HRBP Ebook PDF

Body of Knowledge
HR Business Professional
Module 1: HR Administration
Module 2: Recruitment and Selection
Module 3: Employee Relations and
Communications
Module 4: Compensation and Benefits
Module 5: Training and Development
Module 6: Health, Safety and Security
Universal HR Practices Body of Knowledge
Body of Knowledge
The foundation of the Universal HR Practices materials is a Body of Knowledge
representing the most recent study of the HR profession expressed as behaviors,
skills and knowledge required to fulfill human resource management
responsibilities that are universal and transcend global boundaries.
The Body of Knowledge on which the Universal HR Practices Learning System is

based has six competency domains. For each domain, there are behaviors, skills
and knowledge identified. This learning aid includes all six domains of the Body
of Knowledge so that you may readily identify behaviors, skills or knowledge
presented within all portions of the Learning System.
For your convenience, the Body of Knowledge is provided on the following

pages.
Purpose Statement for HR Administration:
HR professionals in the area of HR Administration should possess a combination

of behaviors and skills/knowledge that include monitoring activities for
opportunities to make improvements and using metrics to measure success,
providing and maintaining information related to the HR function. This
information may take the form of questions from employees, documentation of
employee information in paper forms or in a Human Resource Information
System.
1
Important Behaviors for HR Administration:
01. Use HR metrics and prepare reports to analyze HR issues (for example, the number of
employees hired and those who left, employee turnover, the cost per employee and budgets)
02. Format and maintain organization charts
03. Maintain, file and process HR forms (for example, notices, announcements, new hire forms
and salary forms)
04. Make sure the organization follows legal and industry regulations
05. Maintain human resource information systems (HRIS) data and employee files (for example,
make sure data is updated and correct)
06. Stay updated on new business trends
07. Answer or refer questions from employees as the first level of support
08. Work with external providers of HR services (for example, external recruiters, training
providers, benefit providers)
09. Monitor projects and suggest improvements (for example, ways to recruit better applicants;
resources for internal and external training; ways to improve insurance, benefits, or
compensation plans)
10. Assist managers in updating standard job descriptions in order to match any changes in job
requirements
Important Knowledge and Skills for HR Administration:
01. Skills for planning and organizing (time management techniques)
02. Change management concepts including terms and factors, resistance to change and
communication techniques (but not including the implementation process)
03. Documentation requirements for employees and their employment
2
04. Management of HR documents (for example, managing files, scheduling for records
retention)
05. Communication skills, both verbal and written
06. Human resources information systems (HRIS) for managing employee information
07. Employment best practices (for example, the best ways to recruit, select and retain
employees)
08. Organizational policies and procedures
09. HR ethics and professional standards
10. Confidentiality and privacy rules that apply to employee records, company data and
individual data
11. Tools and methods to analyze business data (for example, spreadsheets and databases)
12. Ways to report information (for example, presentation software, such as Power Point; and
word-processing software, such as Microsoft Word)
13. Different ways to classify employees(for example, workers who are full time, part time,
temporary, or those who receive payment by the day)
14. The number of employees in the budget, and the salary and benefit costs for these employees
3
Purpose Statement for Recruitment and Selection:
HR professionals in recruitment and selection should possess a combination of

behaviors and skills/knowledge that relate to the full process of finding potential
employees through preparation for the new hire’s arrival. These include
managing the job requisition process, providing information on possible jobs to
individuals and groups, managing the interview process and coordinating the
final selection of the employee.
Important Behaviors for Recruiting and Selecting Employees:
01. Manage the process to request jobs (for example, make sure requisitions are approved , get
approval for the number of positions to be filled, monitor open positions)
02. Support managers in developing job descriptions and keep records of job requirements
03. Provide contact between recruiters and hiring managers (for example, prepare job listings,
share appropriate information with the hiring manager and recruiter)
04. Announce job openings within the organization
05. Identify ways to find new hires (for example, advertisements and web sites)
06. Choose a group of potential applicants for managers to interview (for example, read resumes
and conduct phone interviews)
07. Scheduling interviews with managers and applicants
08. Answer questions from job applicants
09. Interview job candidates
10. Promote the organization to potential applicants (for example, attend job or career fairs,
recruit at colleges and universities)
4
11. Organize assessments of applicants (for example, schedule and score assessments, share
results)
12. Coordinate the final selection process (for example, schedule interviews with managers,
check references)
13. Coordinate the employment offer (for example, start date, salary, benefits)
14. Prepare for the new hire’s arrival (for example, get identification documents and required
forms, set up email address)
15. Manage database of applicants (for example, track the sources of applicants and the results of
the recruiting and selection process, decide where to store information about candidates for
possible future employment)
16. Report recruiting metrics (for example, the number of applications received, the number of
candidates interviewed, the number of applicants hired)
17. Coordinate orientations for new employees (for example, discuss the company’s expectations
for the position, review the employee handbook, explain the benefit plans)
Important Knowledge and Skills for Recruiting and Selecting Employees:
01. How government requirements affect recruitment and selection
02. Job functions and responsibilities in the organization and industry
03. Recruitment methods (for example, advertising , job fairs and outsourcing)
04. Procedures to review applications and watch applicants’ progress, including tracking systems
05. Procedures to check references
06. Assessments or evaluations of applicants
07. Procedures to conduct assessments or evaluations
5
08. Tools for selecting candidates
09. Options for recruitment
10. Interviewing techniques
11. Recruiting process (job announcement, initial applicant review, interviews, assessments,
selection, job offer and orientation)
12. Processes for transferring or promoting employees within the organization
13. Diversity and inclusion (for example, diversity of demographics, culture and location)
Module 3: Employee Relations and Communication
Purpose Statement for Employee Relations and Communication:
HR professionals in employee relations and communication should possess a

combination of behaviors and skills/knowledge that include promoting HR
policies and procedures and communicating with employees through individual
approaches, such as exit interviews, and group approaches, such as a company
web site or a rewards program.
Important Behaviors for Employee Relations and Communication:
01. Communicate information to the company about HR policies and procedures (for example,
announcements about organizational changes such as structure, safety and security, or legal
requirements)
02. Support company sponsored activities and awards to encourage a positive work environment
(for example, employee appreciation and rewards, company social gatherings, sports teams
or clubs)
6
03. Collect information about employees’ work experiences by conducting final exit interviews
before employees leave the organization, and conduct surveys about employee attitudes,
work conditions, or diversity issues
04. Complete the assigned tasks when an employee leaves the organization due to voluntary or
involuntary terminations
05. Respond to employee’s questions or concerns about workplace issues (for example,
employment concerns, company HR policies, complaints, retirement questions, payments)
06. Enforce HR policies and procedures (for example, explain and make sure that employees
comply with the employee handbook)
07. Maintain regular communication with employees (for example, through newsletters, or the
company website)
Important Knowledge and Skills for Employee Relations and

Communication:
01. How to encourage and keep employees (employee engagement techniques)
02. Methods and processes for collecting employee feedback (for example, employee attitude
surveys or final exit interviews before leaving the organization)
03. Effects of employment and labor law (for example, minimum wage, rules for terminating
employees, establishing unions or work councils, people with disabilities and rules against
discrimination)
04. How to handle conflicts (for example, addressing the problems of individual employees and
knowing when to involve senior staff)
05. Issues affecting work/life balance (for example, flexibility of hours, telecommuting)
06. Issues of behavior in the workplace (for example, absences, discipline, workplace violence,
or harassment)
7
07. Methods for investigating complaints or grievances
08. Methods for increasing disciplinary action needed for work-related behavior, including
procedures for ending employment
09. Event planning
Purpose Statement for Compensation and Benefits:
HR professionals in compensation and benefits should possess a combination of

behaviors and skills/knowledge that include providing information about
compensation and benefits to employees and about policies associated with time
off/leaves. They also include developing and providing the information
associated with salaries in the form of salary surveys and merit increases and/or
bonus payments.
Important Behaviors for Compensation and Benefits:
01. Communicate information about an employee’s compensation package, when required
02. Communicate information about company benefits
03. Record information about employees in HR database (for benefits or tax purposes)
04. Provide information about payment to employees for working hours and non-working hours
(for example, not working because of illness or vacation)
05. Administer salary adjustments
06. Track eligibility for time off and temporary leaves (for example, maternity, mourning, unpaid
leave)
07. Explain policies and procedures for taking time off and requesting leaves of absence
8
08. Coordinate activities to support employee programs (for example, programs to improve
health, tuition reimbursement or educational assistance)
09. Coordinate the completion of salary surveys from external organizations
10. Report the results of current research and available information about salaries
11. Provide data for merit increases or bonus payments
Important Knowledge and Skills for Compensation and Benefits:
01. Total compensation packages
02. Benefit programs (for example, health care plans and flexible benefits)
03. Retirement plans and programs
04. Salary surveys
05. Effects of laws and regulations on compensation and benefits
06. Company-wide compensation policies (for example, wage agreements with unions or work
councils, employee categories and salary increases)
07. Contracts with service and product providers (for example, health insurance and pension
plans)
08. Bonus and incentive programs
09. Payroll processes
10. Leave and time-off allowances
9
Purpose Statement for Training and Development:
HR professionals in training and development should possess a combination of

behaviors and skills/knowledge that include developing and delivering basic
training programs and collecting information about training programs, such as
training needs, employee participation, and evaluation of programs. They also
include monitoring completion of the performance review process and the
preparation of development plans.
Important Behaviors for Training and Development:
01. Develop basic training programs (for example, safety regulations, emergency preparedness,
presentation skills and time management skills)
02. Train employees for basic programs (for example, safety regulations, emergency
preparedness, presentation skills and time management skills)
03. Collect and analyze evaluations of training programs (for example, review evaluation forms,
contact trainees or supervisors after the training and ask how effective the training was)
04. Coordinate and monitor training activities (for example, cross training, re-training,
scheduling, setting up the classroom and completion of required training)
05. Collect information, analyze needs and make recommendations for training and future
development programs
06. Monitor completion of performance reviews and development plans
07. Keep records to document employee development and performance
10
Important Knowledge and Skills for Training and Development:
01. Different training and learning methods (for example, e-learning, blended learning, seminars
and mentoring)
02. How to give feedback on job performance
03. Organizational culture (for example, the organization’s vision, mission, values, history,
processes and guidelines)
04. Policies and techniques for evaluating performance
05. Opportunities for training and development
06. Procedures for evaluating trainings
07. Training policies
08. Training needs assessment
09. Individual development plans
10. Performance management methods (for example, setting goals, benchmarking, 360-degree
feedback, performance incentives)
11. Training skills for basic programs
12. How to organize meetings (for example, writing agendas, inviting attendees, scheduling and
setting up rooms)
13. Career paths (for example, concepts such as opportunities for job promotion, how employees
can grow within an organization)
11
Purpose Statement for Health, Safety and Security:
HR professionals in the area of health, safety, and security should possess a

combination of behaviors and skills/knowledge that focus on promoting a safe
work environment, encouraging employee participation in health and wellness
programs and documenting events that relate to employee well-being. These
events may include injuries or crimes or the return to work after a long absence.
Important Behaviors for Health, Safety and Security:
01. Encourage employees to participate in health and wellness programs (for example, exercise
programs, health tests, vaccinations, vision tests)
02. Track reports about injuries and crimes (for example, accidents, theft, vandalism)
03. Process claims from employees (for example, workers’ compensation, short-term or long-
term disability benefits and social security or social insurance)
04. Complete tasks for employees who are returning to work after a long absence (for example,
after giving birth, after an injury, returning with medical issues)
05. Promote a safe work environment
Important Knowledge and Skills for Health, Safety and Security:
01. Effects of laws and regulations about health and safety
02. Policies and programs for paying workers who take a leave of absence (for example, medical
leave, maternity leave, injury leave, or leave due to a death in the family)
03. Safety risks in the workplace (for example, violence, use of drugs and alcohol, small spaces,
dangerous materials, fires, emergencies)
12
04. Security risks in the workplace (for example, data or materials theft, equipment theft, damage
or destruction)
05. Health and safety practices (for example, emergency evacuation procedures, ergonomic
evaluations, safety-related behaviors)
06. Policies and procedures for investigating issues of health, safety or security
07. Programs to improve employee health and well-being
13
Module 1: HR Administration .................................................................................................... iii
Acknowledgements ................................................................................................................... vii
Module 1 Body of Knowledge ................................................................................................. viii
Purpose Statement .............................................................................................................................. viii
Body of Knowledge ........................................................................................................................... viii
Section 1.1: Strategic HR Management and Business Trends ...................................................1

Introduction ..................................................................................................................................4
The Evolving Role of the Human Resource Professional ............................................................5
A Historical Perspective of Human Resources ..................................................................................... 5
HR Today: An Expanded Role ............................................................................................................. 6
Elements for HR Success ...........................................................................................................10
Competency Areas .............................................................................................................................. 12
Core Bodies of Knowledge ................................................................................................................. 13
Core Behaviors.................................................................................................................................... 13
Proficiency Standards and Career Levels ........................................................................................... 13
Time Management and the Organization ............................................................................................ 17
Strategic HR Management .........................................................................................................22
Stakeholders ........................................................................................................................................ 22
Strategic Planning Process .................................................................................................................. 23
Strategy Formulation .......................................................................................................................... 26
Strategy Development ......................................................................................................................... 28
Strategy Implementation ..................................................................................................................... 43
Strategy Evaluation ............................................................................................................................. 44
Financial Measures ............................................................................................................................. 47
Nonfinancial Measures ....................................................................................................................... 48
The Balanced Scorecard...................................................................................................................... 48
Organizational Structure ............................................................................................................51
Functional Structure ............................................................................................................................ 52
Product Structure ................................................................................................................................ 52
Geographic Structure .......................................................................................................................... 53
Front-Back Structure ........................................................................................................................... 54
Matrix Structure .................................................................................................................................. 54
HR Trends ..................................................................................................................................56
Globalization ....................................................................................................................................... 58
Staffing................................................................................................................................................ 59
Compensation and Benefits ................................................................................................................ 61
Human Resource Measurement and Metrics ...................................................................................... 64
Employee Engagement ....................................................................................................................... 65
Training and Development.................................................................................................................. 66
Keeping Current on Business Trends .........................................................................................72
Technology for Today’s HR Professional ..................................................................................74
Monitoring the Technological Front ................................................................................................... 74
Human Resource Information Systems ............................................................................................... 77
Knowledge Management Systems ...................................................................................................... 82
Section 1.2: Gathering, Measuring and Reporting HR Data ...................................................86

Introduction ................................................................................................................................87
Understanding Research Terms and Techniques .......................................................................88
Inductive and Deductive Reasoning ................................................................................................... 88
Primary and Secondary Research ....................................................................................................... 90
Experimental Research Process .......................................................................................................... 91
Quantitative and Qualitative Data Analyses ....................................................................................... 93
Reliability and Validity ..................................................................................................................... 108
Human Resource Management and Evaluation Metrics ..........................................................110
Initial Considerations ........................................................................................................................ 110
Frequently Used HR Metrics ............................................................................................................ 111
Budgeted Headcount ................................................................................................................113
Strengths and Weaknesses of the Headcount Method ...................................................................... 114
Evaluating HR’s Strategic Contributions .................................................................................114
Financial Measures ........................................................................................................................... 115
Performance Measures ...................................................................................................................... 120
Trend Analysis .................................................................................................................................. 123
Reporting Methods ...................................................................................................................125
Section 1.3: Workforce Planning and Employment Strategies .............................................128

Introduction ..............................................................................................................................129
Workforce Planning .................................................................................................................129
Benefits of Workforce Planning ....................................................................................................... 131
Role of HR in Workforce Planning................................................................................................... 131
Four-Step Process for Workforce Planning ...................................................................................... 131
Job Analysis .............................................................................................................................134
Job Analysis Benefits ........................................................................................................................ 136
Writing Job Descriptions and Specifications .................................................................................... 136
Recruitment and Selection .......................................................................................................142
Employment Procedures ..........................................................................................................142
Staffing Options to Consider............................................................................................................. 143
Employment Contracts, Records and Documentation ...................................................................... 147
Section 1.4: Change Management and Business Process Improvement for HR Professionals156
Introduction ..............................................................................................................................157
Change Management ................................................................................................................157
Managing Change ............................................................................................................................. 157
Change Process Theory..................................................................................................................... 158
Managing Change in Organizations .................................................................................................. 159
HR’s Key Role in Managing Change ............................................................................................... 162
Change Drivers ................................................................................................................................. 163
Project Management .................................................................................................................167
Common Project Characteristics ....................................................................................................... 168
Common Project Phases and Roles ................................................................................................... 169
Project Planning Tools ...................................................................................................................... 170
Project Success.................................................................................................................................. 172
Quality Improvement Methods and Analysis ...........................................................................173
Quality Standards .............................................................................................................................. 173
Quality Improvement Theories and Methods ................................................................................... 174
Data Gathering and Analysis Methods ............................................................................................. 178
Benchmarking ................................................................................................................................... 182
Section 1.5: Organizational Policies, Procedures and Regulations .......................................188

