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CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved.

CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

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Page 1: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

CHAPTER 6:

DESIGN & REDESIGN OFWORK SYSTEMS

Copyright © 2005 South-Western. All rights reserved.

Page 2: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–2

Exhibit 6-1Exhibit 6-1

Model for Design of Work SystemsModel for Design of Work SystemsExhibit 6-1Exhibit 6-1

Model for Design of Work SystemsModel for Design of Work Systems

Page 3: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–3

Design of Work SystemsDesign of Work SystemsDesign of Work SystemsDesign of Work Systems

• Job SpecializationJob Specialization– Creates jobs with very narrow task (activity) assignmentsCreates jobs with very narrow task (activity) assignments– Resulted in high efficiency, quickly achieved job Resulted in high efficiency, quickly achieved job

competency, low training costs, but created monotonous competency, low training costs, but created monotonous jobsjobs

• Job EnlargementJob Enlargement– An increase in task variety to relieve boredomAn increase in task variety to relieve boredom

• Job RotationJob Rotation– Employees moved across different specialized positionsEmployees moved across different specialized positions– Enlargement & rotation add variety but not necessarily Enlargement & rotation add variety but not necessarily

responsibilityresponsibility

• Job SpecializationJob Specialization– Creates jobs with very narrow task (activity) assignmentsCreates jobs with very narrow task (activity) assignments– Resulted in high efficiency, quickly achieved job Resulted in high efficiency, quickly achieved job

competency, low training costs, but created monotonous competency, low training costs, but created monotonous jobsjobs

• Job EnlargementJob Enlargement– An increase in task variety to relieve boredomAn increase in task variety to relieve boredom

• Job RotationJob Rotation– Employees moved across different specialized positionsEmployees moved across different specialized positions– Enlargement & rotation add variety but not necessarily Enlargement & rotation add variety but not necessarily

responsibilityresponsibility

Page 4: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–4

Design of Work SystemsDesign of Work SystemsDesign of Work SystemsDesign of Work Systems

• Job EnrichmentJob Enrichment– Increasing amount of responsibility for quality & Increasing amount of responsibility for quality &

productivity that employees have for their own workproductivity that employees have for their own work

• Vertical LoadingVertical Loading– Reassignment of job responsibility formerly Reassignment of job responsibility formerly

delegated to supervisor to employeedelegated to supervisor to employee

• Job EnrichmentJob Enrichment– Increasing amount of responsibility for quality & Increasing amount of responsibility for quality &

productivity that employees have for their own workproductivity that employees have for their own work

• Vertical LoadingVertical Loading– Reassignment of job responsibility formerly Reassignment of job responsibility formerly

delegated to supervisor to employeedelegated to supervisor to employee

Page 5: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–5

Five Core Job CharacteristicsFive Core Job CharacteristicsFive Core Job CharacteristicsFive Core Job Characteristics

• Skill varietySkill variety–Extent to which work allows Extent to which work allows

employee to use variety of skillsemployee to use variety of skills

• Task identityTask identity–Extent to which work allows Extent to which work allows

employee to complete whole or employee to complete whole or identifiable piece of workidentifiable piece of work

• Task significanceTask significance–Extent to which employee Extent to which employee

perceives that work is important perceives that work is important & meaningful to those inside or & meaningful to those inside or outside organizationoutside organization

• Skill varietySkill variety–Extent to which work allows Extent to which work allows

employee to use variety of skillsemployee to use variety of skills

• Task identityTask identity–Extent to which work allows Extent to which work allows

employee to complete whole or employee to complete whole or identifiable piece of workidentifiable piece of work

• Task significanceTask significance–Extent to which employee Extent to which employee

perceives that work is important perceives that work is important & meaningful to those inside or & meaningful to those inside or outside organizationoutside organization

• AutonomyAutonomy–Extent to which employee is able Extent to which employee is able

to work & determine work to work & determine work procedure at own discretionprocedure at own discretion

• FeedbackFeedback–Extent to which work allows Extent to which work allows

employee to gain sense of how employee to gain sense of how well job responsibilities are metwell job responsibilities are met

