HRM822 Final Exam Study Notes

Exam Breakdown

Part I: You are provided with 4 questions and must answer 3 for 10 marks each. Related to:

i. Downsizing

ii. Forecasting techniques

iii. Outsourcing of HR functions

iv. HR auditing/measurement

Part II: Related to JOB ANALYSIS. Worth 20 marks total. You will be provided with an NOC job

description and will have to:

i. Explain why conducting a job analysis is vital! (5 marks)

ii. The techniques that you would use to conduct a job analysis for this role. (10 marks)

iii. The documents that you would create/construct after completing the job analysis. (5

marks)

Part III. A case study. You will be provided with a case study (taken from your text) related to

both mergers/acquisitions (M & A’s) and international placements/culture. You will then

answer 5 questions worth 10 marks each related to:

i. The risks/benefits and success rates of M & A’s.

ii. The 4 accepted cultural outcomes of an M & A.

iii. Human Resources ‘due diligence’. What would you check?

iv. The scanning of external factors. In this case what external factors should have been

examined and addressed?

v. Stakeholder theory. In this case what stakeholders were involved and how might they

have influenced the success and/or failure of this particular case?

Exam Hints

1. Please use dark blue or black ink. Highlighting may be useful.

2. Do not write out the question, we have a copy of the exam paper.

3. Use bullet points!

4. Yes, neatness is important.

5. Number each book and clearly number each question.

6. If a question is worth 10 marks and asks for, as an example stakeholders, then name 5

stakeholders and then briefly describe their impact or influence. Naming/identifying will earn 1

mark and explaining will earn 1 mark.

7. If there are less than 5 available answers (for example cultural results from a merger) then name

the possible outcomes and provide explanations of them with a brief introduction and

conclusion.

8. Providing real life examples will often earn marks and is very useful to demonstrate an

understanding.

9. Job Analysis!

Downsizing

Downsizing: activities undertaken to improve organizational efficiency, productivity and/or

competitiveness that affects the size of the organization's workforce, its costs and its work

processes

Downsizing often fails as it is not properly planned or carried out in a manner that reflects the

organization's strategies

Why do organizations downsize?

1. Labour costs are perceived as the easiest to adjust quickly

2. Declining profit

3. Increased competition

4. Economic downturn

5. Mergers

6. New technology

7. Reducing operating costs

8. Reduced cash flow

9. Flattening the organization

10. Getting rid of ‘deadwood’

11. New management/ownership

Alternatives to Downsizing

Cutting non-personnel related costs such as business expenses, advertising, etc.

Cutting personnel related costs such as reducing bonuses, wages, benefits.

Reducing the work week.

Providing incentives for voluntary severances such as offering early retirement.

Offering extended leaves of absence, sabbaticals or vacations.

Eliminating overtime.

Implementing worksharing.

Relying on attrition and a hiring freeze.

Outsourcing some functions.

Implementing other cost reduction strategies.

Best Practices in Downsizing

Hands-on involvement prior to the decision.

Selective in its application rather than ‘across the board’.

Long-term in focus. Identify your organizational and competitive strategies and

advantages

Attack specific areas. Identify redundancies, inefficiencies, areas for technological

advancement, outdated/obsolete functions/duties and products.

Address the psychological needs of survivors.

Treat those displaced with dignity and fairness.

Create smaller, autonomous teams (the power of 100).

Be proactive and focus on performance

Negatives of Downsizing

Higher ‘quit’ rate.

Less attractive to new or high potential recruits.

Reduced employee commitment.

Lower performance.

Management may fixate on restructuring rather than customer needs or rebuilding.

Less innovation and risk taking.

Lower morale.

Increased litigation.

Decreased attention to safety.

Decreased organizational reputation

Forecasting Techniques

Quantitative Forecasting Techniques

Quantitative techniques work best when the environment is stable and you have a

long-term statistical history to use. They require the compilation of historical data and

the use of software or someone trained in statistical analysis. Completion may be

lengthy. Requires detailed data on organizational staffing, sales, efficiency, etc.

Ratio Analysis: is an quantitative technique. An example is comparing the relationship

between total sales and the number of employees required.

The 5 steps for conducting a ratio analysis are:

1. Select the appropriate trend

2. Track the trend over time

3. Track the workforce size over the same time

4. Calculate the average ratio of the trend to the workforce size

5. Calculate the forecasted demand for labour

Regression analysis: another quantitative technique. It presupposes that there is a

relationship between one or more independent (causal) variables which then impact

the dependent (target) variable.

