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Summary HRM & OB1

Table of Contents

1. OB: Introduction, Personality and Values (Chapter 1) ........................................................... 2

2. OB: Values, Attitudes and Emotions (Chapters 3+6) ............................................................. 9
3. OB: Perception & Individual Decision-Making (Chapter 5) .................................................. 20
4. HRM: Strategic Human Resource Management (Chapter 1) ............................................... 27
5. HRM: Personnel Planning (Chapter 4).................................................................................. 32
6. HRM: Recruitment & Selection (Chapter 5+6) .................................................................... 46
7. OB: Motivation 1 (Chapter 7) ............................................................................................... 60
8. OB: Motivation 2 (Chapter 8) ............................................................................................... 70
9. OB: Leadership (Chapter 10) ................................................................................................ 78
10. HRM: Performance Management (Chapter 7) ................................................................... 90
11. Exam related questions .................................................................................................... 100

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1. OB: Introduction, Personality and Values (Chapter 1)

LO

• …understand the OB model and the relationships of input, process and outcome variables.
• … describe the link between personality and behavior.
• … describe the Big 5 personality model and explain how it can be used in management
• … use personality theories and corresponding instruments to make decisions about people in
organizations.
…and apply this to practice situations and cases

Key Terms

Organization: A consciously coordinated social unit, composed of two or more people,

that functions on a relatively continuous basis to achieve a common goal or
set of goals

Manager: An individual who achieves goals through other people. They work in
organisations. The work of managers can be categorized into four different
activities: planning, organizing, leading, and controlling.

Organizational A field of study that investigates the impact that individuals, groups, and
Behaviour (OB): structure have on behaviour within organizations for the purpose of
applying such knowledge toward improving an organization's effectiveness.

lt focuses on three determinants of behavior in organizations: individuals,

groups, and structure. In addition, OB applies the knowledge gained about
individuals, groups, and the effect of structure on behavior in order to make
organizations work more effectively.

Model: An abstraction of reality, a simplified representation of some real-world

phenomenon. Thinking and decision supporting tools.

Contingency variables: Situational factors or variables that moderate the relationship between two
or more variables. We'll best understand OB when we realize how both
(general effects, and the contingencies that affect them) often guide
behavior.

Personality: The sum of ways in which an individual reacts to and interacts with others.
We most often describe personality in terms of the measurable traits a
person exhibit.

How can personality be measured?

- Self-report surveys
- Observer ratings
- Combination of self-report and observer ratings

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Heredity: Refers to factors determined at conception (Konzeption, Schöpfung). They

are either completely or substantially influenced by your biological parents'
biological, physiological, and inherent psychological makeup. The heredity
approach argues that the ultimate explanation of an individual's personality
is the molecular structure of the genes, which are located on the
chromosomes. This is not to suggest that personality never changes.

Personality traits: Enduring characteristics that describe an individual's behavior. The more
consistent the characteristic over time and the more frequently it occurs in
diverse situations, the more important the trait is in describing the
individual.

The dark triad: A constellation of negative personality traits consisting of Machiavellianism,

narcissism, and psychopathy. Because of their negative nature, researchers
have labeled these the Dark Triad-though they do not always occur
together.

Machiavellianism: The degree to which an individual is pragmatic, maintains emotional

distance, and believes that ends can justify means. High-Mach employees, by manipulating
others to their advantage, win in the short term at a job, but they lose those gains in the long
term because they are not ,well liked. (Often abbreviated Mach). Just focus on the goals.

Narcissism: The tendency to be arrogant, have a grandiose sense of self-importance, require

excessive admiration, and possess a sense of entitlement. Narcissists may be more
charismatic than others. They are more likely to be chosen for leadership positions, and
medium ratings of narcissism are positively correlated with leadership effectiveness

Psychopathy: In organizational behavior, it does not connote clinical mental illness. In the OB
context, psychopathy is defined as a lack of concern for others and a lack of guilt or remorse
(Bedauern) when actions cause harm. “I cannot relate to other when they are suffering.”

Other personality traits relevant to OB:

(Like all traits, effectiveness may depend on the context, though some (like the Big Five) tend to be
effective to almost any context.)

Core self-evaluation (CSE): Bottom-line conclusions individuals have about their capabilities,
competence, and worth as a person. People who have positive CSEs like themselves and see
themselves as effective and in control of their environment. Those with negative CSEs tend
to dislike themselves, question their capabilities, and view themselves as powerless over
their environment.
(!) -> do not use “self-confidence” in exam

Self-monitoring: A personality trait that measures an individual's ability to adjust his or her
behavior to external, situational factors. They are highly sensitive to external cues and can
behave differently in varying situations. High self-monitor employees show less commitment
to their organizations but receive better performance ratings and are more likely to emerge
as leaders.

Proactive personality: People who identify opportunities, show initiative, take action, and
persevere until meaningful change occurs. They have higher levels of job performance and
do not need much oversight.

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Barnum effect: An effect where you think that a personality quiz applies to you specifically,
whereas in reality it is completely random and had nothing to do with the
results of the test you took.

Psychometrics: Systematic testing, measurement and assessment of intelligence,

personality, aptitudes etc..
-> 2 criteria for choosing a psychometric assessment: Reliability (the degree
to which an assessment delivers consistent results when repeated);
Predictive validity (the extent to which assessment scores accurately
predict behaviors such as job performance)

Key Theory / Models

OB Model

-> Effectiveness of the organisation

• A general model that defines the field of OB and stakes out its parameters, concepts, and
relationships.

• The model illustrates that inputs lead to processes, which lead to outcomes. Note that the model
also shows that outcomes can influence inputs in the future, which highlights the broad-reaching
effect that OB initiatives can have on an organization's future.

> To have a thinking tool for difficult management decisions in novel situations
> To better understand to what organizational success is related to
> To understand how the attitude "work engagement" of employees can be enhanced

Input: Inputs are variables like personality, group structure, and organizational culture that
lead to processes. These variables set the stage for what will occur in an organization
later.

Processes: Actions that individuals, groups, and organizations engage in as a result of inputs and
that lead to certain outcomes.

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Outcome: Outcomes are the key variables that you want to explain or predict and that are affected
by other variables.

Attitudes and Stress: Employee attitudes are the evaluations that employees make,
ranging from positive to negative, about objects, people, or
events. Stress is a psychological process that occurs in response to
environmental pressures.

Task performance: The combination of effectiveness and efficiency at doing core job
tasks. The task performance of a teacher would be the level of
education that students obtain. It is the most important human
output contributing to organizational effectiveness.

Organizational Citizenship The discretionary behavior that is not part of an employee's

Behavior (OCB): formal job requirements, and that contributes to the
psychological and social environment of the workplace, is called
organizational citizenship behavior (OCB), or simply citizenship
behavior.

Withdrawal behavior: The set of actions employees take to separate themselves from
the organization. Behavior that in some way is below task
requirements.

Group cohesion: The extent to which members of a group support and validate one
another at work. When employees trust one another, seek
common goals, and work together to achieve these common
ends, the group is cohesive.

Group functioning: Group cohesion should lead to positive group functioning. Group
functioning refers to the quantity and quality of a group's work
output.

Productivity: The highest level of analysis in OB is the organization as a whole.

An organization is productive if it achieves its goals by
transforming inputs into outputs at the lowest cost. Thus,
productivity requires both effectiveness and efficiency.

Survival: The final outcome we will consider is organizational survival,

which is simply evidence that the organization is able to exist and
grow over the long-term

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Big Five Model of Personality

OCEA(N)

Conscientiousness: This dimension is a measure of personal consistency and reliability. A highly

conscientious person is responsible, organized, dependable, and persistent.
Those who score low on this dimension are easily distracted, disorganized, and
unreliable.

Emotional stability: This dimension taps a person's ability to withstand stress. People with
emotional stability tend to be calm, self-confident, and secure. Emotional
stability is sometimes discussed as its converse, neuroticism. Those with high
neuroticism tend to be nervous, anxious, depressed, and insecure.

Extraversion: This dimension captures our relational approach toward the social world. They
experience more positive emotions than do introverts, and they more freely
express these feelings. On the other hand, introverts (low extraversion) tend to
be more thoughtful, reserved, timid, and quiet.

Agreeableness: This dimension refers to an individual's propensity to defer to others (Neigung,

sich anderen unterzuordnen). In contrast, people who score low on
agreeableness are cold and antagonistic.

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Big five traits at work / how big five traits influence OB criteria:

Situation Strength Theory

• Situation strength theory proposes that the way personality translates into behavior depends on
the strength of the situation. By situation strength, we mean the degree to which norms, cues
(Hinweise), or standards dictate appropriate behavior.

• Strong situations show us what the right behavior is, pressure us to exhibit it, and discourage the
wrong behavior. In weak situations, conversely, "anything goes," and thus we are freer to express
our personality in behavior. Thus, personality traits better predict behavior in weak situations
than in strong ones.

Researchers have analyzed situation strength in organizations in terms of four elements:

1. Clarity: Cues about work duties/responsibilities are available and clear

2. Consistency: Those cues regarding work duties are compatible with one other, point to the same
desired behavior
3. Constraints: One’s freedom to decide/act is limited by forces outside of one’s control
4. Consequences: Decisions/actions have important implications for the organization/it’s members/
clients/supplies etc.

-> It is not always desirable for organizations to create strong situations for their employees for
several reasons.

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Person-Organization Fit Theory (P-O fit)

• Person-organization fit essentially means people are attracted to and are selected by
organizations that match their values, and they leave organizations that are not compatible with
their personalities.

• Individuals and organizations are most effective when their values, needs, and interests are
aligned. Person-organization fit (P-O) leads to employee commitment, satisfaction, retention,
organizational performance and individual health.

Using the Big Five terminology:

- People high on extraversion fit well with aggressive and team-oriented cultures
- People high on agreeableness match up better with a supportive organizational climate than one
focused on aggressiveness
- People high on openness to experience fit better in organizations that emphasize innovation rather
than standardization

Implications for Managers

• Personality matters to organizational behavior incl. performance.

• Consider screening job applicants for high conscientiousness and other relevant traits—
depending on the criteria your organization finds most important. Other aspects, such as core
self-evaluation or narcissism, may be relevant in certain situations.
• Try to consider the optimal person-organization fit.
• Take into account employees' situational factors when evaluating their observable personality
traits, and lower the situation strength, to better ascertain personality characteristics.

When did the first personality test happen and why?

During WW1 (US Army), observing soldiers to check if they are battle worthy

Where did the first personality quizzes appear most likely?

Women magazines. A quiz is typically for fun -> not in scientific articles.

What is problematic regarding a personality quiz that states „I enjoy being in groups“ for you to
agree/not agree to?
No clear yes and now... non-existent in the real world. Statements free of context -> low predictive
validity

What is the risk of taking personality quizzes/tests online?

Giving data, they are sold for advertisers / trying to manipulate you etc.

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2. OB: Values, Attitudes and Emotions (Chapters 3+6)

LO (Values and Attitudes)

• Understand the relevance of values for the behavior of individuals in organizations

• Describe the GLOBE dimensions of cultural values
• Summarize the relationship between attitudes and behavior
• Contrast the three components of an attitude
• Compare and contrast the major job attitudes
• Define job satisfaction and ways to measure it
• Summarize the main causes of job satisfaction and dissatisfaction
… apply the analysis models in a practical case

LO (Emotions and Moods)

• Differentiate between emotions and moods and identify their sources

• Show the impact emotional labor has on employees and identify strategies for emotion
regulation Contrast the evidence for and against the existence of emotional intelligence
• Describe affective events theory and its applications
• Apply concepts about emotions and moods to specific OB issues

Key terms

Attitudes: Evaluative statements or judgments concerning objects, people, or events.

They reflect how we feel about something. When you say, "I like my job," you
are expressing your attitude about your work. Favourable or unfavourable.

Values: - Values represent belief systems

- They contain a judgmental element and carry an individual’s ideas about
what is right, good or desirable (Schwartz and Bilsky, 1987)
- Terminal values (take the form of nouns: “freedom”, “happiness”); Guide us
- Instrumental values (preferable modes of behavior: being friendly,
punctual, agile etc.)
- They have both, content and intensity attributes
– Content: a mode of conduct or end-state of existence is important
– Intensity: specifies how important a mode of conduct or end-state is
- Some beliefs or values say little about a person’s personality
- Values cloud (trüben) objectivity and rationality, they influence attitudes
and attidues influence behavior
- Values are learned (unlike personality which is also determined genetically)

Cognitive dissonance: Any incompatibility between two or more attitudes or between behavior and
attitudes. People seek a stable consistency among their attitudes and
between their attitudes and their behavior. No individual can avoid
dissonance. Something must change to eliminate the dissonance. (e.g.
smoking and saying living healthy)

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Generation Y Myth

• Cohorts (Jahrgänge) in Germany after the Second World War hardly differ in what they consider
important in life, what worries them and how they engage in politics and society.

-> Differences, which the literature postulates between the so-called generation Y, X, the baby
boomers, the generation of 68, and the so-called skeptical post-war generation hardly exist.

-> Surveys such as the Shell Youth Study make little sense, as does a management literature that
gives advice on how to handle generational differences that are not empirically identifiable.

Major Job Attitudes:

1. Job satisfaction: Positive feeling about one's job resulting from an evaluation of its
characteristics.

2. Job involvement: The degree to which people identify psychologically with their jobs
and consider their perceived performance levels important to their
self-worth. Employees with high job involvement strongly identify
with and care about the kind of work they do.

3. Psychological Employees' belief in the degree to which they affect their work
empowerment: environment, their competence, the meaningfulness of their job,
and their autonomy in their work.

4. Organizational The degree to which an employee identifies with a particular

commitment: organization and its goals and wishes to maintain membership in
the organization. An employee with strong organizational
commitment identifies with his or her organization and its goals and
wishes to remain a member.

Emotional attachment to an organization and belief in its values is

the gold standard for employee commitment.

Even if employees are not currently happy with their work, they
may decide to continue with the organization if they are committed
enough.