• AutonomyAutonomy–Extent to which employee is able Extent to which employee is able

to work & determine work to work & determine work procedure at own discretionprocedure at own discretion

• FeedbackFeedback–Extent to which work allows Extent to which work allows

employee to gain sense of how employee to gain sense of how well job responsibilities are metwell job responsibilities are met

Page 6: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–6

Exhibit 6-2Exhibit 6-2

Job Characteristics ModelJob Characteristics ModelExhibit 6-2Exhibit 6-2

Job Characteristics ModelJob Characteristics Model

Page 7: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–7

What Workers NeedWhat Workers NeedWhat Workers NeedWhat Workers Need

• Changing demographics Changing demographics & life styles& life styles

– Worker needs vary by age, Worker needs vary by age, gender, race, religion, gender, race, religion, physical abilities, sexual physical abilities, sexual orientation, & marital & family orientation, & marital & family statusstatus

• Employee needs for Employee needs for work/life balancework/life balance

– Workers less committed to Workers less committed to organizations today organizations today

– Also suffer from burnout & Also suffer from burnout & lower performancelower performance

• Changing demographics Changing demographics & life styles& life styles

– Worker needs vary by age, Worker needs vary by age, gender, race, religion, gender, race, religion, physical abilities, sexual physical abilities, sexual orientation, & marital & family orientation, & marital & family statusstatus

• Employee needs for Employee needs for work/life balancework/life balance

– Workers less committed to Workers less committed to organizations today organizations today

– Also suffer from burnout & Also suffer from burnout & lower performancelower performance

• Employee needs Employee needs representation (“voice”)representation (“voice”)

– Workers want to be involved Workers want to be involved in work-related issues & in work-related issues & expect organization to listen expect organization to listen to concernsto concerns

• Employee concerns about Employee concerns about safety in workplacesafety in workplace

– Workers want safe, hazard-Workers want safe, hazard-free working environmentfree working environment

• Employee needs Employee needs representation (“voice”)representation (“voice”)

– Workers want to be involved Workers want to be involved in work-related issues & in work-related issues & expect organization to listen expect organization to listen to concernsto concerns

• Employee concerns about Employee concerns about safety in workplacesafety in workplace

– Workers want safe, hazard-Workers want safe, hazard-free working environmentfree working environment

Page 8: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–8

Types of Task InterdependenceTypes of Task InterdependenceTypes of Task InterdependenceTypes of Task Interdependence

• Pooled interdependencePooled interdependence– Individual employees work Individual employees work

independently of each other in independently of each other in performing tasks but utilize performing tasks but utilize coordination of activitiescoordination of activities

• Sequential Sequential interdependenceinterdependence

– Work in process flow is linear, Work in process flow is linear, from one individual to anotherfrom one individual to another

– One individual depends on One individual depends on timely completion of quality timely completion of quality work from another coworkerwork from another coworker

• Pooled interdependencePooled interdependence– Individual employees work Individual employees work

independently of each other in independently of each other in performing tasks but utilize performing tasks but utilize coordination of activitiescoordination of activities

• Sequential Sequential interdependenceinterdependence

– Work in process flow is linear, Work in process flow is linear, from one individual to anotherfrom one individual to another

– One individual depends on One individual depends on timely completion of quality timely completion of quality work from another coworkerwork from another coworker

• Reciprocal Reciprocal interdependenceinterdependence

– Workflow is randomWorkflow is random– Responds to immediate Responds to immediate

situation situation – Employees have joint & Employees have joint &

shared responsibilities for shared responsibilities for work work

• Higher levels of Higher levels of interdependence require interdependence require higher levels of higher levels of coordination & attentioncoordination & attention

• Reciprocal Reciprocal interdependenceinterdependence

– Workflow is randomWorkflow is random– Responds to immediate Responds to immediate

situation situation – Employees have joint & Employees have joint &

shared responsibilities for shared responsibilities for work work

• Higher levels of Higher levels of interdependence require interdependence require higher levels of higher levels of coordination & attentioncoordination & attention

