MID TERM EXAM

BUS 502 HUMAN RESOURCE MANSGEMENT

SPRING 2015

Tanzir Rifat Khan

Id: 20884

QUESTIONS I (20% Points):

Suppose that you are currently the Human Resource (HR) Manager of a
hypothetical company Hugo, Inc. Explain the strategic management process
in your part of Human Resource Managerwith practical examples based on
the framework of human resource management - ARDM

The process of developing a strategic human resources management

(HRM) plan allows businesses of any size to better understand the human
resources available to them, determine what human resources they will
need, decide how to best use the human resources at their disposal, and
develop a system to ensure human resources needs are sufficiently
covered.
1. Identify both opportunities and problems that can affect your HRM plan.
Consider the business environment, upcoming projects, potential drops in
revenue, and anything else that may affect how many employees youll
need and be able to hire.
2. Consider your current and future demand for human resources. Look at
the quantity of employees you will need as well as the job functions theyll
have to perform. Finding a concrete number is nearly impossible, but
estimating projected human resource needs will help you create a more
effective HRM plan. If necessary, provide online training opportunities to
ready employees to step into positions with more responsibility.
3. Analyze the human resources you have available. Look at the strengths
and skills of current employees, as well as their weaknesses. This will help
you to better place each employee in a position to achieve their best and
avoid problems that might arise when an employee is put into a position for
which he has no aptitude. Consider your business environment, space and
company culture as well to see how you can best use all of the available
resources you have on hand.

Human Resource Management

Steps in developing HRM strategy

Step 1: Get the 'big picture'
Understand your business strategy.

Highlight the key driving forces of your business. What are they? e.g.
technology, distribution, competition, the markets.
What are the implications of the driving forces for the people side of
your business?
What is the fundamental people contribution to bottom line business
performance?

Step 2: Develop a Mission Statement or Statement of Intent

That relates to the people side of the business.
Do not be put off by negative reactions to the words or references to
idealistic statements - it is the actual process of thinking through the issues
in a formal and explicit manner that is important.

What do your people contribute?

Step 3: Conduct a SWOT analysis of the organization

Focus on the internal strengths and weaknesses of the people side of the
business.
Consider the current skill and capability issues.
Vigorously research the external business and market environment. High
light the opportunities and threats relating to the people side of the
business.

What impact will/ might they have on business performance?

Consider skill shortages?
The impact of new technology on staffing levels?
From this analysis you then need to review the capability of your personnel
department. Complete a SWOT analysis of the department - consider in
detail the department's current areas of operation, the service levels and
competences of your personnel staff.

Step 4: Conduct a detailed human resources analysis

Concentrate on the organization's COPS (culture, organization, people, HR
systems)
Consider: Where you are now? Where do you want to be?
What gaps exists between the reality of where you are now and
where you want to be?
Exhaust your analysis of the four dimensions.

Step 5: Determine critical people issues

Go back to the business strategy and examine it against your SWOT and
COPS Analysis
Identify the critical people issues namely those people issues that you
must address. Those which have a key impact on the delivery of your
business strategy.
Prioritize the critical people issues. What will happen if you fail to
address them?
Remember you are trying to identify where you should be focusing your
efforts and resources.

Step 6: Develop consequences and solutions

For each critical issue highlight the options for managerial action generate,
elaborate and create - don't go for the obvious. This is an important step as
frequently people jump for the known rather than challenge existing
assumptions about the way things have been done in the past. Think about
the consequences of taking various courses of action.
Consider the mix of HR systems needed to address the issues. Do you
need to improve communications, training or pay?
What are the implications for the business and the personnel function?
Once you have worked through the process it should then be possible to
translate the action plan into broad objectives. These will need to be broken
down into the specialist HR Systems areas of:

employee training and development

management development
organization development
performance appraisal
employee reward
employee selection and recruitment
manpower planning
communication
Develop your action plan around the critical issues. Set targets and dates
for the accomplishment of the key objectives.

Step 7: Implementation and evaluation of the action plans

The ultimate purpose of developing a human resource strategy is to ensure
that the objectives set are mutually supportive so that the reward and
payment systems are integrated with employee training and career
development plans.
There is very little value or benefit in training people only to then frustrate
them through a failure to provide ample career and development
opportunities.

