Chapter 14

Question 1

Aligning HRM programs and policies with organizational goals is the beginning of what process?

Answer 1

> Aligning HRM programs and policies with organizational goals is the beginning of the strategic HR planning process.

Question 2

What is the end of strategic HR planning process?

Answer 2

> Assessing whether these policies and practices have been effective is the end of one cycle in the planning process, because HR professionals need to know how their programs and policies are performing.

> Just as organizations keep scorecards on their financial effectiveness, so too must the HR department track the effectiveness of its programs

Question 3

Corporate scorekeeping allows organizations to:

Answer 3

> to make the adjustments necessary to reach their goals.

Question 4

The scorecard, with its measures of key indicators allow managers and employees to do what?

Answer 4

> The scorecard, with its measures of key indicators, focuses managers’ and employees’ attention on what is important to the organization.

> Focusing on desired results increases the ability to attain the results.

Question 5

Measures allow us to make what kind of judgements about policies and practices?

Answer 5

> Measures allow us to make judgments about the relative effectiveness of various policies and practices, just as baseball scores and statistics allow fans to track the success of baseball teams.

Question 6

How do decision makers within organizations view HR activities?

Answer 6

> Decision makers within organizations view HR activities, such as training courses, as expenses?

Question 7

Some HR managers resist measuring their work. Indeed, according to the IBM Global Human Capital Study, only 6 percent of those HR managers interviewed felt that they were very effective at using data to make decisions about the workforce. What are two reasons for this?

Answer 7

> One reason for this low level is the lack of integration of human resources information systems (HRIS) with each other and with operational systems (finance, sales, and so on)

> Another reason is that HR professionals have limited knowledge of measurement models and limited skills in measurement design. There is an acute shortage of HR professionals with skills in spreadsheets, HRIS, and statistics

Question 8

The main reason HR is not measured is that:

Answer 8

> there is no standard way of measuring.

Question 9

There may evolve two types of HR - what are two potential branches of HR?

Answer 9

> There may evolve two types of HR, with one branch similar to sales and accounting transactions, and the other more like marketing and finance strategic decision making

> For example, the necessary transactional work (similar to accounting) might be handled by a personnel department and the strategic work by the HR department.

Question 10

How many HR professionals in Fortune 500 companies measure HR productivity and what can be said about those that do measure productivity?

Answer 10

> About two-thirds of HR professionals in Fortune 500 companies measure HR productivity

> However, those that do measure are more likely to be treated as strategic partners

Question 11

Interest in measuring HR is growing slowly, fuelled by:

Answer 11

> business improvement efforts across organizations,

> attempts to position HR as a strategic partner, and

> the need for objective indicators of success to accompany the analysis of HR activities.

Question 12

There are other pressures that make measurement a hot topic in HR. For example, Sarbanes-Oxley (American legislation that affects Canadian companies operating in the United States) requirements force HR to what?

Answer 12

> provide information about executive compensation, pension plans, and whistleblower protection.

Question 13

More HR professionals are now trained in what field?

Answer 13

> More HR professionals are now trained in the field of measurement and capable of developing HR scorecards and measuring human capital.

Question 14

There are nine compelling reasons for measuring HRM effectiveness:

Answer 14

1) Labour costs are most often a firm’s largest controllable cost.

2) Managers recognize that employees make the difference between the ­success and failure of projects and organizations. Good performance can be rewarded objectively.

3) Organizations have legal responsibilities to ensure that they are in compliance with laws governing the employer–employee relationship.

4) Evaluations are needed to determine which HR practices are effective, because at this point managers and HR professionals cannot distinguish between a fad and a valid change program

5) HR professionals should be skeptical of potential fads, as research has shown that 90 percent of them lose their popularity within a decade rather than become accepted practice

6) Measuring and benchmarking HR activities will result in continuous improvements. Performance gaps can be identified and eliminated.

7) Audits will bring HR closer to the line functions of the organization.

8) Data will be available to support resource allocations

9) Investors want this information. Why? The market-to-book ratio suggests that for every 6 dollars of market value, only 1 dollar appears on the balance sheet. This money would represent tangible assets such as buildings and equipment, and financial assets such as cash and marketable securities.

