HRM822 Final Exam Study Notes

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1 HRM822 Final Exam Study Notes Exam Breakdown Part I: You are provided with 4 questions and must answer 3 for 10 marks each. Related to: i. Downsizing ii. Forecasting techniques iii. Outsourcing of HR functions iv. HR auditing/measurement Part II: Related to JOB ANALYSIS. Worth 20 marks total. You will be provided with an NOC job description and will have to: i. Explain why conducting a job analysis is vital! (5 marks) ii. The techniques that you would use to conduct a job analysis for this role. (10 marks) iii. The documents that you would create/construct after completing the job analysis. (5 marks) Part III. A case study. You will be provided with a case study (taken from your text) related to both mergers/acquisitions (M & A s) and international placements/culture. You will then answer 5 questions worth 10 marks each related to: i. The risks/benefits and success rates of M & A s. ii. The 4 accepted cultural outcomes of an M & A. iii. Human Resources due diligence. What would you check? iv. The scanning of external factors. In this case what external factors should have been examined and addressed? v. Stakeholder theory. In this case what stakeholders were involved and how might they have influenced the success and/or failure of this particular case? Exam Hints 1. Please use dark blue or black ink. Highlighting may be useful. 2. Do not write out the question, we have a copy of the exam paper. 3. Use bullet points! 4. Yes, neatness is important. 5. Number each book and clearly number each question. 6. If a question is worth 10 marks and asks for, as an example stakeholders, then name 5 stakeholders and then briefly describe their impact or influence. Naming/identifying will earn 1 mark and explaining will earn 1 mark. 7. If there are less than 5 available answers (for example cultural results from a merger) then name the possible outcomes and provide explanations of them with a brief introduction and conclusion. 8. Providing real life examples will often earn marks and is very useful to demonstrate an understanding. 9. Job Analysis!

2 Downsizing Downsizing: activities undertaken to improve organizational efficiency, productivity and/or competitiveness that affects the size of the organization's workforce, its costs and its work processes Downsizing often fails as it is not properly planned or carried out in a manner that reflects the organization's strategies Why do organizations downsize? 1. Labour costs are perceived as the easiest to adjust quickly 2. Declining profit 3. Increased competition 4. Economic downturn 5. Mergers 6. New technology 7. Reducing operating costs 8. Reduced cash flow 9. Flattening the organization 10. Getting rid of deadwood 11. New management/ownership Alternatives to Downsizing Cutting non-personnel related costs such as business expenses, advertising, etc. Cutting personnel related costs such as reducing bonuses, wages, benefits. Reducing the work week. Providing incentives for voluntary severances such as offering early retirement. Offering extended leaves of absence, sabbaticals or vacations. Eliminating overtime. Implementing worksharing. Relying on attrition and a hiring freeze. Outsourcing some functions. Implementing other cost reduction strategies. Best Practices in Downsizing Hands-on involvement prior to the decision. Selective in its application rather than across the board. Long-term in focus. Identify your organizational and competitive strategies and advantages Attack specific areas. Identify redundancies, inefficiencies, areas for technological advancement, outdated/obsolete functions/duties and products. Address the psychological needs of survivors. Treat those displaced with dignity and fairness. Create smaller, autonomous teams (the power of 100). Be proactive and focus on performance

3 Negatives of Downsizing Higher quit rate. Less attractive to new or high potential recruits. Reduced employee commitment. Lower performance. Management may fixate on restructuring rather than customer needs or rebuilding. Less innovation and risk taking. Lower morale. Increased litigation. Decreased attention to safety. Decreased organizational reputation Forecasting Techniques Quantitative Forecasting Techniques Quantitative techniques work best when the environment is stable and you have a long-term statistical history to use. They require the compilation of historical data and the use of software or someone trained in statistical analysis. Completion may be lengthy. Requires detailed data on organizational staffing, sales, efficiency, etc. Ratio Analysis: is an quantitative technique. An example is comparing the relationship between total sales and the number of employees required. The 5 steps for conducting a ratio analysis are: 1. Select the appropriate trend 2. Track the trend over time 3. Track the workforce size over the same time 4. Calculate the average ratio of the trend to the workforce size 5. Calculate the forecasted demand for labour Regression analysis: another quantitative technique. It presupposes that there is a relationship between one or more independent (causal) variables which then impact the dependent (target) variable. For example the more games the Toronto Maple Leafs win (causal variable) the more beer your restaurant will sell (dependent variable). So you could predict how many staff to schedule and the amount of beer to stock based on your prediction about how good the Leafs will be. Trend Analysis: examines the relationship over time between an operational index such as sales and the demand for labour. An example would be comparing attendance in class to marks awarded The trend must be consistent and have been in place for some time. It is quantitative. HR Budgets: operational or short term demand forecasting that require the number and type of personnel required for each role. It results in a staffing table.

