is matched with an extra, free share on condition that the

executive remains employed by the organisation at the end of the deferred period. This type of

scheme is designed to reward performance and loyalty to the organisation.

Share Option Schemes: This scheme gives executives the right to buy a block of shares on

some future date at the share price ruling when the option was granted. It is a form of long-term

incentive to motivate executives to perform more effectively if they can anticipate a substantial

capital gain when they sell their shares at a price above that prevailing when they took up the

option.

Performance Share Schemes: Some organisations have performance share schemes under

which executives are potentially awarded shares. The release of the share is subject to the

organisation’s performance and the executive being in the organisation’s employment at the

vesting date. This type of scheme rewards loyalty to the organisation, and value delivered to

shareholders in the form of share price performance and dividends.

Executive Restricted Share Schemes: Under such schemes free shares are provisionally

awarded to participants. These shares do not belong to the executives until they are released or

vested; hence they are ‘restricted’.

Benefits: Most benefits are usually linked directly to income level (e.g. life assurance, gratuity,

pension plan) hence, executives typically receive higher benefit than other employees.

Prerequisites: In addition to regular benefits received by all employees, executives often receive

status enhancement benefits which are referred to as “Perquisites”. These are special benefits

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that demonstrate their status within an organisation. Example include: Luxury office, special

parking space/slot, company paid club membership fees, vehicle expenses, etc.

Service contracts: High severance payments are provided for departing executives in their

contracts. It is also paid even when an executive is disengaged by the organisation, but when the

disengagement is “without cause”.

7.12. Summary

Compensation Management is the management of remuneration given to employees.

Compensation should be internally equitable and externally competitive in order to attract,

motivate, and retain high talents in an organisation. Theories of compensation provide the

conceptual framework for effective compensation management.

Job evaluation assists organisations to determine the relative worth of jobs in an organisation

while remuneration survey helps in establishing the market competitiveness of an organisation’s

compensation. Job analysis is also used to identify and determine in detail the particular job

duties, requirements, and the relative importance of the duties for a given job. Executive

compensation and benefits are usually different from and higher than those of others employees.

Practice Questions

1. Discuss the three basic theories used for Compensation Management.

2. State and discuss the principles and elements of remuneration.

3. Define the concept of Job Evaluation and discuss methods used in Job Evaluation.

4. Discuss Job Analysis techniques and how it is useful in job evaluation.

5. Discuss the steps required for effective wages and salary administration.

6. Your organisation is about to make an offer for the position of a Managing Director. Design

an attractive executive compensation package.

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CHAPTER EIGHT

ORGANISATIONAL CULTURE AND CORE VALUES



▪ define the concepts of organisational culture and core values;

▪ distinguish between organisational culture and core values;

▪ develop meaningful organisational core values; and

▪ discuss how organisation’s core value can be embedded in HR processes.

8.1. Definitions

Organisational or Corporate Culture refers to the shared values, standards, beliefs and

behaviour that distinguish an organisation. It consists of those rules of conduct that are shared by

members of an organisation. Typically, corporate culture is embedded in the vision, mission,

strategy and goals of an organisation. In other words, the culture of an organisation is reflected in

its policies and practices. The purpose of culture is to give members a sense of identity and to

inculcate in them a sense of commitment to the beliefs and values of the organisation. Every

organisation has its own unique culture which helps to create a unique identity for itself.

Organisations may have a similar culture, but no two organisations have the same culture.

Core Values refer to a declaration that informs the customers and employees of a company

about the company’s top priorities and what its core beliefs are. Companies usually use a value

statement to help them identify with and connect to targeted consumers, and to also remind

employees about its priorities and goals.

8.2. Difference between Culture and Core Value

Culture and values are not the same; but both help in shaping how an organisation likes to do its

business and manage relationship with customers, employees and other stakeholders. Value

guides decision making and a sense of what is important and right, while culture is the collection

of business practices, processes, and interactions that make up the work environment.

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8.3. Components of Organisational Culture

Coleman (2013) observed six components of corporate culture.