Introduction ..............................................................................................................................189
The Influence of Law on the Organization ....................................................................................... 189
Jurisdiction ........................................................................................................................................ 193
Legal Areas Monitored by HR .................................................................................................193
Laws of Employment ........................................................................................................................ 195
Compensation and Benefit Laws ...................................................................................................... 196
Occupational Health and Safety ........................................................................................................ 196
Anti-Discrimination, Harassment and Fair Work Laws ................................................................... 197
Exploring the Legal and Regulatory Issues for Your Organization .................................................. 197
Considerations Involving Legal and Regulatory Environments ....................................................... 198
HR Ethics and Professional Standards .....................................................................................205
HR’s Role in Promoting Organizational Ethics ................................................................................ 205
Corporate Social Responsibility (CSR) ............................................................................................ 212
Policies, Procedures and Work Rules ......................................................................................219
HR Responsibilities for Workplace Policies, Procedures and Work Rules ...................................... 219
Confidentiality and Privacy Regulations ..................................................................................222
Privacy Protection ............................................................................................................................. 222
Developing Employee Privacy Programs ......................................................................................... 224
Bibliography ...............................................................................................................................227
Index ............................................................................................................................................232
Acknowledgements
SHRM acknowledges its volunteer leaders for their valuable contributions to the Universal HR
Practices Learning System:
Lead Subject Matter Expert

Diane M. Dowlin, SPHR, GPHR, CCP, GBA, CMS, CEBS
International Human Resources Director, FIS
Jacksonville, Florida
Subject Matter Experts
Mohamed Boraei, MBA Timo Michel, HRMP

HRIS & Project Manager, Qatar Foundation HR Business Partner, HR International
Doha, Qatar Deutschland, Germany
Brad Boyson, MSHRM, SPHR, GPHR, Rachel Park

HRMP Program Manager, Global Talent
Executive Director, SHRM MEA Acquisition, Mastercard Worldwide
Dubai, United Arab Emirates Singapore, Singapore
Cigdem Ozdemir Evren, MBA, HRBP Patchara Popaitoon

HR Generalist, FNSS Defense Systems Researcher/Teacher/Lecturer, School of
Ankara, Turkey Management University of Bath
Claverton Down, Bath, United Kingdom
Arturo Gaitán Nicholls
Human Resource Analyst, Bancolombia Aparna Rajesh, MBA, GPHR
Bogota, Colombia HR Manager, Lafarge
Dubai, United Arab Emirates
Nancy Kaysarly, PHR
OED Advisor, International Management Howard A. Wallack, MA, MSc, GPHR
Consulting Company Vice President, Global Business
Cairo, Egypt Development (acting), Society for Human
Resource Management
Sameer Khanna, GPHR, HRMP Alexandria, Virginia
Vice President and Head HR – Region India,
Ericsson India Pvt. Ltd.
New Delhi, India
Module 1 Body of Knowledge
For your convenience, the Body of Knowledge for Module 1: HR

Administration is provided on the following pages.
Purpose Statement
Purpose Statement for HR Administration:
HR professionals in the area of HR Administration should possess a combination

of behaviors and skills/knowledge that include monitoring activities for
opportunities to make improvements and using metrics to measure success,
providing and maintaining information related to the HR function. This
information may take the form of questions from employees, documentation of
employee information in paper forms or in a Human Resource Information
System.
Body of Knowledge
Below are lists of the behaviors and skills and knowledge required for mastery of
content related to Module 1: HR Administration.
Important behaviors for HR administration:
1. Use HR metrics and prepare reports to analyze HR issues (for example, the number of
employees hired and those who left, employee turnover, the cost per employee and budgets)
2. Format and maintain organization charts
3. Maintain, file and process HR forms (for example, notices, announcements, new hire forms
and salary forms)
4. Make sure the organization follows legal and industry regulations
© 2012 SHRM viii

5. Maintain human resource information systems (HRIS) data and employee files (for example,
make sure data is updated and correct)
7. Answer or refer questions from employees as the first level of support
8. Work with external providers of HR services (for example, external recruiters, training
providers, benefit providers)
9. Monitor projects and suggest improvements (for example, ways to recruit better applicants;
resources for internal and external training; ways to improve insurance, benefits, or
compensation plans)
10. Assist managers in updating standard job descriptions in order to match any changes in job
requirements
Important knowledge and skills for HR administration:
01. Skills for planning and organizing (time management techniques)
02. Change management concepts including terms and factors, resistance to change and
communication techniques (but not including the implementation process)
03. Documentation requirements for employees and their employment
04. Management of HR documents (for example, managing files, scheduling for records
retention)
05. Communication skills, both verbal and written
06. Human resources information systems (HRIS) for managing employee information
07. Employment best practices (for example, the best ways to recruit, select and retain
employees)
08. Organizational policies and procedures
© 2012 SHRM ix
10. Confidentiality and privacy rules that apply to employee records, company data and
individual data
11. Tools and methods to analyze business data (for example, spreadsheets and databases)
12. Ways to report information (for example, presentation software, such as Power Point; and
word-processing software, such as Microsoft Word)
13. Different ways to classify employees(for example, workers who are full time, part time,
temporary, or those who receive payment by the day)
14. The number of employees in the budget, and the salary and benefit costs for these employees
© 2012 SHRM x
1.1: Strategic HR
Management and Business
Trends
This section covers the following information from the Body of
Knowledge:
Behaviors: 02. Format and maintain organization charts
05. Maintain human resource information systems (HRIS) data and

employee files (for example, make sure data is updated and
correct)
08. Work with external providers of HR services (for example,

external recruiters, training providers, benefit providers)
Skills & Knowledge: 01. Skills for planning and organizing (time management techniques)
05. Communication skills, both oral and written
06. Human resource information systems (HRIS) for managing

employee information
Section 1.1: Strategic HR Management
and Business Trends
Introduction ....................................................................................................................................4
The Evolving Role of the Human Resource Professional ...........................................................5

A Historical Perspective of Human Resources ............................................................................5
HR Today: An Expanded Role.....................................................................................................6
Elements for HR Success .............................................................................................................10

Competency Areas .....................................................................................................................12
Core Bodies of Knowledge ........................................................................................................13
Core Behaviors ...........................................................................................................................13
Proficiency Standards and Career Levels ...................................................................................13
Time Management and the Organization ...................................................................................17
Strategic HR Management ..........................................................................................................22

Stakeholders ...............................................................................................................................22
Strategic Planning Process .........................................................................................................23
Strategy Formulation ..................................................................................................................26
Strategy Development ................................................................................................................28
Strategy Implementation ............................................................................................................43
Strategy Evaluation ....................................................................................................................44
Financial Measures .....................................................................................................................47
Nonfinancial Measures ...............................................................................................................48
The Balanced Scorecard .............................................................................................................48
Organizational Structure ............................................................................................................51

Functional Structure ...................................................................................................................52
Product Structure ........................................................................................................................52
Geographic Structure ..................................................................................................................53
Front-Back Structure ..................................................................................................................54
Matrix Structure .........................................................................................................................54
HR Trends ....................................................................................................................................56
Globalization ..............................................................................................................................58
Staffing .......................................................................................................................................59
Compensation and Benefits ........................................................................................................61
Human Resource Measurement and Metrics..............................................................................64
Employee Engagement ...............................................................................................................65
Training and Development .........................................................................................................66
Keeping Current on Business Trends ........................................................................................72
Technology for Today’s HR Professional ..................................................................................74

Monitoring the Technological Front ..........................................................................................74
Human Resource Information Systems ......................................................................................77
Knowledge Management Systems .............................................................................................82
Module 1: HR Administration Section 1.1: Strategic HR Management and
Business Trends
Introduction
Human resource management (HRM) is an organization’s design of formal
systems that ensures the effective and efficient use of human talent to accomplish
organizational goals. HRM is an essential function for organizations to remain
competitive and to fulfill their organizational missions.
Although the focus of human resources (HR) is the development of human

capital, the significance of HR’s contributions is now more apparent. HR’s
traditional function—to provide advice, service and control to other areas of the
organization—has expanded and developed a more global, strategic character.
This section examines the following topics:

 The evolution of the human resource profession into an essential function
of organizations worldwide
 Major success factors for today’s HR professional
 Organizational structures
 Current HR and technology trends and how they impact HR roles and
responsibilities
© 2012 SHRM 4
Business Trends
The Evolving Role of the Human Resource Professional

The role of the HR professional is evolving in ways that are significant but not yet
completely defined. How can HR professionals adapt as their traditional role
changes and expands? According to HRM experts, the following transitions are
necessary (Bates 2002):
 Move beyond the basics of HR knowledge and develop a greater
understanding and awareness of business functions and costs.
 Be ready to develop new skills and take on new responsibilities as previous
HR administrative tasks are outsourced and automated.
Figure 1-1. Facing the Future of HR
A Historical Perspective of Human Resources
In fulfilling their organizational responsibilities, HR staff has typically provided

three types of support: service, control and advice. The relative importance of
these three support types varies based on the organization.
© 2012 SHRM 5
Business Trends
Service
HR is a service-oriented function with a diverse customer base. This customer

base includes upper management, line management, employees, peers,
departments, legal and regulatory agencies, vendors, applicants, retirees and
families of employees. An example of HR’s service role is answering employee
questions concerning benefit packages.
Control
Control involves reviewing and measuring employee performances to monitor

how well they meet the goals and needs of the organization. Controls are used to
evaluate supervisory and employee performance, to correct deficiencies and to
motivate employees. An example of HR’s control function is designing a new
performance appraisal system.
Advice
HR professionals advise and assist line managers. This process involved gathering
facts, diagnosing problems, providing solutions and offering objective assistance
and guidance on employee-related problems. An example is providing a line
manager with specific policy and procedure steps for dealing with employee
grievances. Rather than managing the situation personally, the HR professional
gives responsibility to the line managers and provides the assistance they need to
increase productivity and work satisfaction.
HR Today: An Expanded Role
Many HR professionals still fulfill the roles of service, control and advice.
However, the scope of those roles in many organizations now has a stronger
strategic focus. HR professionals today often balance the following three major
responsibilities, listed here and shown in Figure 1-2:
 Strategic
 Operational
 Administrative
© 2012 SHRM 6
Business Trends
Figure 1-2. HR’s Current Expanded Role
Strategic
HR’s strategic role requires a long-term and forward-thinking focus. HR

professionals can help the organization create the right culture and build the right
structure. Strategic HR activities include the following:
 Help the organization prepare for change
 Forecast needs for specialized skills and knowledge that will be required to
achieve strategic goals
 Manage talent
 Restructure the organization
 Develop performance management systems that support strategic
objectives
To fulfill HR’s strategic role, HR professionals must understand each of the

following elements:
 The organization’s business and the environment in which it operates
 Notable competition
 Trends and events that could influence the organization’s success
HR professionals must establish business partnerships with senior management

and with essential figures in other functions within the organization.
© 2012 SHRM 7
Business Trends
Operational
The operational role of HR involves both the development and deployment of HR

policies to ensure successful implementation of HR strategy (which was set at the
strategic level). By fulfilling its operational role, HR supports the attainment of
organizational objectives and goals.
The development of HR policies includes activities such as recruiting for current

job openings, resolving employee complaints and communicating with
employees. For example, part of the organization‘s strategy could involve
building a globally based and culturally diverse workforce. HR could use
nontraditional sources for recruitment and could require specific job skills such as
proficiency in other languages. HR professionals could also increase employee
engagement by the following two actions:
 Help employees develop better communication skills and channels.
 Develop and carry out employee involvement strategies.
In the deployment of HR policies, line managers are usually the people who apply
these policies in their local management. Therefore, at the operational level, HR
professionals need to work closely with the line managers to effectively deliver
HR practices to the employee. The HR practices deployed to employees should be
consistent with the organization’s intended policies; this approach allows
employees to attain sufficient knowledge, skills and abilities to perform their
roles. Perhaps more importantly, effective deployment of HR practices can
strongly motivate employees to support the goals of the organization.
Administrative
Administrative responsibilities are treated as less important to allow HR

professionals to focus on the expanding roles that contribute more directly to the
organization’s financial goals.
HR’s administrative role focuses on dealing with compliance issues and record
keeping. Human resource information systems (HRIS) can help with this role.
HRIS applications manage HR data, such as employee records, and create
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compliance reports. These responsibilities are made easier by technology. For

example, many employees keep their own information up-to-date by using self-
service computer stations. Human resource information systems are discussed in
more detail later in this section.
Some administrative functions are not considered core HR functions and are
outsourced to third-party providers, which are used in place of doing the work
internally. Examples of outsourced functions include the following:
 Administration. Outsourced functions include benefits plan
administration, payroll administration and background checks.
 Recruiting. Vendors such as staffing agencies are used to source, screen
and recommend potential employees for placement.
 Health care. Medical examinations are outsourced to third-party providers
rather than retaining professional medical staff within the organization.
 Training. Third-party providers develop and deliver training programs.
 Compensation. Organizations outsource salary and benefits surveys to
third-party providers.
 Legal. Organizations hire attorneys as outside counsel rather than retaining
attorneys on staff.
Depending on the business process used in the organization, HR staff may

complete some or all of the following tasks when working with third-party
providers:
 Prepare requests for proposals (RFPs).
 Solicit bids to provide services.
 Review the responses.
 Select the providers.
 Manage the relationship.
 Ensure performance by establishing metrics.
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Elements for HR Success

As part of a multi-year effort, the Society for Human Resource Management has
developed a competency model for the human resource management professional.
These efforts began by forming the HR Thought Leadership Initiative. Members
of this initiative identified the key competencies needed by all HR professionals
regardless of enterprise and role. The HR Thought Leadership Initiative’s findings
have guided the development of the Elements for HR Success competency
model. Figure 1-3 illustrates the Elements for HR Success model.
To develop this model, SHRM researchers reviewed different competency

models, conducted over 100 focus groups with HR professionals in 29 cities
around the world, and surveyed 640 Chief Human Resource Officers. The
content of the resulting model was validated in a 2012 survey of over 32,000 HR
professionals. Survey respondents encompassed numerous career levels and
worked in organizations located around the world.
Continuing efforts by the Society of Human Resource Management will

focus on:
 Establishing links between proficiency in these competencies and
outcomes including self, peer and supervisor ratings of employee
performance, HR unit performance, and organizational effectiveness.
 Developing competency-based tools for building and maintaining
proficiency
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Figure 1-3. Society for Human Resource Management’s Elements for HR Success Model
(Society for Human Resource Management, SHRM’s HR Competency Model Initiative 2012)
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Competency Areas
The Elements for HR Success model contains the following nine competency
areas (see Figure 1-3):
1. Human Resource Technical Expertise and Practice: the ability to apply
the principles and practices of HRM to contribute to the organization’s
success
2. Relationship Management: the ability to manage interactions to provide
service and support the organization’s success
3. Consultation: the art of providing expert advice to organizational
stakeholders in a variety of circumstances
4. Organizational Leadership and Navigation: the ability to direct
initiatives and processes with agility and to gain buy-in from stakeholders
5. Communication: the ability to create a free exchange of information
among stakeholders at all levels of the organization to produce desired
outcomes
6. Global and Cultural Effectiveness: the art of managing human resources
within and across borders and cultures
7. Ethical Practice: the integration of core values, integrity, and
accountability with all organizational and business practices
8. Critical Evaluation: skill in interpreting information to determine return
on investment and the organizational impact of decisions and
recommendations
9. Business Acumen: the ability to understand business functions and
metrics in both the organization and the industry
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Core Bodies of Knowledge

The Society for Human Resource Management’s research indicates that success is
a function of what you know and the behaviors you engage in to apply your
knowledge. In the Elements for HR Success model, your knowledge is based
upon your mastery of the following six core bodies of knowledge which make up
your HR technical expertise and practice (see Figure 1-3):
 Business management and strategy
 Workforce planning and employment
 Human resource development
 Compensation and benefits
 Employee and labor relations
 Risk management
Core Behaviors
However, success does not rely solely on what you know. It also depends on how
you act to apply your knowledge. The core behaviors performed by successful
HR professionals range from relationship management to business acumen.
These behaviors, represented in the behavior circle (that is, horseshoe), are critical
behaviors used by HR professionals to apply their knowledge to business
situations. The importance of these competencies to individual HR professionals
will vary among organizations and role, but it may also vary according to an
individual’s career level.
Proficiency Standards and Career Levels

SHRM has identified competencies and defined behaviors for each of these nine
areas. In addition, specific proficiency standards have been associated with four
career levels:
 Entry: typically less than two years in the profession; usually a specialist
in a support function, such as recruiting or benefits
 Mid: typically three to seven years in the profession; often managing
projects; usually a generalist or tenured specialist
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 Senior: typically eight to fourteen years; often holding a formal title such
as director or principal
 Executive: typically fifteen years or more in the profession; usually
holding the top HR role in the organization
In terms of strategic HR management, executive-level HR defines strategy,

senior-level HR creates action plans to implement that strategy, mid-level HR
implements action plans, and entry-level HR gathers and reports metrics related to
strategic outcomes.
Figure 1-4 illustrates the way in which proficiency standards vary for the same
competency area. This list illustrates how one proficiency standard per
competency may evolve as one matures in one’s HR career. For each
competency, there are approximately 15-20 proficiency standards per level.
Entry Mid Senior Executive
Human Resource Technical Expertise and Practice
Employs standard Applies policies and Ensures the delivery Ensures alignment of
operating procedures procedures across the of high-quality HR HR policies and
and policies when organization processes procedures with
performing HR organizational values
transactions and goals
Figure 1-4. Example Career Level Proficiency Standards by Competency Area

(continued to next page)
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Relationship Management
Refers potentially Mediates difficult Mediates difficult Creates conflict

difficult interactions to interactions, escalating employee relations or resolution strategies
manager when warranted other interactions as a and processes
neutral party throughout the
organization
Consultation
Provides pertinent Identifies threats to Offers business Identifies

facts and information business and solutions in a opportunities to
to mid and senior- recommends effective proactive manner provide HR and
level HR leaders solutions business solutions that
maximize return on
investment for the
organization
Organizational Leadership and Navigation
Listens actively to Demonstrates Leads project plans for Works with other
identify challenges flexibility and timely completion executives to design,
and solutions adaptability maintain, and
champion the mission,
vision, and strategy of
the organization

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Communication
Produces accurate, Delivers well- Solicits feedback and Crafts messages to be

error-free organized, impactful buy-in on HR delivered to
communication presentations initiatives from stakeholders on high-
stakeholders visibility issues
Global and Cultural Effectiveness
Possesses general Implements and audits Develops expert Uses global economic
knowledge of local organizational/HR knowledge of global outlook to determine
cultural issues practices to ensure economic trends and impact on the
global/cultural best practices organization’s human
sensitivity capital strategy
Ethical Practice
Demonstrates Establishes oneself as Establishes HR team Challenges other

accountability for a credible resource for as a credible and executives and senior
actions employee and trustworthy resource leaders when potential
management issues within the conflicts of interest
organization arise

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Critical Evaluation
Gathers facts and Maintains working Maintains advanced Maintains expert

analyzes data knowledge of metrics, knowledge in use of knowledge in use of
data collection, data, evidence-based data, evidence-based
statistics, and analysis research, benchmarks, research, benchmarks,
and metrics to make and metrics to make
critical decisions critical decisions
Business Acumen
Demonstrates basic Maintains functional Maintains advanced Benchmarks the

knowledge of business knowledge of knowledge of key competition and other
lines and organizational industry and relevant comparison
products/services business units organization metrics groups

(concluded)
Time Management and the Organization
The evolving role of the HR professional includes knowledge of time

management techniques. Successful time management is based on consistently
applying a few techniques to how we approach work. Remember, you can control
your own time. Some of the techniques are listed below:
 Have a good planning system and use it.
 Take on realistic goals and schedule accurately.
 Do not over-commit.
 Define priorities to decide between urgent and important tasks.
 Build in some flexibility to deal with the unexpected.
 Do not procrastinate. Manage your time every day.
 Define and use periods of quality time in your schedule.
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 Learn to say No in a professional manner.