10) HR managers are more likely to be welcome at the boardroom table, and to influence strategy, if they use measures to demonstrate the contribution of their function

Question 15

What is the typical life cycle of a fad:

Answer 15

1) Stage 1: Ascendency
- Language such as “Something new and revolutionary is here” and “Out with the old, in with the new”
- Descriptions and how-tos
- Great praise and high promise

2) Stage 2: Maturity
- Exhortations to jump on the bandwagon
- Initial questions asking whether the technique is a fad
- Suggestions and pleas to look beyond the superficial

Question 16

A fad can also be defined by 9 characteristics:

Answer 16

> It is simple and claims to solve complex problems.

> It claims to apply to and help anyone.

> It is not anchored or related to any known and generally accepted theory.

> Proponents hesitate to present it in academic settings or write about it in referred journals.

> Proponents cannot tell you exactly how it works.

> It is a “track” topic at 75 percent of the conferences you have attended.

> Its proponents claim that it has changed their lives and that it can change yours too.

> Its greatest proponents are those with the least experience in the field.

> It is just too good to be true.

Question 17

Provide one example that displays how frequency-based mimicry, trait-based mimicry, and outcome-based mimicry work:

Answer 17

> Organizations often adopt a practice simply because others are doing it. This will occur if a large number of organizations are doing it (frequency-based mimicry), if large visible firms are doing it (trait-based mimicry), or if other firms seem to be successful by adopting it (outcome-based mimicry).

Question 18

What are the six clusters—the “6 Cs” of evaluating HRM:

Answer 18

> Compliance
Client satisfaction
Culture management
Cost control
Contribution
Collection and conversion of big data into predictions

Question 19

Senior management depends on HR expertise to ensure what for the organization?

Answer 19

> Senior management depends on HR expertise to ensure that organizational practices comply with the law, and many HR departments were started because of the need to record compliance with employment standards, such as hours worked and overtime payments

> Legislation dealing with the employer–employee relationship is increasing, and the areas of safety, health, employment equity, and industrial relations are all highly regulated.

> HR can make a difference by ensuring that managers and employees comply with the law, thus saving the company legal costs, fines, and damaging publicity.

Question 20

Currently, HR is being asked to ensure not only that the organization complies with laws but also what?

Answer 20

> Currently, HR is being asked to ensure not only that the organization complies with laws but also that it is ethical.

> This means the development of a code of conduct, protection for whistleblowers, and the redesign of orientation and training programs to include curriculum on ethics.

Question 21

What are constituent groups and who is included in that group?

Answer 21

> Constituent groups, who include external and internal clients, are those people who can influence or must interact with the HR department.

Question 22

External clients of HR are:

Answer 22

> candidates for positions, suppliers of HR services such as technology, and government regulators.

Question 23

Internal clients of HR are:

Answer 23

> Internal clients include employees grouped by occupation, union leaders, and managers.

Question 24

Managers are turning to client or constituent group perceptions of the HR department for input on what?

Answer 24

> for input about the effectiveness of HR performance

> this approach stems from earlier efforts in total quality management and tries to reconcile the gaps between client expectations and levels of satisfaction. The bigger the gap, the less effective the HR department.

Question 25

The advantages of measuring client satisfaction with the HR department include

Answer 25

> Measuring client satisfaction reminds the HR department that it is indeed a “service” that must deal with the expectations of its clients. > Surveying clients about their unmet needs increases the credibility of the HR function. > Initiating and managing change by surveying constituent group before, during, and after a change program increases the possibility that the HR department will understand the clients’ perceptions, identify resistance to change and overcome such resistance, and prove that the change program meets its goals.

Question 26

Methods of Measuring Client Satisfaction - Informal Feedback

Answer 26

> Constituent group perceptions can be obtained informally, as part of the feedback process, whenever the HR professional is undertaking an assignment or completing a routine task such as filling a position. People can simply be asked if they are satisfied with the service.

Question 27

Is informal feedback an effective Method of Measuring Client Satisfaction?