4 Staffing Table: When staff prepare information on the expected demand for labour in the short-term based on based on current or expected levels of activity. It is based on activity levels and represents the total projected HR demand for each role. A Recommended Supply Forecasting Technique Markov Model: a series of matrices that detail the various patterns of movement to and from the jobs in an organization. It requires the use of historic mobility rates, which leads to a forecast of future movement and finally those are used to develop programs. Lists 5 possible options: 1. remain in current job 2. promotion 3. lateral transfer 4. exit from the job/company 5. demotion The Markov Model is useful for determining: a. the number of personnel moves each year b. the number of external hires required c. movement patterns/career paths in the organization and required training d. success rates for hires and promotions Qualitative Forecasting Techniques Qualitative Supply Forecasting Linear Programming: a complex mathematical procedure to determine the best supply mix. Movement Analysis: used to analyze the ripple effect of promotions Vacancy Model: analyzes personnel flow through the organization beginning at the top and moving down. Qualitative Demand Forecasting These work best when the environment is unstable and or you are introducing new products or techniques. They often require the use of experts. Requires knowledge of external factors, stakeholders, etc Expert Forecasting: usually this is conducted by line managers, HR staff, senior management or consultants. These are qualitative techniques. Scenario/Envelope Forecasting: Projections set by a group based on a variety of assumptions. Usually develop best and/or worse case scenarios, these are the boundaries of the envelope. Impact Analysis: Past trends are analyzed by experts and they predict the probability of a future outcome. Qualitative Supply & Demand Forecasting Delphi Technique The experts do not meet so this reduces the chance of groupthink. Also they do not meet so there is no need for travel and therefore it is easier to schedule and less costly.

5 1. Define the issue or question 2. Identify the experts and the timeline 3. Orient the experts 4. Issue the first questionnaire 5. Summarize the answers 6. Issue the first round summary and the second round questionnaire 7. Compile the answers to the second and issue an opinion based on the majority viewpoint. 8. Continue, summarize and review Nominal Group: Much like the Delphi Technique only the experts meet. This may cost more for travel, etc and may take longer to get the experts together. Also one may overpower the others or groupthink may occur. 1. Define the issue or question 2. Identify the experts and the timeline 3. Issue the demand statement to the experts 4. Experts conduct research 5. Experts meet but individual interactions are discouraged 6. Experts brainstorm 7. Vote is taken and outcomes are ranked. Outsourcing of HR Functions Outsourcing: a contractual relationship for the provision of business services by an external provider Why Outsource? Reduce cost Economies of scale Access to specialized skills/expertise Harmonize policies/procedures globally Access to advanced technology Written/contractual performance standards Reduce head count/organizational politics Improved service Focus on strategic value added functions rather than transactional functions When should a function be outsourced? When it is: Rule based Repetitive Frequently undertaken Predictable Able to be fully or partially automated Able to be delivered remotely

6 Not a core function Does not add to organizational knowledge or capabilities Why not outsource? Costs may rise as unexpected events/demands crop up No control over level of service (outside of contracted stipulations) No control over contracted staff System or cultural incompatibilities Lack of flexibility Vendor may become or assist competitors Impact on employee morale Destruction of internal culture Privacy risks Reduced corporate value Damage to corporate knowledge base (hollowing out) Functions that are most commonly outsourced Compensation Payroll Benefits administration Compensation administration Pension administration and investing Training Training delivery Training design Training design and development Development of training policies Recruitment & Selection Advertising Screening of external applicants Applicant testing Reference checking Preliminary interviews Exit interviews Other Functions Temporary staffing Information technology Employee assistance programs Wellness programs Occupational health & safety Claims management