 Stay away from perfectionism and aim for excellence.
 Build in time for personal development.
Ways to Manage Your Time Effectively
Figure 1-5. Quote by Kenneth Patton
Planning is the most important activity in managing your time effectively. It is

best to plan at the end of the preceding day or at the beginning of the new day.
Here are other ways you can manage your time effectively:
 Manage and control interruptions.
 Combine routine tasks and separate routine tasks from your high-priority
tasks.
 Break any large task or project into smaller pieces.
 Work on priority or routine tasks during that time of day that matches your
work habit preferences.
 Handle each piece of paper or document only once if at all possible.
Respond to it, file it or discard it.
 Delegate to others if appropriate and possible.
 Reserve uninterrupted blocks of time for difficult and lengthy projects.
During this time, refrain from meetings, e-mails and phone calls.
 Throughout the day review your objectives for that day and update or
reprioritize.
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 Give yourself a break or several breaks during the day. Get up and stretch;
leave your desk for lunch. Getting away even for a few minutes from your
work will help you return alert and refreshed.
 Most importantly, maintain your work/life balance. Put family and other
social activities on your daily and weekly lists. Avoid the habit of ignoring
these constantly for work.
There are ways in which we all waste time. Some are beyond our control, but
many are within our control. These are the ones we need to work on. Two of the
biggest challenges for managing time are also two that can easily be controlled:
1. Unnecessary and unproductive meetings
2. E-mails
Preventing Unnecessary and Unproductive Meetings
To prevent unproductive meetings, first determine if the meeting is really

necessary. Figure 1-6 outlines when it makes sense to have a meeting and when it
makes sense not to have a meeting.
Reasons to have a meeting Reasons NOT to have a meeting
Attendees can collaborate, You can more effectively accomplish your

review, evaluate, discuss, purpose by telephone, memo, report, e-mail or
problem solve and decide with one-on-one discussion.
each other.
Attendees can present It is premature to meet. The subject is too

significant information. uncertain or too insignificant to justify a meeting.
Figure 1-6. Reasons to Have or Not to Have a Meeting (continued to next page)
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Reasons to have a meeting Reasons NOT to have a meeting
The meeting allows you to take The group needs a cooling-off period. There may
action. be too much anger or hostility among members.
The group can do something You can consider having one day each week when
together that you can’t do better no meetings are held.
alone.
Figure 1-6. Reasons to Have or Not to Have a Meeting (concluded)

Effective Meetings
There is one crucial key to effective meetings: make an agenda, and follow it. The
agenda drives the content and outcomes of the meeting and, where appropriate,
should reflect the needs of all attendees, so everyone has an interest in the
outcomes. Here are some tips for fostering productive meetings:
 Start on time.
 Always make and follow an agenda. With each agenda item, include the
following:
 The topic stated in question form
 The person responsible for leading the discussion
 The information relative to the issue
 The time allotted for that issue
 The action/reason/purpose of the exchange
*Helpful Tip: Include with the agenda a not-on-agenda list of topics

that are off limits for this meeting. Indicate when these items may be
expected to appear on a future agenda.
 Avoid attending your subordinates' meetings unless specifically invited to
discuss a topic, and limit your time attending to the discussion of that topic.
 Limit presentations to ten minutes.
 Avoid having a meeting lasting over ninety minutes.
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Managing E-mail
E-mail can take away two to three hours of productive time at the workplace. To
help manage your time on e-mail, check e-mails only at specified times during the
day, unless you are waiting for an urgent message. When you have planned to
devote a block of time to work on a project, do not interrupt it by checking
e-mails. Here are some other ways to better manage your e-mail:
 Create folders to sort and save appropriate e-mails.
 Touch each e-mail just once, just as for paper documents. Decide whether
to delete, save, respond to later, save for reference or retention or respond
to immediately.
 Keep e-mails short—no more than one to ten sentences. Communicate the
main point in the first or second sentence.
 After two rounds of trying to solve a problem via e-mail, use the phone or
talk in person.
 If you can’t respond immediately, let the other party know when you can
respond to avoid repeat messages.
 Remove yourself from as many distribution lists as possible.
 Use filters or rules to eliminate or to assign junk e-mails to a special folder.
 Use “No response required” to end messages and to discourage
unnecessary replies.
 If people are sending you messages or jokes that you do not need and want,
ask them politely to stop.
 Use the subject line for the entire message or use shortcuts to convey a
quick message
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Strategic HR Management
Stakeholders
A stakeholder is a person, group or organization that has a direct or indirect

interest in the organization (for example, owners, investors, employees, suppliers
or the community).
An organization’s value impacts the organization’s stakeholders. The stakeholders

perceive that value in distinctive ways. HR professionals should be familiar with
the stakeholder concept as described below.
The stakeholder concept proposes that any organization operates within a

complex environment. This environment affects and is affected by various forces
or stakeholders, who all share in the organization’s values and activities. The
needs of the different groups can make business objectives more complex.
R. Edward Freeman proposed the stakeholder concept in the mid-1980s as an

alternative to the shareholder perception. The shareholder concept believes that
the goal of a business is to create as much wealth as possible. This wealth is
returned to the shareholders in the business. The managers’ goals should be to
maximize profit, both in the short term and long term. The stakeholder concept
recognizes the different types of value an organization creates (Freeman, Harrison
and Wicks, Managing for Stakeholders: Survival, Reputation, and Success 2007).
Figure 1-7 illustrates the stakeholder concept.
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Figure 1-7. Stakeholder Concept
Strategic Planning Process
After identifying its stakeholders, the organization can proceed with strategic
planning. Strategic planning is the process of positioning the organization for the
future. The future can be eighteen months, three years, five years or even longer.
The strategic planning process consists of four stages that an organization goes
through to generate its strategic plan. Shown in Figure 1-8, the process is a cycle:
a strategy is developed, implemented and evaluated. Then a new or modified
strategy is formulated based on the evaluation.
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Figure 1-8. Strategic Planning Process
Figure 1-9 shows what happens during each stage of the strategic planning
process.
Planning Stage Description

 Define the company’s vision, mission and value statements.
Formulation
 Specify the core strategy.
 Establish strategic goals.
 Develop short- and long-term objectives from the strategic
Development
goals.
 Perform a strengths, weaknesses, opportunities and threats
(SWOT) analysis.
 Align internal systems and develop functional supporting
strategies.
Figure 1-9. Stages of the Strategic Planning Process (continued to next page)
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Planning Stage Description

 Create specific action plans.
Implementation
 Allocate budgets and resources to support objectives.
 Make plans to communicate to employees.
 On a regular basis, review external and internal factors for
Evaluation
changes.
 Review progress toward achieving strategic objectives and
measurable outcomes.
 Take corrective action.
Figure 1-9. Stages of the Strategic Planning Process (concluded)
Strategic planning in an organization is complicated by a number of factors,

including the following:
 Difficulty in gathering information in a timely fashion from all regions
within the organization
 Difficulty involving personnel from all regions in planning sessions
 Multiple operating environments, each of which includes diverse
economic, political, legal and cultural forces
 Different levels of risk and tolerance for risk
 Different technology platforms
A crucial step is to involve all the right people in the strategic planning process.
If stakeholders feel they are ignored or uninformed, then implementing the
strategy will be difficult, if not impossible. HR plays a unique organizational
role, which can impact whether people feel connected to or disconnected from
the company’s overall strategy.
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The strategic planning process involves people at different levels.

 Strategic planning team. The strategic planning team is usually a small,
high-level team. This team reviews and revises the organization’s message
at crucial stages.
 Setting strategic goals, objectives and budgets. The strategy is divided
into goals, objectives and contributing factors. The strategic core team can
expand to a much larger group of people to reflect a global composition.
The budgets approved by headquarters should reflect the priorities and
activities in the strategy.
 Development of functional strategies. If the organization’s operations are
geographically dispersed, include a representative sample of HR
professionals from local operations for successful involvement.
 Communicating and motivating employees about the organization’s
strategy. Communicating about strategy requires a systematic process to
ensure that people know where the organization is going and what their
role is. Employees also need to be committed and motivated to help the
organization achieve its goals.
Each of the four steps in the strategic planning process is discussed in greater
detail.
Strategy Formulation
Strategy formulation is the first stage of the strategic planning process. This
stage includes the following actions:
 Define the organization’s vision, mission and value statements.
 Specify the core strategy.
 Establish strategic goals.
The complete strategic plan comes from the organization’s mission and strategic
goals. The mission statement expresses the organization’s essential purpose and
value. Some global organizations choose to develop separate mission statements
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for their subsidiaries to reflect the characteristic values and terminology of the
local cultures.
The mission statement defines the course for the organization. The strategic goals
start moving the organization and its people in the intended direction. Strategic
goals are turned into short-term and long-term objectives for each value-adding
activity and must be measurable.
Figure 1-10. Sample Mission (used with permission)
The organization’s strategy must be clearly communicated to the entire

organization. David Collis and Michael Rukstad provide an example of a
strategic goals chart (Collis and Rukstad 2008). A clear statement of strategy
should communicate the following to the entire organization:
 The strategy’s desired endpoints
 The time frame for reaching the endpoints
 The scope or boundaries of the organization’s activities (for example,
regional, business model or enterprise focus)
 The competitive advantage the organization will leverage to reach its
goals
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Strategy Development
Strategy development is the second stage of the strategic planning process. This
stage includes the following actions:
 Develop short- and long-term objectives from the strategic goals.
 Perform a SWOT analysis.
 Align internal systems and develop functional supporting strategies.
This stage must address different organization issues, such as the following:
 Organizational competency refers to how an organization develops and
uses its core business capabilities to differentiate itself. Examples include
research and development, technology, customer relations and distribution.
 Market refers to how an organization positions its products and services.
Two frequently stated market strategies are being a low-cost provider and
creating the most value for customers. Some organizations choose to serve
a broad customer base; other organizations choose to serve a specific niche,
market segment or location. These choices have specific implications for
HR programs.
 Competition refers to how an organization responds to a competitive
threat. Will it compete aggressively or avoid direct conflict? Will it try to
eliminate competitors by acquisition or cooperate through alliance and joint
ventures?
The competitive strategy may be based on extensive analysis, such as that

introduced by Michael Porter in Competitive Strategy (Porter 1980).
Growth and market entry strategy refers to the decision to expand an

organization’s presence. This strategy requires analyzing the tactical options
available for market entry or growth. Figure 1-11 lists some of the more common
tactics. (In this context, tactics refers to the implementation of strategy.) Many of
these tactics are low risk for market entry, and each tactic has its strengths and
weaknesses. Decisions about which tactic to pursue depend on timing, desired
control, strategic importance, risk management and financial incentives. Human
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resources will be deeply involved in preparing and implementing the chosen

tactic. Therefore, HR professionals should be prepared to play a role in early
discussions of these options.
Market Entry/
Description
Growth Tactics
Strategic alliances Strategic alliances include a number of organizations loosely or

tightly joined for a variety of purposes, including manufacturing,
marketing, distribution or sales. Some alliances involve customers,
partners and competitors.
Joint venture A joint venture is a form of strategic alliance with two or more
organizations developing a product or service together.
Equity partnership Equity partnership involves acquiring partial ownership through a

purchase of shares. This partnership can be general (sharing
proportionally in control, profits and liabilities) or limited (no
managerial authority and liability limited to investment). The
partnership agreement defines issues such as leadership and division
of profits and losses.
Licensing Licensing means that the organization designated by a legal entity in

the host country is granted the rights to produce or sell a product. This
is a low-risk entry strategy that avoids tariffs and quotas imposed on
exports. However, there is little control of the licensee’s activities and
results.
Franchising Franchising is when a trademark, product or service is licensed for an

initial fee and ongoing royalties. Franchising is similar to licensing as
a low-risk entry strategy. This tactic involves an initial franchise fee
with ongoing royalties.
Figure 1-11. Market Entry and Growth Tactics (continued to next page)
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Market Entry/
Description
Growth Tactics
Contract Contract manufacturing means contracting for the manufacture of

manufacturing components or products as a means of lowering labor costs.
Turnkey operation A turnkey operation or BOT is an organization that includes

(also called BOT, everything needed to start operating in a certain location.
or build, operate
and transfer)
Management With a management contract, an organization is hired to manage and

contract run the daily operations of the business. Decisions about financing
and ownership reside with the owners.
Acquisition Acquisition results in the expansion of the organization’s employee

base and facilities. Significant cultural, systems and management
challenges can occur during acquisitions. Data privacy can be a
serious issue.
Greenfield A Greenfield operation is the start-up of a new business plant or

operation operation, usually in a new location.
Brownfield A Brownfield operation is the reuse of land that was previously used
operation for industry or manufacturing.
Figure 1-11. Market Entry and Growth Tactics (concluded)
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A start-up is a term used to describe an organization that recently began

operating and is in an early phase of development. HR’s role in supporting the
start-up strategy occurs during the research, planning and implementation
phases.
Global HR professionals prepare themselves for the start-up process by reviewing

information on the following:
 Country-specific employment-related issues such as employment practices,
recruiting sources, workforce relations, taxation and legally mandated
components of compensation and benefit plans
 Cultural, religious and ethical issues that will affect practices
The website http://www.doingbusiness.org offers country-specific information

related to doing business in other countries and complying with local labor laws.
The International Labour Organization (http://www.ilo.org) is another useful
resource for labor management in different locales.
Figure 1-12 shows some examples of the scope of the HR professional’s

responsibilities during the following activities:
 Researching locations for start-ups
 Identifying local resources and challenges
 Localizing the global HR strategy as necessary
 Ensuring the fulfillment of local HR functions
Many of these tasks are familiar to the HR professional. However, with a start-up
each task must start at the beginning with no previous experience to build on.
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Researching New Operations
Political/business/social environment Industry/labor environment

