OS 352 4/24/08 I. Exam III is on Monday, 4/28, 11:45- 2:45pm, in Science Center /28 Office Hours: 9am-11am, my office. II. HR Scorecard, continued. III. Discussion: Combs et al. article, Hammonds article. IV. Course summary. V. Evaluations.

Exam III  40 points multiple choice questions  30 points true / false questions  10 points: Choose 2 / 4 Identifications  20 points: Choose 1 of 2 essays “When Salaries Aren’t Secret” and HR Metrics or Employee benefits and labor relations

Scorecard …  Concise description and summary of firm performance by particular categories  Metrics: measurements that summarize organizational performance in a particular performance category.  Used to aid in firm communication and managerial decision-making

HR Scorecard Report card provided to managers regarding people-related outcomes (e.g., productivity, turnover). Last time: Scorecard by function. Can also focus on people outcomes generally: Employee satisfaction Customer satisfaction w/ ees Learning Productivity Environment (physical env., culture)

Annual HR Scorecard (by function) I. Recruiting, selection, retention -Average time to fill: 65 days (goal: 30 days) -Turnover of “stars”: 8% (goal: 0) II. Training and development - % of new hires who receive safety training within 6 months: 55% (goal: 100%) -Annual training $s / ee: $500 (goal: $1,000) III. Compensation and performance mgmt. - Compa-ratio: 1.4 (goal: 1) -% of ees who believe the performance appraisal process is fair: 43% (goal: 75%)

Annual HR Scorecard (general people outcomes) I. Employee satisfaction Turnover: 20% Employees satisfied: 77% II. Customer satisfaction w/ ees Customer complaints re ees: 5% % returning customers: 25% III. Learning $ / ee spent on training: $1,000 / ee IV. Productivity Output/ee: 25 units / hour % Ee suggestions implemented: 2% V. Environment (physical env., culture) Ee Satisfaction with Environment: 4.3/5.0 % of managers identifying w/culture:75%

Best Practices: HR Systems (Combs et al. meta-analysis, 2006)  HR systems can be a source of competitive advantage  Sets of complementary and consistent HR practices yield the greatest returns Incentive compensation Training Compensation level Selectivity in hiring Internal promotion HR planning Flextime Grievance procedures Employment security ??? Performance appraisal Teams Information sharing

The Payoff to HR Systems (Combs et al., 2006) Based upon survey and archival data from approximately 19,000 firms, 92 studies. There was a significant average correlation between the adoption best practices and firm performance of for HR systems (2-13 best practices)..14 for individual HR practices. A 1 standard deviation increase in best practices resulted in a 4.6% increase in gross ROA and a 4.4% decrease in employee turnover.

The Payoff to HR Systems- cont. (Combs et al., 2006) In manufacturing firms … there was a significant average correlation between the adoption best practices and firm performance of.30. In service firms … there was a significant average correlation between the adoption best practices and firm performance of.17. Why the difference? manufacturer reliance on complex machines and standardized procedures requires HR best practices to facilitate adaptation to environmental change. direct customer contact in service organizations is an alternative catalyst for skill updating and motivation.

Human Resource Management Definition The policies, practices, and systems that influence employees’ behavior, attitudes, and performance.

Who Is Responsible for Managing Human Resources? A partnership of:  top management  human resource professionals  managers  employees  consultants  HR specialty firms

Goals of HRM that are the Primary Responsibility of Managers  Attract, retain, and motivate ees  Direct employee efforts toward goals of organization (In other words, why you should care about HRM even if you are not an HR professional)

High Performance Work Systems The right combination of people, technology and organizational structure that makes full use of the organization’s resources and opportunities in achieving its goals. Task design, reward systems, information systems

What coaxes the value out of the system? Managers!  Sound business strategy  Strong firm culture  Trust between workers and management  Relational psychological contracts Very difficult to achieve!

Managing through … Credibility  Trust  Expertise  Dynamism Authority  Hierarchical level  Job title  Resources

Key Take-Aways            