ANS 1

The Hawthorne effect is a form of reactivity whereby subjects improve an aspect of

their behavior being experimentally measured simply in response to the fact that they
are being studied,[1][2] not in response to any particular experimental manipulation.

The term was coined in 1955 by Henry A. Landsberger[3] when analyzing older
experiments from 1924-1932 at the Hawthorne Works (a Western Electric
manufacturing facility outside Chicago). Hawthorne Works had commissioned a
study to see if its workers would become more productive in higher or lower levels of
light. The workers' productivity seemed to improve when changes were made and
slumped when the study was concluded. It was suggested that the productivity gain
was due to the motivational effect of the interest being shown in them. Although
illumination research of workplace lighting formed the basis of the Hawthorne effect,
other changes such as maintaining clean work stations, clearing floors of obstacles,
and even relocating workstations resulted in increased productivity for short periods
of time. Thus the term is used to identify any type of short-lived increase in
productivity.[3][4][5]

Contents
[hide]

• 1 History
o 1.1 Relay assembly experiments
o 1.2 Interviewing Program
o 1.3 Bank wiring room experiments
• 2 Interpretations and criticisms of the Hawthorne studies
• 3 See also
• 4 References
• 5 External links

• 6 Further reading

[edit] History
The term gets its name from a factory called the Hawthorne Works,[6] where a series
of experiments on factory workers were carried out between 1924 and 1932.

This effect was observed for minute increases in illumination.

Evaluation of the Hawthorne effect continues in the modern era.[7][8][9]

Most industrial/occupational psychology and organizational behavior textbooks refer

to the illumination studies. Only occasionally are the rest of the studies mentioned.[10]
In the lighting studies, light intensity was altered to examine its effect on worker
productivity. The findings were not significant. The workers appeared to try harder
when the lights went dim, just because they knew that they were in an experiment.
This led to the idea of the Hawthorne Effect, that people will behave differently when
they are being watched.

[edit] Relay assembly experiments

In one of the studies, experimenters chose two women as test subjects and asked them
to choose four other workers to join the test group. Together the women worked in a
separate room over the course of five years (1927-1932) assembling telephone relays.

Output was measured mechanically by counting how many finished relays each
dropped down a chute. This measuring began in secret two weeks before moving the
women to an experiment room and continued throughout the study. In the experiment
room, they had a supervisor who discussed changes with them and at times used their
suggestions. Then the researchers spent five years measuring how different variables
impacted the group's and individuals' productivity. Some of the variables were:

• changing the pay rules so that the group was paid for overall group production,
not individual production
• giving two 5-minute breaks (after a discussion with them on the best length of
time), and then changing to two 10-minute breaks (not their preference).
Productivity increased, but when they received six 5-minute rests, they
disliked it and reduced output.
• providing food during the breaks
• shortening the day by 30 minutes (output went up); shortening it more (output
per hour went up, but overall output decreased); returning to the first condition
(where output peaked).

Changing a variable usually increased productivity, even if the variable was just a
change back to the original condition. However it is said that this is the natural
process of the human being to adapt to the environment without knowing the
objective of the experiment occurring. Researchers concluded that the workers
worked harder because they thought that they were being monitored individually.

Researchers hypothesized that choosing one's own coworkers, working as a group,

being treated as special (as evidenced by working in a separate room), and having a
sympathetic supervisor were the real reasons for the productivity increase. One
interpretation, mainly due to Elton Mayo,[citation needed] was that "the six individuals
became a team and the team gave itself wholeheartedly and spontaneously to
cooperation in the experiment." (There was a second relay assembly test room study
whose results were not as significant as the first experiment.)

[edit] Interviewing Program

The workers were interviewed in attempt to validate the Hawthorne Studies. The
participants were asked about supervisory practices and employee morale. The results
proved that upward communication in an organization creates a positive attitude in the
work environment. The workers feel pleased that their ideas are being heard.

[edit] Bank wiring room experiments

The purpose of the next study was to find out how payment incentives would affect
group productivity. The surprising result was that productivity actually decreased.
Workers apparently had become suspicious that their productivity may have been
boosted to justify firing some of the workers later on.[11] The study was conducted by
Mayo and W. Lloyd Warner between 1931 and 1932 on a group of fourteen men who
put together telephone switching equipment. The researchers found that although the
workers were paid according to individual productivity, productivity decreased
because the men were afraid that the company would lower the base rate. Detailed
observation between the men revealed the existence of informal groups or "cliques"
within the formal groups. These cliques developed informal rules of behavior as well
as mechanisms to enforce them. The cliques served to control group members and to
manage bosses; when bosses asked questions, clique members gave the same
responses, even if they were untrue. These results show that workers were more
responsive to the social force of their peer groups than to the control and incentives of
management.

[edit] Interpretations and criticisms of the Hawthorne

studies
H. McIlvaine Parsons (1974) argues that in the studies where subjects had to go for
long drives with no toilet breaks, the results should be considered biased by the
feedback compared to the manipulation studies. He also argues that the rest periods
involved, possible learning effects, and the fear that the workers had about the intent
of the studies may have biased the results.

Parsons defines the Hawthorne effect as "the confounding that occurs if experimenters
fail to realize how the consequences of subjects' performance affect what subjects do"
[i.e. learning effects, both permanent skill improvement and feedback-enabled
adjustments to suit current goals]. His key argument is that in the studies where
workers dropped their finished goods down chutes, the "girls" had access to the
counters of their work rate.

It's possible that the illumination experiments were explained by a longitudinal

learning effect.[citation needed] It is notable however that Parsons refuses to analyze the
illumination experiments, on the grounds that they haven't been properly published
and so he can't get at details, whereas he had extensive personal communication with
Roethlisberger and Dickson.

But Mayo says it is to do with the fact that the workers felt better in the situation,
because of the sympathy and interest of the observers. He does say that this
experiment is about testing overall effect, not testing factors separately. He also
discusses it not really as an experimenter effect but as a management effect: how
management can make workers perform differently because they feel differently. A
lot to do with feeling free, not feeling supervised but more in control as a group. The
experimental manipulations were important in convincing the workers to feel this
way: that conditions were really different. The experiment was repeated with similar
effects on mica splitting workers.[citation needed]
Richard E. Clark and Timothy F. Sugrue (1991, p.333) in a review of educational
research say that uncontrolled novelty effects cause on average 30% of a standard
deviation (SD) rise (i.e. 50%-63% score rise), which decays to small level after 8
weeks. In more detail: 50% of a SD for up to 4 weeks; 30% of SD for 5–8 weeks; and
20% of SD for > 8 weeks, (which is < 1% of the variance).

A psychology professor at the University of Michigan, Dr. Richard Nisbett, calls the
Hawthorne effect 'a glorified anecdote.' 'Once you've got the anecdote,' he said, 'you
can throw away the data.'"[citation needed]

Harry Braverman argues in "Labor and Monopoly Capital" that the Hawthorne tests
were based on behaviorist psychology and were supposed to confirm that workers'
performance could be predicted by pre-hire testing.[citation needed] However, the
Hawthorne study showed "that the performance of workers had little relation to ability
and in fact often bore a reverse relation to test scores...".[citation needed] What the studies
really showed was that the workplace was not "a system of bureaucratic formal
organization on the Weberian model, nor a system of informal group relations, as in
the interpretation of Mayo and his followers but rather a system of power, of class
antagonisms". This discovery was a blow to those hoping to apply the behavioral
sciences to manipulate workers in the interest of management.[citation needed]

The Hawthorne effect has been well established in the empirical literature beyond the
original studies. The output ("dependent") variables were human work, and the
educational effects can be expected to be similar (but it is not so obvious that medical
effects would be). The experiments stand as a warning about simple experiments on
human participants viewed as if they were only material systems. There is less
certainty about the nature of the surprise factor, other than it certainly depended on
the mental states of the participants: their knowledge, beliefs, etc.

Research on the demand effect also suggests that people might take on pleasing the
experimenter as a goal, at least if it doesn't conflict with any other motive[12], but also,
improving their performance by improving their skill will be dependent on getting
feedback on their performance, and an experiment may give them this for the first
time. So you often won't see any Hawthorne effect—only when it turns out that with
the attention came either usable feedback or a change in motivation.

Adair (1984): warns of gross factual inaccuracy in most secondary publications on

Hawthorne effect and that many studies failed to find it. He argues that it should be
viewed as a variant of Orne's (1973) experimental demand effect. So for Adair, the
issue is that an experimental effect depends on the participants' interpretation of the
situation; that this is why manipulation checks are important in social sciences
experiments. So he thinks it is not awareness per se, nor special attention per se, but
participants' interpretation must be investigated in order to discover if/how the
experimental conditions interact with the participants' goals. This can affect whether
participants believe something, if they act on it or don't see it as in their interest, etc.