QUESTIONS II (20% Points):

Assuming that you are the HR Manager of a hypothetical
company Hugo, Inc., (a) provide a job descriptions and job
specifications for your assistant before hiring a person

with whom to replace you. (b) For job design, explain the
job characteristics model of work motivation.
A) Administrative Assistant

hugo inc

Position Description
The Administrative Assistant will support the
hugo inc.
Market
Operations team. You will support the
hugo inc.
Market
Manager,Tanzir rifat KhanOperations and the VP of Market Operations
for
hugo inc.
.
Primary Responsibilities:
Performs general clerical duties to include but not limited to:
photocopying, faxing, mail distribution and filing.
Coordinates and maintains records for staff office space, phones,
company credit cards and office keys.
Creates and modifies various documents using Microsoft Office.
Maintains Outlook calendar(s) in current and accurate status.
Coordinates meetings and conference calls as needed or
anticipated.
Coordinates travel arrangements as needed.
Answer phones promptly and uses good judgment to prioritize the
distribution of messages in a timely manner.
Prepares meeting materials and assists with the development of
PowerPoint presentations.
Responsible for keeping inventory of all office supplies and placing
orders for replenishment is needed.
Records minutes at various meetings and archives them
accordingly.
Performs all other related duties as assigned.
Requirements:

High school diploma/GED

3+ years of administrative support experience with increasing
responsibility required
Microsoft Word: Mail merge and know how to embed documents

Microsoft Excel: (transferring Word documents to Excel and editing

spreadsheets)
Assets:

Some college coursework or business vocational school education

preferred
Previous experience in a healthcare environment preferred
Bilingual/Spanish is a plus
Core Competencies:

Strong attention to detail and excellent organizational skills required.

Must have the ability to multi-task in a fast paced and deadline
driven environment.
Must be able to maintain professionalism and a positive service
attitude at all times.
Must be able to work Monday to Friday, 8 a.m. to 5 p.m.
is part of the family of companies that make
one of the
leaders across most major segments of the US health care system.

helps nearly 60 million Americans live their lives to the fullest by

educating them about their symptoms, conditions and treatments; helping
them to navigate the system, finance their health care needs and stay on
track with their health goals. No other business touches so many lives in
such a positive way. And we do it all with every action focused on our
shared values of Integrity, Compassion, Relationships, Innovation &
Performance.
At
, you will perform within an innovative culture thats focused on
transformational change in the health care system. You will leverage your
skills across a diverse and multi-faceted business. And you will make
contributions that will have an impact thats greater than youve ever
imagined.
Diversity creates a healthier atmosphere: equal opportunity employer
M/F/D/V

is a drug-free workplace. Candidates are required to pass a

drug test before beginning employment. In addition, employees in
certain positions are subject to random drug testing

b) Job Characteristics Model

The job characteristics model is one of the most influential attempts
to design jobs with increased motivational properties. [ Proposed by
Hackman and Oldham, the model describes five core job dimensions
leading to three critical psychological states, resulting in work-related
outcomes.
Figure 6.3.

The Job Characteristics Model has five core job dimensions.

Skill variety refers to the extent to which the job requires a person to
utilize multiple high-level skills. A car wash employee whose job consists of
directing customers into the automated car wash demonstrates low levels
of skill variety, whereas a car wash employee who acts as a cashier,
maintains carwash equipment, and manages the inventory of chemicals
demonstrates high skill variety.

QUESTIONS III (20% Points):

In recruiting employees to fill open positions, you have

two resources of manpower: internal and external. If you
have two positions - High and Low, from which source are
you going to recruit to fill both positions? Why?
The searching of suitable candidates and informing them about
the openings in the enterprise is the most important aspect of
recruitment process.
The candidates may be available inside or outside the
organization. Basically, there are two sources of recruitment i.e.,
internal and external sources.

(A) Internal Sources:

Best employees can be found within the organisation When a
vacancy arises in the organisation, it may be given to an
employee who is already on the pay-roll. Internal sources include
promotion, transfer and in certain cases demotion. When a higher
post is given to a deserving employee, it motivates all other
employees of the organisation to work hard. The employees can
be informed of such a vacancy by internal advertisement.

Advantages of Internal Sources:

The Following are The Advantages of Internal Sources:
1. Improves morale:
When an employee from inside the organisation is given the
higher post, it helps in increasing the morale of all employees.
Generally every employee expects promotion to a higher post
carrying more status and pay (if he fulfills the other
requirements).