For example the more games the Toronto Maple Leafs win (causal variable) the

more beer your restaurant will sell (dependent variable). So you could predict

how many staff to schedule and the amount of beer to stock based on your

prediction about how good the Leafs will be.

Trend Analysis: examines the relationship over time between an operational index

such as sales and the demand for labour. An example would be comparing attendance

in class to marks awarded The trend must be consistent and have been in place for

some time. It is quantitative.

HR Budgets: operational or short term demand forecasting that require the number

and type of personnel required for each role. It results in a ‘staffing table’.

Staffing Table: When staff prepare information on the expected demand for labour in

the short-term based on based on current or expected levels of activity. It is based on

activity levels and represents the total projected HR demand for each role.

A Recommended Supply Forecasting Technique

Markov Model: a series of matrices that detail the various patterns of

movement to and from the jobs in an organization. It requires the use of

historic mobility rates, which leads to a forecast of future movement and finally

those are used to develop programs.

Lists 5 possible options:

1. remain in current job

2. promotion

3. lateral transfer

4. exit from the job/company

5. demotion

The Markov Model is useful for determining:

a. the number of personnel moves each year

b. the number of external hires required

c. movement patterns/career paths in the organization and required

training

d. success rates for hires and promotions

Qualitative Forecasting Techniques

Qualitative Supply Forecasting

Linear Programming: a complex mathematical procedure to determine the

best supply mix.

Movement Analysis: used to analyze the ripple effect of promotions

Vacancy Model: analyzes personnel flow through the organization beginning

at the top and moving down.

Qualitative Demand Forecasting → These work best when the environment is unstable

and or you are introducing new products or techniques. They often require the use of

‘experts’. Requires knowledge of external factors, stakeholders, etc

Expert Forecasting: usually this is conducted by line managers, HR staff, senior

management or consultants. These are qualitative techniques.

Scenario/Envelope Forecasting: Projections set by a group based on a variety

of assumptions. Usually develop ‘best’ and/or ‘worse’ case scenarios, these are

the boundaries of the ‘envelope’.

Impact Analysis: Past trends are analyzed by experts and they predict the

probability of a future outcome.

Qualitative Supply & Demand Forecasting

Delphi Technique The experts do not meet so this reduces the chance of

‘groupthink. Also they do not meet so there is no need for travel and therefore

it is easier to schedule and less costly.

1. Define the issue or question

2. Identify the experts and the timeline

3. Orient the experts

4. Issue the first questionnaire

5. Summarize the answers

6. Issue the first round summary and the second round questionnaire

7. Compile the answers to the second and issue an opinion based on the

majority viewpoint.

8. Continue, summarize and review

Nominal Group: Much like the Delphi Technique only the ‘experts’ meet. This

may cost more for travel, etc and may take longer to get the experts together.

Also one may overpower the others or groupthink may occur.

1. Define the issue or question

2. Identify the experts and the timeline

3. Issue the demand statement to the experts

4. Experts conduct research

5. Experts meet but individual interactions are discouraged

6. Experts brainstorm

7. Vote is taken and outcomes are ranked.

Outsourcing of HR Functions

Outsourcing: a contractual relationship for the provision of business services by an external

provider

Why Outsource?

Reduce cost

Economies of scale

Access to specialized skills/expertise

Harmonize policies/procedures globally

Access to advanced technology

Written/contractual performance standards

Reduce head count/organizational politics

Improved service

Focus on strategic value added functions rather than transactional functions

When should a function be outsourced?

When it is:

Rule based

Repetitive

Frequently undertaken

Predictable

Able to be fully or partially automated

Able to be delivered remotely

Not a ‘core’ function

Does not add to organizational knowledge or capabilities

Why not outsource?

Costs may rise as unexpected events/demands crop up

No control over level of service (outside of contracted stipulations)

No control over contracted staff

System or cultural incompatibilities

Lack of flexibility

Vendor may become or assist competitors

Impact on employee morale

Destruction of internal culture

Privacy risks

Reduced corporate value

Damage to corporate knowledge base (hollowing out)

Functions that are most commonly outsourced

Compensation

Payroll

Benefits administration

Compensation administration

Pension administration and investing

Training

Training delivery

Training design

Training design and development

Development of training policies

Recruitment & Selection

Advertising

Screening of external applicants

Applicant testing

Reference checking

Preliminary interviews

Exit interviews

Other Functions

Temporary staffing

Information technology

Employee assistance programs

Wellness programs

Occupational health & safety

Claims management

HR Auditing

Why do we audit HR performance?