1. Vision: A great culture starts with a vision. A vision guides corporate values and provides the

organisation with purpose. That purpose orients every decision employees make. Vision states

the purpose of the business.

2. Values: A company’s values are the core of its culture. While a vision articulates a company’s

purpose, values offer a set of guidelines on the behaviours and mindsets needed to achieve that

vision. It is important for companies to reflect their core values in all business dealings, which

should not be a mere statement like our core values are: integrity, professionalism, trust, and so

forth without living by them.

3. Practices: Values are of little importance unless they are entrenched in a company’s practices.

If an organisation expresses that “people are our greatest asset”, it should also be ready to invest

in people in visible ways.

4. People: Culture cannot be built without people who either share its core values or possess the

willingness and ability to embrace those values. This is why great companies have some of the

most stringent recruiting policies. Studies have shown that people stick with cultures they like,

and bringing on the right “culture carriers”, reinforces the culture an organisation already has.

5. Narrative: Companies have a unique story. The ability to unearth that history and craft it into

a narrative is a core element of culture creation. The elements of that narrative can be formal

(like Coca-Cola, which dedicated enormous resources to celebrating its heritage and even has a

World of Coke museum in Atlanta), or informal, (like those stories about how Steve Jobs’ early

fascination with calligraphy shaped the aesthetically oriented culture at Apple). Narratives are

more powerful when identified, shaped, and retold as a part of a company’s ongoing culture.

6. Place: The place where an organisation is situated and how it is structured shape culture. For

instance, open architecture is more conducive to certain office behaviours, like collaboration,

while certain cities and countries have local cultures that may reinforce or contradict the culture

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a company is trying to create. Place, whether geography, architecture, or aesthetic design impacts

the values and behaviours of people in a workplace.

8.4. Communication of Organisational Core Values

It is very important to communicate and integrate organisational core values to all stakeholders

for them to have positive impact on the company’s culture and its business. Many companies

will define their core values, publicly share them as prints in the offices and post them on their

website. It is crucial to translate the core values into behaviours that are easy to understand by

the employees.

Michael Hyatt (2012) has identified six ways to communicate the core values to every member

of the organisation.

1. Living the values: Core values are best communicated when the organisational leaders “walk

their talk”. In other words, they demonstrate behaviours that align with organisational core

values. A study has shown that an organisation’s performance is linked to the frequency with

which it communicates it core values to all its employees. A recent survey conducted by

Deloitte in Nigeria has found that 70% of the employees who agreed that their companies had

performed well financially said their executive management team speaks to them often about the

core values associated with the culture of the company.

2. Teaching the values: It is critical to inculcate in new employees the organisation’s core

values. This can be done during their induction/on-boarding programme. It is good to tell the

story behind each value chosen and what your organisation expects in terms of behaviour related

to the values.

3. Recognising the values: Recognising people who are demonstrating the core values by

rewarding them in real time will reinforce the core values. Some companies have the “Core

Value Employee of the Month” where member of the organisation vote for the person they

view as demonstrating the core values of the company the most, and this person is recognised

company-wide.

4. Hiring new people based on the values: Recruiting people who already have values that are

in alignment with the company’s core values is critical to the success of any organisation. This is

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likened to competency-based recruiting by hiring people based on the “below the surface”

competencies as those that cannot be trained. It is not easy to train a person to have the same

values as an organisation.

5. Reviewing people based on the values: Incorporating an organisation’s core values into

performance management system will help in communicating and reinforcing it. Each core value

comes with a set of behaviour that is measurable and specific, and this should form part of

performance review process. Also during performance reviews managers can coach and support

employees on how to demonstrate the core values that eventually lead to recognition and

rewards.

6. Exiting people based on values: People who cannot imbibe the core values should be

allowed to exit the organisation when all effort to inculcate in them the core values have failed..

8.5. Implementation of organisational core values

8.5.1. Recruitment and Core Values: Core values must be aligned to the company’s

recruitment process. Select to fit with the company’s desired culture and values. Values should

be discussed fully during orientation programmes.

