SUMMARY OF LEARNING OBJECTIVES AND KEY POINTS 1. Identify the basic elements of organizations. Organizations are made up of a series of elements: Designing jobs Grouping jobs Establishing reporting relationships Distributing authority Coordinating activities Differentiating between positions 2. Describe the bureaucratic perspective on organization design. The bureaucratic model attempted to prescribe how all organizations should be designed. It is based on the presumed need for legitimate, logical, and formal rules, regulations, and procedures. 3. Identify and explain key situational influences on organization design. The situational view of organization design is based on the assumption that the optimal organization design is a function of situational factors. Four important situational factors are the following: Technology Environment Size Organizational life cycle 4. Describe the basic forms of organization design that characterize many organizations. Many organizations today adopt one of four basic organization designs: Functional (U form) Conglomerate (H form) Divisional (M form) Matrix Other organizations use a hybrid design derived from two or more of these basic designs. 5. Identify and describe emerging issues in organization design. Three emerging issues in organization design are the following: Team organization Virtual organization Learning organization DISCUSSION QUESTIONS Questions for Review 1. What is job specialization? What are its advantages and disadvantages? Job specialization is the breaking down of a job into smaller component parts. The benefits of job specialization include: (1) worker proficiency on simpler tasks; (2) no lost transfer time associated with workers changing tasks; (3) utilization of specialized efficient machinery; and (4) reduced training costs. The limitations include: (1) potentially boring and dissatisfying jobs and (2) no expected time saved or efficiency obtained. 2. What is departmentalization? What are its most common form? Departmentalization occurs when workers with similar jobs are grouped together within the organization in some logical fashion to increase efficiency. Large organizations cannot be managed by a single individual; therefore, people are grouped in a logical fashion according to an overall plan and are managed more easily. Functional departmentalization groups individuals according to the function they perform or the type of the work they do, such as grouping all individuals involved in marketing into one unit and all those involved in accounting into another. Product departmentalization groups everyone working on the same product into the same unit. For example, automakers typically have units with titles such as Autos and Trucks. Customer departments are formed when every individual working with a specific group of customers is located in the same unit. Dell uses customer departmentalization to form units including Government, Education, and Personal User. Location departmentalization groups everyone working in the same region. A company with three divisions based on east, central, and west locations is using location as the basis of its departmentalization. 3. Distinguish between centralization and decentralization, and comment on their relative advantages and disadvantages. In a centralized organization, decisions are made at the top level of the organization and passed down to workers at lower levels. Power and authority are concentrated at the top of the organization. Advantages of centralization include speed and ease of decision making and strong control of actions, strategy, and risk. Disadvantages include the fact that top managers may be out of touch with needs at the lower levels, the burden of heavy vertical communication, and the possible lack of motivation and initiative by lower-level workers. In a decentralized organization, the workers who make the decisions are those who will be responsible for implementing them. Thus, power and authority are distributed throughout all levels of the hierarchy. The advantages and disadvantages of decentralization are opposite those for centralization. 4. Describe the basic forms of organization design. What are the advantages and disadvantages of each? The U-form design is a functional approach that breaks the firm into specialties such as marketing, production, and accounting. This design is simple and clear, but it may not be adequate for controlling a large, complex organization. H-form designs combine a set of smaller unrelated businesses to form a holding company. Holding companies are very flexible and may be able to reduce overhead expenses. H-form firms, however, can be difficult to manage because management may lack expertise in each unrelated industry. M-form organizations are based on multiple businesses operating in related areas. This allows some activities to be decentralized and others to be centralized. The M-form provides a good balance of competition between units and cooperation over shared resources. The matrix design combines the functional department by creating product groups or temporary departments. Matrix designs allow firms to experience \"the best of both worlds.\" This design allows specialization, while also enhancing horizontal communication and giving management enhanced control. However, matrix designs may be confusing for workers who must report to two superiors. 5. Compare and contrast the matrix organization and the team organization, citing their similarities and differences. The matrix organization and the team organization are both attempts to improve the flexibility of an organization's structure. Both form groups of workers as required by the various projects they undertake. However, the primary difference is that the team organization does away with functional structure altogether. This is shown by the fact that, in the matrix organization, workers are assigned to both a functional and a project supervisor. In the team organization, workers are assigned to a team leader. Questions for Analysis 1. How is specialization applied in setting such as a hospital, restaurant, and church? Service organizations can take advantage of specialization to become more efficient. For example, in the hospital, it is possible to have one person who only changes bed linens, while another sweeps and mops the floor. In a church, some people are in charge of seating the congregation and others help collect funds for the church. In schools, the registration process can be broken down into several parts, with individuals helping with registration forms, course selection, and ID pictures. A restaurant can have one person cooking burgers, while another prepares the buns and condiments. 