5. Perceived Organizational The degree to which employees believe an organization values their
Support (POS): contribution and cares about their well-being. People perceive their
organizations as supportive when rewards are deemed fair,
employees have a voice in decisions, and they see their supervisors
as supportive.

POS is important in countries where the power distance, the degree to which people in a
country accept that power in institutions and organizations is distributed unequally, is lower.
In low power-distance countries like the United States, people are more likely to view work
as an exchange than as a moral obligation, so employees look for reasons to feel supported
by their organizations.

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6. Employee engagement: An employee's involvement with, satisfaction with, and enthusiasm

for the work he or she does. To evaluate engagement, we might ask
employees whether they have access to resources and
opportunities to learn new skills, whether they feel their work is
important and meaningful, and whether interactions with co-
workers and supervisors are rewarding.

Relevance

-> Job attitudes are highly related; there is some distinction but also overlap (that may cause
confusion.)

Measuring Job Satisfaction

Two popular approaches (in surveys):

1. Single global rating: a response to one question, such as “All things considered, how satisfied are
you with your job?” -> First using this one to compare over a certain time.

2. Summation of job facets (more sophisticated) identifies key elements in a job, such as
• the nature of the work
• supervision
• pay / salary
• promotion opportunities
• relations with co-workers.

What causes Job Satisfaction?

1. Job Conditions Especially the intrinsic nature of the work itself, social interactions, and
supervision)

2. Personality (Core self-evaluation CSE -> people more satisfied)

3. Pay (Money motivates people, but doesn’t necessarily make them happier)

4. Corporate Social Responsibility (CSR) An organization's self-regulated actions to benefit society or

the environment beyond what is required by law.

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Outcomes of Job Satisfaction

1. Job Performance
-> Happy workers are more likely to be productive workers.
2. Organizational citizenship behavior (OCB)
-> People who are more satisfied with their jobs are more likely to engage in OCB.
3. Customer Satisfaction
-> Satisfied employees increase customer satisfaction and loyalty.
4. Life Satisfaction
->Research shows that job satisfaction is positively correlated with life satisfaction.

Impact of Job Dissatisfaction

Exit: Dissatisfaction expressed through behavior directed toward leaving the organization.
Voice: Dissatisfaction expressed through active and constructive attempts to improve conditions.
Loyalty: Dissatisfaction expressed by passively waiting for conditions to improve.
Neglect: Dissatisfaction expressed through allowing conditions to worsen. (Nachlässigkeit)

Counterproductive work behavior (CWB)

• Actions that actively damage the organization, including stealing, behaving aggressively toward
co-workers, or being late or absent. Generally, job dissatisfaction predicts CWB.

▪ Absenteeism: the more satisfied you are, the less likely you are to miss work
(Abwesenheiten).
▪ Turnover: A pattern of lowered job satisfaction is the best predictor of intent to leave.
▪ Workplace Deviance: Job dissatisfaction predicts unionization, stealing, undue socializing,
and tardiness.
▪ Managers Often “Don’t Get It”

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Affect: A broad range of feelings that people experience -> Emotions and moods.

Emotions: lntense, discrete, and short-lived feeling experiences that are often caused by a specific
event. Intense feelings directed at sth./sb.

Moods: Feelings that tend to be longer-lived and less intense than emotions and that lack a
contextual stimulus (Anreiz).

The Basic Moods: Positive and Negative Affect (Clock)

When we group emotions into positive and negative categories, they become mood states because
we are now looking at them more generally instead of isolating one particular emotion.

Positive affect: A mood dimension that consists of specific positive emotions such as excitement,
enthusiasm, and elation at the high end.
Negative affect: A mood dimension that consists of emotions such as nervousness, stress, and
anxiety at the high end

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Positivity offset: The tendency of most individuals to experience a mildly positive mood at zero input
(when nothing in particular is going on).

(being neutral is non-emotional)

Sources of Emotions and Moods

1. Personality
-> Moods and emotions have a trait component.
-> Affect intensity – how strongly people experience their emotions.
2. Time of Day
-> here is a common pattern for all of us.
-> Happier in the midpoint of the daily awake period.
3. Day of the Week
-> Happier toward the end of the week.
4. Social Activities
-> Physical, informal, and dining activities increase positive moods.
5. Stress
-> Even low levels of constant stress can worsen moods.
6. Sleep
-> Poor sleep quality increases negative affect.
7. Exercise
-> Does somewhat improve mood, especially for depressed people.
8. Age
-> Older people experience fewer negative emotions.
9. Gender
-> Women (Western societies) tend to be more emotionally expressive, feel emotions more intensely
and express emotions more frequently than men.

Mindfulness: Receptively paying attention to and being aware of the present moment,
events, and experiences. (Achtsamkeit)

Emotional labor: A situation in which an employee expresses organizationally desired

emotions during interpersonal transactions at work.
-> Can cause emotional dissonance.

Duchenne smile: A genuine smile that involves the muscles around the eyes. Difficult to
fake / Deep acting

Surface acting: Hiding one's feelings and forgoing emotional expressions in response to
display rules. -> leads to emotional exhaustion
-> Displayed : required or appropriate emotions (Surface smile)

Deep acting: Trying to modify one's true feelings based on display rules
-> Felt : the individual’s actual emotions (requires practice, more healthy)

Illusory correlation: The tendency of people to associate two events when in reality there is no
connection. (Ex. the belief that mood is tied to the weather)

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Emotional dissonance: Inconsistencies between the emotions people feel and the emotions they
project. Long-term emotional dissonance is a predictor for job burnout,
declines in job performance, and lower job satisfaction.

Emotional intelligence: A person's ability to (1) perceive emotions in the self and others, (2)
understand the meaning of these emotions, and (3) regulate his or her
own emotions accordingly or help others to regulate it. Being to busy to
realize one’s own bad mood indicates low EI.

Pro EI
+ Intuitive appeal
+ Predicts criteria that matter
+ Is biologically-based

Contra EI
- Researchers do not agree on definitions – too vague as a concept
- Can’t be measured
- Is nothing but personality with a different label

Emotional contagion: The process by which peoples' emotions are caused by the emotions of
others. When someone experiences positive emotions and laughs and
smiles at you, you tend to respond positively.

Emotional Regulation (deep acting)

Involves identifying and modifying the emotions you feel. Effective emotion regulation techniques
include:
o Acknowledging rather than suppressing emotional responses to situations
o Re-evaluating events after they occur
o Venting (entlüften)
o Mindfulness
-> Takes effort and training but beneficial for well-being.

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OB Applications of Emotions and Moods

1. Selection
-> EI serves as a hiring factor, especially for social jobs

2. Decision Making
-> Positive emotions can lead to better decisions

3. Creativity
-> Positive mood increases flexibility, openness, and creativity

4. Motivation
-> Positive mood affects expectations of success. Feedback amplifies this effect.

5. Leadership
-> Emotions are important to acceptance of messages from organizational leaders

6. Negotiation
-> Emotions can affect negotiations

7. Deviant (abweichend) Workplace Behaviors

-> Negative emotions lead to workplace deviant behaviors

8. Safety and Injury at Work

-> Don’t do dangerous work when in a bad mood

What are the most powerful moderators of the attitude-behavior relationship?

• the importance of the attitude

• its correspondence to behavior
• its accessibility
• the presence of social pressures
• whether a person has direct experience with the attitude

Explanation:
Important attitudes reflect our fundamental values, self-interest, or identification with individuals or
groups we value. These attitudes tend to show a strong relationship to our behavior. However,
discrepancies between attitudes and behaviors tend to occur when social pressures to behave in
certain ways hold exceptional power, as in most organizations. You're more likely to remember
attitudes you frequently express, and attitudes that our memories can easily access are more likely
to predict our behavior. The attitude-behavior relationship is also likely to be much stronger if an
attitude refers to something with which we have direct personal experience.

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Job Attitudes & HRM & Strategy

Strategic Controlling: Big 3 KPI’s (Key Performance Indicator)

1. Employee Engagement

2. Net Promoter Score (NPS: measures customer experience and predicts business growth)

3. Cost-to-income ratio (cost-to-income ratio measures the cost of running a business compared to
its operating income. The lower the cost-to-income ratio is, the more profitable the company should
be. It's a useful metric for assessing the efficiency of the operation

3 Components of an Attitude (CAB or ABC-Model of Attitude)

To fully understand attitudes, we must consider their fundamental properties or components.

Typically, researchers assume that attitudes have three components: cognition, affect, and behavior.

-> Cognitive component: The opinion or belief segment of an attitude. A description of or

belief in the way things are. lt sets the stage for the more critical part
of an attitude – its affective component. (e.g. "My pay is low")

-> Affective component: The emotional or feeling segment of an attitude reflected in the
statement. Affect can lead to behavioral outcomes.(e.g. “I am angry
over how little I'm paid”)

-> Behavioral component: An intention to behave in a certain way toward someone or

something. (e.g. ''I'm going to look for another job that pays better")

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Affective Events Theory (AET)

Cascading Model of Emotional Intelligence

Implications for Managers

• Do not assume that all people from a specific culture share the same values
• Use humor and praise to increase employees’ positive moods
• Being in a good mood oneself can result in more positivity and better cooperation
• Selecting positive team members can have an emotional contagion effect
• Encourage positive displays of emotion, which make customers feel more positive and thus
improve customer service interactions and negotiations
• Be careful not to ignore co-workers’ and employees’ emotions; do not assess others’ behavior as
if it were completely rational

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GLOBE study’s nine dimensions of cultural practices/values (!)

The GLOBE (Global Leadership and Organizational Behaviour Effectiveness) Project, which extends
Hofstede’s work by looking at additional cultural dimensions.
(-> check document)

• Performance orientation
The degree to which a collective encourages and rewards (and should encourage and reward)
group members for performance improvement and excellence.
•
• Assertiveness
The degree to which individuals are (and should be) assertive, confrontational, and aggressive in
their relationship with others.

• Future Orientation
The extent to which individuals engage (and should engage) in future-oriented behaviors such as
planning, investing in the future, and delaying gratification.

• Humane Orientation
The degree to which a collective encourages and rewards (and should encourage and reward)
individuals for being fair, altruistic, generous, caring, and kind to others.

• Institutional Collectivism
The degree to which organizational and societal institutional practices encourage and reward (and
should encourage and reward) collective distribution of resources and collective action.

• In-Group Collectivism
The degree to which individuals express (and should express) pride, loyalty, and cohesiveness in
their organizations or families.

• Gender Egalitarianism
The degree to which a collective minimizes (and should minimize) gender inequality.

• Power Distance
The extent to which the community accepts and endorses authority, power differences, and
status privileges.

• Uncertainty Avoidance
The extent to which the community accepts and endorses authority, power differences, and
status privileges.

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3. OB: Perception & Individual Decision-Making (Chapter 5)

LO

• Define perception and explain the factors that influence it

• Explain attribution theory and list the three determinants of attribution
• Explain the link between perception and decision making
• Contrast the rational model of decision making with bounded rationality and intuition
• Describe the common perception and decision biases or errors – and how decision makers can
avoid these
• Explain how individual differences and organizational constraints affect decision making
• Apply perception / individual decision-making theory to business practice

Perception

• A process by which individuals organize and interpret their sensory impressions to give meaning
to their environment.

• What we perceive can be substantially different from objective reality. People's behavior is based
on their perception of what reality is, not on reality itself. Our perception becomes the reality
from which we act.

Factors that influence perception:

Perceiver: When you look at a target, your

interpretation of what you see is influenced by your
personal characteristics-attitudes, personality,
motives, interests, past experiences, and
expectations.

Target/Object: The characteristics of the target also

affect what we perceive. Because we don't look at
targets in isolation, the relationship of a target to its
background influences perception, as does our
tendency to group close things and similar things
together.

Context/Situation: The time at which we see an

object or event can influence our attention, as can
location, light, heat, or situational factors. Awareness
and objective measures can reduce our perception
distortions.

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Attribution Theory (!)

• An attempt to explain the ways we judge people differently, depending on the meaning we
attribute to a behavior, such as determining whether an individual's behavior is internally or
externally caused.

• Attribution theory suggests that when we observe an individual's behavior, we attempt to

determine whether it was internally or externally caused. That determination depends largely on
three factors: (1) distinctiveness, (2) consensus, and (3) consistency.

• Internally caused behaviors are those an observer believes to be under the personal behavioral
control of another individual.

• Externally caused behavior is what we imagine the situation forced the individual to do.

Distinctiveness: Refers to whether an individual displays different behaviors in different

situations. What we want to know is whether this behavior is unusual. If it is, we
are likely to give it an external attribution. If it is not, we will probably judge the
behavior to be internal.

Consensus: If everyone who faces a similar situation responds in the same way, we can say
the behavior shows consensus.

Consistency: Does the person respond the same way over time? The more consistent the
behavior, the more we are inclined to attribute it to internal causes.

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Errors and Biases often involved when perceiving others:

1. Fundamental The tendency to underestimate the influence of external factors and

attribution error: overestimate the influence of internal factors when making judgments
about the behavior of others.

2. Self-serving bias: The tendency for individuals to attribute their own successes to internal
factors and put the blame for failures on external factors. People tend to
attribute ambiguous (zweideutig) information as relatively flattering
(schmeichelhaft), accept positive feedback, and reject negative feedback.
(e.g. Gack, when he truly believes that external factors contributed to his
bad performance)

3. Selective perception: The tendency to choose to interpret what one sees based on one's
interests, background, experience, and attitudes. Any characteristic that
makes a person, an object, or an event stand out will increase the
probability we will perceive it.

4. Halo effect: When we draw a positive impression about an individual based on a single
characteristic, such as intelligence, sociability, or appearance.

5. Contrast effect: Evaluation of a person's characteristics that is affected by comparisons with

other people (more) recently encountered who rank higher or lower on the
same characteristics. We don't evaluate a person in isolation. Our reaction
is influenced by other people we have recently encountered.

6. Stereotyping: Judging someone based on one's perception of the group to which that
person belongs. One problem with stereotypes is that they are widespread
generalizations, although they may not contain a shred of truth when
applied to a particular person or situation.