8.5.2. Recognition and Core Values: Core values are promoted and entrenched when

recognition and reward are tied to them. There should be a reward for employees living the

values. Employees who demonstrate behaviours that align with the core values should be

recognised while those who do not should be sanctioned.

8.5.3. Performance Management and Core Values: Core values must be entrenched to the

performance management process. Managers must be made accountable for ensuring that their

“direct reports” are measured on the organisation’s core values during performance reviews.

8.6. Summary

Corporate Culture and Core Values determine the behaviour expected of employees in an

organisation. Core values should be appropriately communicated, displayed as prints in strategic

places within the organisation and the leadership should lead by example in order to reinforce it.

Core values should reflect in company’s recruitment, learning/training, compensation and

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performance management process. Employees demonstrating the core values should be

recognised while those who are not, should be appropriately sanctioned.

Practice Questions

1. Define the following:

• Organisational culture; and

• Organisational Core values.

2. The corporate culture of an organisation is the same as its core value. True or False? Give

reasons for your answer.

3. Discuss factors to be considered in the formulation of Organisational Core Values.

4. As Human Resource management practitioner, how would you communicate and entrench

your company’s Core value?

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CHAPTER NINE

MANAGING WORKFORCE GENERATIONAL DIVIDE



▪ explain workforce generational divide,

▪ identify the characteristics of various workforce generations; and

▪ state different ways to motivate and manage different workforce generation.

9.1. Introduction

A generation is defined as a group of individuals who were born around the same time; who

share a common set of life events and trends. There are basically two views on generational

differences in the workplace. The first view postulates that shared events influence and define

each generation (Zemke, Raines, & Filiczak, 2000), and that while individuals in different

generations are diverse, they nevertheless share certain thoughts, values, and behaviours because

of the shared events. Furthermore, these values, reactions, and behaviours presumably differ

across generations.

The second view postulates that although there might be variations throughout an employee’s

life cycle or career stage, ultimately employees may be “generic” in what they want from their

jobs, and trying to bifurcate employees by generations may be misguided (Jorgensen, 2003,

Jurkiewicz & Brown, 1998, Yang & Guy, 2006).

These views clearly indicate that the workforce in organisations are different and each have

peculiar characteristics which should be properly understood by human resource management

practitioners.

Managing of several generations with diverse backgrounds is not an easy task, but it is the reality

of the business world today. In order to truly create a cohesive workplace, managers must

encourage employees to view generational difference as a diversity imperative, capable of

adding value to the business. The diverse perspectives, motivations, attitudes and needs of the

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different generations have changed the dynamics of the workforce of today. A little insight into

the differences among the generations can help organisations better understand the needs and

expectations of their talent in an age-diverse workforce. By learning the motivations, identifying

the tremendous potentials and generational footprint of each segment, human resource managers

can leverage the unique talents and capitalise on the diversity of the respective teams. There are

five generations of workforce: Veterans, Baby Boomers, Generation X, Generation Y, and

Generation Z.

9.1.1. Veterans

These are people born from 1922 to 1944. They are also called the Traditionalists, the Builders,

Silent Generation, The Beat Generation, Industrialists, The Radio Babies, Leading-edge

Boomers, The Depression Generation, or World War II Generation.

The veterans have the following message ingrained in them during developmental years: Make

do or Without; Stay in Line; Sacrifice; Consider the Common Good; Duty; Hard-work;

Dedication.

This generation believes they should work for the same company their entire career. They have a

strong sense of commitment and are loyal. They are detailed, oriented with command and control

leadership style. Veterans or traditionalists will have difficulty in an open and empowered

environment because they are more attuned to hierarchical structures and will rather be the

executive decision-maker. As a leader, they expect that they will be followed unconditionally as

they did when they were employees. They are averse to risk. They are conservative in their

dressing and language.