7 HR Auditing Why do we audit HR performance? To ensure that HR is accepted s a business function. HR practitioners must be business people and speak the language of business. Numbers must be related to outcomes and they must reflect value added activities. The problem is that unlike other business activities, there is no standard accepted way of measuring HR activities. Labour is often the largest controllable cost To objectively identify and reward good performance Legal compliance Determine which HR practices are effective To support continuous improvements Bring HR closer to line functions Provide data for resource allocation Most Frequent Measures Turnover Employment Engagement Cost Per Employee (training, hiring) Labour Cost (per unit or sale or service) Revenue Per Employee Customer Satisfaction Units of Output Per Employee Other Factors Which Maybe Measured Employee involvement/commitment Improving organizational human capital (KSAO s) Decreasing recruitment costs Improving selection techniques/processes Identifying and keeping key employees Succession planning/management Reducing injuries and absenteeism Improving recruitment pool by creating a positive organizational identity/culture Ensuring that compensation is in-line with organizational strategy Ensuring that labour costs and headcount are aligned with organizational requirements Legislative compliance Positive employee relations (no need to unionize or limiting work stoppages and grievances The 5C Model Compliance: with legal requirements Client Satisfaction (stakeholders as clients): through feedback, surveys, measuring critical incidents

8 Culture Management: perceptions and attitudes both internal and external and employee commitment Cost of Control (of employee behaviours): such as absenteeism, injuries and turnover. Also increasing efficiencies based on time/volume/cost Contribution (of HR): employee involvement, flexible work systems, KSAO s, internal culture, employee development Balanced Scorecard (BSC) A measurement of framework that helps managers translate strategic goals into operational objects to answer 4 basic questions 1. How do customers/clients see us (customer perspective) 2. What must we excel at (internal business perspective) 3. Can we continue to improve (innovation perspective) 4. How do we look to shareholders (financial perspective) Job Analysis Job Analysis: an examination of the jobs in teh organization with a view to documenting the tasks, duties and responsibilities of a job and the KSAO's associated with the successful performance of the job Elements required for a successful job analysis include: Working condition Employee qualifications Training and skill requirements Work processes Why is job analysis so important? Incorporates recent changes in processes and techniques, keeping job descriptions up to date Ensures that HR demand and supply are matched by recruitment & selection methods Aligns HR programs to corporate strategy & future needs Tracks technological changes Helps to prioritize work activities and functions Identifies core functions & future skill requirements Provides for comparisons with different work sites (even globally) Assists in developing training programs Allows for stated and understood performance standards Assists in meeting pay equity requirements Allows for creation of required workplace accommodations Assists in developing organizational identity Used to set compensation guidelines Incorporated into Health & Safety program The Job Analysis Process 1. Determine the job to be analyzed.

9 2. Determine the appropriate methods. 3. Examine existing data and documentation. 4. Define and formalize any new job duties, methods and performance standards. 5. Maintain the new data and standards. Job Description: the written documents produced by the job analysis process, emphasizing duties, tasks, specifications and competencies. Should also include 1) job title 2) NOC code 3) compensation category 4) department 5) supervisor s title 6) date of description Compensable Factors: knowledge, skills, effort, responsibility and working conditions. Performance Appraisal: comparison of an individual s performance to the standards specified in the job description Job Analysis Techniques Critical incident technique A qualitative process of job analysis that produces behavioural statements along a range from superior to ineffective performance for a specific job Jobholders are asked to identify the key dimensions of their job Describe (in writing or verbally) specific critical incidents that relate to success, as well as those that lead to job failure Questionnaires Usually completed by the jobholder, their supervisors, and the people who work in other jobs that are related to the specific job being investigated Frequently used instruments include Functional Job Analysis (FJA) Job Diagnostic Survey Position Analysis Questionnaire (PAQ) Hay system Uses 3 key factors: Know-how (knowledge and skills) Problem solving (decision making level) Accountability (responsibilities including use of organizational resources such as supervision of other workers, resources and budgeting) Behaviorally anchored rating scales (BARS) The job is divided into key dimensions. Behaviourial statements are developed for each dimension on a continuum (or rating scale) and these correspond with numerical rankings Job diaries Jobholders maintain a written record of their job activities, and associated time expenditures for a preset period that typically ranges from a complete work cycle or typically a week to up to a month Observation (direct or indirect)