2. Learn how your school or business is organized. Analyze the advantages and disadvantages of this form of departmentalization, and then comment on how well or how poorly other forms of organization might work. In most institutions, academic units are organized by discipline, such as English, Chemistry, and Finance, to create functional departmentalization. However, there are probably elements of other forms of departmentalization as well. For example, many universities have separate colleges for graduate and undergraduate education, a form of customer departmentalization. If your school has satellite campuses in other parts of the city or state, with separate teaching and administrative staff, that is a form of regional departmentalization. 3. Identify five ways in which electronic coordination affects your daily life. You should be able to easily find several examples of electronic coordination, including work or school related email, electronic contact and schedule information, web-based interfaces with work or school, electronic access to library information, and so on. Electronic coordination may be implemented on a variety of different types of hardware, including cell phones, personal computers, and personal digital assistants. 4. Each of the organization designs is appropriate for some firms but not for others. Describe the characteristics that a firm using the U form should have. Then do the same for the H form, the M form, and the matrix design. For each item, explain the relationship between that set of characteristics and the choice of organization design. The U-form organization structure is best suited for organizations that use functional departmentalization, such as small or new firms or firms that manufacture a single product. The H-form is most appropriate for firms pursuing unrelated diversification, where each unit may act without coordinating with the other units. The M-form is best for firms pursuing related diversification because it enhances coordination between the units. Matrix designs work well for organizations that work on discrete projects, such as engineering, consulting, or accounting firms. Firms using the matrix design need functional expertise, but they also need flexibility and coordination across functions. 5. What are the benefits of using the learning organization approach to design? Now consider that, to learn, organizations must be willing to tolerate many mistakes because it is only through the effort of understanding mistakes that learning can occur. With this statement in mind, what are some of the potential problems with the use of the learning organization approach? Benefits include a well-trained and satisfied workforce, flexibility, improved quality and efficiency, and continuous improvement. However, managers must balance the competing demands of learning and perfection. In order to facilitate learning, managers must tolerate mistakes. But too many mistakes can lead to a breakdown in performance and distract attention from goal achievement. Intel managers have developed a unique approach to handling this problem. They first develop the optimal plant design, a process that involves lots of mistakes and lots of opportunities for learning. Then, they \"copy exactly\" that plant design as they build future plants. In other words, once the design is perfected, it is then reproduced over and over again. This achieves a balance between learning and efficiency. BULIDING EFFECTIVE DIAGNOSTIC SKILLS Exercise Overview Diagnostic skills enable a manager to visualize the most appropriate response to a situation. In this exercise, you're asked to apply your diagnostic skills to the question of centralization in an organization. Exercise Background Managers often find it necessary to change an organization's degree of centralization or decentralization. Begin this exercise by reflecting on two very different scenarios in which this issue has arisen: Scenario A. You're the top manager in a large organization with a long and successful history of centralized operations. For valid reasons beyond the scope of this exercise, however, you've decided to make the firm much more decentralized. Scenario B. Assume the exact opposite of the situation in Scenario A: You still occupy the top spot in your firm, but this time you're going to centralize operations in an organization that's always been decentralized. Exercise Task Now do the following: 1. For Scenario A, list the major barriers to decentralization that you foresee. Decentralized organizations can struggle with multiple individuals having different opinions on a particular business decision. As such, these businesses can face difficulties trying to get everyone on the same page when making decisions. 2. For Scenario B, list the major barriers to centralization that you foresee. Centralized organizations can suffer from the negative effects of several layers of bureaucracy. These businesses often have multiple management layers stretching from the owner down to frontline operations. Business owners responsible for making every decision in the company may require more time to accomplish these tasks, which can result in sluggish business operations. 3. In your opinion, which scenario would be easier to implement in reality? In other words, is it probably easier to move from centralization to decentralization or vice versa? Whatever your opinion in the matter, be ready to explain it. Centralized organizations can be extremely efficient regarding business decisions. Business owners typically develop the company's mission and vision, and set objectives for managers and employees to follow when achieving these goals. Decentralized organizations utilize individuals with a variety of expertise and knowledge for running various business operations. A broadbased management team helps to ensure the company has knowledgeable directors or managers to handle various types of business situations. 4. Given a choice of starting your career in a firm that's either highly centralized or highly decentralized, which would you prefer? Why? Business owners should carefully consider which type of organizational structure to use in their company. Small organizations typically benefit from centralized organizational structures because owners often remain at the forefront of business operations. Larger organizations usually require a more decentralized structure since such companies can have several divisions or departments. Business owners may need to consider changing the organizational structure depending on the growth and expansion of business operations. SKILLS SELF-ASSESMENT INSTRUMENT Delegation Aptitude Survey Purpose: To help students gain insight into the process of and the attitudes important to delegation. Introduction: Delegation Has a number of advantages for managers, workers, and organizations, but it also presents challenges. Managers who understand the benefits of delegation, who trust their subordinates, and who have the emotional maturity to allow others to succeed are more likely to be effective delegators. Instructions: 1. Complete the following Delegation Aptitude Survey. You should think of work-related or group situations in which you have had the opportunity to delegate responsibility to others. If you have not had such experiences, try to imagine how you would respond in such a situation. Circle the response that best typifies your attitude or behavior. 