Page 9: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–9

Redesign of Work SystemsRedesign of Work SystemsRedesign of Work SystemsRedesign of Work Systems

• Current & future work systems more broadly Current & future work systems more broadly defined & more closely related to strategic choices defined & more closely related to strategic choices

• Workers becoming more involved in design & Workers becoming more involved in design & reengineering of jobsreengineering of jobs

• Cross-function teams strategically beneficialCross-function teams strategically beneficial– Also create challenges in effectively managing themselvesAlso create challenges in effectively managing themselves

• Employees raised in individualistic cultures need Employees raised in individualistic cultures need training to be effective team memberstraining to be effective team members

• Current & future work systems more broadly Current & future work systems more broadly defined & more closely related to strategic choices defined & more closely related to strategic choices

• Workers becoming more involved in design & Workers becoming more involved in design & reengineering of jobsreengineering of jobs

• Cross-function teams strategically beneficialCross-function teams strategically beneficial– Also create challenges in effectively managing themselvesAlso create challenges in effectively managing themselves

• Employees raised in individualistic cultures need Employees raised in individualistic cultures need training to be effective team memberstraining to be effective team members

Page 10: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–10

OutsourcingOutsourcingOutsourcingOutsourcing

• Involves contracting out some of organization’s Involves contracting out some of organization’s noncore work activities to outside specialists noncore work activities to outside specialists

– Can do work more effectivelyCan do work more effectively– Often for less than cost of doing work in-houseOften for less than cost of doing work in-house

• Areas frequently outsourced:Areas frequently outsourced:– PayrollPayroll– BenefitsBenefits– Technological supportTechnological support

• More than 75% of organizations outsource at least More than 75% of organizations outsource at least one HR functionone HR function

• Involves contracting out some of organization’s Involves contracting out some of organization’s noncore work activities to outside specialists noncore work activities to outside specialists

– Can do work more effectivelyCan do work more effectively– Often for less than cost of doing work in-houseOften for less than cost of doing work in-house

• Areas frequently outsourced:Areas frequently outsourced:– PayrollPayroll– BenefitsBenefits– Technological supportTechnological support

• More than 75% of organizations outsource at least More than 75% of organizations outsource at least one HR functionone HR function

Page 11: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–11

OutsourcingOutsourcingOutsourcingOutsourcing

• Can free up HR staff to focus on more Can free up HR staff to focus on more strategic issuesstrategic issues

• Considerations:Considerations:– Cost savingsCost savings– Whether contractor can deliverWhether contractor can deliver– Compliance with lawsCompliance with laws– Impacts on employees whose jobs might be lostImpacts on employees whose jobs might be lost– Impacts on morale of remaining employeesImpacts on morale of remaining employees

• Can free up HR staff to focus on more Can free up HR staff to focus on more strategic issuesstrategic issues

• Considerations:Considerations:– Cost savingsCost savings– Whether contractor can deliverWhether contractor can deliver– Compliance with lawsCompliance with laws– Impacts on employees whose jobs might be lostImpacts on employees whose jobs might be lost– Impacts on morale of remaining employeesImpacts on morale of remaining employees

Page 12: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–12

OffshoringOffshoringOffshoringOffshoring

• Involves exporting tasks & jobs to countries Involves exporting tasks & jobs to countries where labor costs significantly less than in U.S.where labor costs significantly less than in U.S.

• India remains largest marketIndia remains largest market• Wages approximately 10% of those paid in U.S.Wages approximately 10% of those paid in U.S.

– Often considered good by local standardsOften considered good by local standards

• Challenge of managing virtual global teamsChallenge of managing virtual global teams• Need for tight organizational & operational Need for tight organizational & operational

control to ensure coordination & communicationcontrol to ensure coordination & communication

• Involves exporting tasks & jobs to countries Involves exporting tasks & jobs to countries where labor costs significantly less than in U.S.where labor costs significantly less than in U.S.

• India remains largest marketIndia remains largest market• Wages approximately 10% of those paid in U.S.Wages approximately 10% of those paid in U.S.