Rosenthal and Jacobson (1992) ch.11 also reviews and discusses the Hawthorne
effect. [13]
In a currently unpublished working paper, economists John List and Steven Levitt
claim that in the illumination experiments the variance in productivity is partly
accounted for by other factors such as the weekly cycle of work or the seasonal
temperature, and so the original conclusions were overstated. If so, this confirms the
analysis of SRG Jones's 1992 article examining the relay experiments

ANS 2

Kautilya provides a systematic treatment of management of human resources as early as 4th century B.C. in his
treatise titled "Artha-Shastra". As it has been described in the book, there prevailed logical procedures and principles
in respect of labour organizations such as Shreni or guild system and co-operative sector. The wages were paid
strictly in terms of quantity and quality of work turned out and punishment were imposed for unnecessarily delaying
the work or spoiling it. The Government used to take active interest in the operation of both public and private sector
enterprises and provided well-enunciated procedures to regulate employer-employee relationship. Kautilya provides
an excellent discussion on staffing and personnel management embracing job descriptions, qualifications for jobs,
selection procedure, executive development, incentive systems (Sarasasaama- daana- bheda- danda- catura or
Carrot and Stick approach) and performance evaluation. We find several indications of prevalence of guild system
involving performance of work at the residence of the entrepreneurs themselves. In course of time, the guild system
was followed by cooperative sector consisting of craftsmen and traders, and purporting to promote their professional
interests. Indeed, numerous professional societies were formed on these lines with their own systematic procedures
and policies to nurture their own interests. Again, there are several indications regarding the operation of principles
of the division of labour. The concept of "Varnashram" or caste system was originally based on these principles. The
individuals who used to earn their livelihood by engaging themselves in activities such as teaching, sacrifice or state
management were designated as Brahmins while those specialising in fighting were termed as Kshatriyas. Moreover,
individuals engaged in the areas of trade, business and agriculture were called Vaishyas and those devoting
themselves in manual work were known as Shudras. Later on, these professions emerged to be hereditary which
facilitated the transfer of skills and training from one generation t another Numerous professions based on such
specialised transfer of skills became hereditary including goldsmiths, weavers, potters, blacksmiths, carpenters,
hunters, charioteers, snake charmers, architects, sculptors, armourers and turned out to be separate communities
by themselves. From the 14th century B.C. to the later half of the 10th century A.D., the relationships between the
employer and employees were marked by justice and equity. As regards Indian economy in Mediaeval India,
although there was a lull because of numerous foreign aggressions for around 700 years, during the Mughal rules,
the India trade and commerce were revived. Several "Karkhanas" were established at Agra, Delhi, Lahore,
Ahmedabad and various other places. However, majority of the artisans and the craftsmen were extremely poor and
lived on starvation level. Therefore, it was not startling that the productivity of workers was very low. Presumably,
low wages, climate conditions and poor physique were the major factors responsible for it. During early British rules,
there prevailed a laissez-faire policy towards the business. As it is evidenced in the report of the IndigoCommission,
the working conditions were appalling, living conditions were sub-human and several abuses prevailed in indigo
plantations. Again, as regards tea plantation, we come across several inhuman cruelties caused to the workers. Even
the Plantation Act of 1863 makes provisions that if the workers failed to complete their period of contract, they
should be imprisoned for a period not exceeding three months. Explicitly, the working conditions in the tea
plantations were extremely bad. The laborers who attempted to run away were subject to imprisonment, whipping
and allied extreme punishment. Accordingly, the workers were entirely helpless in the ace of the organized and
powerful European planters.

The above conditions prevailed till the enactment of the Factory Act of 1881. According to the Act, the workers
employed in the factories were allowed a eek off-day and provisions were also made for inspection as well as limiting
he hours of work for women workers to eleven per day. The act further provided that the minimum age of children
for employment should be seven ears and that the maximum working hours for them should not exceed seven ours
a day and that too in the day-shift. In 1890, the first labour organization designated as Bombay Mill Hands
Association was established. Subsequently, in 1905, the printers' Union at Calcutta and in 1907, the Postal union at
Bombay was established.

The Madras Labour Union was organized thereafter in 1918. In 1922, the indentured labour system involving
migration of Indian labour to other countries on contract basis was abolished as a result of a strong National
movement. In the same year, the Central Labour Board was established to federate the different unions in the
Bombay city and the All India Trade Union Congress was organized. It may be noted that the reliable statistics of
trade union growth are not available for the period before the formal implementation of the Indian Trade Unions Act,
1926, a landmark in the history of industrial relations in this country. The early thirties witnessed a highly-weakened
trade union movement. However, the conditions prevailing five years before as well as during the Second World War,
were conducive to the rapid growth of the trade unionism. Between 1939-40 and 1944-45 the number of registered
trade unions increased from 666 to 865 (i.e., by 29.7 percent) and the total membership of union submitting returns
increased from 511, 134 to 889, 388 (i.e., by 70.4 percent). There was a large scale expansion of the trade union
movement after the Second World War - especially after the independence. As Subramanian observes, there existed
four-fold reasons for this rapid growth.

These were as follows: (1) the cumulative impact of the acute economic distress stemming from war conditions and
the removal of the war-time restrictions on strikes, (2) the development of three more central labour organizations
and the competition among them, (3) the labour policy of the Government based on adjudication rather than
collective bargaining, and (4) the growth of the spirit of trade unionism among the workers. Accordingly, during the
period 1947-1960 while, industrial employment rose by 2.8 times, the total claimed union membership also went up
by 2.3 times. In 1960, 45 percent of the total industrial workforce was claimed to be unionized. Today, the total
membership is estimated to be around 4.3 million i.e., 28 percent of total workforce.

Explicitly, during post-independence period, the activities of Personnel Department in different public and private
sectors have multiplied. According to the provisions of section 49 of the Factories Act, 1948, it became obligatory for
the-employers to employ a Welfare Officer in a factory employing 500 or more workers. Likewise, section 58 of the
Mines Act, 1952, empowers the Government to specify employment of welfare officer/officers. However, it does not
mean that the functions of Personnel Department are entirely limited to welfare activities. Management of human
resources is being regarded as a specialized profession such as that of medicine and law. In addition to the industrial
relations functions (although sometimes the industrial relations forms a separate department), the Personnel
Department is responsible for other varied functions including employment, safety, training, wage and salary
administration and research and development. The Head of the Personnel Department is associated with top
management and helps it in the formulation of personnel policies for the company. Indeed, the activities involved in
Personnel Department are akin to those performed in this department in any other western countries.