Answer 27

> Line managers might be reluctant to give honest feedback face to face, > an individual HR officer might not be able to see patterns in the feedback because there is no method for measuring the frequency of problems, > and HR professionals have little incentive to report negative feedback to superiors in the organizational hierarchy

Question 28

How can HR managers use surveys to measure performance?

Answer 28

> Surveys can be used to solicit feedback confidentially, anonymously, and from a larger number of constituent groups. One approach is to list the HR activities, such as selection, and ask specific questions about them

Question 29

What is the critical incident method?

Answer 29

> In the critical incident method, clients are asked to describe a situation in which the HR department provided assistance that was particularly useful, the consequences of this help, and why it was seen as helpful. > Similarly, they are asked to describe a situation in which the assistance was not at all useful, and why. Clients’ responses help the HR department identify issues and services that affect unit effectiveness.

Question 30

What are 3 problems with measuring client satisfaction in HR?

Answer 30

1) High expecations 2) Conflicting Expectations 3) Professional Affiliations (In other words, the HR professional might be trying to do what is right in the profession)

Question 31

Highly effective organizations seek to influence employee attitudes through the development of what?

Answer 31

> Highly effective organizations seek to influence employee attitudes through the development of an appropriate culture that will support optimum performance.

Question 32

The assumption underlying the culture management model is what?

Answer 32

> is that HR practices can have a positive influence on employee attitudes, which in turn influence employee performance.

Question 33

What are attitudes in the organizational context?

Answer 33

> Attitudes, in an organizational context, can be defined as perceptions or opinions about organizational characteristics.

Question 34

The most frequently measured attitudes in the organization are

Answer 34

> The most frequently measured attitudes in the organization are job satisfaction and engagement

Question 35

Surveys measure attitudes toward what people / components?

Answer 35

> measure attitudes toward supervisors, colleagues, pay, promotions, and the work itself.

Question 36

A study of 40 global companies over three years showed that companies with employees with high engagement scores had more than what percent in net profit margin over those with low scores

Answer 36

> more than 3%

Question 37

Define satisfaction:

Answer 37

> Satisfaction: This is a passive measure of employee contentment with little relationship to performance.

Question 38

Define motivation:

Answer 38

> Motivation: This measure probes whether employees feel stimulated in their role and are driven to meet work and organizational goals. Motivation is strongly related to productivity measures.

Question 39

Define commitment:

Answer 39

Commitment: A measure of the alignment between the strategy, objectives, and values of the organization, commitment is strongly linked to employee loyalty and customer service excellence.

Question 40

Define advocacy:

Answer 40

> Advocacy: This is a measure of whether employees will speak highly of the organization as an employer and as an organization with products and service. Advocacy is strongly linked to sales growth and employee attraction.

Question 41

Define engagement:

Answer 41

> Engagement: If an employee scores highly on motivation, commitment, and advocacy, then they would be classified as engaged. Engaged employees are more productive, deliver higher customer satisfaction levels, deliver the brand promise more effectively, create stronger growth, and generate higher profits.

Question 42

There are three commonly used surveys for measuring employee engagement. What are they? and whats an advantage to using them?

Answer 42

> Gallups Q12 Employee Engagement survey > Ultrecht Engagement Scale (UWES-9) > Affective Organizational Commitment

Question 43

The cost of employees consists of:

Answer 43

> consists of pay and benefits, the cost of absenteeism, and the cost of turnover.

Question 44

HR practices can reduce labour costs in what way?

Answer 44

> by reducing the workforce while attempting to get the same volume of work done with fewer employees.

Question 45

There are three ways to reduce labour expenses by reducing the size of the labour force:

Answer 45

1) Technology: One of the most frequently used ways to cut labour costs is to increase the use of technology. Technology to process benefits claims and pursue e-learning has replaced HR staff, resulting in cost savings of about 30 percent (Caudron 2001, 26–31). 2) Outsourcing: Firms are also outsourcing major activities in order to manage the costs of labour. However, there are detrimental effects of cutting costs in this way. Core talent may be lost and the capacity for innovation diminished (Wright and Snell 2005, 177–182). Refer to Chapter 13, Outsourcing, for a more detailed discussion of outsourcing. 3) Downsizing: Chapter 10, Downsizing and Restructuring, provides an analysis of the processes for restructuring.