 Real decision makers (that is, formal  Major business leaders
versus informal power structures)  Conditions in industry
 Government structures and attitude  Presence of union representation
toward business and use of collective bargaining
 Stability and continuity of policy across
Recruitment and hiring
changes in leadership and administration
 Typical education requirements
Workforce  Sources for recruiting and
 Employee classification system (for reliability of references
example, exempt/nonexempt,  Contracting requirements
hourly/salary, monthly)
 Enforceability of local system HR policies and procedures
 Use of contracts and restrictions on  Payroll and tax procedures (for
hiring (for example, part-time or example, HR information system
temporary employment) and learning management system

implications)
Compensation and benefits  Customary workweek
 Pay structures, pay review cycle,  Social restrictions on job
progression assignments (for example, who can
 Mandatory or customary bonus payments work certain shifts or jobs)
 Overtime, night or shift pay
Figure 1-12. Sample Research Topics for Starting a New Global Business (R. e. Herod 2007)
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Environmental Scanning/SWOT Analysis
An environmental scan is a survey of internal and external environments to

identify the following:
 Internal strengths and weaknesses
 External potential opportunities and threats to the proposed strategy
Environmental scanning can involve an analysis technique known as SWOT

analysis. SWOT is an acronym that stands for strengths, weaknesses,
opportunities and threats. The SWOT analysis is used to discover two things
about an organization:
 Distinctive capabilities that provide a strategic advantage
 Potential problem areas that must be addressed
A SWOT matrix is illustrated in Figure 1-13.
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Internal External
 Strengths  Opportunities
 CEO backing  New markets
 Good communication system in  New partners
place  Improved brand
 Initial excitement and good awareness
motivation
 Strong vendor relationships
 Consistent with strategy
Weaknesses  Threats
 No market research  Local rules and
 Organizational resistance to regulations
change  Environmental impacts
 Workload is already excessive  New competitors
 Not enough resources assigned  Poor economy and
 Loss of focus resistance to new
investments
Figure 1-13. Sample SWOT Matrix
Strengths and weaknesses refer to the internal environment. Opportunities and

threats come from the external environment. The opportunities represent
favorable circumstances that the organization can leverage to produce a desired
effect. The threats indicate possible danger, harm or menace. Strengths and
opportunities can be leveraged. Weaknesses and threats are problems that must be
solved but can be difficult to control.
Figure 1-14 shows a hypothetical HR SWOT analysis. In this example, a real

estate and property development organization wants to expand its number of
properties, square footage and number of locations.
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Internal External
 Strengths  Opportunities
 Strong organizational  High growth in some
brand locations
 Good onboarding  Technology and building
program techniques
 High income potential
 Weaknesses  Threats
 Lack of cross-border  Lack of talent
experience  Individualistic culture
 Difficulty reaching  Financial crisis
diversity goals (for  Working with accounts
example, for women)
 Lack of valuable career
plans
Figure 1-14. A Hypothetical HR SWOT Matrix
HR’s Strategic and Tactical Roles in Internationalization

Mergers and Acquisitions
Mergers and acquisitions (M&A) are a common way for an organization to

develop a presence in a local market. However, there is also a significant risk of
failure. Figure 1-15 lists some of the potential benefits and risks of the M&A
strategy for expansion.
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Potential Benefits Potential Risks

 Acquire local company’s  Meet administrative (political,
familiarity with local market legal and regulatory) resistance
forces and competitors to M&A
 Acquire known brands and  Incur liabilities of other
market share organization (for example,
 Gain access to new market of acquired rights of workforce,
consumers or customers lawsuits)
 Gain additional resources,  Incur loss of shareholder value
institutional knowledge and  Lose talent and productivity
skills during prolonged integration
period (integration of strategies,
management, workforce,
processes and technology)
Figure 1-15. Potential Benefits and Risks of Mergers and Acquisitions
HR’s due diligence in mergers and acquisitions. Many organizations have

developed their own due diligence checklists. Figure 1-16 lists typical factors HR
should include in its due diligence investigation. The investigation should use
multiple sources and local contacts and experts.
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Due Diligence Topics

Management Community labor environment
 Talent of current managers at top and  Union climate
middle levels  Availability of necessary skills
 Anticipated level of post-M&A
Current HR function
motivation of managers  In-house or outsourced
 Likelihood of retaining top  Future plan
management
HR policies and procedures
 Management pay structure
 Written or unwritten policies and
 Ability to recruit top managers procedures
Management style  Compatibility with own policies and
 Centralized versus decentralized procedures
 Paternalistic, authoritarian or  Other required policies (for example,
collaborative regulatory, such as affirmative action)
 Distance of management style from that
Effect of future business strategy
of your own organization  HR activities needed to support
 Probability that managers will be able business strategy (for example, hiring,
to adapt to new style closing of operations)
General employee information
 Types of employees (for example, full
time or part time)
 Local customs of employment
 Retention plans, if applicable
Figure 1-16. HR Due Diligence for M&A (continued to next page)
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Due Diligence Topics
Work environment Hidden costs of acquisition

 Employee attitudes  Special contract terms with
 Type of worker representation and management
participation  Benefit plans and transferability to
 Rates of absenteeism and disability new employees
 Safety records  Pension plan status (adequacy of
 Complaints filed with regulatory funding, distribution, retention of
agencies unvested percentage)
 Separation and incentive pay plans
 Compensation packages
 Pending lawsuits and judgments
Figure 1-16. HR Due Diligence for M&A (R. Herod 2007) (concluded)
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Strategic Alliances and Partnerships
In The Global Challenge: Frameworks for International Human Resource

Management (Evans, Pucik and Björkman 2010), the authors note that HR can
do the following to add value to strategic alliances and partnerships:
 Identify and select partners. HR can identify appropriate competencies
needed in a partner, analyze the impact of the partner’s organizational and
ethnic cultures, and assess the strength of the partner’s HR function.
 Negotiate the relationship. HR may help select and train the negotiation
team and contribute its own facilitation skills. HR must also address issues
such as transfer of competencies and ensure that the partner is developing
the appropriate staff and workforce.
 Implement alliances. This may involve contributing to
compensation/reward plans, development programs and transfers that will
improve alliance performance. HR may also help integrate cultures and
enable collaboration.
 Promote learning. Transfer of knowledge may be an important goal in the
alliance. HR can help ensure that opportunities for learning are built into
the arrangement and implement programs designed to stimulate learning.
Given the potential benefits, HR should be involved at an early stage in planning

these strategies and should be included in management teams.
Expanding Resources Across Borders
Offshoring, outsourcing and open sourcing are all ways of expanding resources
and increasing efficiency by using opportunities across borders.
Offshoring. Offshoring is transferring service or manufacturing operations to a

foreign country where there is a supply of skilled and less costly labor. For
example, a financial services company in the United Kingdom could open a
facility in Thailand to perform back-office banking transactions.
Cost savings may not be the only attraction of offshoring. Organizations may also
be attracted to the greater proximity that offshoring provides to growing markets
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or suppliers. There has also been a trend toward offshoring to certain areas
because of a greater availability of talent. India, China and Russia now provide
more than half of the supply of young professionals. In 2003, there were 30%
fewer engineers in low-wage economies than in mid- to high-wage economics,
but by 2008 the gap had narrowed to 18%. As education improves in emerging
and developing economies, the talent gap will continue to close (Farrell 2006).
Some of the factors for choosing one location over another relate to workforce
and talent issues. Therefore, HR’s early and close involvement is important.
Figure 1-17 highlights main areas for HR research during the due diligence
period.
Due Diligence Topics for Offshoring
Cost and quality Talent pool

 Wage structure relative to  Size of labor force with required
other options skills
 Tax structures  Size of offshore sector and share
 Real estate of exports
 Infrastructure (for example,  Availability of vendors for
telecommunications networks, specific services (for example,
transportation, energy) IT)
Figure 1-17. HR Due Diligence for Offshoring (continued to next page)
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Due Diligence Topics for Offshoring
Sociopolitical environment Risk levels

 Government receptivity,  Political and labor unrest
amount of regulation  Natural disasters
 Ethical environment of  Personal and property security,
political and business intellectual property rights
communities  Economic stability
 Quality of life  Regulatory stability
 Accessibility
Figure 1-17. HR Due Diligence for Offshoring (Farrell 2006) (concluded)
Outsourcing. Outsourcing occurs when a company contracts with a third-party

vendor for the supply of products, services or component parts. Outsourcing can
occur to a domestic firm or across borders. This practice is a common way to take
advantage of global differences—for example, in cheaper labor or access to raw
materials or end users.
Outsourcing is a way of accessing special skills and knowledge that can raise the
quality level of an organization’s products or services or enhance its ability to
respond quickly to customer demands. However, organizations generally do not
outsource their core competencies, the essential activities that create the
organization’s characteristic value.
The advantage of outsourcing lies in a company’s ability to acquire value without

a long-term investment in assets. Figure 1-18 lists reasons to outsource.
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Reasons to Outsource
 Reducing and controlling costs  Accelerating process
 Improving focus on core improvements
strategic competencies by  Managing difficult situations
transferring important but non- and deadlines
core competencies  Sharing financial risk
 Gaining access to world-class  Satisfying government reporting
talent requirements
 Freeing internal resources  Accessing technology
 Adding resources that do not  Obtaining critical mass
exist internally
Figure 1-18. Reasons to Outsource
In a cosourcing arrangement, an organization outsources only one part of a

function—for example, by retaining the more strategic aspects of compensation
but outsourcing the data-intensive activities.
The term insourcing has a variety of meanings, including the following:

 Contracting a function out to another entity that manages and performs the
function on-site
 Transferring a previously outsourced function back in-house
 Hiring of local workers by foreign organizations operating subsidiaries
locally
In International Human Resource Management: Policy and Practice for

Multinational Enterprises (Briscoe, Schuler and Claus 2008), the authors
describe the internal challenges of outsourcing:
 Internal divisions of the organization must agree to use the service or
product provider. Management may have to enforce the strategic decision
to outsource.
 The organization must define clear processes and parameters and establish
efficient communication channels with the provider.
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 If outsourcing results in workforce reductions, the organization must

manage the economic, legal, social and organizational costs.
 Externally, local instabilities and obstacles that prevent the contractor from
performing as promised can also jeopardize the organization’s own
performance. This factor must be considered when choosing products or
services to be outsourced.
HR may be involved directly in outsourcing—by contracting out HR processes

or subprocesses—or indirectly. For example, HR may provide training and
decision support tools to help the organization’s managers supervise the
outsourcing process. HR has a role in developing and monitoring relationships
with external stakeholders and in supporting the organization’s corporate social
responsibility program. Therefore, HR may also evaluate vendors’ performance
on such issues as labor conditions and environmental practices.
Strategy Implementation
The third stage of the strategic planning process is strategy implementation.

This stage involves three actions:
 Create specific action plans.
 Allocate budgets and resources to support objectives.
 Make plans to communicate to employees.
At this stage, the strategy becomes part of the organization’s operations, priorities
and direction. A strategy is only as good as its implementation and evaluation.
Even a very thoughtful strategy can fail if it is not properly implemented.
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The Role of HR in Implementing Strategy
HR has an important role as manager of the organization’s human talent

resources. In this role, HR can promote successful implementation of an
organization’s strategy. Managing talent means constantly analyzing the talent
pool against the requirements of the organization’s strategy. How can HR retain
highly valuable assets and increase the general value of the organization’s talent?
 By developing strategic competencies
 By promoting the exchange of learning and experience throughout the
organization
HR can take the following actions to support implementation of the

organization’s strategy:
 Maintain a talent pool of innovative, literate leaders who can be assigned
to strategically sensitive areas. This concept is discussed in Christopher
A. Bartlett and Sumantra Ghoshal’s Managing Across Borders: The
Transnational Solution (Bartlett and Ghoshal 2002).
 Identify and develop key skills in the existing talent pool.
 Increase the pool of needed skills through targeted recruiting.
 Help define the interconnected roles of different parts of the organization.
 Establish methods for communication and collaboration.
 Create strategies for decreasing competition between units and enhancing
collaboration.
Strategy Evaluation
The last stage in the strategic planning process is evaluation, which involves
the following three actions:
 On a regular basis, review external and internal factors for changes.
 Review progress toward achieving strategic objectives and measurable
outcomes.
 Take corrective action.
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Evaluation can and should occur at any time. Evaluation impacts the organization
in the following ways:
 Affects both the perceptions of external stakeholders and the behaviors of
internal stakeholders (management and employees)
 Confirms the continued relevance of the organization’s strategy
 Demonstrates progress toward achieving specific goals based on that
strategy
HR professionals can differentiate evaluation metrics by what they measure.
Activity versus Results
Figure 1-19 compares activity measures to results measures.
Activity Measures Results Measures
Activity measures focus on what an Results measures focus on the output of those
organization does (its processes). processes (improvements in time, money,
quality, efficiency, effectiveness and
credibility).
Activity measures identify problems and Results measures are essential to success.
areas for improvement and lead to
improved results.
Example: An organization’s strategy is to Example: An organization’s strategy is to

increase its ability to innovate. An activity increase its ability to innovate. A results
measure tracks the number of employees measure focuses on the number of new
who have attended workshops on products in development.
creativity.
Figure 1-19. Activity Measures versus Results Measures
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Operations should examine what they are measuring and ensure the following:
 Results measures receive the most emphasis.
 The balance and the relationship between activity and results measures are
appropriate.
Cost Control versus Value Creation
Cost control measures focus on the ratio of operating costs to income. Value
creation measures focus on the following:
 Number of patents and product innovations
 Time to achieve competency
 Development time for new products
 Effectiveness of knowledge sharing and global collaboration
 Strength of the employment brand
 Opening of new markets and opportunities for revenue
Cost control and value creation both are valuable and contribute to the
organization’s financial goals. Leading organizations have a healthy balance
between cost and value creation measures. A strong emphasis only on cost control
or only on value creation can create challenges for strategic and organizational
alignment.
Benchmarks
Benchmarks are measures or markers used as a basis for judging or measuring

something else. Here are examples:
 For commercial enterprises: inventory turn, profit margin
 For nonprofits: ratio of fund-raising costs to total expenses
 For government agencies: the number of transactions with citizens
performed within a period of time
Additional information on benchmarks is presented in Section 1.4: Change

Management and Business Process Improvement for HR Professionals.
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Financial Measures
A variety of metrics—both financial and nonfinancial—are used to evaluate the

effectiveness of organizational strategies. The choice of tactic depends on the
nature of the strategy and the organization’s priority. We will discuss typical
financial and nonfinancial metrics and the balanced scorecard, beginning with
financial measures.
Financial measurements can shape the future of an organization. Here are three
examples:
 Good performance data can increase the organization’s value and ability to
attract talent.
 Senior management can earn rewards based on economic performance
measures.
 Labor unions can use financial reports to support demands for increases in
wages.
Excessive use of financial measures can overemphasize the importance of short-

term results. Viewing financial results as trends can help lessen this effect.
Financial measures must always be used within the context of a specific industry.
For example, profit margins are very different in financial services than in
manufacturing consumer goods.
Compensation levels can also be a financial metric. For example, an

organization’s average wages can be benchmarked against industry averages to
identify potential vulnerabilities. A history of stagnant wages can signal problems
with retaining valuable employees.
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Nonfinancial Measures
Nonfinancial measures examine changes in areas that are not measured in terms
of currency. However, the effects of these changes can be expressed in currency
to show their financial effect. Such measures may include the following:
 Share of market, which may signify competitive strength
 Reputation among investors, consumers, governments and political groups
 Level of brand awareness among consumers
 Achievements in social responsibility
 Recognizable employee brand (useful in recruiting and hiring)
 Reputations for quality, customer relations and innovation
 Efficiency (that is, use of most current, efficient technology and processes)
 Activity ratios, which measure the efficiency with which resources are used
to generate profit (for example, number of inventory turns in a period,
average age of inventory, average collection and payment period, asset
turnover)
 Employee retention and job satisfaction ratings
The Balanced Scorecard
The balanced scorecard is a tool used to evaluate organizational strategies. This

tool must accommodate the varied goals of different strategies.
For additional information about the balanced scorecard, see Section 1.2:
Gathering, Measuring and Reporting HR Data.
Robert Kaplan and David Norton (Kaplan and Norton 1992) first introduced the
balanced scorecard as a metric that considers both financial and operational
performance. Kaplan and Norton believe that relying only on common financial
measures—such as return of shareholder value or revenue growth—gives an
incomplete picture of an organization’s strengths and weaknesses. This is
especially true in modern organizations that succeed in their ability to innovate
and respond quickly to change. Kaplan and Norton also believe that traditional
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measurement approaches do not account for the complex relationships between

different aspects of performance.
The purpose of a balanced scorecard is to achieve balance in three main areas:

 Between financial and nonfinancial indicators of success
 Between internal and external constituents in the organization
 Between lagging indicators and leading indicators of performance
Figure 1-20 illustrates the general form of a balanced scorecard. (The scorecard
can be customized for different types of organizations.) The scorecard
incorporates measures from four perspectives and illustrates the interrelationship
of leading and lagging performance indicators (that is, the cause-effect
relationship between measures).
Figure 1-20. The Balanced Scorecard for a For-Profit Organization
Four perspectives are represented in the balanced scorecard.
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Financial
Financial measures examine the effect of the organization’s actions on its

financial goals. The typical financial measures are profitability, growth (for
example, in sales and market share) and shareholder value (for publicly held
companies).
Customer (External)
Kaplan and Norton (Kaplan and Norton 1992) found that customer concerns tend
to divide into the categories of time, quality, performance and service and cost.
For example, customer measures of an organization’s performance may include
the following:
 Time. How much time does it take to receive a product after an order has
been placed?
 Quality. Is a product being returned because of a flaw or because a service
is performed incorrectly?
 Performance and service. Does the product or service meet the
customer’s needs and add value?
 Cost. Is the cost appropriate for the value delivered and the competitive
environment?
Operations (Internal)
The operations (or internal) perspective looks at how well the organization
performs the essential processes that create its value. These processes can directly
affect customers (for example, quality monitoring) or important competencies (for
example, technology and managing product life cycles).
Learning and Growth
The learning and growth perspective recognizes that remaining competitive or

sustaining value requires continuous improvement and innovation. Examples of
learning and growth measures include the following:
 The rate or number of new product introductions
 Rates of improvement in measures such as quality or productivity
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Leading indicators predict future performance. Improved customer loyalty (a

customer measure) eventually translates into increased revenue growth and
possibly improved profits (financial measures).
Lagging indicators (such as financial performance) show only what has

happened in the past. Consider an organization that is in the middle of
implementing a strategic initiative to improve performance. This organization
could see a disconnect between strong leading indicators and poor lagging
indicators. However, if the organization continues to improve the leading
indicators, the lagging indicators will eventually turn around.
For more information about the use of the balanced scorecard, refer to the
Balanced Scorecard Institute, http://www.balancedscorecard.org.
Organizational Structure
Organizational structure is a way to align and relate the parts of an organization to
get the most performance from all functions. Organizations must implement
organizational structures that provide a good fit with their industries—allowing
the right balance of local responsiveness, efficiency and sharing of learning and
innovation. The wrong organizational design can severely hamper the
organization’s ability to achieve its goals. HR professionals should be familiar
with the elements of organizational structures, so they can guide their
organizations through choosing and implementing the elements that are right for
them.
Organizations can be structured according to function, product or geography.