ANS 3

1.1 INTRODUCTION
Planning the right man for right job and developing him into effective team member is
an important function of every manager. It is because HR is an important corporate
asset and performance of organisations depends upon the way it is put in use. HRP is
a deliberate strategy for acquisition, improvement and preservation of enterprise’s
human resources. It is a managerial function aimed at coordinating the requirements,
for and availability of different types of employees. This involves ensuring that the
organisation has enough of right kind of people at right time and also adjusting the
requirements to the available supply.
6
Basics of Human
Resource Planning
HRP is a forward looking function and an organisational tool to identify skill and
competency gaps and subsequently develop plans for development of deficient skills
and competencies in human resources to remain competitive. HRP is influenced by
technological changes and other global business compulsions. HRP ensures benefits to
the organisations by creating a reservoir of talent, preparing people for future costcutting
and succession planning besides creating a back-up plan in case of
diversification and expansion.
Human resource planning should be an integral part of business planning. The
planning process defines projected changes in the types of activities carried out by the
organisation and the scale of those activities. It identifies the core competencies
required by the organisation to achieve its goals. Human resource planning interprets
people requirements in terms of stalls and competencies. As Quinnmills indicates,
human resource planning is a decision making process that combines three important
activities (1) identifying and acquiring the right number of people with the proper
skills, (2) motivating them to achieve high performance, and (3) creating interactive
links between business objectives and resource planning activities.
Human resource planning is indeed concerned with broader issues about the
employment of people than the traditional quantitative model approach of manpower
planning. But it specifically focuses on those aspects of human resource management
that are primarily about the organisation’s requirements for people from the viewpoint
of numbers, skills and how they are deployed.
However, it must be recognized that although the notion of human resource planning
is well established in the HRM vocabulary it does not seem to be established as key
HR activity.
1.2 WHY IS HUMAN RESOURCE PLANNING
IMPORTANT?
Human resource planning is important for helping both organisations and employees
to prepare for the future but you might be thinking “Are not things always changing?”
for example, a few years ago, the legal profession seemed to be a good field. But it is
now very crowded. So what is the value of planning? The answer is that even an
imperfect forecast of the future can be quite helpful. Consider weather forecasts. You
can probably think of occasions when it snowed, even though the television weather
forecaster predicted there would be no snow. Conversely, you can probably think of
times when it did not snow, even though the weather forecaster predicted a foot of
snow by the next morning. You may be surprised to lean that as inaccurate as weather
forecasts sometimes seem to be many organisations pay a forecasting service for
regular weather updates. The reason for this is quite simple. Even a production that is
sometimes wrong is better than no forecast or production at all. Perhaps the best
example is the stock market. If someone had even a fairly accurate way to predict
which stocks would go up and which stocks would go down, that person could make a
great deal of money investing in the stock market, even though there would be some
mistakes. The key is whether ones production tool improves the chances of making the
right decisions. Even though the predictive tool may not be always accurate, as long
as it is more accurate than random guessing it will result in better decisions.
The same point applies to human resource planning. Even though neither
organisations nor employees can look into the future, making predictions can be quite
helpful, even if they are not always accurate. The basic goal of human resource
planning, then, is to predict the future and, based on these predictions, implement
programmes to avoid anticipated problems. Very briefly humans resource planning is
the process of examining an organisations or individuals future human resource needs
7
Introduction to
Human Resource
Planning System: The
Emerging Context
(for instance, what types of skills will be needed for jobs of the future) compared to
future human resource capabilities (such as the types of skills employees or you
already have) and developing human resource policies and practices to address
potential problems for example, implementing training programmes to avoid skill
deficiencies.
1.3 MEANING AND DEFINITION OF HRP
In simple words HRP is understood as the process of forecasting an organisation’s
future human resource demand for, and supply to meet the objectives such as the right
type of people in the right number. After this process only the HRM department can
initiate recruitment and selection process. HRP is a sub-system in the total
organisational planning. Organisational planning includes managerial activities that
set the company’s objectives for the future and determines appropriate means for
achieving those objectives. HRP facilitates the realization of the company’s objectives
for the future and determines appropriate means for achieving those objectives. HRP
also facilitates the realization of the company’s objectives by providing the right type
and the right number of personnel. HRP is variously called manpower planning,
personnel planning or employment planning.
Human resource planning is the process by which an organisation ensures that it has
the right number and kind of people, at the right place, at the right time, capable of
effectively and efficiently completing tasks that will help the organisation achieve its
overall objective. Human resource planning, then translates the organisation’s
objectives and plans into the number of workers needed to meet those objectives.
Without a clear cut planning, estimation of human resource need is reduced to mere
guesswork.
1.4 NEED FOR PLANNING
The need for planning arises mostly due to the fact that modern organisations have to
survive, operate and grow in highly competitive market economics where change is the
order of the day. The change may be either revolutionary (sudden) or evolutionary
(slow). The different areas of change include: change in technology, change in
population, change in economic structures and systems, change in policies of
government, change in employee attitudes behaviour. etc. These changes create
problems for the management through threats and challenges. Managers have to bear
the problems caused due to the changes and act upon them tactfully in order to avoid
or reduce the effects of these problems on the survival, operation and growth of the
organisation.
Efficient managers can foresee the problems likely to occur and try to prevent them.
As pointed by Terry, successful managers deal with foreseen problems and
unsuccessful managers struggle with unforeseen problems. The difference lies in
planning. Managers have to foresee to make the future favourable to the organisation
in order to achieve the goals effectively. They introduce action, overcome current
problems, prevent future uncertainties, adjust the goals with the unforeseen
environmental conditions and exert all their resources to achieve their goals.
According to Megginson, et al “to have an organisation that looks forward to the
future and tries to stay alive and prosper in a changing world, there must be active,
vigorous, continuous and creative planning”.
Thus, there is a greater need for planning in order to keep the organisation dynamic in
a changing situation of uncertainty.
8
Basics of Human
Resource Planning
More specifically, HRP is required to meet following objectives:
1) Forecast HR requirement.
2) Cope-up with the change — in market conditions, technologies, products,
government regulations and policies, etc.
3) Use existing HR productivity.
4) Promote employees in a systematic manner.
If used properly, it offers a number of benefits:
1) Create reservoir of talent.
2) Prepares people for future.
3) Expand or contract.
4) Cut cost.
5) Succession planning.
1.5 TYPES OF PLANS
There are nine types of plans, such as, philosophy, purpose, objectives, strategies,
policies, procedures and rules, programmes and budgets. Now we shall discuss in
brief each of these types of plans.
1) Philosophy: The organisations’ role that they wish to play in society in terms of
philosophy. The philosophy of the company should have clarity of thought and
action in the accomplishment of economic objectives of a country. The
philosophy bridges the gap between society and the company.
2) Purpose: Every kind of organized group activities or operations has a purpose.
For example, the purpose of a bank is to accept deposits and grant loans and
advances.
3) Objectives: Objectives are the ends towards which organisational activity is
aimed. Every department has its own objectives which may not be completely
same as of the other department or organisation.
4) Strategies: Strategy is determination of the basic long term objectives of an
enterprise and the adoption of courses of action and allocation of resources
necessary to achieve these goals.
5) Policies: Policies are general statements or understandings which guide or
direct thinking and action in decision making. However, all policies are not
statements.
6) Procedure and Rules: Procedures are plans that establish a desired method of
handling future activities. They detail the exact manner in which a certain
activity must be accomplished.
7) Programmes: These are complexes of goals, policies, procedures, task
assigment rules, steps to be taken, or sources to be employed and other elements
necessary to carry out a given course of action.
8) Budget: A budget is a statement of expected results in terms of members. It may
be referred to as a numerical programme. Cash budget, sales budget, capital
expenditure budget are some of the examples of budget.
1.6 THE PLANNING PROCESS
The planning process is influenced by overall organisational objectives and the
environment of business. HRP essentially involved forecasting human resource needs,
9
Introduction to
Human Resource
Planning System: The
Emerging Context
assessing human resource supply and matching demand supply factors through human
resource related programmes.
The HRP Process
Organisational Objectives and Policies
HR plans to be made based on organisational objectives implies that the objectives of
the HR plan must be derived from organisational objectives. Specific requirements in
terms of number and characteristics of employees should be derived from the
organisational objectives.
Organisational objectives are defined by the top management and the role of HRP is to
subserve the overall objectives by ensuring availability and utilization of human
resources.
1.7 FORECASTING TECHNIQUES
Forecasting techniques vary from simple to sophisticated ones. It may be stated that
organizations generally follow more than one technique. The techniques are:
1) Managerial Judgement
2) Ratio Trend Analysis
3) Work Study Techniques
4) Delphi Technique
5) Flow Models
6) Others.
All these above mentioned techniques will be covered in detail in the next Unit.
Environment
Organisational
Objectives and Policies
HR Needs Forecast HR Supply Forecast
HR Programming
HRP
Implementation
Control and
Evaluation of Programme
Surplus Shortage
Restricted Hiring Recruitment
Reduced Hours and Selection
VRS, Lay Off, etc.
s
s
s
s
s
s
s s
s
s
s s
Source: Human Resource and Personnel Management by K. Aswathappa
10
Basics of Human
Resource Planning
HR Demand Forecast
Demand forecast is the process of estimating the future quantity and quality of people
required. The basis of the forecast must be the annual budget and long term corporate
plan, translated into activity levels for each function and department.
Demand forecasting must consider several factors — both external as well as internal.
The external factors are competition, economic climate, laws and regulatory bodies,
changes in technology and social factors. Internal factors include budget constraints,
production levels, new products and services, organisational structure and employee
separations.
HR Supply Forecast
Personnel Demand analysis provides the manager with the means of estimating the
number and kind of employees that will be required. The next step for the management
is to determine whether it will be able to procure the required number of personnel and
the sources for such procurement. This information is provided by supply forecasting.
Supply forecasting measures the number of people likely to be available from within
and outside an organisation, after making allowance for absenteeism, internal
movements and promotions, wastage and changes in hours and other conditions of
work.
New Venture Analysis
New venture analysis will be useful when new ventures contemplate employment
planning. This technique requires planners to estimate HR needs in line with
companies that perform similar operations. For example, a petroleum company that
plans to open a coal mine can estimate its future employment by determining
employment levels of other coal mines.
Other Forecasting Methods
The organisations follow more than one technique for forecasting their peoples’ needs.
L&T, for example, follows ‘bottom-up’ of management judgement and work study
techniques for demand forecasting. Forecasting process in L&T begins during
November of every year. The Department heads prepare their personnel estimates
(based on details of production budget supplied to them) and submit the estimates to
the respective personnel managers. The personnel heads will review the estimates with
the departmental heads and will send final reports to Bombay office where centralized
HR department is located. Estimates are reviewed by the HR department and final
figures are made known to those personnel managers who initiate steps to hire the
required number of people in the following year. The forecast is made for once in Five
yars quinquennium, but is broken down to yearly requirements.
We turn now to approaches to human resource planning and discuss some important
trends that will affcet organisation, employees, and job applicants alike. Each of these
steps is discussed below in detail.
1.8 EXAMINING EXTERNAL AND INTERNAL ISSUES
External and internal issues are the forces that drive human resource planning. An
issue is any event or trend that has the potential to affect human resource outcomes,
such as employee motivation, turnover, absenteeism, the number and types of
employees needed and so forth. External issues are events or trends outside of the
organisation, such as work force demographics and technology. Internal issues refer to
events or trends within the organisation, such as business strategy, organisations
structure and company profitability.
11
Introduction to
Human Resource
Planning System: The
Emerging Context
Work Force Demographics: Potentially important external issue is the composition
of the national workforce. Specifically, there are likely to be changes in the social,
gender and age composition of the workforce. Asians will comprise a large percentage
of the workforce in the future. Women are also expected to comprise a large segment
of the workforce than in the past. The number of married women who are employed
has doubled since 1970. The increased participation of women will have a pressure on
organisations to provide pro-family policies, such as flexi time, and child care to
support working mothers. Increased representation of minorities will result in more
emphasis on diversity programmes to ensure harmonious relations between workers
from different racial and ethnic groups.
Technology: Organisation are investing so much amount on information technology
during the 1980s. Given the size of the investment, a variety of changes in the human
resource area have occured. Human resource requirements have come down
drastically due to technological changes.
There are many organisations who have announced plans to reduce its workforce
around 50 per cent employees as a result of technological changes. Now that you have
read about some of the external issues that affect human resource planning, you will
learn about some important internal issues.
Organisational Structure: Many businesses today are changing their organisational
structure. Organisational structure refers to how work tasks are assigned, who reports
to whom, how communications and decisions are made? As part of their restructuring
during some companies are creating teams to perform the work.
Business Strategy: The approach that a company adopts in conducting business is
referred to as its business strategy. For example, a particular compnay may adopt
strategy on quality enhancement, cost reduction and so on and so forth. It is important
for organisations to monitor both the internal and external environment to anticipate
and understand the issues that will affect human resources in the future.
1.9 DETERMINING FUTURE ORGANISATIONAL
CAPABILITIES
The second step of the human resource planning process involves an analysis of future
organisational or personal capabilities. Capabilities include the skill level of
employees, productivity rates and number of employees, etc.
In the past, more emphasis was on predicting the number of employees of human