Specific Applications of Shortcuts in Organizations

• Employment Interview:
-> Few people are hired without an interview. But interviewers make perceptual judgments that
are often inaccurate and draw early impressions that quickly become entrenched

• Performance Expectations:
-> People attempt to validate their perceptions of reality even when these perceptions are faulty.
The terms self-fulfilling prophecy and Pygmalion effect describe how an individual's behavior
determined by others' expectations
-> Self-fulfilling prophecy (Pygmalion effect): A situation in which a person inaccurately perceives
a second person and the resulting expectations cause the second person to behave in ways
consistent with the original perception. In a good way, overestimating a person.

• Performance Evaluations:
-> Many jobs are evaluated subjectively. Subjective evaluations, though often necessary, are
problematic because of the errors we've discussed-selective perception, contrast effects, halo
effects, and so on.

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Decision Making (Link to perception)

Decision: Individuals make decisions, choices from among two or more alternatives. Ideally,
decision making would be an objective process, but the way individuals make decisions
and the quality of their choices are largely influenced by their perceptions.

Problem: Decision making occurs as a reaction to a problem. That is, a discrepancy exists between
the current state of affairs and some desired state, requiring us to consider alternative
courses of action.

• Decisions require us to interpret and evaluate information

-> our perception filters the available information
• When developing alternatives …
-> our perception processes will affect the outcome
• Saying «no» typically makes us feel uncomfortable!

→Throughout the decision-making process, individuals are largely influenced by their perceptions.

Three approaches:
1) Rational Decision Making
2) Bounded Rationality
3) Intuition

Rational Decision-Making Model

• A decision-making model that describes how individuals should behave to maximize some
outcome.

• We often think the best decision maker is rational and makes consistent, value-maximizing
choices within specified constraints. Rational decisions follow a six-step rational decision-making
model:

1. Define the problem

2. ldentify the decision criteria (budget, trial customer likes?)
3. Allocate weights to the criteria (time)
4. Develop the alternatives
5. Evaluate the alternatives
6. Select the best alternative

• The rational decision-making model assumes the decision maker has complete information, can
identify all relevant options in an unbiased manner, and chooses the option with the highest
utility. → will not happen in reality

• To use the rational model, you need to gather a great deal of information about all the options,
compute applicable weights, and then calculate values across a huge number of criteria.

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Rational: Characterized by making consistent, value-maximizing choices within

specified constraints.

Bounded rationality: A process of making decisions by constructing simplified models that

extract the essential features from problems without capturing all their
complexity. Make a good decision quickly.
-> Often, we don't follow the rational decision-making model for a reason:
Our limited information-processing capability makes it impossible to
assimilate all the information necessary to optimize, even if the
information is readily obtainable.
• People satisfice – they seek solutions that are satisfactory and
sufficient
• They construct simplified models that extract the essential features

That means:
• Once a problem is identified, the search for criteria and options begins
• A limited list of the more conspicuous choices is identified
• The list is reviewed, looking for a solution that is “good enough”
• The first “good enough” options ends the search

Intuitive decision Perhaps the least rational way of making decisions is intuitive decision
making: making, an unconscious process created from distilled experience.
Intuitive decision making occurs outside conscious thought; relies on
holistic associations, or links between disparate pieces of information; is
fast; and is affectively charged, meaning it engages the emotions.
-> System 1

Two types of thinking

System 1: Fast, instinctive, and emotional

System 2: Slower, more deliberative, and more logical

-> Biases occur with each type of thinking!

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Common Biases and Errors regarding Individual Decision-Making:

Decision makers engage in bounded rationality, but they also allow systematic biases and errors to
creep into their judgments. Shortcuts can distort rationality. The following are the most common
biases in decision making.

1. Overconfidence bias: We tend to be overconfident about our abilities and the abilities of
others; also, we are usually not aware of this bias. Individuals
whose intellectual and interpersonal abilities are weakest are most
likely to overestimate their performance and ability.

2. Anchoring bias: A tendency to fixate on initial information, from which one then
fails to adjust adequately for subsequent information. Any time a
negotiation takes place, so does anchoring. The more precise your
anchor, the smaller the adjustment.(e.g. Pieterson, when he takes
competitor prizes as starting point for proposals)

3. Confirmation bias: We seek out (and accept) information that reaffirms our past
choices and current views, and we discount (or are skeptical of)
information that contradicts or challenges them. The rational
decision-making process assumes we objectively gather
information. But we don't. We selectively gather it.

4. Availability bias: The tendency for people to base their judgments on information
that is readily available to them. A combination of readily available
information and our previous direct experience with similar
information has a particularly strong impact on our decision
making. (E.g. managers give more weight in performance appraisals
to recent employee behaviors than to behaviors of 6 or 9 months
earlier, or Pieterson, when he takes competitor prizes as starting
point for proposals)

5. Escalation of commitment: Refers to our staying with a decision even if there is clear evidence
that it is wrong. Evidence indicates that it occurs when individuals
view themselves as responsible for the outcome. The fear of
personal failure even biases the way we search for and evaluate
information so that we choose only information that supports our
dedication.

6. Randomness error: The tendency of individuals to believe that they can predict the
outcome of random events. Decision making suffers when we try to
create meaning in random events.

7. Risk aversion: The tendency to prefer a sure gain of a moderate amount over a
riskier outcome, even if the riskier outcome might have a higher
expected payoff. CEOs at risk of termination are exceptionally risk
averse, even when a riskier investment strategy is in their firms'
best interests.

8. Hindsight bias: The tendency to believe falsely, after the outcome is known, that
we would have accurately predicted it. When we have feedback on
the outcome, we seem good at concluding it was obvious.

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Reducing Biases and Errors

Focus on Goals
Without goals, you can't be rational, you don't know what information you need, you don't know
which information is relevant and which is irrelevant, you will find it difficult to choose between
alternatives, and you're far more likely to experience regret over the choices you make. Clear goals
make decision making easier and help you eliminate options that are inconsistent with your
interests.

Look for Information That Disconfirms Your Beliefs

One of the most effective means for counteracting overconfidence and the confirmation and
hindsight biases is to actively look for information that contradicts your beliefs and assumptions.
When we overtly consider various ways we could be wrong, we challenge our tendencies to think
we're smarter than we actually are.

Don't Try to Create Meaning out of Random Events

The educated mind has been trained to look for cause-and-effect relationships. When something
happens, we ask why. And when we can't find reasons, we often invent them. You have to accept
that there are events in life that are outside your control. Ask yourself if patterns can be meaningfully
explained or whether they are merely coincidence. Don't attempt to create meaning out of
coincidence.

lncrease Your Options

No matter how many options you've identified, your final choice can be no better than the best of
the option set you've selected. This argues for increasing your decision alternatives and for using
creativity in developing a wide range of diverse choices. The more alternatives you can generate, and
the more diverse those alternatives, the greater your chance of finding an outstanding one.

Utilitarianism: A family of normative ethical theories that prescribe actions that maximize
happiness and well-being for all affected individuals.

Whistle-blowers: A person, usually an employee, who exposes information or activity within a

private, public, or government organization that is deemed illegal, illicit,
unsafe, or a waste, fraud, or abuse of taxpayer funds.
-> Individuals who report unethical practices by their employer to outsiders.

Which individual differences influence decision making?

• Personality
• Gender
• Mental Ability
• Cultural Differences

Which organizational constraints influence decision making?

• Performance Evaluation Systems
• Reward Systems
• Formal Regulations Rules and norms that limit freedom of choice
• System-Imposed Time Constraints Explicit deadlines (difficult to gather all information)
• Historical Precedents Choices made today are largely a result of choices made over the years

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4. HRM: Strategic Human Resource Management (Chapter 1)

LO

• Role of HRM in a global context.

• Describe the major contemporary trends in the business environment that are affecting HRM
practices

→ The process of managing human resources (human capital and intellectual assets) is to achieve an
organization’s objectives.

Global Economy
Global Forecast – Trends about the GDP growth and inflation, predictions for the next years.
What is going on (domestic/global economic situation) and what does it mean for us (=> (re)actions?)
What does inflation mean for a company regarding HR? Increase of wages, people wait that the
money worth increases again and spend less money which is bad for the company because it sells
less products and provides less services (possible outcome: restructuring).

Inflation Money loses worth

Deflation Money gains worth
The Thucydides Trap – Economic competition between USA and China
China is investing a lot in several European and African countries to increase competitive advantage.

Industrial revolutions:
1st (1784 – mechanical production & steam power energy),
2nd (1870 – mass production & electrical energy),
3rd (1969 – electronics & IT),
4th (today – artificial intelligence & big data).

Disruptive innovation: An innovation that creates a new market and value network and eventually
disrupts an existing market and value network, displacing established
market-leading firms, products, and alliances. (e.g. Apple/Nokia)

Major contemporary trends and HR Challenges in 2021

1. Cost awareness & Flexibility

→ Examples: Doctors providing their advice online through apps (no need to open a praxis),
self-driving taxis, robots replacing humans, fully automated processes.
Impact: Unemployment, change tasks, reskill people or create new professions
HR will have to manage this situation in the future.

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2. Corporate Governance

→ The framework of rules and practices by which a board of directors ensures

accountability, fairness, and transparency in a company’s relationship with its all
stakeholders.
→ HR Example: Companies stopping their businesses in corrupt countries in which briberies
are usual because this is against their corporate governance.

3. Measuring and enhancing employee engagement

4. Managing Global Workforce – Global Staffing
5. Performance Management
6. Compensation Management

Cost awareness & Labor

->Flexibility From Industry 1.0 to Industry 4.0 -> companies need to adapt to changes.

Strategic Management

Mission: The basic purpose of the organization as well as its scope of operations. The key
question is “WHY?” and not what we are doing.
Examples:
“To inspire and nurture the human spirit – on person, one cup, and one
neighbourhood at a time”
“Google’s mission is to organize the world’s information and make it universally
accessible and useful”

Vision: A statement about where the company is going and what it can become in the future;
clarifies the long-term direction of the company and its strategic intent.

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Strategy: The definition of business strategy is a long-term plan of action designed to achieve a
particular goal or set of goals or objectives. It states how business should be conducted
to achieve the desired goals.

Core Values: The strong and enduring beliefs and principles that the company uses as a foundation
for its decisions.

Human Resource Management – Overview (Chapter 1)

Human Resource Management Utilization of individuals to achieve organizational objectives.

(HRM): Managers at every level must concern themselves with HRM

6 HRM functions:

Staffing: The process through which an organization ensures that it

always has the proper number of employees with the
appropriate skills, at the right time, to achieve organizational
objectives. Staffing involves job analysis, human resource
planning, recruitment, and selection.

Job analysis: Is the systematic process of determining the skills, duties, and
knowledge required for performing jobs in an organization. lt
impacts virtually every aspect of HRM, including planning,
recruitment, and selection.

1. Human resource planning is the systematic process of

matching the internal and external supply of people with job
openings anticipated in the organization over a specified
period. -> NOT conducting of recruitment and selection!

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2. Recruitment is the process of attracting individuals on a

timely basis, in sufficient numbers, and with appropriate
qualifications to apply for jobs with an organization.

3. Selection is the process of choosing the individual best

suited for a position and the organization from a group of
applicants.

Performance Management Goal-oriented process that is directed toward ensuring that

(PM): organizational processes are in place to maximize the
productivity of employees, teams, and ultimately, the
organization. Performance appraisal is a formal system of
review and evaluation of the individual or team task
performance.

Human Resource Development Major HRM functions consisting not only of training but also of
(HRD): individual career planning and development activities,
organization development, and performance management and
appraisal.

Training: Designed to provide learners with the knowledge and skills

needed for their present jobs.

Organizational Development: Planned and systematic attempts to change the organization

(corporate culture), typically to a more behavioural
environment.

Career planning: Ongoing process whereby an individual sets career goals and
identifies the means to achieve them.

Career development: Formal approach used by the organization to ensure that

people with the proper qualifications and experiences are
available when needed.

Compensation
-> Total of all rewards provided to employees in return for their services.

1. Direct Financial Compensation

(Monetary core compensation) Pay that a person receives in the form of wages, salary, commissions,
and bonuses.

2. Indirect Financial Compensation

(Employee benefits) All financial rewards that are not included in direct financial compensation.

3. Nonfinancial Compensation
Satisfaction that a person receives from the job itself or from the psychological and/or physical
environment in which the person works.

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Safety: Protection of employees from injuries caused by work-related

accidents.

Health: Employees’ freedom from physical or emotional illness.

Human Resource Professional: An individual who normally acts in an advisory or staff capacity,
working with other professionals to help them deal with
human resource matters.

What are different types of professionals in HR?

• Executive: top-level manager who reports directly to a corporation’s chief executive officer
or to the head of a major division.
• Generalist: A person who may be an executive and performs tasks in a variety of HR-related
areas.
• Specialist: An individual who may be a HR executive/manager, or a nonmanager, and who is
typically concerned with only one of the six functional areas of HR management.

Line managers: Individuals directly involved in accomplishing the primary

purpose of the organization.

HR Outsourcing (HO): Process of hiring external HR professionals to do the HR work

that was previously done internally.

Shared Service Centre (SSC): A centre that takes routine, transaction-based activities
dispersed throughout the organization and consolidates them
in one place.

Professional Employer A company that leases employees to other businesses.

Organization (PEO):

Human Capital: As defined by economists, refers to sets of collective skills,

knowledge, and ability that employees can apply to create
economic value for their employers.

Union: Consists of employees who have joined together for the

purpose of negotiating terms of employment, such as wages
and work hours

Human resource Any organized approach for obtaining relevant and timely
information system: information on which to base HR decisions.

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5. HRM: Personnel Planning (Chapter 4)

LO

• Identify the advantages of integrating human resources planning and strategic planning
• Explain the meaning of human resource strategic management and give an overview of its
conceptual framework.
• Understand how an organization’s competitive environment influences its strategic planning.
• Describe the basic tools used for human resources forecasting.

Strategic Management

Mission The basic purpose of the organization as well as its scope of operations

Vision A statement about where the company is going and what it can become in the
future; clarifies the long-term direction of the company and its strategic intent.