They can also use hybrid structures, such as front-back or matrix. We will discuss
these five structures in more detail.
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Functional Structure
The functional structure is the most common organizational structure. In this

structure, departments are defined by the services they contribute to the
organization’s mission. For example, the departments can include HR, operations
and marketing and sales. Departments can also be defined by process. For
example, the organization can be divided into departments such as design,
manufacturing, distribution and customer service.
Figure 1-21 shows a functional structure. In this example, some units in the
structure are considered line units, and others are considered staff units. Line units
are workgroups responsible for the organization’s major business functions (such
as production or marketing). Staff units help the line units by performing
specialized services for the organization (such as HR).
Figure 1-21. Functional Structure
Product Structure
In the product structure, functional departments are grouped under major product
divisions. For example, an automobile company can have separate divisions for
cars, truck and sports vehicles. Each of the divisions will have its own marketing,
sales, manufacturing and finance functions. More employees are needed to staff
this type of organization, but this need can be offset because of accumulated
experience and expertise. The truck division, for example, should be better than a
generic vehicle operation at designing and manufacturing trucks. Figure 1-22
shows a product structure.
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Figure 1-22. Product Structure
Geographic Structure
A geographic structure is very similar to a product structure except that

geographic regions, rather than products, define the organizational chart. Each
region has its own complete group of functions. Although more employees may
be needed, each division can also be more responsive to local markets.
Figure 1-23 shows a geographic structure.
Figure 1-23. Geographic Structure
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Front-Back Structure
The front-back structure is a hybrid structure that mixes elements of the

functional, product and geographic organizational structures. The front-back
structure divides the organization into front functions (organized by geographic
locations or customer types) and back functions (organized by product or business
unit). For example, the front end of an athletic shoe corporation can be organized
by geographic region (such as Europe, the Middle East and Africa). The back end
can be organized by product area (such as shoes for different sports).
Matrix Structure
The matrix structure is another hybrid structure. The matrix combines the
functional and product structures to gain the benefits of both. This structure
creates two chains of command in the organization. Some employees may report
equally to two managers. For example, in Figure 1-24, the safety training manager
reports to both the vice president of manufacturing and product manager C.
Figure 1-24. Matrix Structure with Two Chains of Command
Figure 1-25 summarizes the advantages and disadvantages of the various

organizational structures.
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Type of
Advantages Disadvantages
Structure
 Easy to understand  Weak customer or product focus
Functional
 Specializations develop  Potentially weak communication
 Economies of scale among functions
 Communication within  Weak grasp of broader
functions organizational issues
 Career paths  Hierarchical structure
 Fewer people
 Economies of scale  Regional or local focus
Product
 Product team culture  More people
 Product expertise  Weak customer focus
 Cross-functional
communication
 Proximity to customer  Fewer economies of scale
Geographic
 Localization  More people
 Quicker response time  Potential quality control
 Cross-functional problems
communication
Figure 1-25. Advantages and Disadvantages of Organizational Structures

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Type of
Structure
 High level of customer  Potential for conflict between
Front-back
focus front and back (for example,
 Flexibility (units can be explaining decreases in sales by
added to meet demand for mutual accusations of poor
new products or performance)
emergence of new  Necessity for developing new
customers) skills (customer/market focus)
for all employees
 Combines strengths of  Can be expensive and difficult to
Matrix
both functional and explain to employees
product structures  May result in conflicting
 Blends technical and priorities when individuals have
market emphasis more than one superior
 Develops managers who
are comfortable with
technical and marketing
issues
Figure 1-25. Advantages and Disadvantages of Organizational Structures (concluded)
HR Trends
How do you determine what trends to analyze? Because your organization is
unique, the trends you analyze will also be unique. The organization’s HR needs
change constantly in response to the economy, specific industry changes,
competition and localities where the organization has a presence.
In 2009, the Society for Human Resource Management (SHRM) published a list
of the future workplace trends according to SHRM’s HR subject matter expert
panels (Society for Human Resource Management, Future Insights: The Top
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Trends According to SHRM's HR Subject Matter Expert Panels 2009). Twelve

Special Expertise Panels compiled lists of the issues they believe will have the
greatest impact in the workplace.
The report identifies broad trends that impact many aspects of HR and the
workplace simultaneously. These broad trends include the following:
 Impact of the global recession on business strategy and employees
 Influence of social networking, especially as it relates to recruiting
 Continuing importance of work/life balance as employees deal with
multiple caring responsibilities and, in some cases, multiple paid jobs
 Need for measurement of results and the development and standardization
of important HR metrics
 Growing need for organizations to demonstrate a commitment to ethics,
sustainability and social responsibility
 Importance of globalization and integrating markets
 Continued emphasis on performance management
In 2011, the International Bar Association’s Global Employment Institute (GEI)

reported on the most important HR issues of the next ten years, as identified by
HR leaders in multinational organizations (International Bar Association Global
Employment Institute 2011).
The following issues were among the top international HR challenges:

 Human resources issues in transnational company operations
 Work/life balance as a significant factor in acquiring and retaining talent
globally
 Managing mobile employees and those working remotely in other countries
 Nondiscrimination and management of diversity in a global company
culture
 The use of the Internet and social networking communications in the
workplace (Heylman 2011)
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More information about HR trends can be found at the following websites:

 http://www.shrm.org/Research/FutureWorkplaceTrends/Pages/default.as
px
 http://www.shrm.org/hrdisciplines/global/Articles/Pages/GlobalizationSt
udy.aspx
 http://www.shrm.org/about/pressroom/Documents/future_of_hr.pdf
We will discuss trends in specific HR areas in more detail below.
Globalization
Christopher Bartlett and Sumantra Ghoshal (Bartlett and Ghoshal 2002) have
proposed the most recent and optimal form of global enterprise: the transnational
corporation (TNC). The TNC blends the standardization used by global
organizations with the localization approach of a multinational organization.
The result is glocalization—an organization with a strong global image but an
equally strong local identity.
Global integration (GI)

 Global integration emphasizes consistency of approach, standardization
of processes and a common corporate culture across global operations.
 Decisions are made from a global perspective so that the organization’s
brand and image are consistent and uniform.
Local responsiveness (LR)

 Local responsiveness emphasizes adapting to the needs of local markets
and allows subsidiaries to develop unique products, structures and
systems.
 Company functions, processes and activities are modified to reflect local
conditions—including markets and cultural, legal and sociopolitical
situations.
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Staffing
Staffing describes the act of selecting, hiring and training qualified people for
specific jobs, as well as reducing the workforce when needed. HR professionals
must consider current and future trends in order to effectively support the
organization’s staffing needs.
In the 2009 SHRM report on future workplace trends (Society for Human
Resource Management, Future Insights: The Top Trends According to SHRM's
HR Subject Matter Expert Panels 2009), one of the Special Expertise Panels
identified trends related to staffing management. Some of these trends include the
following:
 Many workers are available (although not always qualified) to apply for
many jobs. However, other jobs are harder to fill and require a competitive
recruitment strategy.
 Workforce planning will be affected both by availability of qualified
workers and by changes in retirement patterns.
 HR needs to build competency in selecting and managing third-party
products and services.
 Sustaining the employment brand is critical for recruitment and retention
regardless of the employment market and economic business conditions.
 Employers are increasingly using multiple selection measures—including
panel interviews, reference checks and work samples.
In addition, William Arruda, founder of Reach Communications Consulting Inc.,

identified technology trends that he says will find increasing use among
employers and corporate recruiters through 2012. These trends include the
following:
 Customized Google searches help recruiters quickly find relevant and
accurate information on potential employees. One example is the Search
Me button developed by United States-based Vizibility.
 Blended searches provide employers with a multimedia package of
information on job candidates, including photos and videos.
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 Digital bridges let potential employees access online suites of career

marketing tools.
 Crowd sourcing allows colleagues and clients to make online
recommendations and reviews of a person’s work skills (Society for
Human Resource Management, 'Search Me' Button Might Help Eliminate
Mistaken Identity 2011).
Proactive Recruiting Using Social Media
The use of social media is a growing technology trend. Social networking sites
available to recruiters include Facebook, LinkedIn and Twitter. Benefits of using
these media include a reduced cost of recruiting and a larger pool of potential
applicants. The LinkedIn Recruiter platform, for example, provides an
organization’s recruiters with access to an expanding database of over 80 million
members in 200 countries (Society for Human Resource Management, Recruiting
Strategies for Social Media 2010). However, according to Sherrie A. Madia,
author of The Social Media Survival Guide, recruiters should balance social
media with continued use of their existing recruitment channels (Society for
Human Resource Management, Recruiting Strategies for Social Media 2010).
Employment Branding
Employment branding is an organization’s strategy to change how others perceive

it. The goal of employment branding is to project an image of the organization as
a desirable employer.
An effective employment brand is considered crucial for recruitment and retention

(Society for Human Resource Management, Future Insights: The Top Trends
According to SHRM's HR Subject Matter Expert Panels 2009).
More information about the employment branding trend can be found at the
following websites:
 http://www.shrm.org/Research/FutureWorkplaceTrends/Documents/10-
0028%20India_Article_Employer_brand_v5.pdf
 http://www.shrm.org/Publications/Books/Pages/CulturalFitFactor.aspx
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Outsourcing
HR needs to build competency in selecting and managing third-party products and

services (Society for Human Resource Management, Future Insights: The Top
Trends According to SHRM's HR Subject Matter Expert Panels 2009). The use of
third-party contractors is also known as outsourcing. Outsourcing involves
transferring certain business functions outside the organization so that the
organization can focus on core activities.
Before considering outsourcing, organizations should be aware of the following

issues:
 The gap between what the organization needs and what the organization
currently has
 What role outsourcing can serve in closing those gaps
 The impact on the organization in terms of a reduction in workforce or
future dissatisfaction with the outsourcing arrangement (Society for Human
Resource Management 2008)
Compensation and Benefits
Benefits are things that the employee receives in addition to a salary, such as
health insurance. Compensation refers to total rewards that the employee
receives for working, including pay and nonmonetary benefits.
HR Magazine’s 2011 HR Trend Book reports a need for salary and incentive
overhauls as a result of the global financial crisis. As part of compensation
planning for 2011, organizations must align their compensation program with
their recovery strategy (Krell 2010).
Following are some of the significant trends related to compensation and benefits.
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Transparent Executive Compensation
Poor performance by an organization can lead to closer scrutiny of the

compensation received by the organization’s top executives.
In the 2010 SHRM report on trends, the Total Rewards/Compensation and

Benefits Panel identified the following trend:
Figure 1-26. Trend in Compensation
DolmatConnell & Partners, an executive compensation consulting firm, identified

the following top trends in executive compensation for 2009:
1. Low increases in base salaries
2. Restructuring of bonus plans
3. Potential shifts in long-term incentive mixes
4. An increased potential for taking back previously awarded money or
benefits because of corporate underperformance
5. A more conservative approach by compensation committees (Society for
Human Resource Management, Executive Compensation: What Lies
Ahead? 2009)
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Total Rewards Emphasis
The 2010 SHRM report on trends identified the following total rewards trend:
Figure 1-27. Trend in Total Rewards
A 2009 survey by Deloitte Consulting and the International Society of Certified

Employee Benefit Specialists (ISCEBS) identified the cost of providing health
care benefits as the top priority of total rewards specialists (Society for Human
Resource Management, Increased Cost Concerns Dominate 2009 Total Rewards
Trends 2009).
Generational Differences
HR professionals must be aware of the differing attitudes and motivations of

different generations of employees. C. Scott Boring, 2009 ISCEBS President,
cautions that each generation of employees has unique beliefs about work and
rewards. However, in the 2009 survey by Deloitte and ISCEBS, 24% of the
respondents believed that their organization’s leadership did not understand the
total rewards perspective of the different generations in the workforce (Society for
Human Resource Management, Increased Cost Concerns Dominate 2009 Total
Rewards Trends 2009).
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Demand for Work/Life Balance
Employees are facing increased caring responsibilities (for example, caring for
their aging parents). This situation may lead to greater demands for work/life
balance benefits (Heylman 2011).
Preventive Health and Wellness Programs
Many organizations are adopting preventive health and wellness programs. These
programs combat the increase in preventable and chronic health conditions and
the accompanying increase in the organization’s health insurance costs. Examples
of wellness programs include the following:
 Nonsmoking campaigns
 Stress management
 Weight management
 Hypertension (high blood pressure) screening and education
Human Resource Measurement and Metrics
The 2010 SHRM report on future workplace trends identified the following trend
related to human capital measurement and HR metrics:
Figure 1-28. Trend in Human Capital Measurement and HR Trends
One significant trend is the ongoing effort to create a formal and standardized
definition of the practice of HR. This effort requires HR professionals to identify
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and formalize a core group of universal HR principles and practices that are not
confined to any one nation or jurisdiction. An example of this trend is the course
material you are currently studying. Another example is the Society for Human
Resource Management’s effort to establish an HR-specific series of ISO standards
that can be applied worldwide (Society for Human Resource Management,
SHRM Bid to Lead Global HR Standards Effort Ratified 2011). All such efforts
support the increasing objectivity and professionalism associated with the practice
of HR worldwide.
For more information about frequently used HR metrics, refer to the Section 1.2:
Gathering, Measuring and Reporting HR Data.
Additional information about HR metrics and metrics calculators can be found at

the following website:
 http://www.shrm.org/TemplatesTools/Samples/Metrics/Pages/default.asp
x
Employee Engagement
Employee engagement is a measurement of employees’ involvement,

satisfaction, happiness and loyalty with their employment. Engagement is
reflected in how hard employees work and in how long they stay with their
organization.
A recent online survey of over 5,000 executives from 109 countries identified
employee engagement as one of the top most critical HR topics (Society for
Human Resource Management, Study: Engage Employees and Middle Managers
2010). In order to engage their employees globally, organizations are encouraged
to do the following:
 View global HR decisions in the context of national culture.
 Use valid research to align HR practices with actual employee attitudes in a
local population.
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 Collect data on national norms in order to interpret employee surveys

correctly.
 Recognize that the elements that create engagement also create the
employment brand. (Society for Human Resource Management,
Developing and Sustaining Employee Engagement 2010)
Training and Development
Recent technological advances have changed the methods that human resource
and training professionals use to design, deliver and administer training. The use
of technology—such as social media—is allowing learners to learn differently and
more effectively.
Training should use more sophisticated tools that entertain as well as educate
employees. These tools can include gaming, social media and virtual worlds
rather than conventional slides and classroom approaches, according to Anders
Gronstedt of The Gronstedt Group, Inc. The use of innovative technology can
result in better-trained employees (Society for Human Resource Management,
Forget the Classroom: Turn to the Web for Innovative Learning Techniques
2010).
At the 2010 American Society for Training & Development (ASTD) International
Conference and Exposition, keynote speaker Charlene Li explained that the use of
social media tools can enhance social learning and connect it to formal learning.
Li identified the following five levels of engagement in social media-driven
learning (Society for Human Resource Management, Social Media Tools
Redefining Learning in Organizations 2010):
 Watching
 Sharing
 Commenting
 Producing
 Curating (in other words, organizing content into meaningful packages that
connect with the audience to create a meaningful experience)
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Examples of using technology in training include the following:

 An anesthesiologist at a remote hospital watches a YouTube video to see
how to perform a particular procedure (Society for Human Resource
Management, Social Media Tools Redefining Learning in Organizations
2010).
 Employees improve sales by watching a weekly webisode (a short episode
played on the Internet) based on a popular television comedy (Society for
Human Resource Management, Forget the Classroom: Turn to the Web for
Innovative Learning Techniques 2010).
 Employees are presented with a sales case in the form of an alternate
reality game with clues hidden in the organization’s Intranet (Society for
Human Resource Management, Forget the Classroom: Turn to the Web for
Innovative Learning Techniques 2010).
Specific training trends are described in more detail below.
e-Learning
E-learning is on online method of training or education where participants attend

classes via the use of electronic media. E-learning can be delivered via the public
Internet, an organization’s Intranet or extranet, satellite broadcast, DVD or
compact disk or other electronic means. E-learning technology can be used to
implement distance learning, which is the process of delivering educational or
instructional programs to locations away from a classroom or central site.
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Getting-More-from-Less-Training Strategy
Human resources may face competition from other business functions for an
organization’s limited—and sometime diminishing—resources. Many
organizations are reluctant to apply these resources toward additional talent
management and training. Therefore, HR professionals must focus on getting
more from less—that is, retaining and maximizing the productivity of the
strongest talent while minimizing staffing and training costs. A key to this
strategy is maintaining good communications with the organization’s major
stakeholders (Society for Human Resource Management, Getting More from Less
Trend Will Continue in 2010, 2010).
Learning Management Systems
A learning management system (LMS) is computer software that administers,

tracks and reports on employee development opportunities, such as classroom and
online events, e-learning programs and training content. An LMS can track and
manage employee course registration and completion, career development and
other employee development activities. Many learning management systems also
offer testing and measurement capabilities.
Learning Organization
Tetrick and Da Silva define a learning organization as, “A learning organization

can create, acquire and transfer knowledge, and with this new knowledge, it can
then change its behaviors in order to improve organization performance.” (Tetrick
and Da Silva 2003)
Nancy R. Lockwood for the Society for Human Resource Management examined
organizational learning. Her research identified the following attributes for
organizational learning:
 A focus on organizational learning results in a competitive advantage.
 Effective learning refers not only to shifting what is learned but also how
learning occurs and evolves in an organizational context.
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 Within a knowledge economy, cooperation, networking and collaboration

have essential roles in organizational culture.
 Learning organizations have cultures that are open to transformation and
continuous change.
 A learning culture allows for some risk-taking with some tolerance for
mistakes.
 Communities of competence are providing the structure in which to
describe and combine different strengths and core competencies—job
satisfaction, productivity and work quality improve as all members share
knowledge and expertise (Society for Human Resource Management,
Knowledge Management Series Part II: Organizational Learning 2005).
Learning Portals
Portal is a term used to describe a gateway or access point to the Internet. A

learning portal provides access to an organization’s database of information and
resources regarding learning and training. Learning portals allow training and
learning information to be channeled and communicated effectively to employees.
Learning portals are often used together with learning management systems (see
above) to manage data, provide access to internal training programs and distribute
training-related information and resources to employees.
Remote Project Collaborations
Organizations are dealing increasingly with technological advancements,

telecommuting, globalization and escalating travel costs. These factors are leading
to a demand for better options for remote communication and collaboration.
Software companies are responding by offering specialized suites of programs
that make it easier for virtual teams to communicate with each other and to use
project management tools collaboratively. HR professionals can use these new
tools to increase the involvement of local stakeholders in the training program
design and development process.
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Social Networks
A social network is a group of people who interact because they have a common
interest. The group communicates either in-person or using technology (for
example, Facebook or Twitter). Social networking sites such as LinkedIn and
Plaxo Pulse are Internet-based services that allow individuals to do the following:
 Construct a public or semipublic profile within a bounded system
 Create a list or database of other users with whom they share a connection
 View and use their lists of connections and those made by others within the
system
HR professionals can use these sites for multiple professional purposes, including
identifying and contacting potential suppliers, leveraging learning and developing
mentoring and professional support relationships.
University Involvement
An emerging trend is linking organizations with national and international

universities to enhance knowledge and develop competencies within the
organization. One example is the Accenture-XLRI HR Academy, a training
academy in India launched by Accenture and the XLRI School of Business and
Human Resources.
Virtual-World Simulations
Computer and electronic simulations are also growing in popularity. Training-

related simulations place the learner in a virtual work environment (for example,
managing an office or using a machine) and present a series of real-life
challenges. The learner has the opportunity to practice new skills and make
decisions in a supportive and low-risk environment. One of the better-known
virtual-world simulations is Second Life, an Internet-based video simulation
launched in 2003 by Linden Research.
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Simulations offer a number of important benefits:

 Appealing to young learners with sophisticated technological expectations
 Actively engaging individuals in the learning process
 Providing additional opportunities for individuals to learn complex or
potentially dangerous skills in a realistic but safe environment
Web 2.0
The term, Web 2.0, was coined in 2004 to indicate a group of web-based
technologies characterized by interactivity. These technologies are focused on
building connections through the ability to interact and encourage collaboration
and community. Thomas Friedman wrote in The World is Flat that these
programs make connections possible across the world. He quotes Carly Fiorina of
Hewlett Packard who described information as “…digital, mobile, personal and
virtual.” Digitization makes the information easy to transmit. This information
can be manipulated through many applications where people capture and
manipulate data without thinking about the technology (Society for Human
Resource Management, HR and Technology 2009).
More information about how organizations are using Web 2.0 tools can be found
in McKinsey & Company’s report “Building the Web 2.0 Enterprise: McKinsey
Global Survey Results” at the following website:
http://www.mckinseyquarterly.com.
Webinars
A webinar is an interactive seminar on the Internet. Usually the webinar is a live

presentation. The webinar can be one-way communication with limited audience
interaction, or it can be limited two-way communication to allow full participation
between the audience and the presenter (for example, through the addition of
collaborative, polling and question-and-answer activities). This technological
solution provides many of the benefits of live classroom training without many of
the attendant costs of bringing the instructor to the audience or the audience to the
instructor.
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Additional information on training and development is presented in Module 5:

Training and Development.
Keeping Current on Business Trends

The following suggested tasks for conducting trend research will vary based on
the circumstances associated with the research:
1. Understand your organization’s strategic vision. Focus your trend
analysis on issues that have the greatest influence on the organization.
Research external conditions first and then examine conditions internal to
your organization.
2. Collect information through research. Prioritize your research efforts to
encompass both an organizational focus and an HR focus.
3. Identify a pattern to use in predicting future events. Today’s biggest
challenge with respect to research is not the access to information but
rather finding information that is relevant. Anticipate the events and issues
that have the greatest value. Through continued research, trends will
emerge.
4. Benchmark and measure to quantify the trend. Trend analysis is most
beneficial when you have a benchmark of the current situation. You may
be the first person to anticipate the trend. In this circumstance, you will
define a benchmark from which to measure the trend. Then you can
compare your research findings with how the organization operates now.
Over time, subsequent comparisons should be captured.
5. Share your research findings. Other organizational leaders can benefit
from your research. Share your insights, experience and findings.
6. Gain perspectives and consensus from others. Your research has more
influence and validity when you include additional perspectives. Reaching
consensus with your stakeholders (anyone affected by the information)
increases the strategic value.
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7. Measure outcomes from responding to trends. Continue to measure the

results achieved. As the environment changes, your earlier efforts will
create a basis to anticipate change.
8. Record outcomes as the basis for tracking future trends. Always keep a
defined basis (sometimes referred to as a baseline) to track future trends
and to continuously measure progress.
As an HR professional, your analysis of trends includes a personal world

perspective. Each person’s world perspective is influenced by cultural
presumptions. These presumptions also influence how you perceive your research
findings.
Dr. Geert Hofstede’s dimensions of culture may be helpful in understanding the

differences between cultures when you conduct trend research:
 Power distance
 Uncertainty avoidance
 Individualism/collectivism
 Masculinity/femininity
 Long-term/short-term
 Indulgence/restrain (Hofstede, Hofstede and Minkov 2010)
For example, uncertainty avoidance reflects the level of tolerance society

members have for uncertainty and ambiguity.
When researching and communicating with other cultures, pay particular attention
to the concepts of time and personal space. Be aware that different cultures may
perceive and value time differently (Society for Human Resource Management,
When in Rome: Note Cultural Differences When Training, Experts Say 2009).
More information about Hofstede’s dimensions of cultures can be found at the

following website: http://www.clearlycultural.com.
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Additional information on cross-cultural communication is presented in Module

3: Employee Relations and Communication, Section 3.1: Communication in
the Workplace.
Technology for Today’s HR Professional

HR’s role in managing technology is to help identify new technologies that can
help with the following goals:
 Achieving the organization’s strategic HR goals
 Facilitating the rapid pace of change due to technology
 Managing the cultural change and strategic redirection associated with the
introduction of new technology
Technology has allowed HR to reduce some administrative tasks—like benefits

administration and record keeping—and focus its attention on more strategic
tasks—like knowledge and talent management and strategy development.
Monitoring the Technological Front
Technology has changed, and the rate of change has increased dramatically in the
computer age, changing the way the organization does business. In order to be
better leaders and effective strategic partners, HR professionals must be aware of
technology trends, capabilities and issues.
Consider the following factors when monitoring the technological front:

 Advances in technology
 Technological skills
 The digital divide
Advances in Technology
Changes in technology can alter both the structure of jobs and the structure of the
organization. Technology allows organizations to provide service twenty-four
hours a day to accommodate customers who live in all parts of the world. Also,
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technology may provide employees with the tools to do a job more efficiently and
accurately. Technology has even affected the way in which organizations solve
problems. The phenomenon of swarming—the rapid linking of networks of
individuals through cell phones and other electronic devices—has been used to
brainstorm solutions to work situations. HR must be ready to capitalize on the
advantages of instantaneous and global communication, such as employee self-
service and e-learning.
The following are a few of the major changes in technology.
Electronic Record Keeping
Electronic data is subject to data retention laws and regulations. Improperly

deleting electronic records may be a legal violation. However, keeping documents
beyond compliance requirements can leave a business vulnerable. For example,
records discovered by plaintiffs can become evidence in court. Therefore, policies
must be in place for the conversion, migration, storage and legal destruction of
records. Keeping electronic data is particularly important in the event of litigation.
Under these circumstances, the employer must preserve electronic documents (as
well as hard-copy documents) until the matter is conclusively resolved. These
record management efforts include e-mails, backup tapes, local hard drives,
network drives, floppy disks, CD or DVD drives and any other removal drives.
Electronic Signatures
In 1999, the European Union adopted the EU Directive on Electronic Signatures.

The electronic signature technology must pass certain tests to be used as a legal
signature. Qualified electronic signatures would carry the same legal effect as
handwritten signatures. According to the Summaries of EU Legislation website,
the goal of this community framework for electronic signatures is as follows
(EUROPA 2008):
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Figure 1-29. Goal for Electronic Signatures
Application Service Providers (ASPs)
An application service provider (ASP) hosts and runs an organization’s software

applications on the Internet. Instead of purchasing software and installing it, the
organization pays the ASP on a subscription basis.
Advantages of using ASPs include the following:

 Automating administrative tasks (such as time and attendance tracking,
applicant tracking and other workforce management issues)
 Spending less money on software installation and maintenance
 Making IT resources available for other major tasks
 Creating efficiencies in various business processes (Society for Human
Resource Management 2007)
One disadvantage of an ASP is the potential lack of customization. In addition,

experts advise caution and careful evaluation before choosing an ASP partner.
Because the market is currently young, ASPs may be better suited for activities
(such as HR activities) that are not critical to an organization’s mission (Society
for Human Resource Management 2007).
Cloud Computing
Cloud computing refers to storing, developing or processing data on software

running on the Internet, instead of on a personal computer or the organization’s
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server (Zielinski 2009). For example, you can create a spreadsheet using a cloud
provider’s application. The spreadsheet will be stored on the Internet and is
accessible any time you want to make changes and additions to the data
(Thornburg 2009).
Technological Skills
Organizations must train employees on the new technologies that allow them to
work anytime and anywhere. The need for new technological skills may emerge
quickly. An organization’s success can depend on constant monitoring of needed
skills and educational options. Organizations must recognize that retraining
workers is an ongoing effort and important in building a skillful workforce.
Computer-based learning or e-learning may help organizations respond quickly to
new training needs.
The Digital Divide
As organizations become more dependent on the Internet, lack of access

(including broadband or high-speed access) to the Internet may create a divide
between those who have digital access and those who do not. The digital divide
can limit the following:
 Sharing of information
 Opening of educational and training opportunities
 Opportunities for small businesses located in communities without high-
speed access
Human Resource Information Systems
HR professionals are experiencing a greater need for broad-based employee

information to help them make effective decisions and maintain necessary
information. This need is especially true for compliance purposes. A human
resource information system (HRIS) is a tool that supports human resources
functions. This tool can be used for gathering, storing, maintaining, retrieving and
revising HR data. An effective HRIS provides information the company needs to
track and analyze employees, former employees and applicants.
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Most HRIS programs include three types of reporting or analytics:

 Standard reports
Standard reports include both regulatory-related reports and recruiting
reports.
 Ad hoc reports
An ad hoc report writer allows users to create their own reports beyond
the standard reports.
 Scorecards and dashboards
The balanced scorecard is a strategic evaluation tool. A dashboard is a
visual display of HR metrics. A role-based dashboard provides important
metrics for the role and is configurable to user preferences.
Does your organization need a special human resource information system? The
answer depends on how much information the organization needs to operate
efficiently. Smaller organizations typically need only the basic information
associated with payroll records. Larger organizations often want more specific
information for effective HR planning and may invest in the following technology
solutions:
 Self-service online applications can enlist employees in entering and
updating their own profiles and in initiating many transactions, such as
changes in beneficiaries or benefit options.
 Employees can answer many employment-related questions themselves by
accessing an online help desk.
 Manager self-service software gives managers the ability to access crucial
information and to perform tasks themselves, without the help of HR
personnel. These tasks include managing performance reviews, accessing
report data, monitoring team members and managing employee salaries
and status changes (Society for Human Resource Management, Making the
Move to Manager Self-Service 2010).
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More information about human resource information systems can be found at the
following website:
 http://www.shrm.org/about/foundation/products/Pages/HRTechEPG.aspx
HRIS Applications
Figure 1-30 shows some types of HRIS applications that apply to different
functional areas of HR.
HR Functional
HRIS Applications
Area
 Provides environmental  Provides quality and
Strategic
scanning results productivity improvements
management
 Tracks hiring, promotions,  Prints appropriate
Workforce
transfers and termination compliance data in the
planning and
rates by job group required format
employment
 Records the number and  Collects resumes and
percentage of each segment internal job applications
in apprenticeship and
training programs
Figure 1-30. Applications of HRIS (continued to next page)
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HR Functional
HRIS Applications
Area
 Outlines career path  Registers employees for
Human resource
development courses, monitors costs,
development
 Records information such as schedules trainers and
education, skills and classrooms
completed training programs  Evaluates employee
performance
 Tracks salary survey results  Facilitates analysis and
Total rewards
 Facilitates benefits comparison of salaries
administration across job classifications
 Facilitates employee self-  Prints compliance data in the
service appropriate format
 Tracks history of tuition
reimbursement
 Tracks retirement planning
 Stores employee discipline  Records union service data
Employee and
records  Maintains attitude survey
labor relations
 Records labor distribution results
data
 Identifies trends in on-the-  Monitors medical
Risk
job accidents and illnesses examinations and follow-up
management
and helps in development of procedures resulting from
preventive measures injury or illness
 Tracks insurance and  Identifies high-risk
workers’ compensation conditions
claims by accident  Monitors accidents and their
 Tracks safety records costs by type and location
Figure 1-30. Applications of HRIS (concluded)
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Implementing HRIS Globally
The use of HRIS applications has provided valuable, consistent information to

management, but it has also encountered difficulties. Some HRIS systems are
time consuming and expensive to implement and maintain. This difficulty is
magnified when systems must span multiple countries with different technical
platforms and communications.
HRIS operations face a number of practical challenges:

 Affordability
 Different technology platforms in various units
 Types and quality of electronic access available
 Different understandings of terminology and meanings when collecting
data (for example, the varying definitions of contractor, temporary
employee, part-time employee and full-time employee)
 Different lengths of fields and records based on language and local
differences
 Attitudes and regulations toward employee data and privacy
 Cultural acceptance of the technology system (Employees’ emotional
response to a technology should be carefully considered. Will an employee
with little computer experience be comfortable using a kiosk?)
HRIS Skill Banks and Skill Tracking Systems
HR professionals can use the human resource information system as a source for
internal recruitment. HRIS skill banks and skill tracking systems can help
generate computerized talent or skill inventories. These inventories can furnish a
list of people who have the needed knowledge, skills and abilities. Information
systems that include a compete record of each employee’s qualifications allow
organizations to scan records quickly and to locate qualified candidates for vacant
positions.
However, HR professionals should be aware that skill inventories are only as

good as the data they contain. These inventories can be time consuming and
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costly to maintain, so consider carefully the type of data that is collected and used
in a skill tracking system. In many organizations, employees regularly update
their employee records (for example, as a part of the performance appraisal
process).
Selecting Human Resources Information Technology
Human resources information technology is an increasingly necessary tool to help