2. Score the survey according to the directions that follow. Calculate your overall score. 3. Working with a small group, compare individual scores and prepare group responses to the discussion questions. 4. Calculate a class-average score. Have one member of the group present the group's responses to the discussion questions. Delegation Aptitude Survey Statement 1. I don't think others can do the work as well as I can. 2. I often take work home with me. 3. Employees who can make their own decisions tend to be more efficient. 4. I often have to rush to meet deadlines. 5. Employees with more responsibility tend to have more commitment to group goals. 6. When I delegate, I always explain precisely how the task is to be done. 7. I always seem to have too much to do and too little time to do it in. 8. When employees have the responsibility to do a job, they usually do it well. 9. When I delegate, I make clear the end results I expect. 10. I usually only delegate simple, routine tasks. 11. When I delegate, I always make sure everyone concerned is so informed. 12. If I delegate, I usually wind up doing the job over again to get it right. 13. I become irritated watching others doing a job I can do better. 14. When I delegate, I feel I am Strongly Agree 1 Slightly Agree 2 Not Sure Slightly Disagree 3 4 Strongly Disagree 5 1 2 3 4 5 5 4 3 2 1 1 2 3 4 5 5 4 3 2 1 1 2 3 4 5 1 2 3 4 5 5 4 3 2 1 5 4 3 2 1 1 2 3 4 5 5 4 3 2 1 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 losing the control I need. 15. When I delegate, I always set specific dates for progress reports. 16. When I do a job, I do it to perfection. 17. I honestly feel that I can do most jobs better than my subordinates can. 18. When employees make their own decisions, it tends to cause confusion. 19. It's difficult for subordinates to make decisions because they don't know the organization's goals. 20. When employees are given responsibility, they usually do what is asked of them. 5 4 3 2 1 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 5 4 3 2 1 Discussion Questions 1. In what respects do the survey responses agree or disagree? 2. What might account for some of the differences in individual scores? 3. How can you make constructive use of the survey results? EXPERIENTIAL EXERCISE Purpose: Organization design refers to the overall set of elements used to configure an organization. The purpose of this exercise is to give you insights into how managers must make decisions within the context of creating an organization design. Introduction: Whenever a new enterprise is started, the owner must make decisions about how to structure the organization. For example, he or she must decide what functions are required, how those functions will be broken down into individual jobs, how those jobs will be grouped back together into logical departments, and how authority and responsibility will be allocated across positions. Instruction: Assume that you have decided to open a handmade chocolate business in your local community. Your products will be traditional bars and novelty shaped chocolates, truffles, other chocolate products such as ice cream, and gift baskets and boxes featuring chocolates. You have hired a talented chef and believe that her expertise, coupled with your unique designs and highquality ingredients, will make your products very popular. You have also inherited enough money to get your business up and running and to cover about one year of living expenses (in other words, you do not need to pay yourself a salary). You intend to buy food items including chocolate, cocoa, white chocolate, nuts, and fruit from suppliers who deliver to your area. Your chef will then turn those ingredients into luscious products that will then be attractively packaged. Local grocery store owners and restaurant chefs have seen samples of your products and indicated a keen interest in selling them. You know, however, that you will still need to service accounts and keep your customers happy. At the present time, you are trying to determine how many people you need to get your business going and how to group them most effectively in an organization. You realize that you can start out quite small and then expand as sales warrant. However, you also worry that if you are continually adding people and rearranging your organization, confusion and inefficiency may result. Under each of the following scenarios, decide how best to design your organization. Sketch a basic organization chart to show your thoughts. Scenario 1. You will design and sell the products yourself, as well s oversee production. You will start with a workforce of five people. Scenario 2. You intend to devote all of your time to sales to increase revenues, leaving all other functions to others. You will start with a workforce of nine people. Scenario 3. You do not intend to handle any one function yourself but will instead oversee the entire operation and will start with a workforce of 15 people. 1. After you have created your organization chart, form a small groups of four to five people each. Compare your various organization charts, focusing on similarities and differences. 2. Working in the same group, assume that five years have passed and that your business has been a big success. You have a large factory for making your chocolates and are shipping them to 15 states. You employ almost 500 people. Create an organization design that you think fits this organization best. Discussion Questions 1. How clear (or how ambiguous) were the decisions about organization design. 2. What are your thoughts about starting out too large to maintain stability, as opposed to starting small then growing? 3. What basic factors did you consider in choosing a design? MANAGEMENT AT WORK Let's say you're a businessperson in New York who needs to fly to Hong Kong. Logging on to Orbitz, you find that American Airlines (AMR) offers a nonstop round-trip flight for $2,692. Because Orbitz recommends that you \"Act Fast! Only! ticket left at this price!