This generation can be engaged by the following approaches:

1. Being patient but firm

2. By their setting of clearly defined goals based on their job expectation.

3. Coaching them on effective people management skills

4. Assisting them with being more receptive to change by involving them in the change process

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5. Providing useful information in a timely and effective manner

6. Acknowledging and exploiting their experience by enlisting them as mentors to younger

employees.

7. Holding everyone accountable for performances and behaviours

9.1.2. Baby Boomers

These are people born between 1945 to 1963. They are also called Boomers or Vietnam

Generation. During their developmental years, the message entrenched are: “be anything you

want to be; change the world; work well with others; live up to expectation; and Duck and

cover”. The technology of the era is television. Their work experience perspective is “Live to

work”. They are passionate about participation in the workplace. They are charaterised as

workaholic. They love to collaborate and value relationship. They also value recognition and are

quite competitive in nature.

Baby boomers grew up believing in themselves and their ability to accomplish anything; they

believe that no challenge is too big; and that it is important to know that baby boomers like

tangible rewards. They view change as inevitable and are receptive towards it.

They are engaged by adopting the following:

1. Providing them with challenging work opportunities that align with the achievement of the

organisation mission and values.

2. Puting in place a viable recognition scheme to reward their work ethics.

3. Providing an open and collaborative work environment.

4. Providing career path for all clearly defined and communicated roles.

5. Encouraging them to participate in the decision making process.

9.1.3. Generation X

These are people born between 1964 to 1979. They are also refered to as Gen X, Baby Busters,

Post-Boomers. The technology of this era is the computer.

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The message ingrained during their developmental years are: “Don’t count on it; Heroes don’t

exist; Always ask ‘why’. The work perspective of this generation is “Work to live” – believe

that work should not define their lives. They constantly want to be provided with appropriate

feedback and empowered to get the job done. Because they learned to take care of themselves at

an early age, this generation tends to be self-reliant and unimpressed by authority. Their

communication style is open and honest, and they tend to “tell it like it is”. They do not

necessarily build relationships easily, and their communication style tends to be brutally honest.

They are result-oriented and hence feel a sense of accomplishment when results are achieved.

They take work-life-balance serious because they have a sense of loyalty to their family and

friends. They are risk takers who always seek new challenges, hence they are not overly loyal to

their employers. They are technologically driven and are passionate about streamlining

processes.

Generation X can be engaged by doing the following:

1. Give them frequent constructive feedback.

2. Design and implement work-family friendly policies which will give them room to pursue

other interests.

3. Create an environment that promotes and rewards creativity.

4. Recognition programmes should be designed to focus on results.

5. Provide strategic learning and development opportunities and be seen to be supportive of their

professional growth.

6. Create an environment that encourages open and effective communication.

9.1.4. Generation Y

These are people born between 1980 to 2000. They are also called Millennials, Nexters, Internet

generation (iGeneration), The Now Generation, Generation D (D for Digital), Net Gen (Net

Generation), DOT.com Generation, Microwave Generation. The technology of this era is the

internet.

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This generation is characterised by the work perspective – “Work my way” – devoted to their

own careers, not to their companies. Desire meaningful work. They believe work should be

measured by results and not the amount of hours put in the office. Having used a computer since

birth, they are resourceful and hungry for information. They have high potentials and are fast

moving, internet savvy and instant goal oriented. Millennials are very accommodating of

diversity in people. They often see these differences as an opportunity to learn new things and

make new friends.

The expectations of Millennials

Millennials expect their boss to help them navigate their career path; give them constructive

feedback; mentor and coach them; sponsor them for formal development programmes, and are

comfortable with flexible schedules.

Millennials expect their company to develop their skills for the future; have strong values;

offer customisable options in their benefits/reward package; allow them to blend work with the

rest of their life and offers a clear career path.

Millennials want to learn technical skills in their area of expertise; self-management and

personal productivity; leadership; industry or functional knowledge, creativity and innovation

strategies.

