Discovering Management: Human Resource Management. Prof. Dr. Gudela Grote D-MTEC ETH Zürich

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1 Discovering Management: Human Resource Management Prof. Dr. Gudela Grote D-MTEC ETH Zürich

2 Human Resource Management (HRM) Definition: HRM concerns the policies, practices, and systems that influence employees' behavior, attitudes, and performance. Goal: HRM aims at applying human resources within organizations such that people succeed and organizational performance improves. Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 2

3 A tragic example of effects of work on personal well-being Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 3

4 Effects of Human Resource Management HRM-practices (especially job design and selection/ appraisal/training) better predict company performance than R&D, QM, strategy and technology (West, 2001) Empowerment better predicts company performance than technology-based management practices in the short- and long-term (Patterson et al., 2004; Birdi et al., 2008) HRM-practices as cause and effect of company performance (Guest et al., 2003) Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 4

5 Characteristics of HRM in successful companies (Pfeffer & Veiga, 1999) Selective hiring Extensive training Self-managed teams and decentralization Reduction of status differences High compensation contingent on organizational performance Sharing information Employment security Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 5

6 Characteristics of HRM in successful companies (Pfeffer & Veiga, 1999) Selective hiring Extensive training Self-managed teams and decentralization Reduction of status differences High compensation contingent on organizational performance Sharing information Employment security Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 6

7 Prototypical procedure in personnel selection Job analysis Planning e.g. work samples/tests; selection of predictors Job requirements Selection of success criteria Implementation Assessment and combination of predictors Decision about selection/ placement Evaluation Validity testing Cost-benefit analysis Assessment and combination of success criteria Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 7

8 Validity of different selection methods Personality dispositions Cognitive ability tests ~.5 General personality tests ~.3 Graphology ~.0 Behavioral simulation Work samples ~.5 Assessment center ~.55 Biographical focus CV/references ~.2 Biographical questionnaire ~.35 Structured interview ~.45 Unstructured interview ~.3 Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 8

9 Characteristics of HRM in successful companies (Pfeffer & Veiga, 1999) Selective hiring Extensive training Self-managed teams and decentralization Reduction of status differences High compensation contingent on organizational performance Sharing information Employment security Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 9

10 Personnel development Systematic furthering of personal aptitude in relation to individual expectations and organizational requirements education/training counselling/coaching management by objectives team development job design Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 10

11 Basic assumptions in personnel development Dynamic relationship between person and work: person and work change continuously, requiring also continuous adaptation Adaptation can happen from the perspective of fit human to task and/or fit task to human Define possible career paths: e.g., management versus technical career Identify individual career needs: e.g., different types of career orientations Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 11

12 Career orientations in Switzerland (Swiss HR-Barometer, Grote & Staffelbach, 2012) Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 12

13 Career orientations in Switzerland (Swiss HR-Barometer, Grote & Staffelbach, 2012) Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 13

14 Characteristics of HRM in successful companies (Pfeffer & Veiga, 1999) Selective hiring Extensive training Self-managed teams and decentralization Reduction of status differences High compensation contingent on organizational performance Sharing information Employment security Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 14

15 Core concept of job design: Self-regulating teams Teams: several people who work together over a period of time to reach common goals and who share a sense of belonging together Self-regulation: individual and collective autonomy in order to coordinate work processes and to cope with process variances and uncertainties locally Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 15

16 Prerequisites for good team work Adequate common task Complexity higher than individual competencies Clear performance criteria Collective decision competence Shared goal orientation Positive goal coupling Goal transparency and feedback Adequate group composition Different perspectives on the task Shared language Development of group rules Adequate group size Support for team development (form, storm, norm, perform) Handling conflicts between individual and collective autonomy Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 16

17 Characteristics of HRM in successful companies (Pfeffer & Veiga, 1999) Selective hiring Extensive training Self-managed teams and decentralization Reduction of status differences High compensation contingent on organizational performance Sharing information Employment security Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 17

18 Changing context for leadership In the past the question was: "How do I lead a company?" Today it is: "How do we lead a company?" For the future it will be: "How does a company lead itself?" "Boundaryless, flattened, flexible, project-based and teambased organizations that employ temporary, externalized and remote workers, whose tasks are more intellectual amd less routine and cannot be controlled and coordinated by structure or direct supervision, need mechanisms of coordination through shared meaning systems and a shared sense of purpose" (Shamir, 1999) Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 18