\" you buy your ticket online. On your departure date, you arrive at the American Airlines ticket desk, only to be referred to the Cathay Pacific Airways counter. Your flight, the ticket agent informs you, is actually operated by Cathay, and she points to the four-digit \"codeshare number\" on your ticket. Bewildered but hoping that you're still booked on a flight to Hong Kong, you hustle to the Cathay counter, where your ticket is in fact processed. Settled into your seat a few hours later, you decide to get on your laptop to see if you can figure out why you are and aren't on the flight that you booked. Going back to Orbitz, you find that, like American, Cathay does indeed offer a nonstop round-trip flight to and from its home city of Hong Kongfor $1,738. It dawns on you that if you'd bought your ticket directly from Cathay, you'd be sitting in the same seat on the same airplane for almost $1,000 less. If this scenario sounds confusing, that's because it is, even to veteran flyers. What's confusing about it is the practice of codesharing, which works like this: You buy a ticket from Airline A for a flight operated by Airline B on a route that Airline A for a flight operated by Airline B on a route that Airline A doesn't otherwise serve. This practice is possible if both airlines, like AMR and Cathay, belong to the same airline alliance (in this case, Oneworld). On the surface, the advantages to the airlines may seem mostly a matter of perception: An airline seems to be serving certain markets that it doesn't actually serve and flying certain routes more frequently than it actually does. The networks formed by codesharing agreements, however, are real, and the breadth of an airline's network is a real factor in attracting high margin corporate travelers. In fact, the spread of codesharing has led directly to the formation of much larger \"alliances\" of carriers who cooperate on a substantial level, including codesharing and shared frequent-flyer programs. The three largest airline alliances are the Star Alliance, which includes United Airlines, US Airlines; SkyTeam, which includes Delta, Air France, Alitalia, and Dutch-based KLM; and Oneworld, which includes AMR, Cathay, Qantas, British Airways, and Japan's JAL. An airline alliance is one form of a virtual organizationin this case, a temporary alliance formed by two or more organizations to pursue a specific venture or to exploit a specific opportunity. Although each member remains an independently owned and managed organization, alliance members can save money by sharing sales, maintenance, and operational facilities and staff (such as check-in, boarding, and other on-the-ground personnel), and they can also cut costs on purchases and investments by negotiating volume discounts. The chief advantages, however, are breadth of service and geographical reachin short, size (both perceived and real). Star Alliance, for example, operates 21,000 daily flights to 1,160 airports in 181 countries. According to the most recent data, its members carried 603.8 million passengers for a total of nearly (1 rpk means that 1 paying passenger was flown 1 kilometer). Based on rpk (which is really a measure of sales volume), Star commands 29.8 percent of global market share in the airline industry greater than the combined market share of all airlines that don't belong to any of the three major alliances. Note that our definition of a virtual organization indicates \"temporary alliance\SUMMARY OF LEARNING OBJECTIVES AND KEY POINTS 1. Describe the environmental context of HRM, including its strategic importance and its relationship with legal and social factors. HRM is concerned with attracting, developing, and maintaining the human resources that an organization needs. Its environmental context consists of its strategic importance and the legal and social environments that affect HRM. 2. Discuss how organizations attract human resources, including human resource planning, recruiting, and selecting. Attracting human resources is an important part of the HRM function. Human resource planning starts with job analysis and then focuses on forecasting the organization's future need for employees, forecasting the availability of employees both within and outside the organization, and planning programs to ensure that the proper number and type of employees will be available when needed. Recruitment and selection are the process by which job applicants are attracted, assessed, and hired. Methods for selecting applicants include application blanks, tests, interviews, and assessment centers. Any method used for selection should be properly validated. 3. Describe how organizations develop human resources, including training and development, performance appraisal, and performance feedback. Organizations must also work to develop their human resources. Training and development enable employees to perform their present job effectively and to prepare for future jobs. Performance appraisals are important for validating selection devices, assessing the impact of training programs, deciding pay raises and promotions, and determining training needs. Both objective and judgmental methods of appraisal can be applied, and good system usually includes several methods. The validity of appraisal information is always a concern, because it is difficult to accurately evaluate the many aspects of a person's job performance. 4. Discuss how organizations maintain human resources, including the determination of compensation and benefits and career planning. Maintaining human resources is also important. Compensation rates must be fair compared with rates for the same or similar jobs in other organizations in the labor market. Properly designed incentive or merit pay systems can encourage high performance, and a good benefits program can help attract and retain employees. Career planning is also a major aspect of HRM. 5. Discuss the nature of diversity, including its meaning associated trends, impact, and management. Diversity exists in an organization when its members differ from one another along one or more important dimensions, including gender, age, and ethnicity. Individual strategies for managing diversity include being understanding, tolerant, and communicative with those who are different. Organizational strategies include having fair policies, practices, and procedures; providing diversity training; and maintaining a tolerant culture. 6. Discuss labor relations, including how employees form unions and the mechanics of collective bargaining. If a majority of a company's non-management employees so desire, they have the right to be represented by a union. Management must engage in collective bargaining with the union in an effort to agree on a contract. While a union contract is in effect, the grievance system is used to settle disputes with management. 7. Describe the issues associated with managing knowledge and contingent and temporary workers. Two important new challenges in the workplace include The management of knowledge workers. Issues associated with the use of contingent and temporary workers. DISCUSSION QUESTIONS Questions for Review 1. Describe the steps in the process of human resource planning. Explain the relationships between the steps. The first step is job analysis, in which the content and requirements of each of the organization's jobs is defined. Then human resource managers must forecast the organization's labor needs and supply in each job by looking at internal and external information. Finally, the demand and supply of workers in each job must be matched, which can involve increasing or decreasing the number of workers. 2. Describe the common selection methods. Which method or methods are the best predictors of future job performance? Which are the worst? Why? Common selection methods include application blanks, in which applicants provide factual information about their background and experiences. Tests may range from skills-based to personality tests. Interviews are another technique. Assessment centers provide realistic tasks for the applicant to complete under observation. The best predictors include assessment centers and tests, if the assessments are related to future job requirements. Application blanks are only able to obtain limited information. Interviews are often the worst indicators of job performance because of interviewer biases and lack of relation to job requirements. 