Strategy The definition of business strategy is a long-term plan of action designed to

achieve a particular goal or set of goals or objectives. It states how business
should be conducted to achieve the desired goals.

Core Values The strong and enduring beliefs and principles that the company uses as a
foundation for its decisions.

External Analysis -> Opportunities and Threats (strategic decision making)

P olitical
E conomic
S ocial
T echnological
E nvironmental
L egal
-> (possibility to rank different influences) // opportunities and threats

SWOT Analysis

Strengths and weaknesses -> Internal analysis

SWOT analysis is a planning exercise in which managers identify internal organizational strengths (S)
and weaknesses (W) and external environmental opportunities (O) and threats (T).
-> Combination internal and external analysis

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DTC company: direct to consumer company

-> After the strategic choice has been made, specific programs, structures and systems could be
developed
-> linking this decisions to HRM “put people on the radar screen”

Resourced Based View Model (RBV)

• The resource-based view of the firm (RBV) is a way of viewing the firm and in turn of approaching
strategy. Fundamentally, this theory formulates the firm to be a bundle of resources.

• It is these resources and the way that they are combined, which make firms different from one
another. It is considered as taking an inside out approach while analysing the firm. This means
that the starting point of the analysis is the internal environment of the organization.

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Core Competency: - A specific set of departmental skills, knowledge, and experience that allows
one organization to outperform its competitors.
- Are a bundle of all skills, HRM and technologies that enables a company to
provide particular benefits to customers
- Is not product specific
- Represents … the sum of learning across individual skill sets and individual
organizational units (becoming a learning organisation)
→ Application of the RBV

Qualities:
Inimitable: Very hard to imitate or copy , either directly or indirectly
Valuable: Capable of delivering superior competitive results
Appropriable: Capable of capture the benefit

Best fit model: It is based on developing HRM policies according to business strategy.
Strategy involves planning future activities, performances objectives, and
policies towards reaching the corporate aims. HRM strategy should be
designed and applied to support the given corporate strategy.

Best practice model: The best practice approach claims that certain bundles of HR activities exist
which universally support companies in reaching a competitive advantage
regardless of the organizational setting or industry.

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Workforce Planning Overview

Human resource planning: (HRP) Systematic process of matching the internal and external
supply of people with job openings anticipated in the organization
over a specified period. It is also incorporated into the business and
financial planning process, so it provides a foundation for a plan that
is aligned with the business strategy.

-> HRP must be linked to the organization’s overall strategy to

compete domestically and globally
-> Process of anticipating and making provision for the movement
(flow) of people into, within, and out of an organization.
-> “The right number of people, with the right skills, at the right
place and at the right time”

Strategic workforce planning (Focus)

• Guarantees an alignment to an organisation’s business strategy.

• Effective and timely quantitative and qualitative data capture will inform potential future risks by
predicting possible alternative futures. Actions can then be taken today to mitigate against future
workforce risks.

Operational workforce planning

• Has a shorter forecast horizon, typically three to twelve months.

• The focus is more on identifying skill gaps, numbers of people required to satisfy more
immediate needs and mechanical processes such as recruitment or training spend. It is a tool to
manage business as usual.

Different types of change initiatives

Transactional change Generally short-term resource needs to modify or improve an existing

process. Quick done, not a big process.

Transitional change New processes replacing existing ones requiring resources in the
medium term (over a one- or two-year period), often aligned with the
operational planning or budgeting cycles or associated with a change
project or programs. Medium-term. Normal process in an organisation.

Transformational change A shift in the business culture of an organization resulting from a change
in the underlying strategy and processes that the organization has used
in the past. A transformational change is designed to be organization
wide and is enacted over a period of time.

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The Balanced Scorecard (BSC)

• A framework to implement and manage strategy. It links a vision to strategic objectives,

measures, targets, and initiatives. It balances financial measures with performance measures and
objectives related to all other parts of the organisation.
• A balanced scorecard is a tool adopted for mapping a firm’s strategy in order to ensure strategic
alignment – a semi-standard structured report, that can be used by managers to keep track of
the execution of activities by the staff within their control and to monitor the consequences
arising from these actions.

Strategy Map (Balance Scorecard)

A strategy map is a diagram that is used to document the primary strategic goals being pursued by an
organization or management team. It is an element of the documentation associated with the
Balanced Scorecard. What are the objectives and what are the drivers?

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Step 1 Critical Elements of Planning

Analyse Current Workforce–Workforce Analytics

1. Employees in Post (Quantitative)

• Individual employee demographic data – gender, age, ethnicity, and other characteristics
relevant to inclusivity goals (for example on disability) or regulatory issues (for example on
nationality and right to work).

• People in relation to type of work (function, role, occupation), level (grade, pay level or
equivalent), length of service (with organisation), length of service in job and/or grade,
organisational work location (division, unit), geographical location (region, country, site or home
office– travel-to-work distances and patterns), salary cost.

• Types of contract

• Current gaps between agreed demand and supply (vacancies, and employee absences, parental
leave, etc.

2. Employee movements (Quantitative)

▪ External recruitment
▪ Leavers – voluntary leavers, retirements, dismissals, etc.
▪ Destinations and reasons for leaving
▪ Patterns of internal movement – see Markov-Analysis

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Markov Analysis: - Studies the flow of people through an organisation

- Determine probability of movement
- Provides snapshot of the movement of people
- Limitations: Choice of time period, sample size, choice of states
-> NOT basis basis for strategic planning process

The process of anticipation and providing for the movement of people into,
within, and out of an organization.

(→ check exercise and mock exam!!)

3. Skills, capability and attitudes (Qualitative)

▪ Data on qualifications
▪ Data on performance (low-high) , potential, training needs
▪ Data on talent profile
▪ Data on critical roles

4. External labour market information

▪ Demographic changes
▪ Education of workforce
▪ Labor mobility
▪ Government policies
▪ Competitors for labour

Step 2 Critical Elements of Planning

Gap Analysis -> Identifying workforce gaps against future needs.

Step 3 Critical Elements of Planning

-Actions to address shortages , surpluses, or skill mismatches

HR planning has two components: requirements and availability. Forecasting involves forecasting the
demand for labor, forecasting the supply of labor and balancing supply and demand considerations.

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Requirements forecast: Determining the number, skill, and location of employees the
organization will need at future dates to meet its goals. Requirement
forecasts also focus on seasonal hiring. -> Demand forecast

Availability forecast: Determination of whether the firm will be able to secure employees
with the necessary skills, and from what sources. -> Supply forecast

→ When employee requirements and availability have been analyzed, the firm can determine
whether it will have a surplus or shortage of employees. Ways must be found to reduce the number
of employees if a surplus is projected. If a worker shortage is forecast, the firm must obtain the
proper quantity and quality of workers from outside the organization. In this case, external
recruitment and selection are required.

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Forecasting Human Resource Requirements (Demand)

Several techniques for forecasting HR requirements are currently used. Some of the techniques are
qualitative in nature, and others are quantitative:

Zero-base forecast: Forecasting method that uses the organization's current level of
employment as the starting point for determining future staffing needs.

Bottom-up forecast: Forecasting method in which each successive level in the organization,
starting with the lowest, forecasts its requirements, ultimately providing an
aggregate forecast of employees needed. The manager in each unit is most
knowledgeable about employment requirements.

As the process moves upward in the company, each successively higher

level of management in turn makes its own estimates of needs,
incorporating the input from each of the immediately preceding levels. The
result, is an aggregate forecast of needs for the entire organization.

Forecasting Human Resource Availability (Supply)

• To forecast availability, the HR manager looks to both internal sources (current employees) and
external source (the labor market).

• The determination of whether the firm will be able to secure employees with the necessary skills,
and from what sources, is an availability forecast. lt helps to show whether the needed
employees may be obtained from within the company, from outside the organization, or from a
combination of the two sources.

Shortage of Workers Forecasted

When firms are faced with a shortage of workers, organizations should intensify their efforts to
recruit the necessary people to meet the needs of the firm.

Innovative recruiting: A shortage of personnel often means that new approaches to

recruiting must be used. The organization may have to recruit
different kinds of candidates, search in different geographic areas
than in the past, and explore new recruitment methods.

Compensation incentives: Firms competing for workers in a high-demand situation may have
to rely on pay incentives.

Alternatives to layoffs: Special training programs may be needed to prepare previously

unemployable individuals for positions with a firm. Remedial skills
(Förderkompetenzen) and training are two types of programs that
may enable companies to reassign employees to other positions
within the company.

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Surplus of Workers Forecasted

When a comparison of requirements and availability indicates that a worker surplus will result, most
companies look to alternatives to layoffs, but downsizing may ultimately be required. Therefore,
whenever financially feasible, firms need to look for alternatives to layoff and retain as many workers
as possible.

Alternatives to layoffs:

1. Restricted hiring policy: Reduces the workforce by not replacing employees who leave. There are
basically three forms of freezes.
- Hard freeze means that no new workers are hired to replace a vacated position.
- Soft freeze means that the company is only hiring to fill critical positions.
- Smart freeze: HR and managers evaluate every position to determine the ones the company could
not survive without and those that are difficult to fill and continue to hire then.

2. Severance packages: Also known as buyouts, refer to pay and benefits awarded to employees for
a period after they leave the company. Severance packages reduce workforce size and operating
costs.

3. Early retirement

4. Workload reduction: Job-sharing, permit employees to work part-time, reduce workweek by a

day, unpaid holiday options

Strategic Job Families Process (!)

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• It's the role of strategic management to identify and focus on those critical few jobs that have
the greatest impact on the strategy. This process ,and its output, is what we call Human Capital
Readiness

• To measure Human Capital Readiness, the organization must first identify the critical internal
processes in the organization's strategy map. Within the human capital requirements in the
learning and growth perspective, the organization identifies the set of competencies required to
perform each critical internal process.

Strategic job families: The categories of jobs in which these competencies can have the biggest
impact on enhancing the organization's critical internal processes.

Next, the organization crafts competency profiles, detailed descriptions of the requirements of
these strategic jobs. An assessment suggests the current capabilities of the organization in each
of the job families based on these competency profiles. The difference between the
requirements and the current capabilities represents a "competency gap," expressed in terms of
the organization's state of Human Capital Readiness. To close the gap, the organization launches
Human Capital Development Programs.

Human Capital Readiness: The process of identifying and focusing on the critical few jobs which
have the greatest impact on strategy and the defined competency
gap.

Competency gap: Shows the difference between requirements for strategic jobs and
current capabilities of the human resources.

→ Check pdf for details

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Competency profile: Describes the knowledge, skills and values an employee needs to be
successful in a given position. Provides the reference point that the HR
department can use when recruiting, hiring, training, and developing
people for that position.

Three components of a competency profile?

1. Knowledge – the general background knowledge required to perform the job;
includes (1) job specific knowledge e.g. subject matter expertise and (2) surrounding knowledge (e.g.
knowing the customer)

2. Skills – the skills required to supplement the general knowledge base, such as negotiating skills,
consulting skills, or project management skills

3. Values – the set of characteristics or behaviors that produce outstanding performance in a given
job

How is Human Capital Readiness assessed?

- self-assessment
- 360° evaluation of individual’s capabilities

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Which two models can be used to develop human capital?

Strategic Job Family Model: Focusing HR programs on the critical few jobs that are pivotal to
the organisation’s strategy

Strategic Values Model: Strategy involves a set of values and priorities which should be
incorporated into every employee’s objectives and actions

Building Global Capabilities for “Going Global”

o Expand global presence

o Leverage digitalization
▪ Digitalization around Products
▪ Digitalization around Marketing
▪ Digitalization around Workforce Capabilities
▪ Digitalization around Leadership

o Sustain core commercial and operational momentum

o Create the organization of the future

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Succession Planning: A Component of Strategic Planning

• Succession planning is the process of ensuring that qualified persons are available to assume key
managerial positions once the positions are vacant.

• The goal is to help ensure a smooth transition and operational efficiency, but the transition is
often difficult.

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6. HRM: Recruitment & Selection

(Chapter 5+6)

LO

• Understand the importance of recruitment and selection in the business.

• context
• Understand the key features of recruitment and selection policies.
• Explain the nature of attraction in recruitment.
• Explain the effectiveness of various selection methods.
• Recognize the importance of using social media in the recruitment. process -> active Sourcing

Recruitment: The process of identifying, screening, shortlisting, and hiring potential

resource for filling up the vacant or newly created positions in an
organization. It is a core function of Human Resource Management.
-> matching process (organisation >< individual)

Recruitment & Selection 1) Job Vacancy – New Jobs

Process: 2) Job Analysis
3) Attracting Candidates
4) Screening Applications
5) Screening/Selection Candidates
6) Appointing Candidates
7) Induction & Training
8) Employee Evaluation

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1. Job Vacancy: -> Reasons for vacancy:

- A previous employee left the business
- Result of expansion
- More work to be done

-> Manage effectively – vacancy could be managed before recruiting

- Without that post being filled
- Job redesign
- Part-time work
- Work on demand

-> Internal or external candidates?

2. Job Analysis: The process of obtaining information about jobs by determining what
the duties, tasks, or activities of jobs are.

HR managers use the data to develop job descriptions and job

specifications that are the basis for employee performance appraisals
and development.

The ultimate purpose of job analysis is to improve organizational

performance and productivity.

Job Description: Provides information regarding the tasks, duties,

responsibilities and special circumstances that make up a job.

Job Specification: The knowledge, skills, and abilities needed to

perform the job. Minimum acceptable qualifications a person needs
to perform a particular job.