– Often considered good by local standardsOften considered good by local standards

• Challenge of managing virtual global teamsChallenge of managing virtual global teams• Need for tight organizational & operational Need for tight organizational & operational

control to ensure coordination & communicationcontrol to ensure coordination & communication

Page 13: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–13

OffshoringOffshoringOffshoringOffshoring

• AdvantagesAdvantages– Cost savingsCost savings– Extend work day to Extend work day to

24 hours24 hours

• AdvantagesAdvantages– Cost savingsCost savings– Extend work day to Extend work day to

24 hours24 hours

• DisadvantagesDisadvantages– Loss of domestic Loss of domestic

jobsjobs– Transfer of technical Transfer of technical

knowledgeknowledge– Public image/loyalty Public image/loyalty

concernsconcerns

• DisadvantagesDisadvantages– Loss of domestic Loss of domestic

jobsjobs– Transfer of technical Transfer of technical

knowledgeknowledge– Public image/loyalty Public image/loyalty

concernsconcerns

Page 14: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–14

Mergers & AcquisitionsMergers & AcquisitionsMergers & AcquisitionsMergers & Acquisitions

• Mergers pursued for a variety of reasons:Mergers pursued for a variety of reasons:– Economies of scale in operationsEconomies of scale in operations– Consolidation in saturated marketsConsolidation in saturated markets– Improving competitive position through larger asset Improving competitive position through larger asset

basebase

• Two thirds of mergers fail Two thirds of mergers fail – Largely because of inability to merge cultural & Largely because of inability to merge cultural &

other human factorsother human factors

• Mergers pursued for a variety of reasons:Mergers pursued for a variety of reasons:– Economies of scale in operationsEconomies of scale in operations– Consolidation in saturated marketsConsolidation in saturated markets– Improving competitive position through larger asset Improving competitive position through larger asset

basebase

• Two thirds of mergers fail Two thirds of mergers fail – Largely because of inability to merge cultural & Largely because of inability to merge cultural &

other human factorsother human factors

Page 15: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–15

Barriers to ChangeBarriers to ChangeBarriers to ChangeBarriers to Change

• Disrupting status quo may be met with resistance Disrupting status quo may be met with resistance by both employees and managersby both employees and managers

• Costs & reallocation of resourcesCosts & reallocation of resources• Employees will resist change unless theyEmployees will resist change unless they

– Perceive need to changePerceive need to change– See benefits from changeSee benefits from change

• Risk & uncertainty; no guarantee of Risk & uncertainty; no guarantee of improvementsimprovements

• Poor coordination & communication can Poor coordination & communication can undermine change initiativesundermine change initiatives

• Disrupting status quo may be met with resistance Disrupting status quo may be met with resistance by both employees and managersby both employees and managers

• Costs & reallocation of resourcesCosts & reallocation of resources• Employees will resist change unless theyEmployees will resist change unless they

– Perceive need to changePerceive need to change– See benefits from changeSee benefits from change

• Risk & uncertainty; no guarantee of Risk & uncertainty; no guarantee of improvementsimprovements

• Poor coordination & communication can Poor coordination & communication can undermine change initiativesundermine change initiatives

Page 16: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–16

To Overcome Resistance to ChangeTo Overcome Resistance to ChangeTo Overcome Resistance to ChangeTo Overcome Resistance to Change

• Promote & implement change so it provides Promote & implement change so it provides benefits to those impacted benefits to those impacted

• Involve employees in change process to Involve employees in change process to increase their commitment to changeincrease their commitment to change

• Open, two-way communicationOpen, two-way communication– Early before change decisions are made Early before change decisions are made – Dispel rumorsDispel rumors– Increase trust & acceptance of change by keeping Increase trust & acceptance of change by keeping

employees informed & asking for inputemployees informed & asking for input

• Promote & implement change so it provides Promote & implement change so it provides benefits to those impacted benefits to those impacted

• Involve employees in change process to Involve employees in change process to increase their commitment to changeincrease their commitment to change