resource supply the company was likely to have in the future. Organisations may use
varieties of procedures to estimate the supply. These procedures are generally
categories as either quantitative which use mathematical or statistical procedures or
qualitative which use subjective judgement approaches.
The quantitative procedure generally use past information about job categories and the
number of people retiring, being terminated, leaving the organisation voluntarily and
being promoted. One of the most well known quantitative procedures is the Markov
analysis. This technique uses historical rates of promotion, transfer and turnover to
estimate future availabilities in the workforce. Based on the past abilities, one can
estimate the number of employees who will be in various positions within the
organisation in the future. Qualitative or judgemental approaches are much more
popular in forecasting human resource supplies. Among the most frequent used
methods are replacement planning, succession planning and vacancy analysis.
Replacement planning evolves an assessment of potential candidates to replace
existing executives and other top level managers as they retire or leave for other
organisations. Succession planning is similar to replacement planning, except that it is
12
Basics of Human
Resource Planning
more long term and developmentally oriented. Finally, vacancy analysis is much like
the Markov analysis, except that it is based on managerial judgements of the
probabilities. If knowledgeable experts provide estimates, vacancy analysis may be
quite accurate.
In recent years, organisations have become concerned with a broader range of issues
of future capabilities. For example, organisations have begun to estimate their future
productivity levels. Towards this end, bench marking is a technique that has become
popular. Bench marking involves comprising an organisation’s human resource
practices and programmes to other organisations.
Although bench marking often focuses on an organisation’s competitors, best practices
bench marking focuses on the programmes and policies used by outstanding
organisation. For example, Federal express, leadership evaluation system, employee
survey programme and total quality management efforts are frequently studied by
other organisations because of their reputations.
1.10 DETERMINING FUTURE ORGANISATIONAL
NEEDS
In this step, the organisation must determine what is human resource needs will be in
the future. This includes the number of employees that will be needed, the types of
skills that will be required. Productivity rates needed to complete successfully. There
are methods for examining the future number of employees, also several procedures
are there for predicting the number of employees needed in the future. This is referred
to as the human resource demand two basic approaches or estimating human resource
demand are qualitative and quantitative methods.
Two quantitative techniques for estimating human resource demand are ratio analysis
and regression analysis. Ratio analysis involves comparing the number of employees
to some index of work load. If your organisation was planning its future training and
development (T&D) staffing demand in five years, you could estimate the number of
employees likely to be employed by the company in five years. And then use this ratio
to determine the number of T&D employees needed in given years. For example, if
your company was expecting to have 5,000 employees in five years, this ratio would
suggest that around 21 T&D employees would be needed.
Regression analysis relies on factors or predictors that determine the demand for
employees, such as revenues, degree of automation, and so forth. Information on these
predictors from past years, as well as the number of workers employees in each of
these years is used to produce an equation or formula. The organisation can then enter
expected figures for the predictors, such as revenues and degree of automation into the
formula to obtain an estimated number of employees needed in future years.
Regression analysis is more sophisticated than ratio analysis and should lead to more
accurate predictions of employee demand. Although both procedures are widely used,
they have their weaknesses. A major weakness is the factors that were related to
workforce size may not be relevant factors in future years.
Turning now to qualitative tools for estimating the demand for employees, the most
common tool is the bottom-up forecast where department managers make estimates of
future human resource demands based on issues, such as new positions needed,
positions to be eliminated or not filled, expected overtime hours to be worked by
temporary, part-time or independent contractor employees and expected changes in
workload by department. Like any other technique, bottom-up forecasting has its
shortcomings. For instance, line managers may overestimate the demand in order to
ensure that they don’t find themselves understaffed.
13
Introduction to
Human Resource
Planning System: The
Emerging Context
1.11 IMPLEMENTING HUMAN RESOURCE
PROGRAMME TO ADDRESS ANTICIPATED
PROBLEMS
In this step the organisation must determine the gaps between future capabilities and
future needs and then employ the necessary human resource programmes to avoid the
problems arising from these gaps.
In implementing a new human resource programme, following basic steps are
recommended to obtain employee acceptance.
1) Communicate need for the programme: Employees would like to know why
the programme is being reduced. Many people believe the old saying “If it aint’s
broke, don’t fix it”. It is imperative to explain, then exactly why the change is
needed.
2) Explain the programme: Management must explain precisely what the
programme is, how it will be implemented and what its effects will be on other
practices and programmes.
3) Explain what is expected of the employees: Management must discuss how the
behaviours of employees are expected to change as a result of the new
programme system. For example, implementation of a new pay for performance
system may also redirect employee activities.
4) Establish feedback mechanisms: No matter how carefully planned and
implemented, almost any new policy or practice is likely to lead to questions and
problems. It is critical, therefore, for mechanisms to be established to resolve
problems and answer concerns that arise. Such mechanisms may include a
telephone hotline, ongoing survey programme as well as a dispute resolution
policy.
Finally, utility analysis is a relatively recent approach to choosing which, if any,
human resource programmes should be implemented. Utility analysis and related
approaches such as human resource accounting, consider the financial benefits versus
the costs of any human resource programme and attempt to base choice of a
programme on its rupee value of the organisation. Using such techniques organisations
are able to determine the best way to invest money in employees.
1.12 ROLE OF HRP PROFESSIONALS
HRP professionals have to perform the following roles that may be divided into three
categories:
1) Administrative role
– Managing the organisational resources
– Employees welfare activities.
2) Strategic role
– Formulating HR strategies
– Managing relationships with managers.
3) Specialized role
– Collecting and analyzing data
– Designing and applying forecasting systems
– Managaing career development.
14
Basics of Human
Resource Planning
These roles are neither necessarily found in every HRP work, nor they are evenly
weighed in time allocation. Many combinations of roles are possible with different
focuses based on circumstances of the organisation. The first two roles managing
relationships with managers and for mutating strategies are weighed equally. The
activities in these areas are equally important to HRP because of the implicit purposes
of anticipating and implementing change in the organisation. The strategic roles are
crucial to the HR professionals effectiveness. These skills are very difficult to develop
when compared to administrative skills. The administrative aspects of the work are
represented in managing the staff function of HRP and in managing employee
welfare activities. These aspects are often seen as supplementary to other aspects and
demand a lot of attention. The remaining three roles represent specialized functions
performed. Primary attention is given to a combination of three categories of
activities – collecting and analyzing data, deisgning and applying forecasting systems
and managing career development. These activities are new to the HR function in
many organisations, and are closely linked with the mission of anticipating and
managing change. Accordingly, they are viewed as central roles of HRP
Professionals.
Activity A
As a HR Manager, what factors you would like to consider for human
resource planning? Briefly explain, how these factors are contributing in planning
process.
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Activity B
What are the forecasting techniques that have been used for human resource planning
in your own organisation or any organisation you are familiar with? Briefly mention
reasons why these techniques are being used.
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Impact of HRP
HRP itself is a process of determining human resources needs in the future and of
monitoring responses to these needs. HRP links a company’s business plans and
broad objectives with the specific programmes and other HRM activities.
Organisations need to learn to forecast HR needs more effectively. More analytic
techniques, driven by strategic planning are vital. Organisations must learn to
manage employee performance more effectively. Even though performance
measurement is complex and ill-defined, yet it is critical to effective management for
this very reason. Organisations must also learn to manage careers of their employees
more effectively.
15
Introduction to
Human Resource
Planning System: The
Emerging Context
Impact of Technology on HRP
In order to cope with the competition, organisations have to ensure on:
a) Producing goods and services more efficiently and economically.
b) Innovating product and processes so as to gain competitive advantages.
Advances in computer technology have offered organisations new opportunities to
enhance and streamline their processes. Computer aided design (CAD), and computer
aided manufacturing (CAM) reduce human resource involvement and shrink the cycle
time. Advances in information technology has reduced efforts required in impacting,
retrieval, processing, and sharing of data. Accurate and timely information can be
made available to different levels of management for decision making. All these
changes in technology result in a change in occupational and skill profile of
manpower.
Different manufacturing technologies have different skills required to design, operate
and maintain the machines and equipment. Also, the same technology can have a
different impact on different categories of workers and industries. The actual skill
implications of technology change will depend on:
a) Management policy for deployment of manpower
b) Attitudes bargaining strength of the union
c) Ability of manpower to adjust and adopt to the new technology.
According to ILO, introduction of new technology can affect other aspects of working
like workers responsibilities, skill requirements, job-content, physical and mental work
load, career prospects and communication and social relationships at workplace.
Skills and knowledge are required for operating and maintaining new technology and
participating in innovative processes. The manual content of skill tends to decrease for
skilled workers and office staff but requirements for mathematical skills and ability to
plan and anticipate future situations tend to increase. The methods, systems and style
of management also need changes in line with high skill demands on personnel. A
more democratic and decentralized management style is necessary to motivate highly
educated employees.
The present education system of our country is inadequate to match the technological
needs. The syllabus is outdated, teachers are not fully acquainted with the new
technology and there is a lack of infrastructure facilities. Therefore, companies will
have to provide appropriate training to add these skills. Manpower planners should
keep in mind this requirement and also the requirement of retraining. There may also
be a need for rationalization of the trade structure because of multi-skilling. For
example, traditional and relatively conceived metal trades which date back to 1930s
have been replaced by six broadly defined occupations. Lathe, mulling, grinding could
be clubbed as cutting mechanics, production engineering, machine and systems.
Engineering, precision engineering and light engineering could be put as industrial
mechanics. In office context, we now require persons who are computer trained and
also operate other office equipment such as fax, and xeroxing machines – this will
also require restructuring of employees.
Changes in work and work design are to be created.
HR Programming
Once an organisations personnel and supply are forecast, the two must be reconciled
in order that vacancies can be filled by the right employees at the right time. HR
programming assumes greater importance in the planning process.
16
Basics of Human
Resource Planning
HR Plan Implementation
Implementation is nothing but converting an HR plan into action. A series of action
programmes are initiated as a part of HR plan implementation. Some such
programmes are recruitment, selection and placement, training and development,
retraining and redeployment, the retention plan and the redundancies plan.
Control and Evaluation
The HR plan should include budgets, targets and standards. It should also clarify
responsibilities for implementation and control, and establish reporting procedures
which will enable achievements to be monitored against the plan. These may simply
report on the numbers employed against establishment and on the numbers recruited
against the recruitment targets. They should also report employment costs against
budget, and trends in wastage and employment ratios.
1.13 BARRIERS TO HRP
Planners face significant barriers while formulating an HRP. The major ones are
following:
1) HR practitioners are perceived as experts in handling personnel matters, but are
not experts in managing business.
2) People question the importance or making HR practices future oriented and the
role assigned to HR practitioners in formulation of organisational strategies.
There are people when needed offer handsome packages of benefits to them to
quit when you find them in surplus. When the task is so simple, where is the need
for elaborate and time consuming planning for human resources.
3) HR information often is incompatible with other information used in strategy
formulation. Strategic planning efforts have long been oriented towards financial
forecasting, often to the exclusion of other types of information. Financial
forecasting takes precedence over HRP.
4) Conflict may exist between short term and long term HR needs. For example,
there arises a conflict between the pressure to get the work done on time and long
term needs, such as preparing people for assuming greater responsibilities. Many
managers are of the belief that HR needs can be met immediately because skills
are available on the market as long as wages and salaries are competitive.
Therefore, long time plays are not required, short planning are only needed.
5) There is conflict between quantitative and qualitative approaches to HRP. Some
people view HRP as a number game designed to track the flow of people across
the department.
6) Non-involvement of operating managers renders HRP ineffective. HRP is not
strictly an HR department function. Successful planning needs a co-ordinated
effort on the part of operating managers and HR personnel.
1.14 SUMMARY
Today, human resource planning is viewed as the way management comes to grasp the
ill-defined and tough-to-solve human resource problems facing an organisation.
Human resource planning as a process of determining the human resources required
by the organisation to achieve its goals. Human resource planning also looks at
broader issues relating to the ways in which people are employed and developed in
order to improve organisational effectiveness. HRP is a decision making process that
combines activities such as identifying and acquiring the right number of people with
17
Introduction to
Human Resource
Planning System: The
Emerging Context
the proper skills, motivating them to achieve high performance and creating interactive
links between business objectives are resource planning activities. HRP sets out
requirements in both quantitative and qualitative terms. Accurate manpower plan is a
dream. A common error of many managers is to focus on the organisation’s short term
replacement needs. Any human resource plan, if it is to be effective, must be derived
from the long term plans and strategies of the organisation. The various approaches to
human resource planning under which a number of major issues and trends in today’s
work plan that will affect organisation and employees are (1) Examine external and
internal isses, (2) Determining future organisations capabilities, (3) Determining
future organisational needs, and (4) Implementing human resources programmes to
address anticipated problems.
Although change is occuring very rapidly in the work world it is important for both
organisations and employees to monitor issues and events continuously and consider
their potential effects.