Millennials are effectively managed by the following:

1. Involve them and empower them to make contributions to the operations of the business.

2. Offer need-based learning and development initiatives.

3. Offer them compensation and benefits packages that will meet their individual needs.

4. Design and communicate the career path for job roles.

5. Create an environment that encourages team work.

6. Recognise and reward them appropriately.

7. Constantly give them constructive feedback.

8. Design a fair and objective performance management system.

9. Put in place a flexible work schedule that permits them to determine the pace of their work.

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9.1.5. Generation Z

These are people born from 2001. They are also called Gen Z or Centennials. This is the

generation born after the Millennials. This generation is still largely kids and adolescents and

many of them are adult whose characteristics are yet to be vetted. Early indications are that they

are increasingly self-aware, independent, innovative and goal-oriented. They also appear to be

more pragmatic than their millennial predecessors, but we have to wait and see if that plays out

as they become employees, consumers, investors and voters. One interesting thing about Z

Generation is that they remember the time before social media. They tend to live much more of

their entire lives from interacting with friends and family to making major purchases – online

and via their smartphones. This could have profound implications for everything from their

relationships and how they lean to virtual reality training and problem-solving.

Generation Z are highly educated. A larger percentage of Gen Z will attend and graduate from

college earlier than any previous generation, including the Millennials. They are also adept at

web-based research and often self-educates themselves with online sources such as YouTube and

Pinterest. They place priority on how fast you can find the right information rather than on

whether or not you know the right information.

Generation Z wants to make a difference in the world. A large proportion of the generation

would prefer to have a job that makes a positive impact in some way, and a large portion of them

are volunteers. They are eco-conscious and concerned about humanity’s impact on the

environment. They also want to make a decent living with a stable employer. However, their

quest for financial prudence and wanting to help people could lead to longer-term differentiation

from Millennials.

Generation Z are more diverse than Millennials. The tremendous diversity that Gen Z brings as

employees, consumers and entrepreneurs will have a profound impact across generations with

cultures. Brands and employers will have to learn how to see the world through the diverse eyes

of Gen Z if they want to win their loyalty. As employees, Gen Z will be hooked to their

smartphones at work and managers should be concerned about how to make them work without

distractions from smartphones.

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9.2. Summary

The workforces in organisations belong to different generational divide. We have the Veterans,

Baby boomers, Generation X, Generation Y and the upcoming Generation Z. These generations

have diverse characteristics, expectations and motivation. Therefore, they should be managed

differently in order to get the best performance from them.

Practice Questions

1. State the characteristics of the various workforce generations.

2. Discuss the differences in the expectations of Generation X and Generation Y.

3. Discuss the differences in the expectations of Generation Y and Generation Z.

4. Discuss how the various workforce generations can be motivated in an organisation to perform

effectively in an organisation.

5. As a human resource professional, what advice would you give an organisation on how to

bridge the generation divide?

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CHAPTER TEN

HUMAN RESOURCE BUDGETING


At the end of this chapter, students will be able to:

1. explain HR budgeting;

2. identify HR budgeting processes;

3. identify and use HR budget templates;

4. coordinate and deliver HR budgeting in both public and private sectors.

10.1. Introduction

As business partners, human resource professionals have the responsibility to ensure the

alignment of Human Resource (HR) activities and programmes with the strategic business goals

and objectives in both public and private sectors. Irrespective of the setting where HR

professionals find themselves, they can only add value by ensuring that the HR activities and

programs are effectively aligned with the organisation’s goals and objectives. One of the key

means of ensuring this alignment is HR budgeting and Workforce Planning. HR Budgeting and

Workforce Planning take their roots from the organisation’s focus, intention and plans. The HR

professional will first of all review and understand the corporate or organisational strategies and

plans before planning for the people - related support programs and initiative to achieve the

organisational objectives. Even though people make up both public and private sectors and help

to drive organisational goals, public sector structure and internal operating environment make the

application of HR budgeting and workforce planning different from that of the private sector.