• Open, two-way communicationOpen, two-way communication– Early before change decisions are made Early before change decisions are made – Dispel rumorsDispel rumors– Increase trust & acceptance of change by keeping Increase trust & acceptance of change by keeping

employees informed & asking for inputemployees informed & asking for input

Page 17: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–17

Reading 6.1Reading 6.1

Restructuring Teams for Re-engineered Restructuring Teams for Re-engineered OrganizationsOrganizations

Reading 6.1Reading 6.1

Restructuring Teams for Re-engineered Restructuring Teams for Re-engineered OrganizationsOrganizations

• Reasons for using teams in organizations:Reasons for using teams in organizations:– Unlikely one individual will have all of knowledge & Unlikely one individual will have all of knowledge &

information needed to make complex decisionsinformation needed to make complex decisions– Teams provide more “buy-in” to decisionsTeams provide more “buy-in” to decisions– Managers believe teams enhance motivation & Managers believe teams enhance motivation &

productivityproductivity– Facilitate acquisition & sharing of information vital to Facilitate acquisition & sharing of information vital to

organizational growth and flexibilityorganizational growth and flexibility– Facilitate variety of internal quality control initiativesFacilitate variety of internal quality control initiatives

• Reasons for using teams in organizations:Reasons for using teams in organizations:– Unlikely one individual will have all of knowledge & Unlikely one individual will have all of knowledge &

information needed to make complex decisionsinformation needed to make complex decisions– Teams provide more “buy-in” to decisionsTeams provide more “buy-in” to decisions– Managers believe teams enhance motivation & Managers believe teams enhance motivation &

productivityproductivity– Facilitate acquisition & sharing of information vital to Facilitate acquisition & sharing of information vital to

organizational growth and flexibilityorganizational growth and flexibility– Facilitate variety of internal quality control initiativesFacilitate variety of internal quality control initiatives

Page 18: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–18

Reading 6.1Reading 6.1

Restructuring Teams for Re-engineered Restructuring Teams for Re-engineered OrganizationsOrganizations

Reading 6.1Reading 6.1

Restructuring Teams for Re-engineered Restructuring Teams for Re-engineered OrganizationsOrganizations

• Problems with teamsProblems with teams– May fail without proper training & supportMay fail without proper training & support– Often poorly integrated into organization’s hierarchyOften poorly integrated into organization’s hierarchy– Individuals often feel their team contributions dilute Individuals often feel their team contributions dilute

personal success personal success – Few teams have found effective means to deal with Few teams have found effective means to deal with

“freeloaders”“freeloaders”– Usually not represented at top levels of organizations, Usually not represented at top levels of organizations,

sending a mixed message about their importancesending a mixed message about their importance

• Problems with teamsProblems with teams– May fail without proper training & supportMay fail without proper training & support– Often poorly integrated into organization’s hierarchyOften poorly integrated into organization’s hierarchy– Individuals often feel their team contributions dilute Individuals often feel their team contributions dilute

personal success personal success – Few teams have found effective means to deal with Few teams have found effective means to deal with

“freeloaders”“freeloaders”– Usually not represented at top levels of organizations, Usually not represented at top levels of organizations,

sending a mixed message about their importancesending a mixed message about their importance

Page 19: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–19

Reading 6.1Reading 6.1

Restructuring Teams for Re-engineered Restructuring Teams for Re-engineered OrganizationsOrganizations

Reading 6.1Reading 6.1

Restructuring Teams for Re-engineered Restructuring Teams for Re-engineered OrganizationsOrganizations

• U.S. & Japanese culture differencesU.S. & Japanese culture differences– Individualism versus collectivismIndividualism versus collectivism– Conflict & conformityConflict & conformity– Power & authorityPower & authority– Time orientationTime orientation– Cultural & demographic homogeneityCultural & demographic homogeneity

• U.S. & Japanese culture differencesU.S. & Japanese culture differences– Individualism versus collectivismIndividualism versus collectivism– Conflict & conformityConflict & conformity– Power & authorityPower & authority– Time orientationTime orientation– Cultural & demographic homogeneityCultural & demographic homogeneity

Page 20: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–20

Reading 6.1Reading 6.1

Restructuring Teams for Re-engineered Restructuring Teams for Re-engineered OrganizationsOrganizations