ANS 4

Multiple person Evaluation Techniques

The above-discussed methods are used to evaluate employees one at a time. In this
section let us discuss some techniques of evaluating one employee in comparison to
another. Three such frequently used methods in organization are – ranking, paired
comparison and forced distribution.

Ranking method

This is a relatively easy method of performance evaluation. Under this method, the
ranking of an employee in a work group is done against that of another employee. The
relative position of each employee is tested in terms of his numerical rank. It may also
be done by ranking a person on his job performance against another member of the
competitive group. The quintessence of this method is that employees are ranked
according to their levels of performance. While using this method, the evaluator is
asked to rate employees from highest to lowest on some overall criterion. Though it is
relatively easier to rank the best and the worst employees, it is very difficult to rank
the average employees. Generally, evaluators pick the top and bottom employees first
and then select the next highest and next lowest and move towards the average
(middle) employees. The longstanding limitations of this method are:

 The ‘whole man’ is compared with another ‘whole man’ in this method. In
practice, it is very difficult to compare individuals possessing varied
behavioral traits.
 This method speaks only of the position where an employee stands in his
group. It does not tell anything about how much better or how much worse an
employee is when compared to another employee.
 When a large number of employees are working, ranking of individuals
becomes a tosticating issue.
 There is no systematic procedure for ranking individuals in the organization.
The ranking system does not eliminate the possibility of snap judgments.

In order to overcome the above limitations a paired comparison technique has been
advanced by organizational scholars.
Paired comparison method

Ranking becomes more reliable and easier under the paired comparison method. Each
worker is compared with all other employees in the group; for every trait the worker
is compared with all other employees. For instance, when there are five employees to
be compared, then A’s performance is compared with that of B’s and decision is
arrived at as to whose is the better or worse. Next, B is also compared with all others.
Since A is already compared with B, this time B is to be compared with only C, D and
E. By this method when there are five employees, fifteen decisions are made
(comparisons). The number of decisions to be made can be determined with the help
of the formulae n (n-2). Ranking the employees by the paired comparison method
may be illustrated as shown in the Table 10.7.

For several individual traits, paired comparisons are made, tabulated and then rank is
assigned to each worker. Though this method seems to be logical, it is not applicable
when a group is large. When the group becomes too large, the number of comparisons
to be made may become frighteningly excessive. For instance, when n=100,
comparisons to be made are 100 (100-2) = 100 (98) = 9800.

Trait: ‘Quantity of work’

Table: Employee Rated

As compared to A B C D E
A + – + –
B – + – +
C + – + –
D – + – –
E + – + +

Forced distribution method

Under this system, the rater is asked to appraise the employee according to a
predetermined distribution scale. The rater’s bias is sought to be eliminated here
because workers are not placed at a higher or lower end of the scale. Normally, the
two criteria used here for rating are the job performance and promotability. Further, a
five point performance scale is used without any mention of descriptive statements.
Workers are placed between the two extremes of ‘good’ and ‘bad’ performances. For
instance, the workers of outstanding merit may be placed at the top 10% of the scale.
The rest may be placed as – 20% —good, 40% —outstanding, 20% —fair and 10%
—fair. To be specific, the forced distribution method assumes that all top grade
workers should go to the highest 10% grade; 20% employees should go to the next
highest grade and so on.

Job performance as the criterion apart, another equally important factor in this method
is promotability. Employees may be classified according to their promotional merits.
The scale for this purpose may consist of three points – namely, quite likely
promotional material, may/may not be promotional material and quite unlikely
promotional material.

One strong positive point in favor of the forced distribution method is that by forcing
the distribution according to predetermined percentages, the problem of making use of
different raters with different scales is avoided. Further, this method is appreciated on
the ground that it tends to eliminate rater bias. The limitation of using this method in
salary administration however, is that it may result in low morale, low productivity
and high absenteeism. Employees who feel that they are productive, but find
themselves placed in a lower grade (than expected) feel frustrated and exhibit, over a
period of time, reluctance to work.

Other methods of appraising performance include: Group Appraisal, Human Resource

Accounting, Assessment Centre, Field Review, etc. These are discussed in the
following sections:

Group appraisal

In this method, an employee is appraised by a group of appraisers. This group consists

of the immediate supervisor of the employee, other supervisors who have close
contact with the employee’s work, manager or head of the department and
consultants. The head of the department or manager may be the Chairman of the
group and the immediate supervisor may act as the Coordinator for the group
activities. This group uses any one of multiple techniques discussed earlier. The
immediate supervisor enlightens other members about the job characteristics,
demands, standards or performance, etc. Then the group appraises the performance of
the employee, compares the actual performance with standards, finds out the
deviations, discusses the reasons therefor, suggests ways for improvement of
performance, prepares an action plan, studies the need for change in the job analysis
and standards and recommends changes, if necessary.

This method eliminates ‘personal bias’ to a large extent, as performance is evaluated

by multiple rates. But it is a very time consuming process.

Human resource accounting

HRA is a sophisticated way to measure (in financial terms) the effectiveness of

personnel management activities and the use of people in an organization. It is the
process of accounting for people as an organizational resource. It tries to place a value
on organizational human resources as assets and not as expenses. The HRA process
shows the investment the organization makes in its people and how the value of these
people changes over time. The acquisition cost of employees is compared to the
replacement cost from time to time. The value of employees is increased by
investments made by the company to improve the quality of its human resources such
as training, development skills acquired by employees over a period of time through
experience, etc. When qualified, competent people leave an organization; the value of
human assets goes down. In this method, employee performance is evaluated in terms
of costs and contributions of employees. Human resource costs include expenditure
incurred by the company in hiring, training, compensating and developing people.
The contributions of human resources is the money value of labour productivity. The
cost of human resources may be taken as the standard. Employee performance can be
measured in terms of employee contribution to the organization. Employee
performance can be taken as positive when contribution is more than the cost and
performance can be viewed as negative if cost is more than contribution. Positive
performance can be measured in terms of percentage of excess of employee
contribution over the cost of employee. Similarly negative performance can be
calculated in terms of percentage of deficit in employee contribution compared to the
cost of employee. These percentages can be ranked to ‘Zero Level’ as shown in the
Table below.

Rank Percentage of surplus/Deficit of

Rating contribution to cost of employee
1. Extremely good performance Over 200
2. Good performance 150 – 200
3. Slightly good performance 100 – 150
4. Neither poor nor good 0 – 100
5. Slightly poor performance 0
6. Poor performance 0 to (— 50)
7. Extremely poor performance (—50) to (—100)

This technique has not developed fully and is still in the transitionary stage.

Assessment centress

This method of appraising was first applied in German Army in 1930. Later business
and industrial houses started using this method. This is not a technique of
performance appraisal by itself. In fact it is a system or organization, where
assessment of several individuals is done by various experts using various techniques.
These techniques include the methods discussed before in addition to in-basket, role
playing, case studies, simulation exercises, structured in sight, transactional analysis,
etc.