To ensure that HR is accepted s a business function.

HR practitioners must be business people and speak the language of business.

Numbers must be related to outcomes and they must reflect value added activities.

The problem is that unlike other business activities, there is no standard accepted way

of measuring HR activities.

Labour is often the largest controllable cost

To objectively identify and reward good performance

Legal compliance

Determine which HR practices are effective

To support continuous improvements

Bring HR closer to line functions

Provide data for resource allocation

Most Frequent Measures

Turnover

Employment Engagement

Cost Per Employee (training, hiring)

Labour Cost (per unit or sale or service)

Revenue Per Employee

Customer Satisfaction

Units of Output Per Employee

Other Factors Which Maybe Measured

Employee involvement/commitment

Improving organizational human capital (KSAO’s)

Decreasing recruitment costs

Improving selection techniques/processes

Identifying and keeping ‘key’ employees

Succession planning/management

Reducing injuries and absenteeism

Improving recruitment pool by creating a positive organizational identity/culture

Ensuring that compensation is in-line with organizational strategy

Ensuring that labour costs and headcount are aligned with organizational requirements

Legislative compliance

Positive employee relations (no need to unionize or limiting work stoppages and

grievances

The 5C Model

Compliance: with legal requirements

Client Satisfaction (stakeholders as clients): through feedback, surveys, measuring

critical incidents

Culture Management: perceptions and attitudes both internal and external and

employee commitment

Cost of Control (of employee behaviours): such as absenteeism, injuries and turnover.

Also increasing efficiencies based on time/volume/cost

Contribution (of HR): employee involvement, flexible work systems, KSAO’s, internal

culture, employee development

Balanced Scorecard (BSC)

A measurement of framework that helps managers translate strategic goals into

operational objects to answer 4 basic questions

1. How do customers/clients see us (customer perspective)

2. What must we excel at (internal business perspective)

3. Can we continue to improve (innovation perspective)

4. How do we look to shareholders (financial perspective)

Job Analysis

Job Analysis: an examination of the jobs in teh organization with a view to documenting the

tasks , duties and responsibilities of a job and the KSAO's associated with the successful

performance of the job

Elements required for a successful job analysis include:

Working condition

Employee qualifications

Training and skill requirements

Work processes

Why is job analysis so important?

Incorporates recent changes in processes and techniques, keeping job descriptions up

to date

Ensures that HR demand and supply are matched by recruitment & selection methods

Aligns HR programs to corporate strategy & future needs

Tracks technological changes

Helps to prioritize work activities and functions

Identifies core functions & future skill requirements

Provides for comparisons with different work sites (even globally)

Assists in developing training programs

Allows for stated and understood performance standards

Assists in meeting pay equity requirements

Allows for creation of required workplace accommodations

Assists in developing organizational identity

Used to set compensation guidelines

Incorporated into Health & Safety program

The Job Analysis Process

1. Determine the job to be analyzed.

2. Determine the appropriate methods.

3. Examine existing data and documentation.

4. Define and formalize any new job duties, methods and performance standards.

5. Maintain the new data and standards.

Job Description: the written documents produced by the job analysis process, emphasizing

duties, tasks, specifications and competencies. Should also include 1) job title 2) NOC code 3)

compensation category 4) department 5) supervisor’s title 6) date of description

Compensable Factors: knowledge, skills, effort, responsibility and working conditions.

Performance Appraisal: comparison of an individual’s performance to the standards specified

in the job description

Job Analysis Techniques

Critical incident technique

A qualitative process of job analysis that produces behavioural statements

along a range from superior to ineffective performance for a specific job

Jobholders are asked to identify the key dimensions of their job

→ Describe (in writing or verbally) specific critical incidents that relate to

success, as well as those that lead to job failure

Questionnaires

Usually completed by the jobholder, their supervisors, and the people who

work in other jobs that are related to the specific job being investigated

Frequently used instruments include

→ Functional Job Analysis (FJA)

→ Job Diagnostic Survey

→ Position Analysis Questionnaire (PAQ)

Hay system

Uses 3 key factors:

→ Know-how (knowledge and skills)

→ Problem solving (decision making level)

→ Accountability (responsibilities including use of organizational

resources such as supervision of other workers, resources and

budgeting)

Behaviorally anchored rating scales (BARS)

The job is divided into key dimensions.

