1. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Human Resource Management (HRM) What? …the functional area of an organization that is responsible for all aspects of hiring and supporting employees (e.g., providing and administering employee benefits). …all the activities related to the recruitment, hiring, training, promotion, retention, separation, and support of employees. …functions within a company that relate to people. Why? …is the effective use of human resources in order to enhance organisational performance. …the process of evaluating human resource needs, finding people to fill those needs, and getting the best work from each employee by providing the right incentives and job environment, all with the goal of meeting the needs of the firm. …applying human resources within complex systems such that people succeed, performance improves, and human error decreases. (Source: web definitions for HRM)

2. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Road map for HRM: Leading teams (Spring Semester) MotivationSatisfaction Performance Personnel selection Performance appraisal / Compensation Personnel development Task / Work process

3. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Topics HRM: Leading teams

4. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Core functions of HRM Job analysis and design Recruitment and selection Training and development Performance management and compensation Labor and employee relations

5. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Examples in the news – HR implications? Bonus payments in banks Swiss Re: CEO Aigrain quits after major losses SR Technics closes Dublin plant with more than 1000 employees Hitzfeld on managing a national football team as a distributed team of club players Increasing use of short time work

6. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Topics HRM: Leading teams

7. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Strategic Human Resource Management "a pattern of planned human resource deployments and activities intended to enable an organization to achieve its goals" (Noe et al., 2005) Derive human resource needs (skills, behaviors, culture) from strategy formulation Strategy implementation by means of HRM practi- ces, which further individuals' capabilities and motivation as well as actual performance

8. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 HRM practices: Strategic choices Job analysis and design –e.g. simple vs. complex tasks, specific vs. generic job descriptions Recruitment and selection –e.g. external vs. internal recruitment, specific vs. general skills Training and development –e.g. focus on current vs. future skills, train few vs. all employees Performance management and compensation –e.g. behavioral vs. results criteria, internal vs. external equity, input vs. behavior vs. output control Labor and employee relations –e.g. GAV vs. individual contracts

9. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Examples of contingencies in strategic HRM (Snell & Youndt, 1995; Lepak & Snell, 1999) Input vs. behavior vs. output control –behavior control only works with low uncertainties –input control most effective with high uncertainties –output control has no effect on performance in any condition Uniqueness and value of human capital –traditional, loyalty based employment relationship when knowledge and skills are firm-specific and of high competitive value –purely economic employment relationship when knowledge and skills are neither firm-specific nor of high competitive value

10. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 HRM practices: Operational decisions Job analysis and design –e.g. adaptations in job assignments; support for job crafting Recruitment and selection –e.g. defining specific job requirements; composition of selection teams Training and development –e.g. individual career planning; internal/external course offers Performance management and compensation –e.g. defining pay scales; specifying appraisal "curve" Labor and employee relations –e.g. adjusting contributions/inducements in the psychological contract

11. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 HRM as operational leadership task: Linking motivation, satisfaction and performance PerformanceMotivationSatisfaction Clear performance-reward relationship Congruence of formal/informal performance criteria Continuous feedback Performance criteria adequate for task Continuous monitoring of difference between expectation and reality Active coping with unfulfilled expectations Fit between individual and organizational goals Clear instrumentalities for individual goals

12. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Topics HRM: Leading teams

13. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Influence of normative assumptions on strategic and operational HRM Example: assumptions about human nature (Schein, 1988) Economic man: Employees will do whatever affords them the greatest economic gain Social man: Social needs are the prime motivator of human behavior, and interpersonal relationships the prime shaper of a sense of identity. Self-actualizing man: People seek a sense of accomplishment in their work and are primarily self- motivated and self-controlled Complex man: Human needs fall into many categories and vary according to stage of development and total life situation

14. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Leadership instruments based on the "complex man" assumption Management by objectives based on goal- oriented theories of leadership Psychological contract based on social exchange theory

15. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 MbO: How to make it work Coherent company strategy Increasing personal resources through job design and personnel development for dealing with complex goals and tasks Sufficient control over the work situation (transparency, predictability, means of influence) Leadership through coaching instead of command-and-control Systematic, transparent and participative goal agreement and evaluation of goal attainment Rules for handling conflicts

16. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Complementing MbO: Designing psychological contracts Psychological contracts... …complement and super- impose legal contracts. …contain reciprocal, though not necessarily correspon- ding expectations and offers between employee and employer. …are derived from verbal agreements as well as from behaviors of contract partners and other members of the organization.  The more corresponding and  the more explicit the agreement  the sounder the psychological contract.

17. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Using the psychological contract to handle employment uncertainties Communicate and match reciprocal expectations and offers Early, comprehensive information also on uncertain developments (individual and organizational) Support employability through training, job design, and systematic career management  Distribute risks between organization and employee according to individual coping capabilities  Further organizational commitment which allows for flexibility and "thinking in options"

18. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Topics HRM: Leading teams

19. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Purposes of appraisal Improving performance Making reward decisions Motivating staff Developing subordinates Identifying potential Formal recording of unsatisfactory performance Note: Conscious decision on which purpose(s) to focus on is important

20. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Appraisal criteria Assessment of personal characteristics/ behaviors/outcomes –Recommendation: Focus on assessing behaviors, e.g. by means of behaviorally anchored rating scales (BARS), and on assessing outcomes based on achievement of objectives Compare performance between individuals –rank order –grouping according to a predetermined percentage per evaluation category

21. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Typical errors in appraising others Primacy/recency Halo Implicit theories Stereotypes Central tendency and positive skew Persistence of impression despite information to the contrary Attribution errors

22. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Attribution errors Attribution=attributing causes to behaviors –evaluating differences in behavior by comparing people, tasks, and situations in terms of causes for behavior (dimensions: e.g. internal/external causes; stable/variable causes) Examples of attribution errors: –Fundamental attribution error: overemphasizing the actor as a cause of events –Protecting self-esteem: Underestimating person-related causes for ourselves especially for failure –Underusing consensus information: little use of information from comparisons with others` behavior –Confirming expectations: e.g. assuming person-related causes for behaviors that are atypical for a particular situation; assuming situation-related causes in highly structured situations

23. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Measures to avoid rating errors Systematic preparation of appraisal interview Conscious reflecting of potential errors and their influence on the appraisal Use of structured assessment scales (e.g. BARS) Open communication climate that also allows critical feedback on the appraisal by the appraised person

24. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Topics HRM: Leading teams

25. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Pay is... … money … compensation … reward … incentive … recognition  Procedural and distributive justice at least as important as absolute amount

26. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Basics for determining pay Decomposition of pay into –base/fixed pay (task-related) and –variable pay (person-related, e.g. performance, experience, social situation) Considering value of the work done for the company, the market rate for the job, and individual needs Considering task requirements and qualification requirements

27. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Problems of current job evaluation systems Overestimation of intellectual and leadership requirements Underestimation of physical, social and emotional requirements  Consequence: Low evaluation of many “female-dominated” jobs and person-related service jobs in general

28. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Personnel development Systematic furthering of personal aptitude in relation to individual expectations and organizational requirements by means of -education/training -counselling/coaching -management by objectives -team development -job design

29. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 "Fit human to task": Linking personnel development to strategic HRM demands Analyze requirements –define goals and target group(s) for personnel development –define required qualification profiles –identify indivdiual employees who need development Personnel development intervention Evaluation concerning learning, behavior, and performance outcomes

30. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 "Fit task to human": Tailoring personnel development to individual career demands Define possible career paths –e.g. management versus technical career Identify individual career needs –e.g. locals versus cosmopolitans Continuous adaptation of career needs and career paths

31. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Topics HRM: Leading teams

32. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Leadership is … …the process of influencing the activities of an organized group towards goal achievement. …the ability of an individual to motivate others to forego self-interest in the interest of a collective vision (House & Shamir, 1993) …the influential increment over and above mechanical compliance with the routine directives of the organization (Katz & Kahn, 1978)

33. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Basic leadership functions group internal functions –Task orientation/initiating structure Set goals, distribute tasks, check work results etc. –Employee orientation/consideration resolve conflicts, support/coach team members etc. group external functions –Boundary regulation Adjusting external demands in terms of group internal demands and possibilities

34. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Prerequisites of effective leadership: The "right"... Person –extravert, intelligent, emotionally stable, conscientious, dominant, self-confident, socially perceptive However: –Differences on personality dimensions between people with/without leadership positions are often small (overlapping distributions). –Personality differences may be causes and/or effects of being in leadership positions. –Different situations may demand different personality profiles.

35. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Prerequisites of effective leadership: The "right"... Behavioral style –task-centred and employee-centred –democratic rather than autocratic –transformational rather than transactional However: –Individualized leader-member-exchange is also crucial. –Different situations may demand different behavioral styles.

36. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Prerequisites of effective leadership: The "right"... Instruments –Management by objectives –Systematic performance management –Standardized HRM processes for selecting, appraising, compensating, developing people However: –Instruments can support, but not replace personal leadership. –Most instruments tend to work better in stable situations.

37. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Topics HRM: Leading teams

38. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Core concept of job design: Self-regulating teams Teams: several people who work together over a period of time to reach common goals and who share a sense of belonging together Self-regulation: individual and collective autonomy in order to coordinate work processes and to cope with process variances and uncertainties locally

39. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Prerequisites for good team work Adequate common task –Complexity higher than individual competencies –Clear performance criteria –Collective decision competence Shared goal orientation –Positive goal coupling –Goal transparency and feedback Adequate group composition –Different perspectives on the task –Shared language Development of group rules –Adequate group size –Support for team development (form, storm, norm, perform) –Explicit handling of conflicts between individual and collective autonomy

40. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Team diagnosis: Characteristics of effective teams Goals are clear and accepted Individual and team goals melt together Responsibilities are clear and change depending on situational demands Leadership is seen as a shared responsibility Conflicts are dealt with Team learns and develops Contributions are recognized and valued Communication is open and engaged Group processes are reflected upon and discussed

41. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Changing leadership roles depending on stage in work processes Providing structure at the start of a process Deciding in critical phases Coach/motivator in on-going work processes Team member (= no leadership) in routine processes Moderator in decision processes Evaluator at the end of a process

42. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 New demands on leadership in distributed teams Increasing complexity of situation also requires increasingly complex leadership behaviors: situated and shared leadership

43. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Topics HRM: Leading teams

44. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 What is meant by team diversity? Demographic diversity: differences in observable attributes such as age, gender, ethnicity Psychological diversity: differences in underlying attributes such as abilities, personality, attitudes, values

45. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Why are organizations concerned with diversity management? demographic change –e.g. problems in recruiting personnel globalization of business –e.g. international supply chain relationships and mergers/acquisitions/international cooperations increasing service orientation –e.g. responding to special needs in regional markets and of particular target groups new concepts of organization –e.g. increasing mix of functions/professions in work teams

46. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Success of Diversity Management ? Studies on the relationship between team diversity and performance –Negative effects through social categorization –Positive effects through increased information; however: sharing information is generally difficult –With time negative effects of demographic diversity (  social categorization) decrease and positive effects of psychological diversity (  information sharing) increase (Harrison et al., 1998) –Cultural majorities profit from cultural minorities more than vice versa in student groups (Brodbeck, 2005)

47. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Success of Diversity Management ? Studies on the relationship between team diversity and performance (contd.) –Positive attitude towards diversity is important to achieve positive effects (Van Dick et al., 2008). –More complex tasks are dealt with better by heterogeneous groups (Bowers et al., 2000). –Group goals support performance in diverse (individualists/collectivists) and non-diverse teams (Crown, 2007) No studies available on diversity and firm performance

48. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Topics HRM: Leading teams

49. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 "Benchmarking": Characteristics of HRM in successful companies (Pfeffer, 1998) 1.Employment security 2.Selective hiring 3.Self-managed teams and decentralization 4.High compensation contingent on organizational performance 5.Extensive training 6.Reduction of status differences 7.Sharing information

50. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Topics HRM: Leading teams

51. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Sample questions for exam preparation written, closed (!) book, 1.5 h Friday June 5, 8:15 - 9:45, HG G3 five essay questions, four have to be answered sample questions: (1) Coaches of successful football teams are often taken as models for effective leadership in companies. Based on the leadership concepts dicussed in the lecture, is this justified? (2) What would you do when conducting a performance appraisal interview in order to avoid attribution errors? Exam counts for 50% and semester project for 50% of total course grade.

52. HRM: Leading teams – G. Grote ETHZ, Spring Semester 09 Master thesis topics Currently offered thesis topics: –Analysis of organizational routines in high-risk operations –Organizational dynamics of regulation in the finance sector –Collaborative planning and the role of information uncertainty in Air Traffic Management –Planning and coordination in health care It is always possible to directly contact any member of the research group org.ar.t to discuss possible topics, see also the description of research on our webpage www.oat.ethz.ch