In this approach individuals from various departments are brought together to spend
two or three days working on an individual or group assignment similar to the ones
they would be handling when promoted. Observers rank the performance of each and
every participant in order of merit. Since assessment centres are basically meant for
evaluating the potential of candidates to be considered for promotion, training or
development, they offer an excellent means for conducting evaluation processes in an
objective way. All assessees get an equal opportunity to show their talents and
capabilities and secure promotion based on merit. Since evaluators know the position
requirements intimately and are trained to perform the evaluation process in an
objective manner, the performance ratings may find favor with majority of the
employees. A considerable amount of research evidence is available to support the
contention that people chosen by this method prove better than those chosen by other
methods. The centre enables individuals working in low status departments to
compete with people from well-known departments and enlarge their promotion
chances. Such opportunities, when created on a regular basis, will go a long way in
improving the morale of promising candidates working in less important positions.

Field Review Method

Where subjective performance measures are used, there is scope for rater’s biases
influencing the evaluation process. To avoid this, some employees use the field
review method. In this method a trained, skilled representative of the HR department
goes into the ‘field’ and assists line supervisors with their ratings of their respective
subordinates. The HR specialist requests from the immediate supervisor specific
information about the employees performance. Based on this information, the expert
prepares a report which is sent to the supervisor for review, changes, approval and
discussion with the employee who is being rated. The ratings are done on
standardized forms.

Since an expert is handling the appraisal process, in consultation with the supervisor,
the ratings are more reliable. However, the use of HR experts makes this approach
costly and impractical for many organizations.

ANS 5

Different Types of Motivation Theories

July 8, 2009

Employee Motivation in the Workplace:

Different Types of Motivation Theories
Part 3
Does money motivate people effectively? In part 1 of this series on HR theories of
motivation, we answered that question. No.

Well, if not money, how do we create an environment where people are motivated?
Check part 2. The key: create productive work relationships.
But people are different; so how do we build productive work relationships with all
types of people? In this last installment on workplace motivation, we’ll cover some of
the main theories for how various people motivate themselves.

Of the many different types of motivation theories, I would like to highlight three that
are of particular use:

1. David Merrill and Roger Reid’s work on the four personal styles
2. David McClelland’s theory of motivation involving three basic needs:
achievement, power, and affiliation
3. Fredrick Herzberg’s work on money as a demotivator at work

There are many more good motivation theories – Maslow, Myers-Briggs, etc. – but
I’ve found these three to be most useful in managing groups.

The Power of Intrinsic Motivation

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The starting point for all three different types of motivation theories is that they are
built on the concept that intrinsic motivation is much stronger than extrinsic. This
bedrock fundamental is perhaps the most powerful concept to apply in your work; see
my post on top employee motivators for a more thorough review of incentive plans.

Briefly, it means that to get great results, you need people to be intrinsically interested
in their work. Your efforts to control, set expectations, and reward people are all
methods of extrinsic motivation, which helps explain why managers are often
disappointed with employee results when relying on those motivation tools.

So, to help you get better results, here are three methods of intrinsic motivation that
all build on that intrinsic bedrock.

Employee Motivation Theory 1: Personal Styles

In their theory on motivating different types of people, Merrill and Reid identify four
personal styles:

Style Major Drivers Prefers to

Driver Action Oriented: Focus is on present time frame, direct action. Minimum concern for caution in relationships. Control, Tell
Tends to reject inaction.

Expressive Intuition Oriented: Focus is on involving others, future time frame. Minimum concern for routine. Tends to reject Emote, Tell
isolation.

Amiable Relationship Oriented: Focus is on relating, supporting; present time frame. Minimum concern for affecting Emote, Ask
change. Tends to reject conflict.

Analytical Thinking Oriented: Focus is on cautious action, “getting it right”, historical time frame, cautious action. Control, Ask
Minimum concern for relationships. Tends to reject being wrong.

* Information adapted from their book, Personal Styles & Effective Performance.
Application: To help people feel connected intrinsically with their work, structure
their work so these personal style needs are met.

Examples:

Style More Effective Less Effective

Driver • When you want to make a point, ask, as in, “What do you think of this idea?” • When you want to make a point, lecturing them,
as in, “Here’s how it is."
• Get things done quickly that are going to be effective, even if they aren’t
perfected. • Spending time in reflection and consideration, in
an attempt to perfect.

Expressive • Make work a party while you’re getting stuff done; breathe life into work. • Spend 3 hours in a room sequentially creating a
step-by-step checklist.
• Make use of their good gut instincts.
• Don’t trust them until they can “prove it.”

Amiable • Include effectively when a group tackles a project, and not just the “amiable” • Try to get results through intimidation and
coworker; they’ll feels others’ “pain” if their input is excluded. application of stress.

• Act trustworthy, and trust them. • Divide and conquer; use conflict – of ideas, of
emotions – to try to get best results

Analytical • Give them space to get grounded – to get it “right” – before they proceed to • Use conflict to try to get best results.
action.
• Push, push, push, especially if towards an
• Assign complex problems where you need absolute confidence in the details. outcome that favors your self-interest.

• Ask them to “wing it”, to bet the company on

their “hunch.”

Employee Motivation Theory 2: McClelland’s Theory

of Motivation
Style More Effective Less Effective

Achievement Seek: To excel; may avoid both low- and high-risks as a result, in order to pursue meaningful Work alone or with other high
nAch success. achievers

Power Seek: Either personal or institutional power. Either way they want to direct others, but the Direct others
nPow institutional power is in service to the institution’s success, so those with that focus tend to
make better managers.

Affiliation Seek: Harmonious work relationships, to accept, to be accepted, and to include others. They Work in settings with
nAff can be more comfortable conforming to group norms. significant personal
interaction

Application: To help people connect intrinsically with their work, structure their
work so their major need is met. The “Power” need correlates to the “Driver” above;
“Affiliation” to the “Amiable” above.

What’s new here is the “Achievement” need. It can cut across all the Merrill and Reid
personal motivation styles. The key here is to surround high achievers with other high
achievers. To be their best, they need to know they’re on a team capable of pulling off
a worthwhile, attainable mission.

Employee Motivation Theory 3: Money as a De-

Motivator
Frederick Herzberg was a clinical psychologist and pioneer of “job enrichment.” He
proposed the Motivation-Hygiene Theory, also known as the two factor theory of job
satisfaction. According to his theory, people are influenced by two sets of factors:

Motivator Factors Hygiene Factors

• Work itself • Pay and benefits

• Responsibility • Company policy and administration
• Promotion • Relationships with co-workers
• Growth • Physical environment
• Achievement • Supervision
• Recognition • Status
• Job security
• Salary

Application: To create an environment where people motivate themselves, you must

adequately take care of the hygiene factors. If you don’t, demotivated employees will
likely result. The key here is that “adequate” is enough; you don’t need an outstanding
physical environment because it won’t increase employee motivation noticeably. In
sum, the “hygiene factors” have a downside if not done well, but not much of an
upside potential impact on employees, even if they’re done very well.

Then, allow the “motivator factors” to work for you – these are the factors that have
the real upside and can make a strong contribution to your results. And note, they are
almost all methods of intrinsic motivation.

The one “extrinsic” item on the list, recognition, can be made intrinsic if it’s in the
form of encouragement, rather than as a reward. For example, in Soul of a New
Machine, Tracey Kidder writes that the “reward” for successful hi tech engineers is…
the chance to tackle the next cool project! “Congratulations on the great results. I’m
not at all surprised. Now let’s figure out how you can make that kind of an impact
again,” is more powerful than “Atta boy/girl” in whatever form, whether bonus,
plaque, employee of the month award, etc.

A Summary of Employee Motivation Theories

Employee motivation is simple.

• You can’t motivate people.

• You can provide an environment where people motivate themselves.
• Apply what you know about people’s styles to strengthen their individual
work “environment.”
• And along the way, focus, focus, focus on intrinsic motivation factors.
• Which means: Build strong work relationships and expand those relationships
so that more is possible.

These different types of motivation theories are simple in concept. What makes it hard
is that all of the above mean building a healthy, vibrant work environment, and that
work is as vulnerable as building any other effective relationship in your life.

Hopefully, in these posts on employee motivation, we’ve given you some signposts to
help guide the way.
As always, we’re curious about your thoughts!

OTHER ANS
Book: Compensation: Theory, Evidence, And Strategic Implications
"The authors artfully synthesize complex scholarly articles from economics, psychology,
and sociology. The organization of the book is exceptionally transparent... Compensation
should be accessible to a wide range of readers who appreciate a multidisciplinary
perspective on organizational issues... I cannot emphasize enough how effectively Gerhart
and Rynes discuss compensation thoughout this book. As an experienced academic
researcher, I have already benefited tremendously from my first reading of the book . It is
a must-read, and I recommend it without reservation to instructors, researchers, and
students."--Industrial and Labor Relations Review"Gerhart and Rynes provide a thorough,
comprehensive review of the vast literatures relevant to compensation. Their insights
regarding the integration of economic, psychological, and management perspectives are
particularly enlightening. This text provides an invaluable tool for those interested in
advancing our understanding of compensation practices."--Alison Barber, "Eli Broad
College of Business, Michigan State University"Compensation: Theory, Evidence, and
Strategic Implications provides a comprehensive, research-based review of both the
determinants and effects of compensation. Combining theory and research from a variety
of disciplines, authors Barry Gerhart and Sara L. Rynes examine the three major
compensation decisions???pay level, pay structure, and pay delivery systems.