Reading 6.1Reading 6.1

Restructuring Teams for Re-engineered Restructuring Teams for Re-engineered OrganizationsOrganizations

• Three keys to successful teamsThree keys to successful teams– Value & endorse dissentValue & endorse dissent– Encourage fluidity of membershipEncourage fluidity of membership– Enable teams to make decisionsEnable teams to make decisions

• Three keys to successful teamsThree keys to successful teams– Value & endorse dissentValue & endorse dissent– Encourage fluidity of membershipEncourage fluidity of membership– Enable teams to make decisionsEnable teams to make decisions

Page 21: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–21

Figure 1Figure 1

Three Key Elements for Success of US Three Key Elements for Success of US TeamsTeams

Figure 1Figure 1

Three Key Elements for Success of US Three Key Elements for Success of US TeamsTeams

Page 22: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–22

Figure 2Figure 2

Team Development ModelTeam Development ModelFigure 2Figure 2

Team Development ModelTeam Development Model

Page 23: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–23

Reading 6.2Reading 6.2

HRM Outsourcing: Make or Buy HRM Outsourcing: Make or Buy DecisionDecision

Reading 6.2Reading 6.2

HRM Outsourcing: Make or Buy HRM Outsourcing: Make or Buy DecisionDecision

• Five competitive forces driving Five competitive forces driving organizations to outsource HR activities:organizations to outsource HR activities:– DownsizingDownsizing– Rapid growth or declineRapid growth or decline– GlobalizationGlobalization– Increased competitionIncreased competition– RestructuringRestructuring

• Five competitive forces driving Five competitive forces driving organizations to outsource HR activities:organizations to outsource HR activities:– DownsizingDownsizing– Rapid growth or declineRapid growth or decline– GlobalizationGlobalization– Increased competitionIncreased competition– RestructuringRestructuring

Page 24: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–24

Reading 6.2Reading 6.2

HRM Outsourcing: Make or Buy HRM Outsourcing: Make or Buy DecisionDecision

Reading 6.2Reading 6.2

HRM Outsourcing: Make or Buy HRM Outsourcing: Make or Buy DecisionDecision

• Operational rationales for outsourcingOperational rationales for outsourcing– Small firms lack resources; large firms gain Small firms lack resources; large firms gain

economies of scaleeconomies of scale– Specialized HR expertise & objectivitySpecialized HR expertise & objectivity

• Reduced liability & risk in legally sensitive HR Reduced liability & risk in legally sensitive HR areasareas

– Innovations & economies of scale in HRIS Innovations & economies of scale in HRIS technology used by outside vendors technology used by outside vendors

• Simplify transactions Simplify transactions

• Reduce HR costsReduce HR costs

• Operational rationales for outsourcingOperational rationales for outsourcing– Small firms lack resources; large firms gain Small firms lack resources; large firms gain

economies of scaleeconomies of scale– Specialized HR expertise & objectivitySpecialized HR expertise & objectivity

• Reduced liability & risk in legally sensitive HR Reduced liability & risk in legally sensitive HR areasareas

– Innovations & economies of scale in HRIS Innovations & economies of scale in HRIS technology used by outside vendors technology used by outside vendors

• Simplify transactions Simplify transactions

• Reduce HR costsReduce HR costs

Page 25: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–25

Reading 6.2Reading 6.2

HRM Outsourcing: Make or Buy HRM Outsourcing: Make or Buy DecisionDecision

Reading 6.2Reading 6.2

HRM Outsourcing: Make or Buy HRM Outsourcing: Make or Buy DecisionDecision

• Operational rationales for outsourcing Operational rationales for outsourcing (continued):(continued):– Time-sensitive issues better handled by outsourcingTime-sensitive issues better handled by outsourcing– Temporary or cyclical increases in HR needsTemporary or cyclical increases in HR needs– Efficient vendor management practices drive costs Efficient vendor management practices drive costs

down more than economies of scaledown more than economies of scale– Specialized vendors offer activities as their core Specialized vendors offer activities as their core