10 Direct observe the production line for worker behaviours and the skills required for job success. Recording of the number and duration of individual behaviours is normally captured on a standardized recording sheet Indirect can incorporate a variety of means (e.g. videotaped recording of the job being performed) for subsequent analysis Focus groups Interviews 360º Evaluation: evaluation of attributes and performance dimensions of a job from "the full circle" around the job - that is, feedback from subordinates, superiors, co-workers, clients, and the jobholder him/herself Measurement of output/production Machine-generated output reports, as well as production reporting procedures, can obtain information about the job and its normal and peak levels of productions. Technique reveals little about the qualitative or process aspects of the job Useful in determining appropriate performance standards for output Time studies Position analysis questionnaire (PAQ) A common quantitative approach to job analysis consisting of 194 items to assess job characteristics in 6 different dimensions and relate them to human characteristics 1. Information input: How and where the worker obtains necessary information for job functioning 2. Mental processes: The types of planning, reasoning, and decisionmaking processes required by the job 3. Work output: The specific items produced by the worker and the tools he or she employs to produce them 4. Relationships with other workers: Important interpersonal contacts for the jobholder 5. Job context and work satisfaction: The physical and social working environments 6. Other job characteristics: Elements of the job that do not fall into the other five dimensions Functional job analysis (FJA) Analyzes any job using three essential elements: 1. people (important interpersonal relationships on the job) 2. data (obtaining, using, and transforming data in aid of job performance) 3. things (physical machinery, resources, and the environment) Each of these three dimensions is then rated by level of complexity and importance

11 Mergers & Acquisitions Horizontal Merger: the merging of two competitors, who combine to increase market power Vertical Merger: the merger of a buyer and a supplier to achieve the synergies of controlling all factors affecting a company's success, from the production of raw goods to manufacturing to distribution and retail sales Conglomerate Merger: the merger of two organizations competing in different markets Acquisition: the purchase of an entire company or a controlling interest in it Consolidation: joining organizations to form a new organization Takeover: one company seeks to acquire another company Why mergers? o Operating synergy: create economies of scale to reduce costs o Access to new markets o Access to new products o Access to talent o Enhanced reputation o Reduction in operating expenses o Access to distribution channels o Limit the competition o International access o Access to new brands o Economy of scope: using existing resources to create new products/services o Tax advantages o Provide better management to the target company o Target company is undervalued o Prevent competitors from getting it o Corporate (executive) ego o Increased market share o Diversification o Access to technology o Balance cash flow or production (products/services required year round, or acquire a cash cow ) o Increased pay offs or compensation for executives o Shareholder expectations Success Rates o Better success rate the large the organization and greater success rate in manufacturing over service industries o 50% to 80% ultimately fail o Acquisition of a related business has a better success rate o Only 23% end up recovering their costs (McKinsey report) o 4 out of 5 produce no increase shareholder value

12 Why M&A Fails? o Integration issues: cultural/technical/operational o Inadequate due diligence o Debt loads/change in interest/lending o Inability to achieve synergy o Too much diversification o Managers focus on the acquisition/merger o Employee performance/morale Cultural Issues/Outcomes o Culture: the social glue of an organization or the set of important beliefs that members of an organization share Assimilation: one organization gives up its culture. Integration: the fusion of both cultures, resulting in a new culture. Deculturation: each organization retains its original culture until something breaks and the weaker culture assimilates. Separation: the two cultures resist merging and the organization operates as two separate companies HR Due Diligence o Due Diligence: a process which a potential acquirer evaluates a target firm for acquisition o Would include a review of the following: Salary structure Union or non-union Employee relations/management style Compensation strategy Organizational culture Benefits plans Pension WSIB history Grievance history (if union) Lawsuits (if non-union)