Revealing the impact of different compensation policies, this interdisciplinary volume

examinesThe relationship between performance-based pay and intrinsic motivation
Implications of individual pay differentials for team or unit performance The consequences
ofpay for performance policies Effect sizes and practical significance of compensation
findings Directions for future research

Compensation: Theory, Evidence, and Strategic Implications considers why organizations

pay people the way they do and how various pay strategies influence the success of
organizations. Critically evaluating areas where research is inconsistent with common
beliefs, Gerhart and Rynes explore the motivational effects of compensation.

Primarily intended for graduate students in human resource management, psychology, and
organizational behavior courses, this book is also an invaluable reference for compensation
management consultants and organizational development specialists.

ANS 6

Conduct a job evaluation

Applies to: Microsoft Office InfoPath 2003, Word 2003

By Susan M. Heathfield
Your employees want fair pay. Your employees want regular raises. You want to attract and retain

talented employees in your organization. Your employees need clarity about their roles and

responsibilities as well as about what's expected from them. Job evaluation, performed effectively and

used to clarify and revise job descriptions and position responsibilities, is your solution to all of these

issues.

As a compensation and benefits specialist, you are responsible for developing a fair compensation plan.

Job evaluation is a tool used to evaluate the worth of each job in your organization and in today's labor

market. A successful job evaluation system can help you make your organization's pay system

equitable, understandable, legally defensible, approachable, and externally competitive. You can use

job evaluations to:

 Clarify job descriptions so that employees understand the expectations of their roles and the

relationship of their roles to other jobs within the organization.

 Attract desirable job candidates.

 Retain high-potential employees.

What is job evaluation?

Job evaluation is a systematic process that you can use to determine the relative level, importance,

complexity, and value of each job in your organization. With a successful job evaluation system, you can

compare each job to other jobs within your organization.

It is best to perform job evaluation after work analysis. Job evaluation, in conjunction with work analysis,

helps you develop a job description that is broad, descriptive, and flexible so that you can adapt the

description to your organization's changing needs.

Assess employee contribution

Job evaluation helps you establish and qualify differences in employee contribution across jobs. These

differences provide a foundation for employee compensation decisions. The job evaluation process

measures the elements of a job and produces an overall score. In each case, you evaluate the job, not

the employee who performs the job.

Assess job content and value

Typically, job evaluation assesses both the content of a job and the value of a job for your organization.

 Job content refers to the type of work performed and the skills and knowledge necessary

to perform the work.

  Job value refers to the job's degree of contribution in meeting your organization's goals and

the degree of difficulty in filling the job.

Factors in job evaluation

Job evaluators often assess jobs based on these factors:

 Training level or qualifications requirements

 Knowledge and skills requirements

 Complexity of tasks

 Interaction with various levels of the organization

 Problem-solving and independent judgment

 Accountability and responsibility

 Decision-making authority

 Degree of supervision required

 Cross-training requirements

 Working conditions

 Degree of difficulty in filling job

Implement job evaluation

The concept of job evaluation often can be intimidating to employees in an established organization.

Employees might worry about losing their jobs, and pay might be decreased after job comparisons and

evaluations are completed. To help employees accept and understand your job evaluation system,

approach job evaluation from an organizational development perspective.

Create a team

To promote widespread support, understanding, and acceptance across your organization, create a

cross-functional team to work on job evaluation. The team should represent various levels and jobs

within your organization.

Select the job evaluation method

The team can work together to evaluate and select a job evaluation method. Train team members in the

requirements of the Fair Labor Standards Act and any other best practices for selecting a job evaluation

method for your organization.

Communicate with employees

During the implementation of job evaluation, regularly communicate with employees throughout the

process. This helps employees feel a sense of ownership from the results of the job evaluation results.

Steps in job evaluation

The standard steps in job evaluation include:

1. Introduce the concept of job evaluation.

2. Obtain management approval for the evaluation.

3. Train the job evaluation selection team.

4. Review and select the job evaluation method.

5. Gather information on all internal jobs.

6. Use information to fully expand job descriptions.

7. Use the selected job evaluation method to rank jobs hierarchically or in groups.

8. Link the ranked jobs with your compensation system or develop a new system.

9. Implement the job evaluation and compensation systems.

10. Periodically review your job evaluation system and the resulting compensation decisions.

Analyze job evaluation methods

Before implementing job evaluation in your organization, select the most appropriate job evaluation

method. Hundreds of job evaluation systems exist. Research the job evaluation methods and resources

available online. Five job evaluation systems are most commonly used:

 Ranking

 Classification

 Point evaluation

 Factor comparison

 Market comparison

Ranking

Ranking jobs is the easiest, fastest, and least expensive approach to job evaluation. It is also most

effective in smaller organizations with few job classifications. To rank positions, order jobs from highest

to lowest based on their relative value to your organization.

The process of job ranking typically assigns more value to jobs that require managerial or technical

competencies. More value is also assigned to jobs that supervise, exercise decision-making authority,

or rely on independent judgment. For example, a job-ranking system might rank the job of CEO as the

most valued job within the organization and the job of product assembler as the least valued.

 Advantages Simplicity is the main advantage in using a ranking system. It is also easy to

communicate the results to employees, and it is easy to understand.

 Disadvantages Ranking jobs is subjective. Jobs are evaluated, and their value and

complexity are often assessed on the basis of opinion. Also, when creating a new job, existing

jobs must be reranked to accommodate the the new position.

Classification

The general purpose of job classification is to create and maintain pay grades for comparable work

across your organization.

To conduct a job classification: First, write descriptions for a category of jobs; next, develop standards

for each job category by describing the key characteristics of those jobs in the category; finally, match

all jobs to the categories based on the similarity of tasks, the decision-making exercised, and the job's

contribution to the organization's overall goals.

Universities, government employers and agencies, and other large organizations with limited resources

typically use job classification systems. These types of organizations have many types of jobs at diverse

locations and must maintain equitable and fair standards across all work settings.

 Advantage Job classification is simple once you establish your categories. You can assign

new jobs and jobs with changing responsibilities within the existing system.

 Disadvantages Job classification is subjective, so jobs mightfall into several categories.

Decisions rely on the judgment of the job evaluator. Job evaluators must evaluate jobs carefully

because similar titles might describe different jobs from different work sites.

Point evaluation

Point evaluation is the most widely used job evaluation method. In a point evaluation system, you

express the value of a particular job in monetary terms. You first identify compensable factors that a

group of jobs possess. Based on these factors, you assign points that numerically represent the

description and range of the job.

Examples of compensable factors are skills required, level of decision-making authority, number of

reporting staff members, and working conditions.

  Advantage This method is often viewed as less biased than other methods because the

job evaluator assigns each job's total points before the compensable factors become part of the

equation.

 Disadvantages Subjective decisions about compensable factors and the associated

points assigned might be dominate. The job evaluator must be aware of biases and ensure that

they are not represented in points assigned to jobs that are traditionally held by minority and

female employees.

Factor comparison

Job evaluators rank jobs that have similar responsibilities and tasks according to points assigned to

compensable factors. The evaluators then analyze jobs in the external labor market to establish the

market rate for such factors. Jobs across the organization are then compared to the benchmark jobs

according to the market rate of each job's compensable factors to determine job salaries.

 Advantage This method results in customized job-ranking.

 Disadvantage Compensable factor comparison is a time-consuming and subjective

process.

Market comparison

Job evaluators compare compensation for your organization's jobs to the market rate for similar jobs.

This method requires accurate market-pricing surveys.

The value of job evaluation

Job evaluation is a powerful tool in the compensation and benefits specialist's repertoire. Effective job

evaluation helps you gather information to develop job descriptions that meet the changing needs of

your organization. By implementing a successful job evaluation, you can develop an equitable

compensation plan and attract and retain high-performing and talented employees.

 OTHER ANS
There are three basic methods of job evaluation: (1) ranking, (2) classification, (3)
factor comparison. While many variations of these methods exist in practice, the
three basic approaches are described here.

Ranking Method

Perhaps the simplest method of job evaluation is the ranking method. According to
this method, jobs are arranged from highest to lowest, in order of their value or
merit to the organization. Jobs also can be arranged according to the relative
difficulty in performing them. The jobs are examined as a whole rather than on the
basis of important factors in the job; and the job at the top of the list has the highest
value and obviously the job at the bottom of the list will have the lowest value.

Jobs are usually ranked in each department and then the department rankings are
combined to develop an organizational ranking. The following table is a
hypothetical illustration of ranking of jobs.
Table: Array of Jobs according to the Ranking Method

Rank Monthly salaries

1. Accountant Rs 3,000

2. Accounts clerk Rs 1,800

3. Purchase assistant Rs 1,700

4. Machine-operator Rs 1,400

5. Typist Rs 900

6. Office boy Rs 600

The variation in payment of salaries depends on the variation of the nature of the
job performed by the employees. The ranking method is simple to understand and
practice and it is best suited for a small organization. Its simplicity, however, works
to its disadvantage in big organizations because rankings are difficult to develop in
a large, complex organization. Moreover, this kind of ranking is highly subjective
in nature and may offend many employees. Therefore, a more scientific and fruitful
way of job evaluation is called for.

Classification Method

According to this method, a predetermined number of job groups or job classes are
established and jobs are assigned to these classifications. This method places
groups of jobs into job classes or job grades. Separate classes may include office,
clerical, managerial, personnel, etc. Following is a brief description of such a
classification in an office.

(a) Class I - Executives: Further classification under this category may be Office
manager, Deputy office manager, Office superintendent, Departmental supervisor,
etc.

(b) Class II - Skilled workers: Under this category may come the Purchasing
assistant, Cashier, Receipts clerk, etc.