Question 46

HR departments can reduce expenses associated with employees in at least two other ways:

Answer 46

> The first is to increase the efficiencies of those working (i.e., achieve the same results at lower costs or faster speeds), > and the second is to reduce the costs associated with behaviours such as absences or turnover that are, to some extent, under the control of the employee.

Question 47

What is efficiency?

Answer 47

> is expressed in terms of the results achieved (outputs) in comparison to the resource inputs. Measures of efficiency include the following: > Time (e.g., average time to fill an opening, process a benefits claim) > Volume (e.g., number of people interviewed to fill a job, number of requests processed per employee) > Cost (e.g., cost per training hour or per test)

Question 48

What do HR managers have to use when measuring efficiency?

Answer 48

> The use of benchmarks is critical in comparing one organization’s efficiency ratios against the best in the field. Data revealing a cost per hire of 500 dollars or turnover rates of 15 percent are meaningless without relevant comparison points.

Question 49

Examples of cost measures:

Answer 49

> Ratio of compensation expense to total operating expense > Benefit cost per employee covered > Ratio of benefits expense to total operating expense > Processing costs per benefit claim > Administration costs per benefit claim > Cost per training day > Cost per trainee per program

Question 49

Example of number measures:

Answer 49

> Number of training days > Number of interviews per selection > Ratio of filled positions to authorized positions > Percentage of employees with formal performance evaluations > Percentage of designated employees

Question 49

Examples of response time measures:

Answer 49

> Time between requisition and filling of position > Time to process benefits > Time from identifying a training need to program implementation > Time to respond to requests by category

Question 50

To control the expenses associated with employees, organizations should do what?

Answer 50

> To control the expenses associated with employees, organizations should carefully track and compare the rates of absenteeism, turnover, and occupational injuries and illnesses.

Question 51

HR metrics from over 200 Canadian organizations found what about the expenses associated with employees?

Answer 51

> on average, each full-time employee missed seven days over the year (with health and government sectors reporting higher rates); > across all sectors, average turnover is about 8.1 percent (6.1 percent voluntary and 2 percent involuntary) annually; > and turnover is highest in the services, retail, and health care sectors

Question 52

The costs of turnover, which include:

Answer 52

> The costs of turnover, which include termination, replacement, loss of revenue when the position is vacant, and the learning time for new employees to become productive, are estimated at between six and 18 months of the employee’s annual compensation.

Question 53

What is the thesis underlying the contribution model?

Answer 53

> is that HRM practices shape the behaviour of employees within an organization, and thus help the organization achieve its goals. In other words, the effective management of people makes a difference in how well an organization functions

Question 54

The effect of a system of HR practices is greater than the effect of what?

Answer 54

> The effect of a system of HR practices is greater than the effect of individual practices (bundling)

Question 55

Survival is the first measure of what?

Answer 55

> Survival is the first measure of effectiveness, and the contributions of HRM practices should be judged against this life-or-death index.

Question 56

The sixth C of measurement attempts to:

Answer 56

> The sixth C of measurement attempts to gather data on employees and then predict their future behaviour (such as leaving the organization), so that HR can then design programs (retention strategies) to change that behaviour.

Question 57

Big data in human resource management refers to:

Answer 57

> refers to the use of several data sources to evaluate and improve practices including recruitment, training and development, performance, compensation, etc.

Question 58

What are HR analytics?

Answer 58

> In its simplest form, HR analytics is about how HR metrics, such as turnover and employee engagement, are used to describe the workforce > HR analytics is an emerging science that has great potential for the management of human resources. Predictive algorithms can analyze data and recommend employee training needs, predict where fraud or other security risks are likely to happen, identify problems in time management, and even look for changes in employee voice timbre to gauge stress. > HR analytics is a proactive and systematic process for ethically gathering, analyzing, communicating and using evidence-based HR research and analytical insights to help organizations achieve their strategic objectives" (Falletta and Combs 2021, 51–68).