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Key Questions – Job Analysis

Job Analysis -Methods

• Questionnaires

E.g. The Position Analysis A comprehensive, standardized questionnaire that many

Questionnaire (PAQ): managers rely on to conduct job analysis. It focuses on
behaviours jobholders perform, working conditions, and job
characteristics. The PAQ contains 194 items organised into
six division:
- information input (where and how to get the information)
- mental processes (reasoning, decision making, planning and
information processing)
- work input (physical activities, machines and devices used)
- relationship with other (interactions to perform the job)
- job content (physical and social environment of the job)
- other job characteristics (such as workplace)

• Observation

• Interviews

• (!) Critical Incident Method (CIM): Job Analysis method in which job tasks are identified that
(or technique CIT) are critical to job success. It should also be a real incident
that has happened, not something that might happen in the
future.
-> It may be positive It may be positive or negative in
nature.
-> Focus on what they did , with the goal of seeking effective
or ineffective behaviors.
e.g. Pilot: emergency handling
• Combination of Methods
3. Attracting Candidates

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Recruitment is what managers do to develop a pool of qualified candidates for open positions. They
traditionally have used two main types of recruiting, external and internal, which are now
supplemented by recruiting over the Internet.

External recruiting: Looking outside the organisation for people who have not worked for the
organisation previously. (Job postings on career websites; job fairs
(Arbeitsmessen) in the community; career fairs at colleges, open houses for
students; advertising in local newspaper)

Advantages: Access to a large applicant pool, no limit / able to attract the

people who have the skills, knowledge and abilities the company needs / new
fresh approach to problems / company will be exposed to a more diverse set
of skills and experiences.

Disadvantages: High costs for external recruitment, lack of knowledge about

the inner workings.

Internal recruiting: Turning to existing employees to fill open positions. Employees recruited
internally search either lateral moves (job changes with no major changes in
responsibility or authority level) or promotions.

Advantages: Applicants are already familiar with the organisation / managers

already know the candidates (know the skills, abilities and behaviour) / can
help boost motivation or perspective / lateral move can reduce boredom and
it is less time-consuming and expensive.

Disadvantages: limited pool of candidates; tendency of candidates to be set

in the organization's ways, organization simply doesn't have suitable internal
candidates and external recruiting can bring in managerial talent with a fresh
approach (organization in trouble, performing poorly)

Recruitment & Marketing Merge (Modern Recruiting)

Recruiting -> To match qualified applicants.

Marketing -> To attract qualified applicants.

Brand/Messaging: Employer Branding/Employer Value Proposition (EVP)

Channels: Job boards, social, external candidate databases

Communications: Video, emails, career fairs, etc.

Nurturing: Newsletters, educational content, employee stories (pflegen)

Why should I work for your company instead of somewhere else?

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Employer Branding: Establishes the identity of the firm as an employer. It encompasses

the firm’s values, systems, policies and behaviors toward the
objectives of attracting, motivating, and retaining the firm’s current
and potential employees.

Employer branding includes all strategies that improve a company’s

external and internal reputations. Therefore, employer branding is
the interface of marketing and human resource management.

Employee Value Proposition The foundation for your employer brand communications.
EVP: It is the “why” around an organization – it’s the attributes of an
employment experience that attract and retain top talent. It’s what
employees value most, how a company separates itself from its
competitors (competitors for future staff), and the company’s
promise to its people.

EVP is what the company promises its employees, and every day, the
company has to uphold its promises. The EVP is the sum of the
benefits and values that attract, motivate and retain the best
employees.

An EVP provides an authentic, unique and relevant answer to the our

question WHY.

→ Employee Value Propositions = Why people stay

Social Media Recruiting Post often, be responsive, value quality over quantity.

4. Screening Applications / Interviewing

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-> Using the job description and employee specification to compare against the CV.

Parsing: Screening a CV for keywords which are important according to the job
description
Matching: Does those keywords also match the companies job description

Interviewing Candidates – WASP-Approach

Welcome
- Establish Relation
- Explain the purpose of the interview
- Outline the format, then interview with appropriate timings

Acquire Information
- In this phase, the interviewer is seeking to gather as many relevant details from the candidate
as possible so that you can make an informed decision about their suitability.

Supply Information
- Outline the job description in greater detail, giving an overview of their potential role in the
company.
- Answer any remaining questions

Plan and part

- The final part of the interview is designed to ensure that both parties leave the interview fully
aware of the next steps in the selection process.

Interviewing types: - One on one job interview (traditional)

- Phone interview
- Video / Skype interview / MSTeams / Webex / Zoom
- Panel interview
- Group interview

Interviewing methods: - Situational interviews

- Behavioral description interviews
- Strength-based interviews (hard to be prepared, get more
information of a person)
- Case interview
- Structured interviews
- Unstructured interviews

-> p- 58

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(!)

-> PAST BEHAVIOUR

-> CIT could be applied with
STAR-Model

Common reasons for - Lack of preparation

interviews failing: - Judgement made too early (made within some seconds)
- Unstructured interviews
- Interview environment
- Too many interviews
- Poor interviewing skills

6. Selection/Appointing Candidates

Other selection methods: - Psychometric tests

- Individual / group exercises
- Case study analysis
- Formal presentations
- Role play
- Gamification
o Gamified applications and recruiting techniques might be
leveraged to make an organization more attractive.
o Realistic job preview: Company places entertainment games on
its website. Games used by U.S. Army and Marriott Hotels
o Only possible to enter CV if above a certain level of the game
made.

Matrix of requirements for Selection Process

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-> fill in in your own

-> only the candidates with the highest scores

Reliability and validity: Reliability is the degree to which a tool or test measures the same
thing each time it is used. Scores on a selection test should be similar
if the same person is assessed with the same tool on two different
days.

Validity is the degree to which a tool measures what it purposes to

measure (measures a person’s attributes)– for selection tools, it is
the degree to which the test predicts performance the tasks or job on
question. E.g. honesty tests are controversial because it is not clear
that they validly predict honesty in such jobs as retailing and banking.

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7. Induction and Training Induction=Einarbeitung

Induction aims:

o To smooth the early stages when everything is likely to be strange and unfamiliar to the new
employee.

o To quickly establish a favourable attitude to the company in the mind of the new employee
so that he or she is more likely to stay.

o To obtain effective output from the new employee in the shortest possible time.

Induction components: - Company induction

- Departmental induction
- On going Training & Development

8. Employee Evaluation

Monitoring employee is an on going activity , but for new employees , evaluation should have the
following defined phases:

- End of first day / week

- End of first month
- End of probation period -> restart whole circle again

Get also feedback from the new employee to improve our processes.

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Recruiting Metrics -> passive knowledge, know the terms (!)

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Summary from book (p. 173-197)

Characteristics of Properly Designed Selection Tests

Standardization: Uniformity of the procedures and conditions related to administering tests. To

compare the performance of several applicants taking the same test, it is
necessary for all to take the same test under conditions that are as identical as
possible.

Objectivity: Condition that is achieved when everyone scoring a given test obtains the same
results. Multiple-choice and true/false tests are objective. The person taking the
test either chooses the correct answer or does not.

Norm: Frame of reference for comparing an applicant's performance with that of

others. A score by itself is insignificant. lt becomes meaningful only when
compared with other applicants' scores.

Reliability: Extent to which a selection test provides consistent results. Reliability is

expressed as a correlation coefficient. (See previous notes)

Validity: Extent to which a test measures what it claims to measure. If a test cannot
indicate ability to perform the job, it has no value. (See previous notes)

Three approaches to validating selection tests:

1. Criterion-related validity: Test validation method that compares the scores on selection
tests to some aspect of job performance determined, for example,
by performance appraisal. close relationship between the score
on the test and job performance suggests that the test is valid.
The two basic forms of criterion-related validity are concurrent
and predictive validity.
a. Concurrent validity: When the firm obtains test scores and the
criterion data at the same time.
b. Predictive validity: Involves administering a test and later
obtaining the crite1ion information.

2.Construct validity: Test validation method that determines whether a test measures
certain constructs, or traits, that job analysis finds to be important
in performing a job. E.g. a sales representative position may
require the applicant to be extroverted and assertive.

3. Content validity: Test validation method whereby a person performs certain tasks
that are required by the job or completes a paper-and-pencil test
that measures relevant job knowledge. This form of validation
requires thorough job analysis and carefully prepared job
descriptions.

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Employment Tests

Tests fall into one of two categories: aptitude tests and achievement tests.

1. Aptitude tests: A test of how weil a person can learn or acquire skills or abilities

2. Achievement tests: A test of current knowledge and skills

-> These differences, which are measurable, relate to cognitive abilities, psychomotor abilities, job
knowledge, work samples, and personality.

Cognitive ability tests: Tests that determine general reasoning ability, memory, vocabulary,
verbal fluency, and numerical ability.

Psychomotor abilities Test: Refer to the capacity to connect brain or cognitive functions and
functions of the body such as physical strength. An example of a
psychomotor ability is reaction time.

Personality tests: Self-reported measures of traits, temperaments, or dispositions.

Job-knowledge tests: Tests designed to measure a candidate's knowledge of the duties of

the job for which he or she is applying.

Work-sample tests: Tests that require an applicant to perform a task or set of tasks
representative of the job.

Assessment centre: Selection technique that requires individuals to perform activities

similar to those they might encounter in an actual job. The
assessment centre is one of the most powerful tools for assessing
managerial talent because it is designed to determine if they will be
effective in performing a specific job.
-> Increased reliability and validity of the information provided.

Genetic tests: Tests given to identify predisposition to inherited diseases, including

cancer, heart disease, neurological disorders, and congenital
diseases.

Graphoanalysis: Use of handwriting analysis as a selection factor.

Polygraph tests: Lie-detector test. Employee Polygraph Protection Act of 1988

prohibited the use of polygraph tests in the private sector. Effective
techniques for beating lie detectors, which only measure stress and
anxiety, have been developed and are available for use.

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Employment Interview

Employment interview: Goal-oriented conversation in which an interview.er and an applicant

exchange information.

Types of interviews:

Unstructured interview: Interview in which the job applicant is asked probing, open ended
questions. Comprehensive, and the interviewer encourages the
applicant to do much of the talking. often more time consuming than
structured interview and results in obtaining different information from
different candidates.

Structured interview: Interview in which the interviewer asks each applicant for a particular
job the same series of job-related questions. Use of structured
interviews increases reliability and accuracy by reducing the subjectivity
and inconsistency of unstructured interviews. Questions are developed
and asked in the same order of all applicants applying for the vacant
position. This makes it easier to compare candidates fairly.

Behavioural interview: Structured interview in which applicants are asked to relate actual
incidents from their past relevant to the target job. The assumption is
that past behaviour is the best predictor of future behaviour.
E.g. CIT

Situational interview: Whereas the behavioural interview focuses on how an individual

handled circumstances in the past, situational interview creates
hypothetical situations candidates would be likely to encounter on the
job and asking them how they would handle them.

Methods of Interviewing

One-On-On Interview: In a typical employment interview, the applicant meets one-on-one with
an interviewer. As the interview may be a highly emotional occasion for
the applicant, meeting alone with the interviewer is often less
threatening.

Group interview: Meeting in which several job applicants interact in the presence of one
or more company representatives. Provides useful insights into the
candidates' interpersonal competence as they engage in a group
discussion. Saves time for busy professionals and executives.

Board interview: An interview approach in which several of the firm's representatives

interview a candidate at the same time. Companies use the board
interview to gain multiple viewpoints because there are many cross-
functional workplace relationships in business these days.

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Stress interview: Form of interview in which the interviewer intentionally creates anxiety.
The interviewer intentionally makes the candidate uncomfortable by
asking blunt and often discourteous questions.

Realistic job preview (RJP): Method of conveying both positive and negative job information to an
applicant in an unbiased manner.
Helps applicants develop a more accurate perception of the job and the
firm. Employers who give detailed RJPs get two results: fewer employees
accept the job offer, and applicants who do accept the offer are less
Likely to leave the firm.

Potential lnterviewing Problems

- Inappropriate questions
- Permitting non-job-related information
- Interviewer bias (Stereotyping, Positive Halo, Horn Bias, Contrast Error, Interview Illusion bias)
- Interviewer domination
- Lack of training
- Nonverbal communication

Pre-Employment Screening and Background Checks

• At this stage of the selection process, an applicant has normally completed an application form
or submitted a resume, taken the necessary selection tests, and undergone an employment
interview.

• Background investigations involve obtaining data from various sources, including previous
employers, business associates, credit bureaus, government agencies, and academic institutions.

Reference checks: Validations from individuals who know the applicant that provide
additional insight into the information furnished by the applicant and
verification of its accuracy. Valuable source of information to
supplement the background investigation.

Negligent hiring: Liability a company incurs when it fails to conduct a reasonable

investigation of an applicant's background, and then assigns a
potentially dangerous person to a position in which he or she can inflict
harm (including fraud, assault, or battery)

Turnover rate: The number of times on average that employees must be replaced
during a year.

Yield rate: The percentage of applicants from a particular source and method that
make it to the next stage of the selection process to judge relative
effectiveness.

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7. OB: Motivation 1 (Chapter 7)

LO

• Name the three key elements of motivation

• Describe contemporary theories of motivation and apply their key principles to
organizations/practice
• Recognize recent concepts of motivation (Golden Circle, Motivation 3.0/Drive)

Key Theories/Models

1. Reinforcement Theory
2. Self-Determination Theory
3. Goal-Setting Theory
4. Self-Efficacy Theory
5. Expectancy Theory
6. Equity Theory (Motivation2)
7. Job Characteristics Model (Motivation2)

Motivation: The processes that account for an individual's (1) intensity, (2) direction, and (3)
persistence of effort toward attaining a goal. While general motivation is concerned
with effort toward any goal, we'll narrow the focus to organizational goals. The level
of motivation varies both between individuals and within individuals at different
times.

Intensity describes how hard a person tries. This is the element most of us focus on
when we talk about motivation.

High intensity is unlikely to lead to favorable job performance outcomes unless the
effort is channelled in a direction that benefits the organization.

Persistence measures how lang a person can maintain effort. Motivated individuals
stay with a task long enough to achieve their goals. (Ausdauer)

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Deci and Ryan’s Self-determination theory (SDT) (!)

• A theory of motivation that is concerned with the beneficial effects of intrinsic motivation and
the harmful effects of extrinsic motivation.

• People prefer to feel they have control over their actions, and anything that makes a previously
enjoyed task feel more like an obligation than a freely chosen activity undermines motivation.