10.2 Human Resource Budgeting

Human Resource Budget is a detailed quantitative and qualitative plan for an organisation’s

requirements to support business units to achieve their set goals within a period of time, usually a

year. While organisational budget covers revenue and expenditure, Human Resource budget is

more of plans and expenditure with little focus on revenue. Revenue is driven from the sales

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front while HR budget drive sales force. HR budgets detail the financial and non-financial

elements of people requirements to drive the organisational goals during the budget period,

usually a year. Once the people requirements are determined through workforce planning, the

cost elements of getting the people to deliver result are determined through Human Resource

Budgeting. The quantitative elements cover budget items such as: salaries, wages, overtime pay,

cost of recruitment, learning/training and development cost, cost of recognition schemes, cost of

meal/lunch (if applicable), estimated cost of HR initiatives and projects, estimated cost of staff

promotion and transfers during the budget period, estimated cost of exit during the budget period

etc. HR Administrative costs include: vehicle maintenance costs, cost of newspapers and

magazines, furniture and fittings, working tools such as: computer systems, vehicles,

communication gadgets, cost of licenses and permits renewal, cost of travels and

accommodation, estimated cost meetings and events etc.

10.3 HR Budgeting Process

As explained at the introductory part of this chapter, HR budgeting takes its root from the

organisation’s focus, intention and plans for the budget period. For effective HR budgeting

therefore, HR professionals should follow a business-driven budgeting process outlined below:

1. Understand the nature of the organisation’s business in detail.

2. Understand the top management’s agenda for the budget period.

3. Review and internalise the strategic focus for the budget period.

4. Draw up the HR (or people) requirements from the strategic focus and intentions.

5. Agree HR budget assumptions with top management.

6. Review previous year’s budget and compare with the requirements of the current year.

7. Work out the variance analysis of the budgeted and actual for the previous year.

8. Set up the budget template for the budget period.

9. Send the template to every budget unit (unit heads) in HR for their inputs and provide

the budget assumptions for their guidance.

10. Collate the inputs from all units in HR department and seek clarifications where

required.

11. Discuss the final budget draft with relevant HR staff and make adjustments where

required.

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12. Make a power point copy for presentation to top management for approval.

13. Submit the final HR budget draft to Finance Department as may be required.

14. Present the power point version to the top management for discussion and agreement.

15. Effect any required amendments from the budget presentation meeting.

16. Re-present the amended version for management’s final approval.

17. Receive the final approved budget for implementation.

18. Share the approved budget with relevant HR staff.

19. Monitor implementation to ensure budget performance; and

20. In the event of unforeseen expenses - not budgeted for, make a business case for extra-

budgetary approval.

10.4 Some Samples of Human Resource Budgeting Template

General Personnel Budget

XYZ Factory

S/N Staff Grade Current Additional Planned

Head Head Additional Justification

Count Count Requirement

Required Date

1 Director xx

2 GM xx

4 Senior Manager xx

5 MGR II xx Xx Q2 FY2018 New role created.

6 MGR II Xx Xx Q1 FY2018 Position vacant.

7 Specialist xx

8 Officer II xx

9 Officer I

10 Junior II xx Xx Q1 FY2018 Role currently filled on contract basis.

11 Junior I xx

13 Management Trainee xx

14 Contract xx

15 Temporary xx

16 IT Staff xx

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Total xxxx xxxx Recruitment Budget

Current Actual Approved Budgeted Cost Per Recruitment

S/N Staff Head No Of No Of Advert Transport Other

Grade Count Recruitments Recruitments Cost Cost Cost JUSTIFICATION

For For Cost

Year 2016/17 2017/18 N N N N per

annum

1 Finance

Dept. -

Exe. Mgt. 1 0 0 - -

Senior Mgt. 1 0 0

Mgt. 7 0 3

420,000

50,000

120,000

590,000

Specalist 4 0 0 - -

Officer 11 0 14

420,000

50,000

300,000 -

770,000

Junior Staff 6 0 3

200,000

50,000

120,000 -

370,000

2

Sales & Marketing

Dept -

Exe. Mgt. 1 0 0 - -

Senior Mgt. 3 0 1

300,000

50,000

120,000

Mgt. 26 1 1

300,000

50,000

120,000

Specalist 8 0 0 - -

Officer 64 5 12

420,000

50,000

300,000

770,000

Junior Staff 3 0 0 - -

Medical Care Budget

(A) (B) (C ) (D) (E) (F)