business & strategic focusbusiness & strategic focus

• Operational rationales for outsourcing Operational rationales for outsourcing (continued):(continued):– Time-sensitive issues better handled by outsourcingTime-sensitive issues better handled by outsourcing– Temporary or cyclical increases in HR needsTemporary or cyclical increases in HR needs– Efficient vendor management practices drive costs Efficient vendor management practices drive costs

down more than economies of scaledown more than economies of scale– Specialized vendors offer activities as their core Specialized vendors offer activities as their core

business & strategic focusbusiness & strategic focus

Page 26: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–26

Reading 6.2Reading 6.2

HRM Outsourcing: Make or Buy HRM Outsourcing: Make or Buy DecisionDecision

Reading 6.2Reading 6.2

HRM Outsourcing: Make or Buy HRM Outsourcing: Make or Buy DecisionDecision

• Strategic rationales for outsourcing:Strategic rationales for outsourcing:– Outsourcing nonstrategic activities permits HR to Outsourcing nonstrategic activities permits HR to

move away from administration toward strategic rolemove away from administration toward strategic role– Decentralization of HR function through Decentralization of HR function through

redeployment of some of assets to operating unitsredeployment of some of assets to operating units– Develop less bureaucratic HR departmentsDevelop less bureaucratic HR departments– Downsizing may require HR to reduce staff, Downsizing may require HR to reduce staff,

eliminating specialized in-house expertise eliminating specialized in-house expertise – Outsourcing provides “big picture” perspectiveOutsourcing provides “big picture” perspective

• Strategic rationales for outsourcing:Strategic rationales for outsourcing:– Outsourcing nonstrategic activities permits HR to Outsourcing nonstrategic activities permits HR to

move away from administration toward strategic rolemove away from administration toward strategic role– Decentralization of HR function through Decentralization of HR function through

redeployment of some of assets to operating unitsredeployment of some of assets to operating units– Develop less bureaucratic HR departmentsDevelop less bureaucratic HR departments– Downsizing may require HR to reduce staff, Downsizing may require HR to reduce staff,

eliminating specialized in-house expertise eliminating specialized in-house expertise – Outsourcing provides “big picture” perspectiveOutsourcing provides “big picture” perspective

Page 27: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–27

Reading 6.2Reading 6.2 HRM Outsourcing: Make or Buy HRM Outsourcing: Make or Buy

DecisionDecision

Reading 6.2Reading 6.2 HRM Outsourcing: Make or Buy HRM Outsourcing: Make or Buy

DecisionDecision

• Positive outcomesPositive outcomes– Lower HR costsLower HR costs– Higher service qualityHigher service quality– Realignment or redeployment of internal HR Realignment or redeployment of internal HR

expertiseexpertise– Development of negotiation & broker skillsDevelopment of negotiation & broker skills– Enhanced credibility of HR functionEnhanced credibility of HR function– Risk & uncertainty absorption by HR vendorRisk & uncertainty absorption by HR vendor

• Positive outcomesPositive outcomes– Lower HR costsLower HR costs– Higher service qualityHigher service quality– Realignment or redeployment of internal HR Realignment or redeployment of internal HR

expertiseexpertise– Development of negotiation & broker skillsDevelopment of negotiation & broker skills– Enhanced credibility of HR functionEnhanced credibility of HR function– Risk & uncertainty absorption by HR vendorRisk & uncertainty absorption by HR vendor

Page 28: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

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Reading 6.2Reading 6.2 HRM Outsourcing: Make or Buy HRM Outsourcing: Make or Buy