• Some caution in the use of extrinsic rewards to motivate is wise and that pursuing goals from
intrinsic motives (such as a strong interest in the work itself) is more sustaining to human
motivation than are extrinsic rewards.

Most powerful factors for intrinsic motivation

(Need for Autonomy and Need for Competence)

3 basic psychological needs that help people thrive and have their highest quality motivation:

1. Need for Autonomy (have control over one’s actions)

o Experiments showed that monetary rewards undermined people’s intrinsic motivation leading to
a level of post reward behavior that was below baseline.
o Perceived autonomy is required for the motivation to be intrinsic.

2. Need for competence

o Perceived competence is necessary for any type of motivation.
o Positive feedback that provides satisfaction of the need for competence enhances intrinsic
motivation.

3. Need for Relatedness

o Plays a role in maintaining intrinsic motivation.
o SDT hypothesizes that intrinsic motivation will be more likely to flourish in contexts characterized
by a sense of secure relatedness.

Intrinsically motivated Behavior: Activities that people do naturally and spontaneously when they
(short: intrinsic motivation) feel to follow their inner interests.

Intrinsic Rewards Valued outcomes or benefits which come from the individual,
such as feelings of satisfaction, competence, self-esteem,
accomplishment.

Extrinsic Rewards Valued outcomes or benefits provided by others, such as

promotion, pay increase, a bigger office desk, praise,
recognition.

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Main message of self-determination theory

-> Intrinsic motivation contributes to the quality of work, while incentives contribute to the quantity
of work.
-> Individuals should choose jobs for reasons other than extrinsic rewards
-> Managers should provide intrinsic as well as extrinsic incentives

Cognitive evaluation theory

• Much research on self-determination theory in OB has focused on cognitive evaluation theory.

• A version of self-determination theory in which allocating extrinsic rewards for behavior that had
been previously intrinsically rewarding tends to decrease the overall level of motivation if the
rewards are seen as controlling.

Self-concordance: The degree to which people's reasons for pursuing goals are consistent
with their interests and core values.
-> People who pursue work goals for intrinsic reasons are more satisfied
with their jobs, feel they fit into their organizations better, and may
perform better
-> Employees who feel that what they do is within their control and a
result of free choice are likely to be more motivated by their work and
committed to their employers

Locke and Latham’s Goal-Setting Theory

• A theory stating that (1) specific and (2) difficult goals, with (3) feedback, lead to higher
performance. Under the theory, intentions to work toward a goal are considered a major source
of work motivation. (SMART: Specific, Measurable, Attractive, Reachable, Time-related)

• Evidence strongly suggests that specific goals increase performance; that difficult goals, when
accepted, result in higher performance than do easy goals; and that feedback leads to higher
performance than does non feedback.

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Three personal factors influence the goals-performance relationship:

1. Goal commitment
Goal-setting theory assumes an individual is committed to the goal and determined not to lower or
abandon it. The individual (1) believes he or she can achieve the goal and (2) wants to achieve it.

2. Task characteristics
Goals affect performance when tasks are simple rather than complex and independent rather than
interdependent. On interdependent tasks, group goals along with delegation of tasks are preferable.

3. National culture
Setting specific, difficult, individual goals may have different effects in different cultures. In
collectivistic and high power-distance cultures, achievable moderate goals can be more motivating
than difficult ones.

What are the two forms of goal pursuit that individuals use?

Promotion focus: A self-regulation strategy that involves striving for goals through
advancement and accomplishment. (related to high levels of task
performance, citizenship behavior, and innovation)

Prevention focus: A self-regulation strategy that involves fulfilling duties and obligations and
avoiding conditions that pull away from desired goals. (related to safety
performance)

Management by objectives (MBO)

• A program that encompasses (1) specific goals, (2) participatively set, for an (3) explicit time
period, with (4) feedback on goal progress. Many elements in MBO programs match the
propositions of goal-setting theory.

• The organization's overall objectives are translated into specific cascading objectives for each
level (divisional, departmental, individual)

• Management by objectives (MBO) is a formal system of evaluating subordinates on their ability

to achieve specific organisational goals or performance standards and to meet operating
budgets. Following 3 steps:
1. Specific goals and objectives are established at each level of the organisation.
2. Managers and their subordinates together determine the subordinates' goals.
3. Managers and their subordinates periodically review the subordinates' progress toward
meeting goals (e.g. 360-degree evaluation)

• Drawback: Time-consuming, requires a constant flow of information, focus only on the

attainment of goals. -> “results at any cost”
Bandura’s Self-Efficacy Theory

• An individual’s belief that he/she is capable of performing a task. The higher your self-efficacy,
the more confidence you have in your ability to succeed.

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• Feedback influences self-efficacy; individuals high in self-efficacy seem to respond to negative

feedback with increased effort and motivation, while those low in self-efficacy are likely to lessen
their effort after negative feedback.

• Goal-setting theory and self-efficacy theory don't compete with each other; they complement
each other.

4 ways that self-efficacy can be increased:

1. Enactive mastery
Gaining relevant experience with the task or job. (If you've been able to do the job successfully in the
past, you're more confident that you can do it in the future) -> learning by doing

2. Vicarious modelling
Becoming more confident because you see someone else doing the task. (If your friend quits
smoking, it increases your confidence that you can quit, too)

3. Verbal persuasion
Becoming more confident because someone convinces us we have the skills necessary to be
successful. Motivational speakers use this tactic.

4. Arousal
Becoming more “psyched up”, being energized and feeling up to the task and perform better. But if
the task requires a steady, lower-key perspective (say, carefully editing a manuscript), arousal may in
fact hurt performance even as it increases self-efficacy because we might hurry through the task.

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Influencing Self-Efficacy in Others:

-> The best way for a manager to use verbal persuasion is through the Pygmalion effect. The
Pygmalion effect is a form of self-fulfilling prophecy in which believing something can make it true.
("that what one person expects of another can come to serve a self-fulfilling prophecy)

Reinforcement theory

• A theory suggesting that behavior is a function of its consequences and is environmentally

caused.

• Reinforcement theorists see behavior as environmentally caused. Reinforcement theory ignores

cognitive variables of the individual and concentrates solely on what happens when he or she
takes some action.

• Provides powerful means of analyzing what controls behavior, and therefore we typically
consider it in discussions of motivation.

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1. Positive reinforcement is a much better motivational technique than punishment because

punishment:

• tries to stop undesirable behavior and does not offer an alternative behavior
• creates bad feelings, negative attitudes toward the activity and the person who gives the
punishment
• suppresses behavior, but does not permanently eliminate it.

2. Once certain behavior has been conditioned through repetitive reinforcement, elimination of the
reinforcement will decline the motivation to perform that behavior.
• -> do not give a reward every time, for every response but irregularly

Operant Conditioning theory/Behaviourism and Reinforcement

Operant conditioning theory: Probably the most relevant component of reinforcement theory for
management, argues that people learn to behave to get something
they want or to avoid something they don't want.

Behaviourism: A theory stating that behavior follows stimuli (Reize) in a relatively

unthinking manner. Behaviourism is a worldview that assumes a
learner is essentially passive, responding to environmental stimuli.
Reinforcement strengthens a behavior and increases the likelihood it
will be repeated.

Expectancy Effects: Occurs when an incorrect belief held by the perceiver about
(≠ Expectancy Theory!) a target (another person) leads the perceiver to act (often unconsciously)
in such a manner as to elicit the expected behavior from the target.

Equity theory
-> check slides (motivation 1, slide 34)

• According to equity theory, employees compare what they get from their job (their "outcomes,"
such as pay, promotions, recognition, or a bigger office) to what they put into it (their "inputs,"
such as effort, experience, and education).

• They take the ratio (!!not just output or input) of their outcomes to their inputs and compare it
to the ratio of others, usually someone similar like a co-worker or someone doing the same job.

• It’s about perception.

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Based on equity theory, employees who perceive inequity will make one of six choices:

1. Change inputs (exert less effort if underpaid or more if overpaid).

2. Change outcomes (individuals paid on a piece-rate basis can increase their pay by producing a
higher quantity of units of lower quality, salary, benefits, prise, recognition, appreciation -> work not
valued so ask supervisor to increase outcomes). Typically, not in control of employee.
3. Distort perceptions of self ("I used to think I worked at a moderate pace, but now I realize I work a
Jot harder than everyone else").
4. Distort perceptions of others ("Mike's job isn't as desirable as I thought", he really worked
harder).
5. Choose a different referent ("I may not make as much as my brother-in law, but I'm doing a lot
better than my Dad did when he was my age").
6. Leave the field (quit the job, change team or get another task)

Organisational justice

An overall perception of what is fair in the workplace, composed of – (1) distributive, (2) procedural,
(3) informational, and (4) interpersonal justice.

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Distributive justice: Perceived fairness of the amount and allocation of rewards among
individuals.

Procedural justice: The perceived fairness of the process used to determine the distribution of
rewards. If outcomes are favourable, individuals care less about the process,
so procedural justice doesn't matter as much when distributions are
perceived to be fair. When outcomes are unfavourable, people pay close
attention to the process. If the process is judged to be fair, then employees
are more accepting of unfavourable outcomes.

When do employees perceive procedures of decision makers as fairer?

- Decision makers follow several rules/make decisions in a consistent manner
- Avoiding bias (not favouring one group or person over another)
- Using accurate information
- Acting ethically

Interactional justice Perceived degree to which one is treated with dignity and respect.
(Interpersonal justice). Consists of interpersonal and informational
justice.

Informational justice: The degree to which employees are provided truthful explanations for
decisions.

Job engagement: The investment of an employee's physical, cognitive, and emotional

energies into job performance.

What makes people more likely to be engaged in their jobs?

- Degree to which an employee believes it is meaningful to engage in
work
- Match between the individual’s values and those of the organisation

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Simon Sinek: The Golden Circle

• Sinek's Golden Circle model is an attempt to explain why some people and organizations are
particularly able to inspire others and differentiate themselves successfully.
• Not from outside, inspiring leaders act from inside to outside (e.g. apple), People don’t buy
things because what they do, but why they do it. Why -> feelings
• People buy things who believe in what you believe.

Daniel Pink: Motivation 3.0/Drive

• Once you get above rudimentary cognitive skill, rewards such as bonuses don’t work that way
like in mechanical work for example.

• For simple, straight forward tasks, rewards work well, but when a task gets more complicated, it
requires some conceptual, creative thinking those kinds of motivators don’t work.

• Pay people enough to take the issue of money off the table.

• Autonomy (desire to be self-directed) , mastery (get better at things) and purpose lead to better
performance and personal satisfaction.

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8. OB: Motivation 2 (Chapter 8)

LO

• Describe contemporary theories of motivation and apply their key principles to organizations.
• Describe the job characteristics model and the way it motivates by changing the work
environment.
• Compare the main ways jobs can be redesigned.
• Explain how specific alternative work arrangements can motivate employees.
• Describe how employee involvement measures can motivate employees.

Key Terms

• JCM-related terms (skill variety, task identity, task significance, autonomy, feedback)
• Job design
• Terms related to job redesign (job rotation, job enlargement, job enrichment)
• Empowerment
• Terms related to alternative work arrangements: (flextime, job sharing, telecommuting etc.)
• Terms related to employee involvement and participation (EIP) (participation management,
representative participation)
• Terms related to rewards (variable-pay program, bonus etc.)

Key Theories

• Job Characteristics Model

• Redesign of Job
• Alternative Work Arrangements
• Employee Involvement
• Plus application: using rewards to motivate employees

Job design: Suggests that the way elements in a job are organized can influence employee effort.

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Hackman & Oldhams’ Job Characteristics Model (JCM)

• What is the best way to design work so the people are engaged and perform well.
• A model proposing that any job can be described in terms of five core job dimensions (job
characteristics): skill variety, task identity, task significance, autonomy, and feedback.

1. Skill variety: The degree to which a job requires different activities using
specialized skills and talents (technological skills, communication skills, social skills etc.)
-> people with very high skill variety are often business owners who do all tasks

2.Task identity: The degree to which a job requires completion of a whole and identifiable piece of
work. (Low at assembly line). Employee tend to find more meaning.

3. Task significance: The degree to which a job has a substantial impact on the lives or work of other
people. (Not: How much a task contributes to make a profit)

4. Autonomy: The degree to which a job provides substantial freedom and discretion to the
individual in scheduling the work and in determining the procedures to be used in carrying it out.
(Low when a managers always tells you what to do)

5. Feedback: The degree to which carrying out the work activities required by a job results in the
individual obtaining direct and clear information about the effectiveness of his or her performance.

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• Note how the first three dimensions-skill variety, task identity, and task significance-combine to
create meaningful work the employee will view as important, valuable, and worthwhile.
• Jobs ,with high autonomy give employees a feeling of personal responsibility for results;
feedback shows them how effectively they are performing -> obtain internal rewards

Motivating potential score (MPS)

• A predictive index that suggests the motivating potential in a job.

• The three factors that lead to experienced meaningfulness and high on both autonomy and feedback.
If jobs score high on motivating potential, the model predicts that motivation, performance, and
satisfaction will improve and that absence and turnover will be reduced.

Redesign of Jobs

Job Rotation: If employees suffer from over-routinization of their work, one

alternative is job rotation, or the periodic shifting of an employee from
one task to another with similar skill requirements (and similar taks) at
the same organizational level (also called cross-training). Increases job
satisfaction, organizational commitment and can be used as training.
Drawbacks: Training costs increase / reduces overall productivity for
that role / disruptions when members of the work group must adjust
to new employees.

Job Enrichment: The major focus of self-determination theory can be put into action
through the process of job enrichment. In job enrichment, high-level
responsibilities are added to the job to increase a sense of purpose,
direction, meaning, and intrinsic motivation.
How to enrich a job? -> Apply the Job characteristics model
- Provide employees with discretion
- Provide greater authority
- Allow freedom

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Job Enlargement: Is increasing the number of different tasks in a given job by changing
the division of labour. Increasing the range of tasks performed will
reduce boredom and increase motivation to perform at high level ->
increases skill variety as well.