2. No Error in Selection:
When an employee is selected from inside, there is a least
possibility of errors in selection since every company maintains
complete record of its employees and can judge them in a better
manner.
3. Promotes Loyalty:
It promotes loyalty among the employees as they feel secured on
account of chances of advancement.

4. No Hasty Decision:
The chances of hasty decisions are completely eliminated as the
existing employees are well tried and can be relied upon.
5. Economy in Training Costs:
The existing employees are fully aware of the operating
procedures and policies of the organisation. The existing
employees require little training and it brings economy in training
costs.
6. Self-Development:
It encourages self-development among the employees as they
can look forward to occupy higher posts.
Disadvantages of Internal Sources:
(i) It discourages capable persons from outside to join the
concern.
(ii) It is possible that the requisite number of persons possessing
qualifications for the vacant posts may not be available in the
organisation.

(iii) For posts requiring innovations and creative thinking, this

method of recruitment cannot be followed.
(iv) If only seniority is the criterion for promotion, then the person
filling the vacant post may not be really capable.
Inspite of the disadvantages, it is frequently used as a source of
recruitment for lower positions. It may lead to nepotism and
favouritism. The employees may be employed on the basis of
their recommendation and not suitability.
(B) External Sources:
All organisations have to use external sources for recruitment to
higher positions when existing employees are not suitable. More
persons are needed when expansions are undertaken.
The external sources are discussed below:
ows which attract many prospective employees. Many a time
advertisements may be made for a special class of work force
(say married ladies) who worked prior to their marriage.
These ladies can also prove to be very good source of work force.
Similarly there is the labour market consisting of physically
handicapped. Visits to other companies also help in finding new
sources of recruitment.

Merits of External Sources:

1. Availability of Suitable Persons:
Internal sources, sometimes, may not be able to supply suitable
persons from within. External sources do give a wide choice to the
management. A large number of applicants may be willing to join

the organisation. They will also be suitable as per the

requirements of skill, training and education.
2. Brings New Ideas:
The selection of persons from outside sources will have the
benefit of new ideas. The persons having experience in other
concerns will be able to suggest new things and methods. This
will keep the organisation in a competitive position.
3. Economical:
This method of recruitment can prove to be economical because
new employees are already trained and experienced and do not
require much training for the jobs.
Demerits of External Sources:
1. Demoralisation:
When new persons from outside join the organisation then
present employees feel demoralised because these positions
should have gone to them. There can be a heart burning among
old employees. Some employees may even leave the enterprise
and go for better avenues in other concerns.
2. Lack of Co-Operation:
The old staff may not co-operate with the new employees
because they feel that their right has been snatched away by
them. This problem will be acute especially when persons for
higher positions are recruited from outside.
3. Expensive:
The process of recruiting from outside is very expensive. It starts
with inserting costly advertisements in the media and then
arranging written tests and conducting interviews. In spite of all

this if suitable persons are not available, then the whole process
will have to be repeated.
4. Problem of Maladjustment:
There may be a possibility that the new entrants have not been
able to adjust in the new environment. They may not
temperamentally adjust with the new persons. In such cases
either the persons may leave themselves or management may
have to replace them. These things have adverse effect on the
working of the organisation.
Suitability of External Sources of Recruitment:
External Sources of Recruitment are Suitable for The
Following Reasons:
(i) The required qualities such as will, skill, talent, knowledge etc.,
are available from external sources.
(ii) It can help in bringing new ideas, better techniques and
improved methods to the organisation.
(iii) The selection of candidates will be without preconceived
notions or reservations.
(iv) The cost of employees will be minimum because candidates
selected in this method will be placed in the minimum pay scale.
(v) The entry of new persons with varied experience and talent
will help in human resource mix.
(vi) The existing employees will also broaden their personality.
(vii) The entry of qualitative persons from outside will be in the
long-run interest of the organisation.

So to me it can be said that both of sources are needed to finally

recruit the candidates.

Performance evaluation is important for compensation and

promotion of employees. (a) Explain the process of performance
evaluation with practical examples. (b) How could you create a
market-competitive pay plan? Explain this with the point system.