DecisionDecision

Reading 6.2Reading 6.2 HRM Outsourcing: Make or Buy HRM Outsourcing: Make or Buy

DecisionDecision

• Negative outcomesNegative outcomes– Significant cost savings not always Significant cost savings not always

experiencedexperienced– Vendor switching costsVendor switching costs– Long-term vendor contractsLong-term vendor contracts– Disruption of firm’s cultureDisruption of firm’s culture– Removal or distancing of HR function from Removal or distancing of HR function from

employeesemployees

• Negative outcomesNegative outcomes– Significant cost savings not always Significant cost savings not always

experiencedexperienced– Vendor switching costsVendor switching costs– Long-term vendor contractsLong-term vendor contracts– Disruption of firm’s cultureDisruption of firm’s culture– Removal or distancing of HR function from Removal or distancing of HR function from

employeesemployees

Page 29: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–29

Reading 6.3Reading 6.3

Productivity in DownsizingProductivity in DownsizingReading 6.3Reading 6.3

Productivity in DownsizingProductivity in Downsizing

• Many downsizing firms face immediate Many downsizing firms face immediate challenge of keeping operations going with challenge of keeping operations going with minimal staffminimal staff

• Productivity often declinesProductivity often declines

• Survivors Survivors – Working more hours Working more hours – Receive with bigger workloadReceive with bigger workload

• Morale often plummetsMorale often plummets

• Many downsizing firms face immediate Many downsizing firms face immediate challenge of keeping operations going with challenge of keeping operations going with minimal staffminimal staff

• Productivity often declinesProductivity often declines

• Survivors Survivors – Working more hours Working more hours – Receive with bigger workloadReceive with bigger workload

• Morale often plummetsMorale often plummets

Page 30: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–30

Reading 6.3Reading 6.3

Work RedesignWork RedesignReading 6.3Reading 6.3

Work RedesignWork Redesign

• Typical problemsTypical problems– Failure or inability to identify & categorize Failure or inability to identify & categorize

duties & assignmentsduties & assignments– Failure to identify when employee is over-Failure to identify when employee is over-

taskedtasked– Failure to see when business unit’s demands Failure to see when business unit’s demands

exceed its capacityexceed its capacity

• Typical problemsTypical problems– Failure or inability to identify & categorize Failure or inability to identify & categorize

duties & assignmentsduties & assignments– Failure to identify when employee is over-Failure to identify when employee is over-

taskedtasked– Failure to see when business unit’s demands Failure to see when business unit’s demands

exceed its capacityexceed its capacity

Page 31: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

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Reading 6.3Reading 6.3

Work Redesign: Task CategoriesWork Redesign: Task CategoriesReading 6.3Reading 6.3

Work Redesign: Task CategoriesWork Redesign: Task Categories

• Critical tasks Critical tasks – Enable company to Enable company to

accomplish primary accomplish primary objectivesobjectives

• Sub-critical tasks Sub-critical tasks – Need to be Need to be

performed, but performed, but average standard of average standard of quality will sufficequality will suffice

• Critical tasks Critical tasks – Enable company to Enable company to

accomplish primary accomplish primary objectivesobjectives

• Sub-critical tasks Sub-critical tasks – Need to be Need to be

performed, but performed, but average standard of average standard of quality will sufficequality will suffice

• Minor tasks Minor tasks – Add value to firm but Add value to firm but

will not hinder will not hinder operations or goals if operations or goals if left undoneleft undone

• Unnecessary tasks Unnecessary tasks – Can be discarded Can be discarded

because they drain because they drain resourcesresources

• Minor tasks Minor tasks – Add value to firm but Add value to firm but

will not hinder will not hinder operations or goals if operations or goals if left undoneleft undone

• Unnecessary tasks Unnecessary tasks – Can be discarded Can be discarded

because they drain because they drain resourcesresources

Page 32: CHAPTER 6: DESIGN & REDESIGN OF WORK SYSTEMS Copyright © 2005 South-Western. All rights reserved

Copyright © 2005 South-Western. All rights reserved. 1–32

Reading 6.3Reading 6.3

Work RedesignWork RedesignReading 6.3Reading 6.3

Work RedesignWork Redesign

• Output from work categorization process Output from work categorization process must be shared with all employees so they must be shared with all employees so they have list of tasks for which they are have list of tasks for which they are accountableaccountable

• These tasks are used to drive performance These tasks are used to drive performance management processmanagement process

• Output from work categorization process Output from work categorization process must be shared with all employees so they must be shared with all employees so they have list of tasks for which they are have list of tasks for which they are accountableaccountable

• These tasks are used to drive performance These tasks are used to drive performance management processmanagement process