Actual Total Planned Period

S/N Medical Cost Budgeted Payment To Be Medical

Items FY2015/16 Cost Date Covered Cost

Apr 16- Dec16 For For By Per

FY2017/18 FY2017/18 Payment Month

149

N N N

1 HMO Scheme 50,615,955 139,439,610 April, 2017 1 Year 11,619,968

2 Drugs for Clinic 789,320 1,894,368 Monthly 1 Year 157,864

3 Abuja Staff 0 300,000 Monthly

4 Other Hospitals bills:

I) Expatriates (Bupa Insurance Cover) 4,198,247 5,037,896

ii) Exclusions: Not Covered By HMO 2,942,296 6,473,051 Monthly 1 Year

539,421

iii) Medical Check up for Managers 1,081,575 1,297,890 Annually 1 Year

108,158

iv) Sundry bills (Medical Advise) 1,250,000 2,750,000 Quarterly 1 Year 229,167

v) First Aid Box 0 0

5 Others (FOOD HANDLERS TEST QAD & CANTEEN) 742,400 1,932,460 Yearly

161,038

6 Vital Sign Monitor 0 1,500,000

7 World AIDS Day Celebration 0 200,000

8 MCDPC Course for Nurse 0 60,000

9 Contingency 0 200,000

10 Pre-employment medical for new staff

130,690 1,113,479 Monthly 1 Year

92,790

11 Nurses Scrubs 0 50,000

12 Ambulance Equipment 0 1,000,000

13 Vaccines 0 10,000,000

14 Clinic Curtain & Bedsheets 0 100,000

61,750,483

Total 173,348,754

10.5. Rationale for HR Budgeting

Even though HR professionals are not professional accountants, there is a strong need for

responsible HR budgeting. The following are major reasons why HR professionals should not

only know about budgeting but also drive the process, implementation and evaluation:

1. Budgeting provides a clear link between HR roles and the organisational

objectives.

2. It enables the HR professional keep track of HR activities, programmes and

initiatives.

150

3. It brings out the HR department’s contributions to the achievement of the

organisational goals and targets.

4. It sharpens the HR professional’s competence in number crunching and analytics.

5. It provides a good platform for performance measurement of both the HR team

and individuals in HR Department.

6. It enhances the level of focus on activities that create values for the organisation;

and

7. It enables effective allocation of resources (human and non-human), to areas of

the organisation that generate more values.

It improves team work and shared understanding of management’s expectations from the HR

team as every relevant employee is carried along in the budgeting process.

10.6. Summary

Budgeting and planning are essential for effective human resource management. To ensure

effective implementation of human resource activities, initiatives, projects and programmes,

there is a strong need for HR professionals to be well at home with business numbers, most

especially numbers that drive the achievement of HR goals and objectives. Finance Departments

may only assist in providing indices for the budget assumptions; it is the responsibility of HR

professionals to determine the numbers and provide convincing justification for Management’s

approval. The implementation, monitoring and evaluation of the HR budget is also the sole

responsibility of the HR professional. It is, therefore, advised that every HR professional should

ensure they are comfortable with this strategic tool called ‘HR budget’.

Practice Questions

1. Is budgeting part of HR professionals’ role? Explain.

2. Discuss the rationale for HR budgeting.

3. Identify the basic process of HR budgeting.

4. Identify the key elements in HR budget template.

151

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Dr. (Mrs.) Ekwoaba Joy Onyinyechi

Department of Industrial Relations and Personnel Management.

Faculty of Business Administration,

University of Lagos.

0807070-90433/08033069753

[email protected], [email protected]

Dr. Segun Ajibewa

Continental Reinsurance Plc

08023408842/08053408888

[email protected]




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