Guidelines for Enriching a Job

Eustress: Positive stress through additional stress

Distress: Negative stress

Summary: Contemporary Theories of Motivation

→ For exam: What are ways beyond carrot and sticks what employees can do to motivate
employees?

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Alternative Work Arrangements

Flextime: Allows employees some discretion (leave way) over when they arrive
at work and when they leave. Employees must work a specific number
of hours per week but may vary their hours of work, within limits. E.g.:
Employees must be at their jobs during the common core period, but
they may accumulate their other 2 hours around that.

-> Flextime tends to reduce absenteeism because employees can

schedule their work hours to align with personal demands, reducing
tardiness and absences, and they can work when they are most
productive.
Drawback: Not applicable to every job or every worker

Alternatives of temporal flexibility:

- Annual hours contract
- Sabbatical
- Flextime
- Compressed workweek
- Part-time working (sometimes combined with job-sharing)

Job sharing: An arrangement that allows two or more individuals to split a

traditional 40-hour-a-week job.

Telecommuting: Refers to working at home-or anywhere else the employee chooses

(Not homeworking) that is outside the workplace-at least 2 days a week through virtual
devices linked to the employer's office. A sales manager working from
home is telecommuting, but a sales manager working from her car on a
business trip is not.
Advantages: Positively related to objective and supervisor rated
performance and job satisfaction/ reduces role stress and turnover
intentions
Drawbacks: May lead to social loafing (faulenzen) / increase feelings of
isolation as well as reduce job satisfaction and coworker relationship
quality.

Employee involvement and participation (EIP)

• A process that uses employees' input to increase their commitment to organizational success. If
workers are engaged in decisions that increase their autonomy and control over their work lives,
they will become more motivated, more committed to the organization, more productive, and
more satisfied with their jobs. Also applicable for teams.

- Joint decision making

- Trust and confidence in leaders is essential
- Studies of the participation-performance have yielded mixed results
• EIP programs clearly have the potential to increase employees' intrinsic motivation.

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Examples of Employee Involvement Programs

• Participation management

- Common to all participative management programs is joint decision making, in which

subordinates share a significant degree of decision-making power wi.th their immediate
superiors.

- This sharing can occur either formally through, say, briefings or surveys, or informally through
daily consultations as a way to enhance motivation through trust and commitment.

• Representative participation

- Workers are represented by a small group of employees

- The two most common forms of representation are works councils and board representatives.
Works councils are groups of nominated or elected employees who must be consulted when
management makes decisions about employees.
Board representatives are employees who sit on a company's board of directors and represent
employees' interests.

Rewards through Variable-Pay Programs

Variable-pay program:
• Piece-rate, merit-based, bonus, profit-sharing, and employee stock ownership plans are all forms
of a variable-pay program (also known as pay for performance), which bases a portion of an
employee's pay on some individual and/ or organizational measure of performance. The variable
portion may be all or part of the paycheck.

• The fluctuation in variable pay is what makes these programs attractive to management. lt turns
part of an organization's fixed labor costs into a variable cost, thus reducing expenses when
performance declines.

Piece-rate pay plan:

Compensating production workers with a fixed sum for each unit of production completed, but it can
be used in any organizational setting where the outputs are similar enough to be evaluated by
quantity. No base salary.

Merit-based pay plan:

• Pays for individual performance based on performance appraisal ratings.
• A main advantage is that high performers can get bigger raises. If designed correctly, merit-based
plans let individuals perceive a strong relationship between their performance and their rewards.
• Limitation: Typically based on an annual performance appraisal (subjective) / available funds
fluctuates on economic conditions (have little to do with individual performance.)

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Bonus:
A pay plan that rewards employees for recent performance rather than historical performance. The
incentive effects should be higher than those of merit pay because, rather than paying for previous
performance now rolled into base pay, bonuses reward recent performance.

Profit-sharing plan:
Distributes compensation based on some established formula designed around a company's
profitability. Compensation can be direct cash outlays or, particularly for top managers, allocations of
stock options.

Employee stock ownership plan:

• Company-established benefit plan in which employees acquire stock, often at below-market
prices, as part of their benefits.
• Research on ESOPs indicates they increase employee satisfaction and innovation. ESOPs have the
potential to increase job satisfaction only when employees psychologically experience
ownership.

Using Benefits to Motivate Employees

Flexible benefits: Consistent ,with expectancy theory's thesis that organizational

rewards should be linked to each employee 's goals, flexible
benefits individualize rewards by allowing each employee to
choose the compensation package that best satisfies bis or her
current needs and situation. Flexible benefits can
accommodate differences in employee needs based on age,
marital status, partner's benefits status, and number and age
of dependents.

Using Intrinsic Rewards to Motivate Employees

Employee recognition program: A plan to encourage specific behaviors by formally appreciating

specific employee contributions. Employee recognition
programs range from a spontaneous and private thank-you to
widely publicized formal programs in which the procedures for
attaining recognition are clearly identified.

-> Research suggests that financial incentives may be more motivating in the short term, but in the long
run nonfinancial incentives work best.

-> Studies indicate that employee recognition programs are associated with self-esteem, self-efficacy, and
job satisfaction, and the broader outcomes from intrinsic motivation are well documented.

-> An obvious advantage of recognition programs is that they are inexpensive

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Summary in Questions

• What are the predictions of the Job Characteristics Model?

• What are the three major ways a job can be redesigned?
• What are alternative work arrangements and what are their pros and cons?
• How might employee involvement increase motivation?
• Explain why motivation is not the only variable influencing performance.

996 -> work form 9 in the morning to 9 in the evening 6 days in a week.

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9. OB: Leadership (Chapter 10)

LO

• Explain the differences between leadership, management, and power.

• Give an overview of the history of leadership theories.
• Summarize the conclusions of trait theories of leadership.
• Identify the central tenets and main limitations of behavioural theories and contingency theories
of leadership.
• Explain charismatic and transformational leadership.
• Define authentic leadership and positive leadership.
• Address challenges to the effectiveness of leadership.
… and apply the theories and models to practice.

Leadership: - The ability to influence a group toward the achievement of a vision or set of
goals. But not all leaders are managers, nor are all managers leaders.

Managers: Formulate detailed plans, create efficient organizational structures,

and oversee day-to-day operations.

Contrasting Leadership, Power and Management

Direct Leadership: Direct (face-to-face, email etc.), interaction (performance reviews..)

Indirect Leadership: Via structures, processes, rules & regulations, culture & values. Not only
behaviour of leader, but also culture (hierarchical etc.)
History of Leadership Theories

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Trait Theories of Leadership

• Theories that consider personal qualities and characteristics that differentiate leaders from non-
leaders.
• Literature organized around the Big Five framework have found extraversion to be the most
predictive trait of effective leadership.
• Unlike agreeableness and emotional stability (to a certain extent, because as a leader you are
exposed and for making difficult decisions you need to be calm), which do not seem to predict
leadership, conscientiousness, and openness to experience may predict leadership, especially
leader effectiveness.

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• Normative (midrange) scores on the Dark Side

(Dark Triad) personality traits were optimal,
while low (and high) scores were associated
with ineffective leadership
• Once people have power, most of them fall in
the dark triad.

• Another trait that may indicate effective leadership is emotional intelligence (EI). The core
component of EI is empathy.
• Empathetic leaders can sense others' needs, listen to what followers say (and don't say), and
read the reactions of others. Taking opinions of others in consideration and also perceive
emotions in the self.

Typical Leadership traits:

– like being around people

– are able to assert themselves (extraverted)
– are disciplined and able to keep commitments they make (conscientious)
– are creative and flexible (open)
– are emotionally intelligent (core component of EI is empathy; link between EI and leadership
effectiveness not fully investigating yet)

Behavioural Theories of Leadership

• Theories proposing that specific behaviours differentiate leaders from non-leaders.

• Trait research provides a basis for selecting the right people for leadership. Behavioural theories
of leadership, in contrast, imply we can train people to be leaders.

• E.g. GLOBE studies: Culturally Endorsed Leadership Theory (CLT)

The GLOBE research team defined leadership as:
“… the ability of an individual to influence, motivate and enable others to contribute toward the
effectiveness and success of the organizations of which they are members.”

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Initiating structure: The extent to which a leader defines and structures his role and those of the
Job/task-oriented subordinates to facilitate goal attainment Assigns followers particular tasks,
sets definite standards of performance, and emphasizes deadlines. -> more in
relatively autocratic manner. Focusing on the goals.

Consideration: The extent to which a leader has job relationships that are characterized by
Employee-oriented mutual trust, respect for subordinates' ideas, and regard for their feelings.
Helps employees with personal problems, is friendly and approachable,
treats all employees as equals, and expresses appreciation and support
(people-oriented). -> According to GLOBE Brazil for example (don’t favour
unilateral decision making)

“The Michigan Studies” (Katz et al. 1950) identified two dimensions of leadership behaviour:

-> equally effective

GLOBE (Global Leadership and Organisational Behaviour Effectiveness)

• 21 Primary Leadership Dimensions -> factors that in all societal cultures are viewed as
contributing to a leader's effectiveness (or lack of effectiveness).
-> Types of behaviour (came in bundles)

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• 6 Global Leadership Dimensions -> Six universally shared conceptions of leadership (the ways in
which people worldwide distinguish between leaders who are effective and ineffective)
-> 6 bundles

-> Three upper most effective (tree lower ones not very effective)
-> Charismatic/Value-based leadership overall most effective

National Culture and CEO Behaviour (GLOBE 2014)

• Charismatic leadership behaviour is consistently the most impactful leadership behaviour

regarding Top Management Team (TMT) Dedication and Firm Performance
• The “fit” (or match) between the CEOs behaviour and the leadership expectations within a
society predicts the level of TMT Dedication and Firm Competitive Performance: Better fit with
expectations gives the CEO better results in terms of the TMT Dedication and Firm Performance.

Contingency Theories: Traits and behaviours do not guarantee success. Context and situation
matter too.
But: Theories often too complex to apply. Empirical evidence?

Three contingency or situational dimensions:

1. Leader-member relations: The degree of confidence, trust, and respect that subordinates
have in their leader.

2. Task structure: The degree to which job assignments are regimented (that is,
structured or unstructured).

3. Position power: Influence derived from one's formal structural position in the
organization; includes the power to hire, fire, discipline,
promote, and give salary increases.

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Leader-participation model: A contingency theory we cover argues that the way the leader
makes decisions is as important as what he or she decides. Provides
a set of rules to determine the form and amount of participative
decision making in different situations.

The Tannenbaum-Schmidt continuum of leadership behaviour

Should a Manager be democratic or autocratic – or s.th. in between?

-> GLOBE studies can also be contingency theories, because leadership depends on the different
cultures.

Contemporary Theories

Charismatic Leadership Theory (R. House, 1977) (!)

A leadership theory stating that followers make attributions of heroic or extraordinary leadership
abilities when they observe certain behaviours in others.

They have a vision, have a sense of mission, are willing to take personal risks, are sensitive to their
followers' needs, have confidence that their vision could be achieved, and engage in unconventional
behaviours (i.e., they "go against the flow")

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4 Key Characteristics of Charismatic Leaders

1. Vision and articulation: Has a vision-expressed as an idealized goal-that proposes a

future better than the status quo; able to clarify the importance
of the vision in terms that are understandable to others.

2. Personal risk: Willing to take on high personal risk, incur high costs, and
engage in self-sacrifice to achieve the vision.

3. Sensitivity to follower needs: Perceptive of others' abilities and responsive to their needs and
feelings.

4. Unconventional behaviour: Engages in behaviours that are perceived as novel and counter
to norms.

-> Individuals are born with personality traits that make them more charismatic (emotionally stable,
extraverted). Charismatic leadership is not only the province of world leaders-all of us can develop,
within our own limitations, a more charismatic leadership style.
-> born and made

How do charismatic leaders influence followers?

-> Effective when people sense a crisis, when they are under stress or fear for their lives
-> Dark side: When leaders allow their personal goals to override the goals of the organization

Vision: A long-term strategy for attaining a goal by linking the present with a better
future for the organization. Followers are inspired not only by how
passionately the leader communicates – there must be an underlying
vision.

Vision statement: A formal articulation of an organization's vision or mission.

Can you learn to become a charismatic leader? -> Yes to a certain extent (train)

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Full Range Leadership Model (Avolio & Bass, 1995) (!)

Full range of leadership model: A model that depicts seven management styles on a continuum:
laissez-faire, management by exception, contingent reward
leadership, individualized consideration, intellectual stimulation,
inspirational motivation, and idealized influence.

! Transactional Leaders: -> Leaders who guide or motivate their followers in the direction
of established goals by clarifying role and task requirements.
-> Does not require a lot of leadership/activity but not as
effective as the transformational leadership.

! Transformational Leaders: Leaders who inspire, act as role models, and intellectually
stimulate, develop, or mentor their followers, thus having a
profound and extraordinary effect on them.

-> Transactional and transformational leadership complement each other; they are not opposing
approaches to getting things done. The best leaders are transactional and transformational.
-> A combination of all the elements is the most effective (!)

Management by exception: Leaders primarily "put out fires" when there are crisis exceptions
to normal operating procedures, means they are often too late
to be effective. (Active or passive).
Only act when standards are broken. No feedback.

Contingent reward leadership: Gives predetermined rewards for employee efforts, can be an
effective style of leadership but will not get employees to go
beyond the call of duty. (Performance management, MBO)

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How Transformational Leadership Works

-> Has been supported at diverse job levels and occupations but isn’t equally effective in all
situations.
-> Has a greater impact on the bottom line in smaller, privately held firms than in more complex
organizations

Transformational vs. charismatic leadership

• Charismatic leadership places somewhat more emphasis on the way leaders communicate, while
transformational leadership focuses more on what they are communicating.
• Both focus on the leader's ability to inspire followers, and sometimes they clos in the same way.

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More Contemporary Theories

- Positive Leadership -> Trust / Mentoring

- Positive Leadership (Cameron, Creusen, Seliger)

- Authentic Leadership: Leaders who know who they are, know what they believe in and value,
and act on those values and beliefs openly and candidly. focuses on the
moral aspects of being a leader.