(c) Class III - Semiskilled workers: Under this category may come Stenotypists,
Machine-operators, Switchboard operators, etc.

(d) Class IV - Semiskilled workers: This category comprises Daftaris, File clerks,
Office boys, etc.
The job classification method is less subjective when compared to the earlier
ranking method. The system is very easy to understand and acceptable to almost all
employees without hesitation. One strong point in favor of the method is that it
takes into account all the factors that a job comprises. This system can be
effectively used for a variety of jobs.

The weaknesses of the job classification method are:

* Even when the requirements of different jobs differ, they may be combined into a
single category, depending on the status a job carries.
* It is difficult to write all-inclusive descriptions of a grade.
* The method oversimplifies sharp differences between different jobs and different
grades.
* When individual job descriptions and grade descriptions do not match well, the
evaluators have the tendency to classify the job using their subjective judgments.

Factor Comparison Method

A more systematic and scientific method of job evaluation is the factor comparison
method. Though it is the most complex method of all, it is consistent and
appreciable. Under this method, instead of ranking complete jobs, each job is
ranked according to a series of factors. These factors include mental effort, physical
effort, skill needed, supervisory responsibility, working conditions and other
relevant factors (for instance, know-how, problem solving abilities, accountability,
etc.). Pay will be assigned in this method by comparing the weights of the factors
required for each job, i.e., the present wages paid for key jobs may be divided
among the factors weighed by importance (the most important factor, for instance,
mental effort, receives the highest weight). In other words, wages are assigned to
the job in comparison to its ranking on each job factor.
The steps involved in factor comparison method may be briefly stated thus:

* Select key jobs (say 15 to 20), representing wage/salary levels across the
organization. The selected jobs must represent as many departments as possible.
* Find the factors in terms of which the jobs are evaluated (such as skill, mental
effort, responsibility, physical effort, working conditions, etc.).
* Rank the selected jobs under each factor (by each and every member of the job
evaluation committee) independently.
* Assign money value to each factor and determine the wage rates for each key job.

* The wage rate for a job is apportioned along the identified factors.
* All other jobs are compared with the list of key jobs and wage rates are
determined.

An example of how the factor comparison method works is given below:

Table: Merits and Demerits of Factor Comparison Method

Merits

Demerits

* Analytical and objective.

* Reliable and valid as each job is compared with all other jobs in terms of key
factors.
* Money values are assigned in a fair way based on an agreed rank order fixed by
the job evaluation committee.
* Flexible as there is no upper limitation on the rating of a factor.
* Difficult to understand, explain and operate.
* Its use of the same criteria to assess all jobs is questionable as jobs differ across
and within organizations.
* Time consuming and costly.

Point method

This method is widely used currently. Here, jobs are expressed in terms of key
factors. Points are assigned to each factor after prioritizing each factor in the order
of importance. The points are summed up to determine the wage rate for the job.
Jobs with similar point totals are placed in similar pay grades. The procedure
involved may be explained thus:

(a) Select key jobs. Identify the factors common to all the identified jobs such as
skill, effort, responsibility, etc.

(b) Divide each major factor into a number of sub factors. Each sub factor is
defined and expressed clearly in the order of importance, preferably along a scale.

The most frequent factors employed in point systems are:

I. Skill (key factor): Education and training required, Breadth/depth of experience

required, Social skills required, Problem-solving skills, Degree of discretion/use of
judgment, Creative thinking;
II. Responsibility/Accountability: Breadth of responsibility, Specialized
responsibility, Complexity of the work, Degree of freedom to act, Number and
nature of subordinate staff, Extent of accountability for equipment/plant, Extent of
accountability for product/materials;

III. Effort: Mental demands of a job, Physical demands of a job, Degree of potential
stress.

The educational requirements (sub factor) under the skill (key factor) may be
expressed thus in the order of importance.

Degree Define

1. Able to carry out simple calculations; High School educated

2. Does all the clerical operations; computer literate; graduate

3 Handles mail, develops contacts, takes initiative and does work independently;
post graduate

Assign point values to degrees after fixing a relative value for each key factor.
Table: Point Values to Factors along a Scale

Point values for Degrees Total

Factor 1 2 3 4 5

Skill 10 20 30 40 50 150

Physical effort 8 16 24 32 40 120

Mental effort 5 10 15 20 25 75
Responsibility 7 14 21 28 35 105

Working conditions 6 12 18 24 30 90

Maximum total points of all factors depending on their importance to job = 540

(Bank Officer)

4 Find the maximum number of points assigned to each job (after adding up the
point values of all sub-factors of such a job). This would help in finding the relative
worth of a job. For instance, the maximum points assigned to an officer's job in a
bank come to 540. The manager's job, after adding up key factors + sub factors'
points, may be getting a point value of, say 650 from the job evaluation committee.
This job is now priced at a higher level.

5 Once the worth of a job in terms of total points is expressed, the points are
converted into money values keeping in view the hourly/daily wage rates. A wage
survey, usually, is undertaken to collect wage rates of certain key jobs in the
organization. Let's explain this:
Table: Conversion of Job Grade Points into Money Value

Point range Daily wage rate (Rs) Job grades of key bank officials

500-600 300-400 1 Officer

600-700 400-500 2 Accountant

700-800 500-600 3 Manager I Scale

800-900 600-700 4 Manager II Scale

900-1,000 700-800 5 Manager III Scale

Merits and Demerits
The point method is a superior and widely used method of evaluating jobs. It forces
raters to look into all keys factors and sub-factors of a job. Point values are
assigned to all factors in a systematic way, eliminating bias at every stage. It is
reliable because raters using similar criteria would get more or less similar answers.
"The methodology underlying the approach contributes to a minimum of rating
error" (Robbins, p.361). It accounts for differences in wage rates for various jobs
on the strength of job factors. Jobs may change over time, but the rating scales
established under the point method remain unaffected.

On the negative side, the point method is complex. Preparing a manual for various
jobs, fixing values for key and sub-factors, establishing wage rates for different
grades, etc., is a time consuming process. According to Decenzo and Robbins, "the
key criteria must be carefully and clearly identified, degrees of factors have to be
agreed upon in terms that mean the same to all rates, the weight of each criterion
has to be established and point values must be assigned to degrees". This may be
too taxing, especially while evaluating managerial jobs where the nature of work
(varied, complex, novel) is such that it cannot be expressed in quantifiable
numbers.

Some limitations

Job evaluation is not an exact science and the assessment of job demands can never be
totally objective. In addition job evaluation does not determine actual pay nor
eliminate the need for negotiations on pay and conditions or differentials between
grades

Other ANS
The Limitations of Worker-Oriented Job Analysis

Across all worker-oriented job analysis tools a common set of serious

limitations exist, especially in rating the items:

• By removing company-specific focus these tools are blind to the

reality of a company’s culture and the industry and market within
which the company operates and competes. These tools are also US-
centric in their focus. In fact, the non-US-based employees used to
originally validate one of the competency models were 80% American
expatriates.
• None of the analysis tools looks across all employees from exempt
down through non-exempt positions. Therefore no comparative data
can be created to help manage employees both in their current and
future positions. In the case of the management-specific tools, many
of the items refer to direct reports. If an employee does not have
direct reports then they are rated low in every one of those items
regardless of their actual skill. A company that wants a full-service
solution will need to use at least two of the listed tools, none of
which clearly overlap between levels.
• Many of the work behaviors being measured are actually compound
lists. For example, the definitions of several of the competencies in
one of the competency models cited refer to the same interpersonal
skill. If an employee is limited in that one area it has a dramatically
negative impact on the evaluation across each of the items that
include that single skill.
• Each tool is based upon assumptions that certain interpersonal skills
and technical skills always go together. Without clearly separating
interpersonal from technical skills, the skills that truly differentiate
performance are only inferred, but not valid predictors. The vendors’
assumptions are based on their own self-serving research, not on
independent research on predictive validity. These theories are also
founded on an ideal instead of being grounded in business reality.
• These tools are not updated as business conditions and markets shift.
Because of the initial investment of time and energy spent in creating
each tool and the pride in authorship, these tools look and feel the
same today as they did when they were created ten to twenty years
ago. When they are ‘re-validated’ the authors simply review the data
collected on the existing items without looking outside of their own
models for additional items that should be added to reflect current
global business conditions.
• The items are not consistently scored the same way by each rater.
Either because several of the numerical anchors are not clearly
defined (e.g. you are supposed to rate the job on a scale from 1 to 5
and 1, 3, and 5 have text descriptions, but not 2 or 4), which results
in two persons meaning different things by assigning the same
number, or because the description of the item has one of the
 problems mentioned above (i.e. the rater did not understand the
language used in the tool, the person being rated had no direct
reports, and/or the same skill was mentioned across several items).
This variability has been raised in court when employees who feel
they were adversely impacted by a decision challenged the validity of
the tool that was used to make that decision.
• The focus of the tool has been on what the employee is doing instead
of what the employee should be doing. In the case of the very first
analysis tools, that was evident when I/O psychologists defined the
importance of an activity based on the amount of time spent doing
that activity during a normal workday. With the more recent
competency models, raters decide what is important based on
his/her own perceptions. Consultants who use the competency
models may use some benchmark research, but much of that research
suffers from the same problems first mentioned in this list (not
industry or culture specific). Finally, this is a process problem
because no analysis should be done without considering the strategic
objectives of the organization and the position’s objectives that tie
back to that strategy. Unfortunately, as that reality is being
addressed today, the results are still skewed in favor of the status
quo because even though incumbents are superficially defining
importance based on objectives, actual results consistently indicate
that they are only creating profiles that match the skills that they
already have instead of the skills that they should have.