QUESTIONS IV (20% Points):

Performance evaluation is important for compensation
and promotion of employees. (a) Explain the process of
performance evaluation with practical examples. (b) How
could you create a market-competitive pay plan? Explain
this with the point system.

a) Most appraisal instruments require raters to evaluate

employees in relation to some standard of excellence. With
employee comparison systems, however, employee performance
is evaluated relative to the performance of other employees. In
other words, employee comparison systems use rankings,
rather than ratings. A number of formats can be used to rank
employees, such as simple rankings, paired comparisons, or
forced distributions. Simple rankings require raters to rankorder their employees from best to worst, according to their job
performance. When using the paired comparison

Exhibit 1
Rating Errors and their Likely Causes

Errors

Leniency

Severity

Central tendency

Halo

Implicit personality

theory
Recency

X
Key:

administrative
procedures
poorly defined rating
standards

C memory decay

D political considerations

E incomplete information

rater's lack of
conscientiousness

approach, a rater compares each possible pair of employees. For example,

Employee 1 is compared to Employees 2 and 3, and Employee 2 is
compared to Employee 3. The employee winning the most "contests"
receives the highest ranking. A forced distribution approach requires a
rater to assign a certain percentage of employees to each category of
excellence, such as best, average, or worst. Forced distribution is analogous
to grading on a curve, where a certain percentage of students get As, a
certain percentage get Bs, and so forth.
GRAPHIC RATING SCALE.
A graphic rating scale (GRS) presents appraisers with a list of dimensions,
which are aspects of performance that determine an employee's
effectiveness. Examples of performance dimensions are cooperativeness,
adaptability, maturity, and motivation. Each dimension is accompanied by
a multi-point (e.g., 3, 5, or 7) rating scale. The points along the scale are
defined by numbers and/or descriptive words or phrases that indicate the
level of performance. The midpoint of the scale is usually anchored by such
words as "average," "adequate," "satisfactory," or "meets standards."
Many organizations use graphic rating scales because they are easy to use
and cost little to develop. HR professionals can develop such forms quickly,
and because the dimensions and anchors are written at a general level, a
single form is applicable to all or most jobs within an organization. Graphic
rating scales do present a number of problems, however. Such scales may
not effectively direct behavior; that is, the rating scale does not clearly
indicate what a person must do to achieve a given rating, thus employees
are left in the dark as to what is expected of them. For instance, an
employee given a rating of 2 on "attitude" may have a difficult time figuring
out how to improve.

BEHAVIORALLY-ANCHORED RATING SCALES.

A behaviorally-anchored rating scale (BARS), like a graphic rating scale,
requires appraisers to rate employees on different performance
dimensions. The typical BARS includes seven or eight performance
dimensions, each anchored by a multi-point scale. But the rating scales
used on BARS are constructed differently than those used on graphic rating
scales. Rather than using numbers or adjectives, a BARS anchors each
dimension with examples of specific job behaviors that reflect varying levels
of performance.
The process for developing a BARS is rather complex. Briefly, it starts with
a job analysis, using the critical incident technique. This involves having
experts generate a list of critical incidentsor specific examples of poor,
average, and excellent behaviorsthat are related to a certain job. The
incidents are then categorized bydimension. Finally, a rating scale is
developed for each dimension, using these behaviors as "anchors" to define
points along the scale.
BEHAVIOR OBSERVATION SCALES.
A behavior observation scale (BOS) contains a list of desired behaviors
required for the successful performance of specific jobs, which are assessed
based on the frequency with which they occur. The development BOS, like
BARS, also begins with experts generating critical incidents for the jobs in
the organization and categorizing these incidents into dimensions. One
major difference between BARS and BOS is that, with BOS, each behavior is
rated by the appraiser.
When using BOS, an appraiser rates job performance by indicating the
frequency with which the employee engages in each behavior. A multi-point
scale is used ranging from "almost never" to "almost always." An overall
rating is derived by adding the employee's score on each behavioral item. A
high score means that an individual frequently engages in desired

behaviors, and a low score means that an individual does not often engage
in desired behaviors.
ACCURACY OF THE RATINGS.
Accurate ratings reflect the employees' actual job performance levels.
Employment decisions that are based on inaccurate ratings are not valid
and would thus be difficult to justify if legally challenged. Moreover,
employees tend to lose their trust in the system when ratings do not
accurately reflect their performance levels, and this causes morale and
turnover problems. Unfortunately, accurate ratings seem to be rare.
Inaccuracy is most often attributable to the presence of rater errors, such as
leniency, severity, central tendency, halo, and recency errors. These rating
errors occur because of problems with human judgment. Typically, raters
do not consciously choose to make these errors, and they may not even
recognize when they do make them.