3. Compare training and development, noting any similarities and differences. What are some commonly used training methods? Training and development both involve teaching skills to employees. However, training focuses on operational or technical employees and on their current job needs. Development is typically offered to managers and professionals and often is more future-oriented. 4. Define wages and benefits. List different benefits that organizations can offer. What are the three decisions that managers must make to determine compensation and benefits? Explain each decision. Wages are one type of compensation and refer to the hourly compensation paid to operating employees. Benefits include everything of value that organizations use to reward employees, except compensation. Benefits could include such things as leave time, insurance, pensions, dependent care, free meals or use of gym facilities, and paid parking, and it may also include unusual or innovative rewards. The wage-level decision asks a firm to choose whether to offer compensation that is above, at, or below the average wages for that industry and region. The wage-structure decision requires choices about the relative worth of different tasks to the organization. Individual wage decisions are made for each person. They are influenced by the firm's wage-level and wage-structure decisions, as well as an evaluation of an individual's experience, qualifications, and merit. 5. What are the potential benefits of diversity? How can individuals and organizations more effectively manage diversity? Diversity conveys a number of benefits, including higher productivity and lower turnover and absenteeism, leading to lower costs. Diverse organizations are seen as good employers and will better understand different market segments. Finally, diverse organizations tend to be more creative and innovative. Managers need to understand the nature of diversity and try to appreciate the perspectives of others. Managers should display tolerance with behavior of people from other cultures and they must also have excellent communication that can be understood by all members of the organization. Organizations should establish policies that favorably affect how people are treated and how employees perceive the organization's approach to diversity. Diverse organizations must also be flexible and should consider diversity training to better enable members of an organization to function in a diverse workplace. Question for Analysis 1. The family and Medical Leave Act of 1993 is seen as providing much-needed flexibility and security for families and workers. Others think that it places an unnecessary burden on business. Yet another opinion is that the act hurts women, who are more likely to ask for leave, and shuffles them off to a low-paid \"mommy track\" career path. In your opinion, what are the likely consequences of the act? You can adopt one of the viewpoints expressed above or develop another. Explain your answer. Some students will describe the benefits to workers, organizations, and society that come with the provision of leave to workers experiencing family or medical emergencies. Other students will argue that organizations should not bear the costs associated with the leavethat workers themselves or society as a whole should do so instead. Still others are likely to focus on the differential use of the act by men and women, which tends to put female workers at a disadvantage in their careers. 2. How do you know a selection device is valid? What are the possible consequences of using invalid selection methods? How can an organization ensure that its selection methods are valid? The information gained from a selection device must be able to predict future job success, which is known as validation. There are two forms of validation: (1) predictive validationcollecting information from employees or applicants and correlating it with actual job performance, and (2) content validationassessing actual job skills (determined by a job analysis) in a \"work-sample testing\" of applicants to measure their skill level. The use of invalid selection methods tends to exclude applicants who would be high performers if hired and to cause the organization to instead hire workers who do not have the characteristics necessary for success. Validity can best be achieved by ensuring that all predictors used for selection are performance based. 3. Consider a job that you have held or with which you are familiar. Describe how you think an organization could best provide an RJP for that position. What types of information and experiences should be conveyed to applicants? What techniques should be used to convey the information and experiences? Students will offer a variety of answers to this question. Their responses should include a description of the most important skills, traits, or experiences that a qualified applicant should have and an explanation of how those characteristics can be tested and observed through the use of a simulated job task or situation. For example, an applicant for a management consulting position might be required, in a short period of time and under pressure, to perform a financial and strategic analysis of a case study and present his or her conclusions to a mock \"board of directors.\" 4. How would managing nonunionized workers differ from managing workers who elected to be in a union? Which would be easier? Why? Managing unionized workers may be simpler for managers in some respects because procedures for handling problems would be well-defined and recognized by both management and workers. On the other hand, management may not be as flexible in handling problem or unique situations because union rules may restrict management actions to some extent. 5. In what ways would managing temporary workers be easier than managing traditional permanent employees? In what ways would it be more difficult? What differences would likely exist in your own behavior if you were in a contingent or temporary job versus a traditional permanent job? With temporary workers, management does not have to be as concerned about long-range issues, such as building loyalty, creating teamwork, development and training, and establishing an effective long-term working relationship. In addition, if the temporary worker is not effective, management can simply request a replacement. With permanent workers, managers must be more concerned about long-range issues and they must work to establish a relationship that will endure and be effective over a longer period of time. Temporary workers would typically have less loyalty, teamwork, initiative, motivation, and jobspecific skills, as compared to permanent employees. They may exhibit less organizational citizenship, instead asking, \"What's in it for me?