19 Management of uncertainty as strategic and operational leadership function Ø Balance between minimizing uncertainty, which creates stability, and coping with uncertainty, which creates flexibility Central planning High standardization High level of automation Little operative freedom Feedforward control Stability Flexibility Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 19

20 New issues in leadership Leadership portfolios In order to match different situational demands with adequate leadership behaviors, leaders must develop portfolios of styles and behaviors and understand when to use which behavior. Shared leadership Leadership involves different tasks that can be taken on by different team members and may shift between team members. Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 20

21 Sharing different leadership functions in medical teams (Künzle et al., 2010) Leadership (Mean rate per Minute) High performing teams (n=6) (n.s) (n.s) Low performing teams (n=6) (n.s) p<.05 Leadership (Mean rate per Minute) Nurses Residents Nurses Residents Content-oriented Structuring Content-oriented Structuring Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 21

22 Characteristics of HRM in successful companies (Pfeffer & Veiga, 1999) Selective hiring Extensive training Self-managed teams and decentralization Reduction of status differences High compensation contingent on organizational performance Sharing information Employment security Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 22

23 Pay is... money compensation reward incentive recognition Ø Procedural and distributive justice of pay systems at least as important as absolute amount of own pay Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 23

24 Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 24

25 Performance-related pay A part of the overall pay is determined on the basis of individual/group/company performance. Increasing use in the US more than in Europe for managers more than for non-managerial employees in larger companies more than in smaller companies Critical voices become louder: Is the rewarded behavior the desired behavior? Danger of reducing intrinsic motivation Conflict between individual and team performance Pay schemes related to organizational performance tend to avoid these problems Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 25

26 Characteristics of HRM in successful companies (Pfeffer & Veiga, 1999) Selective hiring Extensive training Self-managed teams and decentralization Reduction of status differences High compensation contingent on organizational performance Sharing information Employment security Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 26

27 Characteristics of HRM in successful companies (Pfeffer & Veiga, 1999) Selective hiring Extensive training Self-managed teams and decentralization Reduction of status differences High compensation contingent on organizational performance Sharing information Employment security Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 27

28 Employment relationship: Social exchange defined by legal and psychological contracts Employment relationship Legal contract Firm $ + Goals t + Goal achievement Employee Psychological contract Firm e.g. employability, job security e.g. goal-orientation, loyalty Employee Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 28

29 Flexible working: Any time, any place, contract work, pay for performance Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 29

30 Flexible working: Change from a traditional to a new contract? (Raeder & Grote, 2001) Traditional contract Job security / Life-long employment Internal promotion Specialization Loyalty/ Identification New contract Flexibility / Accepting insecurity Internal development Goal / Performance orientation Employability / Focus on own competencies Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 30

31 Psychological contracts in Switzerland (Swiss HR-Barometer, Grote & Staffelbach, 2012) Mix of old and new contract Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 31

32 Using the psychological contract to handle employment uncertainties Communicate and match reciprocal expectations and offers Support employability through training, job design, and systematic career management Distribute risks between organization and employee according to individual coping capabilities Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 32

33 Characteristics of HRM in successful companies (Pfeffer & Veiga, 1999) Selective hiring Extensive training Self-managed teams and decentralization Reduction of status differences High compensation contingent on organizational performance Sharing information Employment security Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 33

34 Beyond "rational choice": HRM-practices as expression of organizational culture Organizational culture implies Assumptions about human nature (e.g., motivation, trust versus control) Images of organizations (e.g., brain, machine, family) Assumptions about how organizations work best (e.g., centralization versus decentralization) These assumptions strongly influence choices of HRM practices beyond and possibly even against empirical evidence. Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 34

35 Characteristics of HRM in successful companies (Pfeffer & Veiga, 1999) Selective hiring Extensive training Self-managed teams and decentralization Reduction of status differences High compensation contingent on organizational performance Sharing information Employment security Fall Semester 2013 Prof. Dr. Gudela Grote, D-MTEC, ETH Züirch 35

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