b)

I. Basic Factors in Determining Pay Rates

Employee compensation refers to all forms of pay or rewards
going to employees, which include direct financial payments
and indirect payments. Direct financial payments include
wages, salaries, incentives, commissions, and bonuses.
Indirect payments include financial benefits like employer-paid
insurance and vacations.
A. Aligning Total Rewards with Strategy The basic thrust in
pay plans today is to produce an aligned reward strategy
to create compensation plans that guide employee
behaviors
in
the
desired,
strategic
direction.

Distinguishing between high and low performers is a

policy issue, as is seniority-based pay.
B. Equity and Its Impact on Pay Rates External and
internal equity are crucial in pay rates. External equity
refers to how pay compares with rates in other
organizations.
Internal equity refers to employees
viewing their pay as equitable given other pay rates in the
organization. Individual equity refers to the fairness of an
individuals pay as compared with what his/her coworkers
are earning for the same or very similar jobs in the
company. Last, procedural equity refers to the perceived
fairness of the processes and procedures used to make
decisions regarding the allocation of pay.
C. Legal Considerations in Compensation There are many
laws that govern compensation. For example, the Fair
Labor Standards Act (FLSA) regulates the minimum wage
and requires that overtime be paid at a rate of one and
one half times the normal rate of pay for hours worked
over 40 in a workweek. Employees are categorized as
exempt from the act or non-exempt from its provisions.
Other compensation laws include the Equal Pay Act, the
Employee Retirement Income Security Act (ERISA), the
Age Discrimination in Employment Act (ADEA), the
Americans with Disabilities Act (ADA), and the Family
Medical Leave Act (FMLA.)

Table 1. Companies with Salary Range Structures

Percent of Com
All Companies
Number Employees

72%

1 to 100

44%

101 to 500

64%

501 to 2,500

78%

2,501 to 10,000

86%

Over 10,000

85%

Source: 2010-2011 Culpepper Salary Budget & Planning Survey.

Frequency Salary Range Structures Are Reviewed
Salary range structures should be reviewed regularly to maintain a
competitive edge in attracting and retaining top talent. Most companies with
formal base salary range structures review their ranges and structures
annually (Table 2).
Table 2. Frequency of Salary Range Structure Review
Job Level

Percent of Companies
Annually

Every Two Years

Every Three

Top executives

60%

8%

5%

Nonexecutives

77%

9%

7%

Nonexecutives include directors, managers, professionals and hourly nonexempt employees.

Nineteen percent of participants with formal salary range structures
reported that they do not use formal salary structures with executives.

Companies choosing "other/varies" indicated that the frequency for

reviewing structures varies by type of job, business unit, location or union
status. Examples include:

Some companies with union employees review salary structures

based on the length of multiyear labor contracts and review other
nonunion jobs annually.
Some companies in very competitive job markets review salary
structures for critical jobs semiannually.

Methods Used to Design Salary Range Structures

The two most common methods companies use to design base salary
structure ranges are market pricing using external market data and point
factor focusing on internal pay equity.
Most companies use a market-pricing approach with current salary survey
data for individual jobs, to design and adjust salary range structures (Figure
1). Only 3 percent of companies rely solely on the point-factor method,
which assigns a point value to specific jobs within a company.
In addition, 19 percent of companies blend market-based and point-factor
approaches when designing their salary range structures.

Traditional vs. Broadband Salary Structures

Traditional salary structures are organized with numerous layers and range
structures (or pay grades) with a relatively small distance between each

range. This provides a hierarchal system enabling employees to be

promoted from one pay grade to another. When designed correctly,
traditional structures enable the recognition of differing rates of pay for
performance and guarantee a reasonable level of control over internal
compression and salary expenditures.
Broadband salary structures are more flexible and consolidate pay grades
into fewer structures with wider salary ranges.
On average, 82 percent of surveyed companies use traditional salary
structures, while only 7 percent use broadband structures (Figure 2). Nine
percent use a hybrid or mix of traditional and broadband structures.