\" in response to every management request. However, temporary workers may also bring fresh enthusiasm and new ideas to jobs that permanent workers find routine. Temps may be willing to work harder than permanent employees, knowing that their commitment is only for the short term. BUILDING EFFECTIVE DECISION-MAKING SKILLS Exercise Overview Decision-making skills refer to the ability to recognize and define problems and opportunities correctly and then to select an appropriate course of action for solving problems or capitalizing on opportunities. For obvious reasons, these skills should be important to you in making career choices. Exercise Background If you're in the process of making a career choice, you need to have a firm grip on your own abilities, preferences, and limitations. This is particularly true for recent college graduates, who are often preparing to enter career fields that are largely unknown to them. Fortunately, there are many sources of helpful information out there. The BLS, for example, maintains data about occupations, employment prospects, compensation, working conditions, and many other issues of interest to job seekers. Information is available by industry, occupation, employer type, and region. Exercise Task 1. Access a summary of the Department of Labor's National Compensation Survey at http://stats.bls.gov/ncs/ocs/sp/ncbl0449.pdf. (If the page has moved, search by the survey title.) Find detailed data related to the occupation that you regard as your most likely career choice when you graduate. Then locate the detailed data about two other occupations that you might considerone with a salary that's higher than that of your number-one career choice and one with a salary that's lower. 2. Record the hourly salary data for each of your three choices, and then use the hourly salary to project an expected annual income. (Hint: Full time jobs require about 2,000 hours annually.) 3. Based purely on salary information, which occupation would be \"best\" for you? 4. Now go to www.bls.gov/oco and access job descriptions for various occupations. Review the description for each of the three career choices that you've already investigated. 5. Based purely on job characteristics, which occupation would be \"best\" for you? 6. Is there any conflict between your answers to questions 3 and 5? If so how do you plan to resolve it? 7. Are there any job characteristics that you desire strongly enough to sacrifice compensation in order to get them? What are they? What are the limits, if any, on your willingness to sacrifice pay for these job characteristics? BUILDING EFFECTIVE TECHNICAL SKILLS Exercise Overview Technical skills are necessary to understand or perform the specific kind of work that an organization does. In many organizations, this work includes hiring appropriate people to fill positions. This exercise will help you apply certain technical skills to the process of employee selection. Exercise Background You may choose either of the following exercise variations. We tend to favor Variation 1 because the exercise is usually more useful if you can relate to real job requirements on a personal level. Variation 1. If you currently work or have worked in the past, select two jobs with which you have some familiarity. Try to select one job that entails relatively low level of skills, responsibility, education, and pay and one job that entails relatively high levels in the same categories. Variation 2. If you've never worked or you're not personally familiar with an array of jobs, assume that you're a manager of a small manufacturing plant. You need to hire people to fill two jobs. One job is for a plant custodian to sweep floors, clean bathrooms, empty trash cans, and so forth. The other job is for an office manager who will supervise a staff of three clerks and secretaries, administer the plant payroll, and coordinate the administrative operations of the plant. Exercise Task Reviewing what you've done so far, now do the following: 1. Identify the most basic skills needed to perform each of the two jobs effectively. 2. Identify the general indicators of predictors of whether a given individual can perform each job. 3. Develop a brief set of interview questions that you might use to determine whether an applicant has the qualifications for each job. 4. How important is it for you, as a manager hiring an employee to perform a job, to possess the technical skills needed to perform the job that you're trying to fill? SKILLLS SELF-ASSESMENT INSTRUMENT What Do Students Want from Their Jobs? Purpose: This exercise investigates the job values held by college students at your institution. Then it asks the students to speculate about employers' perceptions of college students' job values. This will help you understand how college students can be recruited effectively. It also gives you insight into the difficulties of managing and motivating individuals with different values and perceptions. Introduction: Employees choose careers that match their job values. Employers try to understand employee values to better recruit, manage, and motivate them. Job values are important therefore, in every HR process, from job advertisements and interviews, to performance appraisals, to compensation planning. Instructions: 1. Complete the following Job Values Survey. Consider what you want from your future career. Using Column 1, rank the 14 job values from 1 to 14, with 1 being the most important to you and 14 being the least important. 2. In your opinion, when potential employers try to attract students, how much important do they think students give to each of the values? For Column2, respond with a 1 (plus) if you think employers would rank it higher than students or with a 2 (minus) if you think employers' perception of students' values, not of their own values. 3. In small groups or a class, compute an average ranking for each value. Then discuss the results. Discussion Questions 1. How much variation do you see in the job value ranking in Column 1? That is, are students' value quite different, moderately different, or very similar overall? Students' variation in the job value ranking are moderately different. 