- Servant Leadership: Leadership style marked by going beyond the leader's own self-interest
and instead focusing on opportunities to help followers grow and
develop. Characteristic behaviours include listening, empathizing,
persuading, accepting stewardship.

- Abusive supervisor: Supervision that is hostile both verbally and nonverbally.

- Ethical Leadership
- Digital Leadership
- Health-oriented Leadership

Positive Leadership

Trust

• A positive expectation that another will not act opportunistically.

• Trust is a primary attribute associated with leadership; breaking it can have serious adverse
effects on a group's performance.
• Transformational leaders generate higher levels of trust from their followers.

• Outcomes of trust:
o Trust encourages taking risks
o Trust facilitates information sharing
o Trusting groups are more effective
o Trust enhances productivity

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Trust propensity: How likely an employee is to trust a leader. Trust propensity is closely linked
to the personality trait of agreeableness, and people with lower self-esteem
are less likely to trust others.

Mentoring

• A senior employee who sponsors and supports a less-experienced employee, called a protege.
• Mentoring relationships serve career and psychosocial functions.

Formal mentoring: Protege candidates are identified according to assessments of leadership

potential and then matched with leaders in corresponding organizational
functions.

Informal mentoring: Leaders identify a less experienced, lower-level employee who appears to
have potential for future development.

Career and Psychological Functions of the Mentoring Relationship

Challenges of Leadership

Attribution theory of leadership: A leadership theory stating that leadership is merely an

attribution that people make about other individuals. We
attribute the following to leaders: intelligence, outgoing
personality, strong verbal skills, aggressiveness,
understanding, and industriousness.

-> Attribution theory might give us a wrong impression of a

leader behaviour -> can be luck involved

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Substitutes for and Neutralizers of Leadership

Substitutes: Attributes, such as experience and training, that can replace the need for a
leader's support or ability to create structure.

Neutralizers: Attributes that make it impossible for leader behaviour to make any difference
to follower outcomes.

-> And: Self-Organisation

Implications for Managers

• For positions which require leadership, hire candidates who exhibit transformational leadership
qualities and who have demonstrated vision and charisma.
• Tests and interviews can help you identify people with leadership qualities.
• Seek to develop trusting relationships with followers because, as organizations have become less
stable and predictable, strong bonds of trust are replacing bureaucratic rules in defining
expectations and relationships.
• Consider investing in leadership training such as formal courses, workshops, rotating job
responsibilities, coaching and mentoring.
• In order produce extraordinary results, global leaders need to understand and exceed the
leadership expectations in the cultures they are interacting with (GLOBE studies).

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10. HRM: Performance Management (Chapter 7)

LO:

• Key essentials of management control systems, organizational justice, and performance

management.
• Relate individual performance appraisal to the organization wide performance management
process.
• Identify a variety of appraisal methods.
• Have the skills necessary to use the performance appraisal process as a positive enhancement to
employee performance.
• Has the knowledge to discuss the actual challenges in Performance Management.

Performance management: Goal oriented process directed toward ensuring that

organizational processes are in place to maximize the productivity
of employees, teams, ana ultimately, the organization.
• Dynamic, continuous process
• Improves organizational effectiveness
• Strategic goals

Performance appraisal: Formal system of review and evaluation of individual or team task
performance.
• Periodic (usually annual) event (continuous)
• Formal review
• Last step in performance management process

Three common purposes: 1) Develop people

• Individual development
• Coaching & mentoring
• Retention of top performers
• Leadership Development

2) Reward people
• Pay for contribution
• Promotion & advancement
• Total rewards

3) Drive organisational performance

• Goal alignment
• Further developing the organisation
• Culture development

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Organizational Control

4 Performance Evaluation Methods

1. Trait Methods

• Managers assess subordinates on personal characteristics that are relevant to job performance,
such as skills, abilities, or personality.
-> What workers are like.

• Disadvantages: (1) Rating individuals on subjective personality factors rather tan on objective job
performance. (2) May be unfair and discriminatory. (3) Don’t enable managers to give feedback to
use to improve performance

2. Comparison Methods

A type of performance-appraisal method, require that supervisors evaluate a given employee's

performance against other employees' performance attainments. Employees are ranked from the
best performer to the poorest performer. Employees may be ranked on overall performance or on
various traits.

Forced distribution method:

• Performance appraisal method in which the supervisor is required to assign individuals in
a work group to a limited number of categories, like a normal frequency distribution.
• Three categories that might be used are best performers, moderate performers, and poor
performers. Predetermined distributions:
• 15 percent weil below average
• 25 percent below average
• 40 percent average
• 15 percent above average
• 5 percent weil above average

Disadvantages: (1) Competition and destroys employee loyalty, (2) Actual distribution of
employee performance can be substantial different from the forced distribution

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Paired comparisons:
• Supervisors compare each employee to every other employee, identifying the better
performer in each pair. Following the comparison, the employees are ranked according to
the number of times they were identified as being the better performer.
• Best suited for small groups of employees who perform the same or similar jobs.

Disadvantages: (1) Subjective, (2) Small differences may become exaggerated.

3. Behavioural Methods

• Performance appraisal methods that focus on distinguishing between successful and

unsuccessful behaviours. Relative free of errors and biases.

• Managers evaluate how workers perform their jobs – the actual actions and behaviours that
workers exhibit on the job. (E.g. evaluate a social worker how much he looks clients in the eyes) -
> What workers do and how workers perform their jobs is important.

Three main types of behavioural systems: 1. Critical incident technique (CIT)

2. Graphic Rating Scale Method
3. Behaviourally anchored rating scales (BARS)
4. Behavioural observation scales (BOS)

1. Critical incident technique (CIT)

• Performance appraisal method that requires keeping written records of highly favorable and
unfavorable employee work actions. What happened in the past.
• Useful because this procedure requires extensive documentation that identifies successful and
unsuccessful job performance.
• Supervisors may find the record keeping to be overly burdensome.

2. Graphic Rating Scale Method

The rater checks statements on a list with intervals that the rater believes are characteristics of the
employee.

3. Behaviourally anchored rating scales (BARS)

• Performance appraisal method that combines elements of the traditional rating scale and critical
incident methods; various performance levels are shown along a scale with each described in
terms of an employee's specific job behavior.

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• Incidents as expectations to emphasize the fact that the employee does not have to demonstrate
the exact behavior that is used as an anchor to be rated at that level. Examples of specific
behaviours.
• Experts therefore list only those behaviors that they believe are most representative of the job
the employee must perform.

4. Behavioural observation scales (BOS)

• A specific kind of behavioral system for evaluating job performance by illustrating positive
incidents (or behaviors) of job performance for various job dimensions. BOS is developed in the
same way as a
• BARS instrument, except that it incorporates only positive performance behaviors.

Result Methods

Performance appraisal method in which the manager and employee jointly agree on objectives for
the next appraisal period; in the past a form of management by objectives
The selection of results largely depends on three factors: Relevance, validity and reliability.

SMART: Specific
Measurable
Attainable
Relevant
Timely

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Goals linked to Balanced Scorecard

Success of an individual and a company, objectives can be linked to the four clusters of the balanced
scorecard. Ideally, employees identify approx. six key objectives if possible distributed across all
clusters.

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Management by Objectives (MBO)

A program that encompasses (1) specific goals, (2) participatively set, for an (3) explicit time period,
with (4) feedback on goal progress. Many elements in MBO programs match the propositions of goal-
setting theory. With MBO, PA can be a joint effort, based on agreement.

Five Point Rating Scale

→ Applies to individual objectives and the overall contribution rating.

360 Degree Performance Appraisal

• Popular performance appraisal method that involves evaluation input from multiple levels within
the firm as well as external sources. Improves motivation.
• The 360-degree feedback approach provides an all-inclusive view of each employee.
• A variety of people (manager, peers, co-worker, customers…) appraise performance. Focuses on
behaviours.

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Work Standards Method

• Performance appraisal method that compares each employee's performance to a predetermined

standard or expected level of output.
• Standards reflect the normal output of an average worker operating at a normal pace.
• E.g., Production jobs
• Often coupled with an incentive pay plan known as the piecework plan. For each hour, workers
receive piecework incentives for every item produced over the designated production standard.

Organizational Justice

The study of people’s perceptions of fairness in organizations

Distributive Justice: The form of organizational justice that focuses on people’s beliefs that
they have received fair amounts of valued work-related outcomes.

Procedural Justice: People’s perceptions of the fairness of the procedures used to

determine the outcomes they receive.

Interactional Justice: People’s perceptions of the fairness of the manner in which they are
treated by other people.

Performance Appraisal and other HRM functions

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Characteristics of an Effective Appraisal System

o Reliability and validity

o Job-related criteria (closely to accomplishment of organisational goals)
o Performance expectations (employee must understand in advance what is expected)
o Standardisation (same evaluation instrument for all employees in same category)
o Trained appraisers
o Continuous open communication (feedback -> few surprises in performance review)
o Conduct performance reviews
o Due process (provide employee to appeal appraisal result if inaccurate or unfair)

Reasons Appraisal Programs sometimes fail

o Lack of top management information and support

o Unclear performance standards
o Too many forms to complete
o Use of the appraisal program for conflicting (political) purposes
o Subjectivity
o Bias errors!

Rating errors
In performance appraisals, differences between human judgment processes versus objective,
accurate assessments uncolored by bias, prejudice, or other subjective, extraneous influences.
Major types of rater errors include: - Bias errors
- Contrast errors
- Errors of central tendency
- Errors of leniency or strictness

Bias errors: Evaluation errors that occur when the rater evaluates the employee based
on a personal negative or positive opinion of the employee rather than on
the employee's actual performance. Four ways supervisors may bias
evaluation results are first-impression effects, positive and negative halo
effects, similar-to-me effects, and illegal discriminatory biases.

First-impression effect: An initial favorable or unfavorable judgment about an

employee's which is ignored or distorted.

Positive halo effect: Evaluation error that occurs when a manager generalizes one
(Halo effect) positive performance feature or incident to all aspects of
employee performance, resulting in a higher rating.

Negative halo effect: Evaluation error that occurs when a manager generalizes one
(Horn error) negative performance feature or incident to all aspects of
employee performance, resulting in a lower rating.

Similar-to-me effect: Refers to the tendency on the part of raters to judge favorably
employees whom they perceive as like themselves.

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Illegal discriminatory bias: A bias error for which a supervisor rates member of his or her
race, gender, nationality, or religion more favorably than
members of other classes.

Contrast errors: A rating error in which a rater (e.g. , a supervisor) compares an employee
to other employees rather than to specific explicit performance standards.

Central tendency error: Evaluation appraisal error that occurs when employees are incorrectly
rated near the average or middle of a scale.

Leniency error: Giving an undeserved high performance appraisal rating to an employee.

Motivated by a desire to avoid controversy over the appraisal. Result in
failure to recognize correctable deficiencies for employee.

Strictness errors: Being unduly critical of an employee's work performance.

Managerial Issues concerning Appraisals

1. There is little face to face discussion between the manager and the employee being appraised.
2. The relationship between the employee’s job description and the criteria on the appraisal form
isn’t clear.
3. Managers feel that little or no benefit will be derived from the time and energy spent in the
process, or they are concerned only with bad performances.
4. Managers dislike the face-to-face confrontation of appraisal interviews.
5. Managers are not sufficiently adept at rating employees or providing them with appraisal
feedback.
6. The appraisal is just a once-a-year event, and there is little follow up afterward.

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Reframing Traditional Assumptions of PM

Goal Setting

Annual Planning → Agile Planning

Working Independently → Working as a Team

Feedback

Manager Only → Crowdsourced

1.Manager turnover
2.Dual-reporting relationships
3.Globalization4.Critical Mindsets

Annual Review → In the moment feedback

Judgement → Coaching for Performance

Evaluation

Normal Distribution?
Complex → Keep it Simple
Ratings → No Ratings

Does Technology help?

- Automation
- Reporting & analytics
- Centralization
- Accessibility
- Consistency
- Less administration work

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11. Exam related questions

→ Also check Mini-Cases in slides

• When an individual looks at a target and attempts to interpret what he or she sees – that
interpretation is influenced by personal characteristics of the individual perceiver.
-> correct

• Attribution theory suggests that when we observe an individual’s behavior, we attempt to

determine whether it was internally or externally caused.
-> correct

• Fundamental attribution error: Tendency of individuals to attribute their own success to internal
factors (e.g. ability or effort), while putting the blame for failure on external factors (e.g. bad
luck)
-> false

• An employee’s performance appraisal is very much dependent on the perceptual process. If

subjective measures are taken for the evaluation, this may be problematic because of selective
perception, contrast effect, halo effects etc.
-> correct

• Decision making
- becomes impaired (gestört) when we try to create meaning out of random events True
- Hindsight bias reduces our ability to learn from the past True
- Confirmation bias: tendency to base judgements on information readily available False
- People with weak abilities are more likely to overestimate their performance True
- Relying on experience, impulses, gut feelings etc. easily leads to distortions (Verzerrungen) True

• Which dimension(s) of the Big 5 Personality Model are linked to Growth Need Strength (JCM)?
- Extraversion false
- Agreeableness false
- Conscientiousness True
- Emotional Stability false
- Openness to Experience True

• Assess the following statements about the Job Characteristics Model as true or false:
- If employees have a lot of freedom how to organize their job, they experience a higher
responsibility for the outcome.
True
- Task Identity refers to the degree to which employees relate to their work and enjoy the tasks.
False
- The variable Growth Need Strength is a moderating variable and helps to explain, why individuals
show different reactions.
True
• Assess the following statements about job redesign, flexwork and participation as true or false:

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- Job Enrichment is the horizontal expansion of a job, it involves the addition of tasks at the same
level of skills and responsibility.
False
- 996 refers to a schedule of working from 9 am to 9 pm, six days a week.
True
- Participative Management is a participative process that uses employees’ input to increase their
commitment to the organisations success.
True
- Telecommuting allows employees some discretion over when they arrive at and leave the office.
False

Summary HRM & OB1 Patrick Schaad 101