Single vs. Multiple Salary Structures

Fifty percent of companies with salary range structures have multiple
structures varying by job and/or geographic location. There is a strong
correlation between job level and number of salary structures. Single salary
structures are more common for executives and multiple salary structures
are more common for nonexecutive positions (Table 3).
Table 3. Single vs. Multiple Salary Structures
Job Level

Percent of Companies
Single

Multiple Structures Differing by Job

Multiple Structures Differi

Structure

Function

by
Geographic Location

Executives

52%

12%

8%

Directors/
managers

47%

18%

19%

Professional

44%

19%

20%

Hourly/
nonexempt

43%

17%

24%

As companies increase in size, they typically have a higher number of

salary structures to accommodate more locations and job structures.

QUESTIONS V (10% Points)

Explain the typical benefits and services of employees.
(b) Suppose that you are now retired from your profession
at the age of 65 years old. After your retirement, how
could you make your livings as an ordinary citizen or
resident in the United States?
Employee Benefits Programs
The objective of a good employee benefits program is to help protect both
employees and their families from the possibility of severe economic hardships
caused by illness, disability, loss of life, or unemployment.
A comprehensive employer program will also provide retirement income for the
employee and their family, as well as suitable assistance such as paid time off from
work.
Administering and Selecting Programs

Employers consider the cost to provide and administer benefits plans an integral
part of the total compensation package offered to its employees. While these
benefits programs are typically managed by employers, oftentimes employees are
asked to contribute small premiums or copayments to enjoy the added coverage.
Employers offer benefits to employees for one or more of the following reasons:
Attracting and retaining a talented workforce.
Aligning benefits packages with competitive offers in the marketplace.
Promoting higher levels of morale among employees.
Providing opportunities for promotion or advancement as workers resign, retire, or
move to other positions within the organization.
Keep in mind that no single program can provide for the needs of all employees, it
is usually a combination of benefits that is most effective in meeting the employer's
objectives. That being said, there are two broad categories of benefits offered by
employers in today's work environment: mandated and optional.
Mandated Benefits Programs
Mandated benefits are those required by law. These include federal or state
sponsored programs that aim to provide for the most essential needs of employees
and / or their families. Examples of three very important, and mandated, benefits
include:
Social Security
Unemployment Insurance
Workers Compensation
While unemployment provides help to those that lose their jobs, workers
compensation programs provide assistance to those disabled by occupational
illness or injury. Social Security protects the aged and disabled against expenses
that might otherwise exhaust their entire savings.
In March 2010, the Patient Protection and Affordable Care Act, also known as
Obamacare and the Affordable Care Act (ACA), was signed into law. While not

mandating health care coverage, the law states that firms employing fifty or more
people, and not offering health insurance, will pay a shared responsibility
requirement if the government subsidizes an employee's health care costs.
Optional Benefits Programs
As the name implies, optional employee benefits includes a wide array of programs
that employers can choose to offer employees; typical programs include:
Health Care Insurance
Disability Insurance
Life Insurance
Retirement / Pension Plans
Flexible Compensation
Paid Leave
Perhaps one of the most valued of all employee benefits includes paid time away
from the job, which is often spent with family and friends: holiday pay and
vacation time. Nationally, the average number of paid holidays is eight.
Full retirement age is the age at which a person may first become
entitled to full or unreduced retirement benefits.
If your full retirement age is older than 65 (that is, you were born
after 1937), you still will be able to take your benefits at age 62,
but the reduction in your benefit amount will be greater than it is
for people who were born before 1938.
Here's how it works if your full retirement age is 65.

If you start your retirement benefits at age 62, your monthly

benefit amount is reduced by about 30 percent. The
reduction for starting benefits at age
o

63 is about 25 percent;

64 is about 20 percent;

65 is about 13.3 percent; and

66 is about 6.7 percent.

If you start receiving spouse's benefits at age 62, your

monthly benefit amount is reduced to about 32.5 percent of
the amount your spouse would receive if his or her benefits
started at full retirement age. (The reduction is about 67.5
percent.) The reduction for starting benefits as a spouse at
age
o

63 is about 65 percent;

64 is about 62.5 percent;

65 is about 58.3 percent;

66 is about 54.2 percent; and

67 is 50 percent (the maximum benefit amount).