2. If there are significant differences between individuals, what impact might these differences have on the recruiting process? On the training process? On the performance evaluation and compensation process? Valuing the differences between people and understanding the positive benefits for the University of employing a diverse range of talented people is crucial. A positive approach to diversity allows managers to select the best person for the job based on merit alone and free from bias on the grounds of factors that are not relevant to the person's ability to do the job. There are three approaches to training: (1) the traditional approach, (2) the experiential approach, and (3) the performance-based approach. In the traditional approach, the training staff designs the objectives, contents, teaching techniques, assignments, lesson plans, motivation, tests, and evaluation. The focus in this model is intervention by the training staff. In the experiential approach, the trainer incorporates experiences where in the learner becomes active and influences the training process. Unlike the academic approach inherent in the traditional model, experiential training emphasizes real or simulated situations in which the trainees will eventually operate. In this model, the objectives and other elements of training are jointly determined by the trainers and trainees. Trainers primarily serve as facilitators, catalysts, or resource persons. In the performance-based approach to training, goals are measured through attainment of a given level of proficiency instead of passing grades of the trainees. Emphasis is given to acquiring specific observable skills for a task. This performance-based teacher education (PBTE) model, developed by Elam (1971), is mostly task or skill centered and is also applicable to non-formal educational organizations such as extension. Performance management is a process by which managers and employees work together to plan, monitor and review an employee's work objectives and overall contribution to the organization. More than just an annual performance review, performance management is the continuous process of setting objectives, assessing progress and providing on-going coaching and feedback to ensure that employees are meeting their objectives and career goals. Compensation can be defined as all of the rewards earned by employees in return for their labor. 3. How much variation do you see in the responses for Column 2? That is, does your group or class agree on how employers perceive college students? 4. Is there a large difference between how you think employers perceive college students and your group's or class's reported job values? If there is a large difference, what difficulties might this create for job seekers and potential employers? How might these difficulties be reduced or eliminated? Job Values Survey Working Conditions Working with people Employee benefits Challenge Location of job Self-development Type of work Job title Training program Advancement Salary Company reputation Job security Autonomy on the job Column 1 Your Ranking 6 5 4 11 10 3 2 12 8 9 1 13 7 14 Column 2 Employer Ranking 1+ 1+ 1+ 2221+ 1+ 21+ 1+ 1+ 1+ 2- EXPERIENTIAL EXERCISE Choosing a Compensation Strategy Purpose: This exercise helps you better understand how internal and external market forces affect compensation strategies. Introduction: Assume that you are the head of a large academic department in a major research university. Your salaries are a bit below external market averages. For example, your assistant professors make between $45,000 and $55,000 a year, your associate professors make between $57,000 and $65,000 a year, and your full professors make between $80,000 and $90,000 a year. Faculty who have been in your department for a long time enjoy the work environment and appreciate the low cost of living in the area. They know that they are somewhat underpaid but have tended to regard the advantages of being in your department as offsetting this disadvantage. Recently, however, external market forces have caused salaries for people in your field to escalate rapidly. Unfortunately, although your university acknowledges this problem, you have been told that no additional funds will be provided to your department. You currently have four vacant positons that need to be filled. One of these is at the rank of associate professor, and the other three are at the rank of assistant professor. You have surveyed other departments in similar universities, and you realize that to hire the best new assistant professors, you will need to offer at least $60,000 a year and that to get a qualified associate professor, you will need to pay at least $70,000. You have been given the budget to hire new employees at more competitive salaries but cannot do anything to raise the salaries of faculty currently in your department. You have identified the following options: 1. You can hire new faculty from lower-quality schools. They will likely accept salaries below market rate. 2. You can hire the best people available, pay market salaries, and deal with internal inequities later. 3. You can hire fewer new faculty, use the extra money to boost the salaries of your current faculty, and cut class offerings in the future. Instructions: Step 1: Working alone, decide how you will proceed. Step 2: Form small groups with your classmates, and compare solutions. Step 3: Identify the strengths and weaknesses of each option. Follow-up Questions: 1. Are there other options that might be pursued? 2. Assume that you chose Option 2. How would you go about dealing problems? 3. Discuss with your instructor the extent to which this problem exist at your school. MANAGEMENT AT WORK The Temptations of Temping Back in 2002, New Yorker Diana Bloom logged on to Craigslist, an online network that posts free classified ads, and offered her services as a tutor, editor, and translator. She's been making a living on the short-term jobs that come her way from the website ever since. A former English professor who couldn't find secure long-term employment. Bloom works out of her home in order to take care of a young son. Temp work is also appealing, she says, because \"I'm not very outgoing, and getting my foot in the door to companies would have been hard.\" Craigslist works in the other direction, too, with employers posting openings for jobs both permanent and temporary. Another New Yorker, Simone Sneed, scours the Craigslist \"Gigs\" section for jobs that last for perhaps a day, often for just a few hours. Whether as a backup singer or a grants writer, she's turned the strategy of patching together \"gigs\" into a convenient way to supplement the income from her full-time job. \"I'll use the extra money to pay off my school loan,\" she says. \"Every little bit helps.\" In the current economic climate, unfortunately, overall job postings are down on Craigslist and everywhere else, except for short-term jobsgigs that usually include no health benefits, sick days, or paid vacations. If you're employed short term or part time for economic reasons (probably because you got laid off), the Bureau of Labor Statistics (BLS) classifies you as \"underemployed.\" Naturally, most people who are \"underemployed\" are by definition, \"overqualified.\" In fact, they often have years of professional experience but are willing to take jobs that don't call for their levels of training or experience. Take the case of Gloria Christ. As national project manager for an information technology company in the Chicago area, Christ used to coordinate the installation of Wi-fi hotspots all over the country. She has nearly 20 years of managerial experience, but today she's willing to put it to use as a temporary office manager. Of course, she'd like something with a little more long-term promise: \"At this point in time,\" she says, \"I think even if there was something that was temporary it could become full time later on... Sometimes,\" she explains, \"you can go in at a low level to interview just to get your foot in the door.