Question 59

The Meaning of HR Analytics:

Answer 59

1) Making better human capital decisions by using the best available scientific evidence and organizational facts with respect to “evidence-based HR” 2) Moving beyond descriptive HR metrics (i.e., lagging indicators – something that has already occurred) to predictive HR metrics (i.e., leading indicators – something that may occur in the future) 3) Segmenting the workforce and using statistical analyses and predictive modelling procedures to identify key drivers (i.e., factors and variables) and cause-and-effect relationships that enable and inhibit important business outcomes 4) Using advanced statistical analyses, predictive modelling procedures, and human capital investment analysis to forecast and extrapolate “what-if” scenarios for decision making 5) Standard tracking, reporting, and benchmarking of HR metrics 6) Ad-hoc querying, drill-down and reporting of HR metrics and indicators through an HRIS and/or HR scorecard/dashboard reporting tool 7) Operations research and management science methods for HR optimization (i.e., what’s the best that can happen if we do X, Y, Z, or what is the optimal solution for a specific human capital problem)

Question 60

Define data, performance metrics, and analytics:

Answer 60

> Data: Information including facts, figures, and statistics that can be analyzed in order to understand and predict. > Performance metric: The use of information including qualitative and quantitative data to measure key organizational processes such as employee behaviour. > Analytics: The discovery, interpretation, and communication of meaningful patterns in data (Oracle 2021).

Question 61

What are the seven steps to the HR analytics process?

Answer 61

1) determine constituent group requirements. 2) define HR research and analytics agenda 3) identify data sources 4) gather data 5) Transform data 6) Communicate intelligence results 7) Enable strategy and decision making

Question 62

What kind of process does the HR analytics process serve?

Answer 62

> it serves as a proactive and systematic process for establishing HR analytics practices, projects, and priorities that enable HR strategy, evidence-based decision-making, and the execution of the overall business strategy.

Question 63

What are the 5 barriers to HR analytics?

Answer 63

1) availability and accessibility of accurate and reliable data 2) lack of tools to collect and analyze data 3) Lack of staff with expertise to collect and analyze data 4) lack of time to collect and analyze data 5) Reliance on intuition/data interpretation

Question 64

Research by the Conference Board of Canada found that the skills most valued in analysts working with big data were a combination of the following:

Answer 64

> High-level technical skills, specifically: - The existing ability to develop and manipulate data - The ability to learn, in the face of changing technology and business needs - Flexibility across platforms and business issues > Strong interpersonal skills, including: - The business acumen to understand how to bring analytics to bear on business problems - The ability to communicate findings to business leaders in a way they can absorb—to tell a story

Question 65

Some are starting to question the use of data to control and manipulate employee behaviours - what are some concerns:

Answer 65

1) Operationalizing bias and discrimination. 2) Behaviour shaping. 3) Threatening privacy or autonomy through tracking and surveillance. 4) Creating inconvenience or income insecurity. 5) Reducing performance/people to numbers.

Question 66

What kind of data trend is occurring in analytics?

Answer 66

> What is trending now is the establishment of units where HR data is tightly linked to operational data and the data is used to drive programs to meet organizational objectives.

Question 67

Typical ways of measuring HR activities are as follows:

Answer 67

> Activity-based measures: The number of employees completing training; the number of employees hired > Costing measures: The cost of the training program; the cost per hire > Client satisfaction: The manager has a problem solved; the HR department changes an employee’s benefits information quickly

Question 68

What do we mean by added value?

Answer 68

> An activity measure for an HR professional would be the number of people trained. > A performance measure for an HR professional would be the number of trainees who passed the training test or rated the training courses as above average. > An added-value measure for an HR professional would be the increase in profits, sales, or customer satisfaction, or decrease in complaints, errors, or defects, as a result of the skills learned in the training course.

Question 69

What is Cost–benefit analysis?

Answer 69

Cost–benefit analysis examines the relationship between the costs of a program and its benefits.

Question 70

What are direct costs?