Behaviourial statements are developed for each dimension on a continuum (or

rating scale) and these correspond with numerical rankings

Job diaries

Jobholders maintain a written record of their job activities, and associated time

expenditures for a preset period that typically ranges from a complete work

cycle or typically a week to up to a month

Observation (direct or indirect)

Direct → observe the production line for worker behaviours and the skills

required for job success. Recording of the number and duration of individual

behaviours is normally captured on a standardized recording sheet

Indirect → can incorporate a variety of means (e.g. videotaped recording of the

job being performed) for subsequent analysis

Focus groups

Interviews

360º Evaluation: evaluation of attributes and performance dimensions of a job

from "the full circle" around the job - that is, feedback from subordinates,

superiors, co-workers, clients, and the jobholder him/herself

Measurement of output/production

Machine-generated output reports, as well as production reporting procedures,

can obtain information about the job and its normal and peak levels of

productions.

Technique reveals little about the qualitative or process aspects of the job

Useful in determining appropriate performance standards for output

Time studies

Position analysis questionnaire (PAQ)

A common quantitative approach to job analysis consisting of 194 items to

assess job characteristics in 6 different dimensions and relate them to human

characteristics

1. Information input: How and where the worker obtains necessary

information for job functioning

2. Mental processes: The types of planning, reasoning, and decision-

making processes required by the job

3. Work output: The specific items produced by the worker and the tools

he or she employs to produce them

4. Relationships with other workers: Important interpersonal contacts for

the jobholder

5. Job context and work satisfaction: The physical and social working

environments

6. Other job characteristics: Elements of the job that do not fall into the

other five dimensions

Functional job analysis (FJA)

Analyzes any job using three essential elements:

1. people (important interpersonal relationships on the job)

2. data (obtaining, using, and transforming data in aid of job

performance)

3. things (physical machinery, resources, and the environment)

Each of these three dimensions is then rated by level of complexity and

importance

Mergers & Acquisitions

Horizontal Merger: the merging of two competitors, who combine to increase market power

Vertical Merger: the merger of a buyer and a supplier to achieve the synergies of controlling all

factors affecting a company's success, from the production of raw goods to manufacturing to

distribution and retail sales

Conglomerate Merger: the merger of two organizations competing in different markets

Acquisition: the purchase of an entire company or a controlling interest in it

Consolidation: joining organizations to form a new organization

Takeover: one company seeks to acquire another company

Why mergers?

o Operating synergy: create economies of scale to reduce costs

o Access to new markets

o Access to new products

o Access to talent

o Enhanced reputation

o Reduction in operating expenses

o Access to distribution channels

o Limit the competition

o International access

o Access to new brands

o Economy of scope: using existing resources to create new products/services

o Tax advantages

o Provide better management to the target company

o Target company is undervalued

o Prevent competitors from getting it

o Corporate (executive) ego

o Increased market share

o Diversification

o Access to technology

o Balance cash flow or production (products/services required year round, or acquire a

‘cash cow’)

o Increased pay offs or compensation for executives

o Shareholder expectations

Success Rates

o Better success rate the large the organization and greater success rate in

manufacturing over service industries

o 50% to 80% ultimately fail

o Acquisition of a related business has a better success rate

o Only 23% end up recovering their costs (McKinsey report)

o 4 out of 5 produce no increase shareholder value

Why M&A Fails?

o Integration issues: cultural/technical/operational

o Inadequate due diligence

o Debt loads/change in interest/lending

o Inability to achieve synergy

o Too much diversification

o Managers focus on the acquisition/merger

o Employee performance/morale

Cultural Issues/Outcomes

o Culture: “the social glue of an organization or the set of important beliefs that

members of an organization share”

Assimilation: one organization gives up its culture.

Integration: the fusion of both cultures, resulting in a new culture.

Deculturation: each organization retains its original culture until ‘something

breaks’ and the weaker culture assimilates.

Separation: the two cultures resist merging and the organization operates as

two separate companies

HR Due Diligence

o Due Diligence: a process which a potential acquirer evaluates a target firm for

acquisition

o Would include a review of the following:

Salary structure

Union or non-union

Employee relations/management style

Compensation strategy

Organizational culture

Benefits plans

Pension

WSIB history

Grievance history (if union)

Lawsuits (if non-union)