\" It may be small compensation (so to speak), but during the current recession, although many companies are reluctant to add costly permanent jobs, they are increasingly willing to open up temporary positions to tide them over. Often, of course, you'll have to take a job that isn't exactly what you've trained for or set your sights on, but as one employment-services manager observes. Job seekers today \"are more than willing to try new occupationsmuch more willing than they were even a year ago.\" Interestingly, for a lot of people, the adjustment to current labor-market conditions isn't necessarily as traumatic as you might think. A recent survey conducted by the temporary-staffing agency Kelly Services found that as many as 26 percent of employed American adults regard themselves as \"free agents\" when it comes to the type of job that they're willing to take (up from 19 percent in 2006). Of all those polled, only 10 percent said that they're doing temporary work because they've been laid off from permanent jobs; 90 percent said that they're doing it because they like the variety and flexibility that temping affords them. Kelly client Jaime Gacharna's first assignment was packaging products for a light bags,\" he recalls. Since then, he's worked for eight different employers, working at a job for a few days, a few weeks, or a few months. He doesn't mind the constant adjustments because the variety in his work life compensates for the drawbacks. \"If I want to try something out, and I want something different.\" In fact, temping offers several advantages. It can, for example, provide income during career transitions, and it's a good way to exercise a little control over the balance between your work and the rest of your life. In 1995, for example when she was seven months pregnant with her first child, veteran retail manager Stacey Schick accepted a two-week data-entry job with the Orange County (New York) Association of Realtors. \"I didn't know how to turn o a computer,\" she remembers, but \"they needed bodies.\" Now the mother of two, Schick is still with the Association as its education coordinator. \"I would never have consider it,\" she says, if a job in her field had come up, but the job she landed in has turned out to be a much better fit with her lifestyle: \"It's afforded me the opportunity to have a family and be able to have time with them.\" The path taken by Schick is called temp-to-perm, and it offers employers several advantages as well. Companies that are hesitant to make commitments to untested employees can try before they buythey get a chance to see employees in action before finalizing hiring decisions. Because there are no fees to pay when an employee goes from temp to perm, trying out temp is also cheaper than paying an agency outright to find a hire. The big savings, of course, come from benefits, which can amount to one-third of the total cost of compensating a permanent position. And then there's the recession. While many employers are laying off full-time workers, many are also trying to compensate by turning over some of the work to temp staff. Ironically, of course, many of those who've been laid off are highly qualified, and as they hit the job market willing to accept lower-level positions, the ranks of job hunters are being joined by a substantial number of highly qualified (which is to say, overqualified) workers. \"The quality of candidates,\" says Laura Long of Banner Personnel, a Chicago-area staffing agency, \"is tremendous...As an employer, you can get great employees for a great price.\" As a matter of fact, if you're a U.S. employer, you've always been able to get temp workers at a relatively good price. As of December 2010, according to the BLS, the average cost of a full-time worker in private industry was $22.26 per hour in wages plus $9.75 in benefits, for a total of $32.01 in compensation. By contrast, the average wages for a temp were $12.14 and the average benefits were $3.42, for a total compensation of $15.56. One of the results of this cost differential has been a long-term increase in the number of temp workers which, over the last 20 years, has far outstripped the increase in jobs occupied by full-time workers. Case Questions 1. You're a senior manager at a growing business and you're ready to add employees. Your HR manager has recommended a temp-to-perm policy. You know the advantages of this approach, but what might be some of the advantages? The disadvantages for using \"temps\" would be waste of training, lack of effort, and unfamiliar with company policies. People in temp positions know that they are not there for the long run and work performance quality may not be as high as a normal employee. It is also important to recognize that the organization has to train a person to do the job properly, if they continue to use temps then there will be a lot of re-training involved. 2. Assume that you're a prospective job seeker (which you may very well be). What do you personally see as the advantages and disadvantages of taking a temp-to-perm position? Under what circumstances are you most likely to take a temp-to-perm position? The advantage is being able to work in different areas and learning as you go. I would love to be able to try a different job every other month if I knew I could feel secure that I would eventually find a permanent job at one of these places. I think my biggest worry would be getting to a place and then finding out that the job isn't really what I want and then having to go through the whole process again. I also feel like often times when you come into an organization with a temp-toperm position you are working twice as hard as the permanent people, they look at their job as if they could never lose it, where I as a temporary person look at it as I have to work hard so I can become a permanent employee. 3. What sort of challenges are likely to confront a manager who supervises a mix of temporary and permanent employees? In what ways might these challenges differ if the temporary workers have been hired on a temp-to-perm basis rather than on strictly temporary basis? Some challenges that may confront a manager who supervises a mix of temporary and permanent employees are employee relation and moral issues. The employees may not get along well with the permanent employees especially if they are working alongside them doing the exact same job, but they are not receiving the same pay rate and no employee benefits. These challenges may differ if the temporary workers had been hired on a temp-to-perm basis rather than on a strictly temporary basis because if the temporary workers know that if they are reliable and do their job tasks as assigned, they will eventually be hired onto the company rather than just being let go at the end of the contract