Answer 70

> Direct costs are those that are used to implement the program, such as the cost of selection tests or training materials.

Question 71

What are indirect costs?

Answer 71

> Indirect osts are those that an organization absorbs, such as the trainee’s time away from work. > Indirect costs often go unrecognized, and sometimes are not included in cost–benefit analyses

Question 72

What is utility analysis?

Answer 72

> It is a method of determining the gain or loss to the organization that results from different courses of action.

Question 73

What kind of accounting process does utility analysis use and how does that work?

Answer 73

> This method measures the utilities (gains and losses) by using human resources accounting. > Human resources accounting uses standard accounting practices to calculate and report an organization’s human assets (or employees) in economic terms. >The costs of recruiting, selecting, training, and retaining employees are calculated, and then these costs are amortized over the employees’ working lives.

Question 74

What is an audit and why is it important?

Answer 74

> An HR audit is an important management control method to evaluate an organization's performance and effectiveness of HR management. > An audit measures progress against goals. > Audits can be done annually or quarterly, but a consistent checking against the plan ensures no year-end surprises and allows managers to take corrective action.

Question 75

What is benchmarking concerned with?

Answer 75

> Benchmarking is concerned with enhancing organizational performance by establishing standards against which processes, products, and performance can be compared and subsequently improved

Question 76

Benchmarking can be used to accomplish the following:

Answer 76

> Stimulate an objective review of processes, practices, and systems > Motivate employees to perform to a higher standard by providing a common target for improvement > Provide objective comparative data with best-in-class organizations > Raise questions and stimulate discussions about better ways of operating (Fitz-Enz 2000)

Question 77

There are four benchmarking sources:

Answer 77

1) Internal 2) Competitive 3) Sector 4) Best-of-breed organizations

Question 78

Benchmarking can be done by either internal or external consultants. Explain the difference:

Answer 78

> Internal consultants have the advantage of knowing more about the organization and being trusted by the staff supplying the information. > However, external consultants might be more objective, have greater numbers of outside references or benchmarks, and be more likely to convey bad news to management. (can also be a third party)

Question 79

Benchmarking is popular because:

Answer 79

> Benchmarking is popular because the measures are easy to collect and the numbers have a superficial credibility, but there is no published research that supports a relationship between HR benchmarks and ultimate firm performance

Question 80

The balanced scorecard rests on the assumption that:

Answer 80

> rests on the assumption that any successful business satisfies the requirements of investors (financial performance measures), customers (market share, customer commitment, and retention), and employees (employee satisfaction and organization commitment)

Question 81

The idea of a balanced scorecard arose from the idea that:

Answer 81

> that financial measures alone do not capture the true performance of an organization, and that these measures tend to reflect past performance and are not necessarily predictive.

Question 82

The balanced scorecard provides answers to these four basic questions:

Answer 82

1) How do customers see us? (The customer perspective) 2) What must we excel at? (The internal business perspective) 3) Can we continue to improve and create value? (The innovation and learning perspective) 4) How do we look to shareholders? (The financial perspective) (Kaplan and Norton 2005, 1–10)

Question 83

Analysts posit that what two sources of capital drive business results?

Answer 83

> Analysts posit that human capital and financial capital drive business results. > Human capital can refer to factors such as the employees’ knowledge, skills, capabilities, and attitudes that impact performance

Question 84

The perennial problem in measuring the impact of HRM practices is what kind of effect?

Answer 84

> is separating cause and effect.

Question 85

What are leading and lagging indicators?

Answer 85

> Leading indicator: anticipates, predicts, or affects the future Higher employee turnover is a leading indicator, and can precede lagging indicators (Lockwood 2006) Lagging indicator: represents information that results from an event or a change > Lagging indicators that could follow higher employee turnover include lower customer satisfaction, lower customer retention, and poor sales (Lockwood 2006)

Question 86

Whatever measure you decide to use should have the following characteristics:

Answer 86

1) Alignment 2) Actionable 3) Trackability 4) Comparability 5) ability to drill deep 6) Report and communicate a limited number of measures: 7)