HR professionals manage employee information. Experts recommend that
organizations carefully evaluate the many available options. The HR information
technology that is selected must support the needs of HR and the organization
over time.
The Society for Human Resource Management, recommends answering the

following questions when selecting a human resources information system:
 What do you need the system to do?
 If you presently have a system, what about your present system works well
and what problems exist?
 What other processes can be automated?
 Who will have access to the system?
 What security controls will be needed?
 Will it need to be compatible with any other systems (that is, Accounting)?
Are there any major organizational changes planned that may impact the
choice of system (next 3-5 years)?
 How long do you expect to use this system?
 What kind of a budget do you have to work with? (Society for Human
Resource Management, HRIS: How Can I Find an HRIS System That Is
Right for My Company? 2005)
Knowledge Management Systems
An organization’s human capital is its primary competitive advantage in the

global economy. To retain this advantage, employees must be able to quickly and
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efficiently share knowledge across both organizational and geographic

boundaries.
Knowledge management is the process of gathering, documenting and sharing

important information to improve the performance of employees and the
organization. Knowledge management can strengthen the ability of the
organization to innovate, to react to market conditions and to continually improve.
A knowledge management system is based on four activities, each of which must

occur for knowledge management to be successful:
 Inventory knowledge assets. This activity involves cataloging the tangible
assets of the company (such as white papers, presentations and articles),
best practices and areas of employee expertise.
 Create a knowledge base and directory. The cataloged information from
the first activity is entered into a system for easy access and retrieval. The
directory is a listing of employee skill banks and areas of expertise
(building connections). The knowledge base is all the tangible assets
(building collections).
 Use the system. The knowledge management system can be used both
informally (to educate employees and project team members) and formally
(as a basis to make employee assignments).
 Update the system. Maintain and update the system as people, projects
and information change.
Knowledge management becomes more difficult as organizations grow and

become more global. Challenges include the following:
 The physical task of inventorying and updating so many people and so
much knowledge
 Cultural and personal issues related to sharing information with others (If
information is perceived as power, there may be issues associated with
convincing people to share this valuable asset.)
 The relevance of best practices from one organization’s environment and
culture to another
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Despite these challenges, developing workable knowledge management solutions

is a worthwhile endeavor. These solutions can make the organization smarter,
more agile and efficient. Organizations that find ways to enhance collaboration at
a global level and thereby speed knowledge creation have a major strategic
advantage.
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1.2: Gathering, Measuring
and Reporting HR Data

Knowledge:
Behaviors: 01. Use HR metrics and prepare reports to analyze HR issues (for
example, the number of employees hired and those who left,
employee turnover, the cost per employee and budgets)
Skills & Knowledge: 11. Tools and methods to analyze business data (for example,
spreadsheets and databases)
12. Ways to report information (for example, presentation software,

such as Power Point; and word-processing software, such as
Microsoft Word)
14. The number of employees in the budget, and the salary and
benefit costs for these employees
Section 1.2: Gathering, Measuring and
Reporting HR Data
Introduction ..................................................................................................................................87
Understanding Research Terms and Techniques .....................................................................88

Inductive and Deductive Reasoning ...........................................................................................88
Primary and Secondary Research ...............................................................................................90
Experimental Research Process .................................................................................................91
Quantitative and Qualitative Data Analyses ..............................................................................93
Reliability and Validity ............................................................................................................108
Human Resource Management and Evaluation Metrics .......................................................110

Initial Considerations ...............................................................................................................110
Frequently Used HR Metrics....................................................................................................111
Budgeted Headcount..................................................................................................................113
Strengths and Weaknesses of the Headcount Method .............................................................114
Evaluating HR’s Strategic Contributions ................................................................................114

Financial Measures ...................................................................................................................115
Performance Measures .............................................................................................................120
Trend Analysis .........................................................................................................................123
Reporting Methods ....................................................................................................................125

Module 1: HR Administration Section 1.2: Gathering, Measuring, and
Reporting HR Data
Introduction
Organizations use measurement systems to track results and plan their strategic
development. These measurement systems are an important part of any business
planning process. Metrics and measurements provide information on what works
and what does not.
Human resource professionals have the following responsibilities when measuring

and evaluating:
 Provide training on the purpose and use of essential metrics and
measurement tools.
 Provide measurement reports and data needed for organization-wide
assessments.
 Help the organization analyze and interpret measurements.
 Create and use programs that measure and evaluate HR programs and
initiatives.
Collecting data and analyzing metrics can be completed with little interaction
with people. However, these activities are still crucial to HR management. In
order to identify problems and improve processes, HR must define what success
is and then measure it. Using metrics and measures tells employees that the
organization is committed to specific values and goals.
This section examines the following HR responsibilities:

 Understanding research terms and techniques
 Describing the metrics and techniques used to gather HR data
 Understanding the methods and forms used to report HR data
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Understanding Research Terms and Techniques

HR can conduct its own research or use the research of others to support its
metrics. Any research that HR uses must be based on accurate measurements and
conclusions.
Your measurements are reliable only if you use reliable methods to collect and
analyze your data. Therefore, we will review the main concepts in data research
and analysis:
 Inductive reasoning and deductive reasoning
 Primary research and secondary research
 Experimental research process
 Quantitative and qualitative analyses
 Reliability and validity
Inductive and Deductive Reasoning
Inductive and deductive reasoning are processes for analyzing data. Both types of
reasoning are useful in some ways and limited in others. Figure 2-1 illustrates the
different approaches used in inductive and deductive reasoning.
Figure 2-1. Inductive and Deductive Reasoning Processes
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Inductive reasoning starts with the specific and moves to a broader conclusion. It
involves two steps:
1. Look at a series of specific observations.
2. Design a rule that explains a pattern underlying the observations.
For example, an HR professional can gather data about a group of new hires who
are high performers. Most of the employees also speak more than one language.
The HR professional induces that, for this job, the ability to speak more than one
language is a good indicator of future success. The success of inductive reasoning
depends on the sample size and randomness, which are discussed later in this
section. In this example, a larger sample of new hires from different organizations
could produce a different pattern of data.
Deductive reasoning starts with the general and moves to a narrower conclusion.
It also involves two steps:
1. Start with a general or universal statement that is accepted as true.
2. Apply the premise to a new situation so that you can make a prediction or
improve your understanding.
For example, research at one organization shows that managers who maintain
very high levels of control have workers with lower morale. An HR professional
observes that a particular manager is very controlling. The HR professional
deduces that the organization will find lower morale in this manager’s
department. The success of deductive reasoning depends on the reliability of the
starting premise.
Wherever possible an organization’s procedures should be expressed using

inductive reasoning. In contrast, an organization’s policies should be expressed
using deductive reasoning. Taken together the two reasoning methods explain
the how and the why of an organization’s workplace rules.
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Primary and Secondary Research
Primary research involves data that the HR professional directly gathers for the
evaluation. Secondary research uses data that is gathered by others and reported in
various sources. Data from secondary research must be examined for relevance.
Methods of primary and secondary research are listed in Figure 2-2.
The choice between primary or secondary research depends on the question and
on practical limitations. For example, some questions are very specific and can be
answered only by primary research. Other questions are too broad to be tested
within a confined work environment and can be answered only by secondary
research.
Primary Research Secondary Research

 Experiments  Secondhand reports
 Pilot projects  Historical data (for example,
 Surveys and questionnaires HR records and census records)
 Interviews (exit, individual and  Purchased data (for example,
panel) Gallup data or Roper data)
 Focus groups  Professional journals, books and
 Direct observation other media
 Testing  Benchmarking and best-
practices reports
Figure 2-2. Sources of Primary and Secondary Research for Evaluating HR Effectiveness
Research projects can combine primary and secondary research. For example, an
organization wants to understand how recent technological changes have affected
frontline managers. Primary research can include the following:
 Focus groups of a cross section of managers
 Questionnaires sent to all managers
 Observation of several managers as they perform their daily tasks
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Secondary research can include the following:

 Articles about similar experiences in other organizations
 Analysis of personnel records to identify common elements in managers
who have been able to adapt to new technology
Experimental Research Process
Experimental research uses the scientific method to work with variables

(changing factors) and to examine the results. (Nonexperimental research does not
include variables. Instead, behavior is observed, measured and analyzed.)
Scientific research tries to be as objective as possible.
The HR professional can use the scientific method to discover the factors that
attract people to their jobs, that encourage them to stay at their jobs and that
motivate them to perform well at their jobs.
Five steps are included in the scientific method as indicated in Figure 2-3.
Figure 2-3. The Scientific Method
Step 1: Problem Analysis
Problem analysis means carefully defining the problem you are investigating.
Example
Sales figures are decreasing for all stores at a large organization. Employees
receive no sales training during this financial crisis. The HR professional should
conduct a short internal survey.
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Step 2: Hypothesis Formulation
Hypothesis formulation means describing the problem with a hypothesis. A

hypothesis is a specific, testable prediction that is derived from a theory and
describes a relationship between two variables.
Example
The HR professional makes the following testable hypothesis: after one year,
sales will increase more in stores where sales training is provided compared to
stores where sales training is not provided.
Step 3: Experimental Design
In an experiment, the researcher controls and manipulates parts of the research

environment to measure the impact of each variable. A well-designed experiment
helps us determine the causes with the greatest impact.
Example
All stores in the organization are divided into two similar and comparable groups
according to their sales turnover and size. In Group 1, the store employees receive
sales training. In Group 2, the store employees receive no sales training.
Step 4: Data Collection
Data consists of unanalyzed facts and figures. This data becomes information
when it is placed into a useful context (as with scientific research). Data may be
qualitative or quantitative. The difference between qualitative data and
quantitative data is discussed below.
Example
After one year, the sales turnover of both groups of stores is measured and
compared.
Step 5: Data Analysis
The success of data analysis depends on the effort put into the first four steps.
Data analysis may be qualitative or quantitative. The example below highlights
the difference between qualitative data analysis and quantitative data analysis.
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Example
Data analysis shows that after one year, Group 1 (the group of stores with sales
training) has a better sales turnover.
This short internal survey helped HR promote more sales training for Group 2.
The survey also helped HR develop a sales training philosophy for the entire
organization.
Quantitative and Qualitative Data Analyses
Quantitative and qualitative data analyses both depend on the kind of data that is
used and how the data is collected. Quantitative analysis is based on a limited
number of data points that are easily measured. Qualitative analysis is based on
research that uses open-ended interviewing.
Many parts of the organization use only quantitative data analysis. The human
resources department is different from other parts of the organization because it
often uses both quantitative and qualitative data analysis.
Quantitative Analysis
Quantitative analysis uses a limited number of measurements to collect

numerical data. The use of statistics helps the HR professional with the following
tasks:
 Interpret the collected data
 Accomplish the desired research objectives
 Provide a cost-benefit analysis
 Communicate the results of the project
HR professionals often used statistical methods to analyze compensation, benefits

and employee surveys.
Statistical methods used to interpret research data include descriptive statistics

and inferential statistics. We will discuss descriptive statics first.
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Descriptive Statistics
Descriptive statistics condense and summarize large amounts of data for quick
understanding. Figure 2-4 shows types of descriptive statistics.
Descriptive Statistics
 Charts and graphs
 Frequency distributions and tables
 Measures of central tendency
 Measures of variation
 Measures of association
Figure 2-4. Types of Descriptive Statistical Data Used in Quantitative Analysis
Charts and Graphs
Showing data on a chart or graph lets the researcher see the distribution of scores.
Examples include pie charts, bar charts and graphs. The pie chart is a circular
chart that compares different parts as a percentage of a total amount. Figure 2-5
shows a pie chart.
Figure 2-5. Pie Chart
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The bar chart uses rectangular bars of different lengths to represent and compare
different values. Figure 2-6 shows a bar chart.
Figure 2-6. Bar Chart
The histogram and additional charts and diagrams are presented in Section 1.4:
Change Management and Business Process Improvement for HR Professionals.
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Frequency Distributions and Tables
Frequency distributions and tables are used to sort salary data. A frequency
distribution is a listing of grouped data, from lowest to highest. A frequency table
shows the number of people who receive a particular salary. Figure 2-7 shows a
frequency distribution and table for a determined of salary data.
Organization Salaries Number of

People
A 55,000 2
B 60,000 1
C 65,000 2
D 70,000 5
E 75,000 1
Figure 2-7. Frequency Distribution and Table
Frequency tables can be converted to histograms for a graphic representation of

the data.
Measure of Central Tendency
There are three measures of central tendency:

 The mean is the average score or value.
 The mode is the value that occurs most frequently.
 The median is the middle point above and below which 50% of the
scores are positioned.
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Example
Look at the data shown in Figure 2-8. There are 15 scores for a total of 155
points.
Figure 2-8. Example 1 of Measure of Central Tendency
The mean is the most common measure of central tendency. The mean is
calculated by adding all the data values and then dividing by the number of
values. The calculation in Figure 2-9 shows a mean of 10.33 based on the data in
Figure 2-8.
Figure 2-9. Calculation of Mean
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Figure 2-10 shows a graphical representation of the mean, median and mode for a
positively skewed distribution. In this distribution, most of the data values are at
the lower (left) end of the scale.
Figure 2-10. Example 2 of Measure of Central Tendency
The mean for salary data can be calculated as an unweighted average or as a

weighted average. The unweighted average, or raw average, gives equal weight to
every salary in the survey. Other factors (such as the number of people who
receive each salary) are not considered. The unweighted average is used when
organizations provide only the average salary data rather than actual salaries. The
weighted average, or weighted mean, considers the number of people who receive
each salary.
Figure 2-11 shows the salary data for unweighted and weighted average figures.
The unweighted average is 65,000 (325,000 divided by 5 average salaries
provided by the organization). The weighted average is 65,909 (725,000 divided
by 11 organization salaries).
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Organization Number of Annual Total

Incumbents Salary Salary
A 2 55,000 110,000
B 1 60,000 60,000
C 2 65,000 130,000
D 5 70,000 350,000
E 1 75,000 75,000
Totals: 5 11 325,000 725,000

Organizations
Figure 2-11. Salary Data for Unweighted and Weighted Average Figures
The mean is simple to calculate. However, problems can occur if there are very
few data values. For example, an organization provided a training program that
was rated by only five employees. If four employees rated the training program as
1 (indicating poor) and one rated it as 10 (excellent), the mean rating would be
2.8. This is not the best measure of perception of the training. In this case, the
mode, or the value that occurs most frequently, gives more information. In our
example, four out of the five data values are 1, indicating that most employees did
not find the training effective.
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Another problem occurs with a large number of data points that include extreme
scores. For example, an organization provided a training program that was rated
by 500 employees. Most of the employees rated the program as 7 on a 10-point
scale. However, some of the ratings were very high, and a few ratings were very
low. In this case, the median is the most useful. The median is the score that lies
directly in the middle of the values. To find the median, the data is listed in order
like the ascending order shown in Figure 2-8. The total number of data points are
counted (500) and then divided by two. The median is between data values 250
and 251 and is close to a rating of 7.
Quartiles and percentiles are also used to measure central tendencies. They both
show how groups of data are related to each other (also called dispersion).
Organizations use quartiles and percentiles to determine whether they lead, lag or
match the external market. For example, Figure 2-12 shows the range for one job
grade as reported in a salary survey.
Figure 2-12. Quartiles
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Measures of Variation
Measures of variation show how much the data differs from the central tendency
values. In our training example above, the employees’ rating of the training
program shows a large variation, with some very high ratings and some very low
ratings. This variation could indicate that some employees are insufficiently
prepared for the training. Measures of variation include the following:
 Range is the distance between the highest and lowest scores. The range is
calculated as the highest score minus the lowest score.
Example
The data 10, 11, 12, 68, 69 and 70 yields a range of 60 (70 minus 10).
 Percentile is a point in a distribution that has a given percentage of cases
below it.
Example
If you take a test and are in the 68th percentile, you have scored better
than 68% of the test takers.
 Standard deviation shows how much the scores are spread out from the
mean or average. A normal distribution of data means that most of the
examples are close to the average and that only a few of them are very high
or very low. Normally, distributed data have graphs that look like the bell
curve in Figure 2-13. A large standard deviation tells you that the data is
diverse, while a small standard deviation tells you that the data is close
together. HR professionals use standard deviations to show performance
rating distributions.
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Figure 2-13. The Theoretical Normal Distribution

Measures of Association
Measures of association show how two or more factors (variables) are related. For
example, income can be related to level of education, and the amount of air
pollution can be related to the incidence of respiratory disease.
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Measures of association include the following:

 Scatter diagrams show the relationship between data items using x and y
axes. These diagrams will be discussed later in this section.
 Correlation is a measure of the relationship between two variables. The
correlation coefficient is measured on a scale that varies from +1 through 0
to –1. When one variable increases as the other increases, the correlation is
positive. When one variable decreases as the other increases, the
correlation is negative. Complete correlation between two variables is
expressed by either +1 or –1. Complete absence of correlation is
represented by 0. Figure 2-14 shows a graphic representation of
correlation.
Figure 2-14. Correlation Coefficient
 Regression analysis is a statistical method that predicts a variable from

one or more other variables. The purpose of regression analysis is to
determine whether a relationship exists between variables and the strength
of the relationship.
A causal relationship exists when two variables are related in some way.
Three conditions must be met in a causal relationship:
 Evidence of association must exist.
 The dependent variable must change in a consistent way after the
independent variable changes.
 All other possible causes must be eliminated.
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Inferential Statistics
We have looked at five different types of descriptive statistics. Now we will

consider three different types of inferential statistics, as shown in Figure 2-15.
Inferential Statistics
 Population
 Sample
 Normal distribution
Figure 2-15. Types of Inferential Statistical Data Used in Quantitative Analysis
Inferential statistics lets you form a conclusion about a characteristic of a

population by studying a sample taken from that population. Three concepts
important in inferential statistics include population, sample and normal
distribution.
Population
A population is a group or a collection (of people, objects or measurements) that

you want to form conclusions about. A few examples follow:
 All the employees of an organization
 All the parts produced on a given day
 All the test scores of math students at a given level in a given district
Sample
HR professionals often do not use or cannot use an entire population to test a

hypothesis. Instead, they form conclusions about the population based on a part of
the population, or a sample. A sample of a population has the characteristics of
the whole group. For example, consider a cup of coffee with three cubes of sugar,
as shown in Figure 2-16.
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Assume the sugar represents the population. Add the sugar, and then take a sip
from the cup to taste if the coffee is sweet. This represents sampling the
population. You do not need to drink the whole cup of coffee to see if it has
enough sugar.
Figure 2-16. Sampling
Do not sample a population by choosing only people you know. In addition, make
sure that the sample is random. In random sampling, each member of the
population is equally likely to be chosen. An example of random sampling is in
surveys of voters before and after elections.
Normal Distribution
The normal distribution is the distribution that you expect to see after
conducting a random sampling across a large population. When you use
inferential statistics, you assume that the sample and the population under
examination conform to the characteristics of a normal distribution.
Qualitative Analysis
Qualitative analysis is based on research that uses open-ended interviewing to

explore and understand the opinions and behavior of individuals or a group of
individuals.
Qualitative research is the best research method for gathering information in

depth and in discovering underlying motivations, values and perceptions. In
contrast, quantitative surveys are best for gathering a breadth of information
regarding how many or how much.
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Qualitative research has many applications, including the following:

 Identifying strengths and weaknesses
 Exploring alternative communication methods
 Brainstorming/idea generation
Qualitative research can take many forms. A typical example is an interview with
individuals or groups. Some benefits and cautions related to common qualitative
research tools are described below.
Individual or Panel Interviews
An interview involves asking a carefully planned, structured series of questions in

a face-to-face setting. Interviews give researchers qualitative information and
yield additional insights through probing questions.
Figure 2-17 lists benefits of interviews and cautions regarding their use.
Benefits of Interviews Cautions for Interviewing

 Yield insightful information  An interviewer’s nonverbal
 Provide opinions and reactions signals can influence responses.
to events  Interviewers should not ask
 Allow for personal connection leading questions.
to interviewee  Interviewees might answer
 Are flexible with what they think is correct.
Figure 2-17. Interview Benefits and Cautions
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Surveys and Questionnaires
Many HR professionals find interviews to be more effective when used with the
questionnaire. Questionnaires involve asking a series of prepared questions in
written form. Four common approaches are listed below:
 Rating scales
 Yes, No or Don’t Know answers
 Open-ended essay questions
 Structured questions with multiple-choice answers
Rating scales provide fixed quantitative responses. For example, participants are
asked to read a series of statements and to indicate their degree of agreement, with
1 representing strong disagreement and 5 representing strong agreement. Rating
scales may consist of an odd or even number range. A scale of 1 to 5 allows
participants to choose a centered response (3). A scale of 1 to 6 does not contain a
center value and forces participants to choose a value in the lower range (1, 2 or
3) or the higher range (4, 5 or 6).
Rating scales are easy for participants to answer when the directions are clear.
These scales are sometimes combined with qualitative information. Qualitative
information may be obtained through open-ended questions that encourage
broader reactions than rated items.
Figure 2-18 lists benefits of surveys and questionnaires and cautions regarding
their use.
Benefits of Using Surveys and Cautions When Using Surveys and

Questionnaires Questionnaires
 Interviewee anonymity  Surveys and questionnaires are
 Efficiency less flexible than interviews.
 Standard data collection  Low response rates could yield
little data.
Figure 2-18. Survey and Questionnaire Benefits and Cautions
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Observation, Organizational Records and Testing
Some data-gathering methods have problems with objectivity, availability or cost-

effectiveness. In those cases, you can use a supplemental form of analysis.
Examples include the following:
 Observational techniques. For example, the person being observed is not
aware that his or her behavior, production or responses are being recorded.
 Archival information in organizational records. This information
includes performance appraisals, turnover data and personnel records.
 Job-relevant tests. Job-relevant means that the test accurately reflects a
person’s ability to do a task, such as assembling electronic components or
using equipment.
When you collect personal data as part of a qualitative analysis, be aware of the
laws concerning data privacy in your country.
Reliability and Validity
Before you begin to analyze data, be sure that all data are generated in an
objective way. For example, use the same questionnaire or interviewer’s manual,
the same time frame and comparable sample groups.
Your goal is to gather reliable and valid information that you can use to make
objective conclusions about a particular situation.
Reliability is the ability of an instrument to measure consistently. It is also

defined as the ability to repeat an experiment and get similar results.
Parallel Forms
This method uses two tests that are identical except for the test questions. For
example, a pre-test and a post-test can be considered parallel forms if they are
designed correctly. After both tests are completed, the two scores are correlated.
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Test/Retest
This approach measures the consistency of test scores over time. Participants take
the same test at two different times. After both tests are completed, the scores for
each individual are correlated.
Internal Consistency
Internal consistency tells you how well a test or procedure assesses the same
characteristic, skill or quality. For example, a test is divided into two equivalent
parts. The same person takes both parts of the test. Then scores from each part of
the test are correlated. These scores should be the same or very similar.
Rater Agreement
Do different raters or observers give consistent estimates of the same behavior?

You can check reliability by calculating the percentage of agreement between
raters. For example, a group of raters is observing an employee conducting a
meeting. They rate the employee’s behavior as excellent, good, fair or poor in
twenty categories. The employee receives the same rating in fifteen out of twenty
categories. In this case, the percentage of agreement is 75%.
Training helps clarify the rules for rating and improves reliability among raters.
This is particularly helpful when you are using multirater instruments, such as
360-degree feedback surveys or evaluating employees using an assessment center.
Validity is the ability of an instrument to measure what it is intended to measure.

Validation answers two questions:
 What does the instrument measure?
 How well does the instrument measure it?
An instrument or method that is reliable is not always valid. However, an

instrument that is valid is always reliable.
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Human Resource Management and Evaluation Metrics

We have discussed how HR supports the organization by providing training and
contributing data. HR professionals also have another important responsibility.
They must evaluate the effectiveness of HR functions and processes.
It is important is measure things correctly. It is even more important to measure

the correct things.
Initial Considerations
Before measuring and evaluating data, human resource professionals should

carefully consider the following:
 How were the data generated?
 Why were the data generated?
 Are the data comparable?
 Were the data correctly analyzed?
 Are different cultural understandings involved?
 Are the data privacy protected?
HR professionals should also consider opportunity costs. When you have a

limited budget or limited resources, the opportunity cost is the value of what you
must give up when you choose another option. For example, when an employee
participates in a day of training, the opportunity cost is the loss of participation in
work-related activities.
As HR professionals gather and use data from different locations, they should also
consider the impact of cultural differences. For example, an organization with its
headquarters in one country conducts surveys only inside its own boundaries
because of data privacy considerations. In these situations, the HR professional
can take either of the following actions:
 Identify a different data collection method
 Do not include data from specific locations in the final analysis
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Frequently Used HR Metrics
HR metrics can be used in the following ways:

 Comparing to metrics from previous years to see if organizational
performance has improved or declined
 Showing the benefit of HR practices and how HR professionals contribute
to the organization
 Comparing to the metrics of other organizations (benchmarking) to identify
best practices, areas of excellence and areas requiring improvement
Figure 2-19 describes some frequently used HR metrics and how they are used.
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Figure 2-19. Frequently Used HR Metrics
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Budgeted Headcount
The headcount method is one of the most straightforward methods used to create
a budget that accounts for compensation-related employee costs. Figure 2-20
provides an overview of the headcount method.
Figure 2-20. The Budgeted Headcount Method
A more detailed headcount estimate can be made by further subdividing an

organization into staffing layers and functions. Subdividing helps obtain a better
estimate of cost allocation as well any subsequent revenue-related forecasting.
Figure 2-21 provides examples of how you may want to subdivide an

organization.
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Figure 2-21. Subdividing for Headcount
Strengths and Weaknesses of the Headcount Method
One significant strength of the headcount method comes from its simplicity. The
headcount method is easy to understand, communicate and apply. It is most useful
for work that is routine and where the unique differences between job holders will
have little impact on the range of possible job productivity.
One significant weakness of the headcount method is its failure to differentiate

between the competence and subsequent potential productivity of different
individuals; all employees are considered equally productive using this budgeting
method. This weakness is especially profound in knowledge-based work where
one highly competent employee can be as productive as numerous less-competent
employees put together.
Evaluating HR’s Strategic Contributions

Any organizational function can be measured at two levels: effectiveness and
efficiency. Effectiveness measures how well the organization has met its goals.
Efficiency measures whether operations are done on time and within budget.
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The efficient and effective use of human resources contributes to the

organization’s success and profitability. HR can actively contribute to the
organization’s strategic plan in the following ways:
 By suggesting ways for the organization to measure the effectiveness of the
strategic plan
 By demonstrating the value of HR activities to the organization’s financial
considerations and organizational goals
HR professionals use a variety of metrics to measure the impact of organizational

changes. We will discuss four financial measures, two performance measures and
the analysis of trends.
Financial Measures
Human resource professionals can use the following four financial measures to
evaluate HR’s strategic contributions:
 Return on investment
 Cost-benefit analysis
 Break-even analysis
 Financial statement analysis
Return on Investment
Return on investment (ROI) is defined in many different ways. In basic terms,

return on investment is a calculation that measures the economic return on a
project or investment. This calculation is for a specific investment or for a specific
commitment of money that is made.
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Figure 2-22. Formula for Calculating Return on Investment
Example
An organization lost 100 employees last year, at a cost of 10,000 each, for a total
of 1,000,000. With a new program that will require a one-time investment of
300,000, you can reduce turnover by 50%. This will mean a savings of 500,000.
The net savings the first year will be 200,000. The net return on investment of this
program for the first year would be 66.6%.
Figure 2-23. Sample ROI Calculation
ROI calculations require the following actions:

 Establish clear objectives.
 Define achievements in a measurable way that can be translated into a
monetary value.
 Gather data carefully.
Figure 2-24 illustrates ROI methodology.
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Figure 2-24. ROI Methodology
Cost-Benefit Analysis
The cost-benefit analysis presents data as a ratio. Management uses this analysis
to measure how programs impact the organization’s profitability.
Figure 2-25. Formula for Calculating the Cost-Benefit Ratio
Example
A new HR program will result in total savings of 10,000. The cost of the program
will be 2,000. The cost-benefit ratio is calculated as follows.
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Figure 2-26. Sample Cost-Benefit Ratio Calculation
In HR, a cost-benefit analysis of all HR activities and programs should be

completed on a regular basis. Ideally, this happens once a year in conjunction
with the budget cycle.
The cost-benefit analysis process for the entire HR function includes the
following steps:
1. Identify each program in the HR plan.
2. Evaluate the effectiveness of each program based on the following:

 Cost versus projected benefits of the program
 Relevance of the program to corporate objectives
 Willingness and ability of line managers to execute the program
 Economic risks of not executing the program
3. Prioritize all programs and assign staff resources.
The return on investment calculation is for a single specific investment.
The cost-benefit analysis compares two or more options to help with decision
making.
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Reporting HR Data
Break-Even Analysis
A break-even analysis is one of the simplest forms of cost-benefit analysis. In this

analysis, you find the time at which total revenue associated with the program is
equal to the total cost of the program.
To calculate the break-even point, divide the total cost by the total revenue.
Figure 2-27. Formula for Calculating the Break-Even Point
Example
A program has an annual cost of 35,000 and is expected to generate a savings of

40,000 the first year. The break-even point would be about 10.5 months.
Figure 2-28. Sample Break-Even Point Calculation
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Reporting HR Data
Financial Statement Analysis
A financial (or income) statement explains revenues, expenses and profits over a
specified period of time—usually a year or a quarter. Financial (or income)
statement analysis is a common metric among investors. This analysis is used in
the following ways:
 To determine the financial health of an organization
 To measure the overall impact of a strategic plan
HR professionals can analyze financial statements in various ways:

 To calculate financial ratios, such as the rate of return the organization is
earning on the shareholders’ retained earnings and assets
 To calculate profit margins, such as the gross profit margin, operating
profit margin and net profit margin
Performance Measures
HR professionals should focus on measuring results rather than on measuring

activities. An example of an activity is establishing a dispute resolution training
program for managers. An example of a result that can be measured is the number
of employees retained as a result of a change in dispute resolution. HR can
collaborate with internal stakeholders to select significant measurement points.
This collaboration will have two impacts:
 Ensuring that efforts are being directed at strategically significant
improvements
 Building understanding of the process and its value, which is essential for
cooperation in data gathering
We will discuss two performance measures, the balanced scorecard and

performance audits.
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The Balanced Scorecard

The balanced scorecard approach provides a concise and complete picture of an
organization’s performance. Four main areas are assessed in a balanced
scorecard:
 Finance
 Customers
 Internal business processes
 Learning and growth
Additional information about the organizational use of the balanced scorecard

can also be found at the website of the Balanced Scorecard Institute,
http://www.balancedscorecard.org.
The steps for implementing the balanced scorecard system are similar to the steps
in strategic planning.
Step 1: Plan the Process
Planning involves the following points:

 Confirm the scope of the project and establish a project timeline.
 Outline a project communication approach.
 Determine organizational participation and roles.
 Confirm expected project deliverables.
Goals must be in place before the scorecard is used. If possible, recruit a person
from the organization’s top-level management to provide support for the process.
Step 2: Design the Scorecard
Designing involves the following:

 Focus on measures that actively support the organization’s strategy.
 Identify critical success factors.
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Reporting HR Data
 Develop an action plan.

 Collect and prepare data.
 Decide on tracking measures.
Scorecards should be designed to match the organization’s strategic goals.

Measurements should be tied to specific organizational activities.
Step 3: Employ and Refine Measures
In Step 3, the organization takes the following actions:

 Employ scorecards.
 Monitor performance gaps.
 Refine measures of the scorecard.
 Identify implementation issues.
You can use the balanced scorecard to measure the effectiveness of specific
initiatives of entire departments or the entire organization. Two examples follow.
 The Minnesota Department of Revenue used the balanced scorecard to
measure an initiative to increase taxpayer compliance. Measures included
revenue collected (the financial perspective), taxpayer education and
support (customer perspective), tax policy and internal processes (the
process perspective) and staff self-assessment (the learning and growth
perspective).
Programs should be piloted before they are formally implemented. Gradually use
the balanced scorecard in every division, department and process. Ideally,
scorecard use should start at the top of the organization, so people have direction
and understanding about the total organizational mission and vision.
Performance Audits
Performance audits assess the performance and management of a program by an

objective evaluator, using objective criteria.
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Reporting HR Data
An HR audit measures HR effectiveness and efficiency and demonstrates the

value of HR in helping an organization meet its strategic goals. The HR audit has
two main functions:
 Help organizational decision makers understand what is happening with
various HR activities
 Allow HR managers to determine which programs and positions should
be eliminated or enhanced
You can use HR audit checklists to indicate what items should be included in any
HR audit. The HR audit tool should allow HR professionals to assign a numerical
value to an assessment. This numerical value shows how effectively the
organization has put basic HR activities in place and how well these HR activities
are being performed. Either HR staff or a third-party contractor can conduct an
audit. The benefit of using an outside source is that it can be more objective in its
evaluation than using internal staff.
Before starting an audit, make sure that you have agreement to fix any legal
compliance problem you may discover as part of the audit. If you learn about a
problem and then ignore that problem, you may increase your organization’s
liability.
Trend Analysis
Trend analysis uses statistics to determine whether relationships exist between

two variables. A manager who is looking at HR trends must look for variables
related to HR that seem to change predictably over time. The manager is
analyzing past performance as a predictor of the future.
Example: Using the six years of performance data in Figure 2-29, the HR
manager for ABC Books wants to project the demand for employees for years
seven and eight.
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Reporting HR Data
Labor Productivity HR Demand

Business Factors
Year (annual sales per (number of
(sales in millions)
employee) employees)
1 3.613 11,120 325
2 3.748 11,120 337
3 3.880 12,520 310
4 4.095 12,520 327
5 4.283 12,520 342
6 4.446 12,520 355
Figure 2-29. Performance of ABC Books
A simple trend analysis plots the number of employees each year for the last six
years. Figure 2-30 shows the trend analysis. You can use a statistical formula to
calculate the slope of the trend line. Then project this trend for two more years to
predict the number of employees. (The example assumes there is no turnover.
Turnover should also be considered when deciding on a final estimate.)
Figure 2-30. Trend Analysis Example
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Reporting HR Data
HR forecasts depend on the ability to predict variables (such as level of sales)

within workable limits. When you project figures into the future, the major
determinant is whether relationships will continue to exist. You must clearly
identify any assumptions used in the forecast. This identification will help other
people interpret and accept the information.
Reporting Methods
Reporting methods are ways in which you can effectively present data and
information that you have collected.
When you select the right reporting method, it can help you communicate the
organization’s dynamics and make your presentations more valuable, accurate and
efficient.
When creating a report, be sure to highlight your data points and to focus on the
message. Many times the message can get lost in headings, graphics and other
formatting elements.
One reporting method is the Excel chart, which can be used to display lines, bars,
pie charts and scatter diagrams. Bar charts and pie charts were discussed earlier in
this section. Scatter diagrams are presented in Section 1.4. Before you choose a
method of presentation, carefully consider the type of information you are
presenting. For example, pie charts are useful when the information represents
parts of a whole. Line charts often represent tendencies of change as a function of
time.
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Reporting HR Data
The PowerPoint presentation is a delivery tool that allows you to create slides to
deliver your information. Whether you use PowerPoint or another presentation
program, consider the following guidelines for presentation design and delivery
(Reynolds 2008):
 Use the slides as an aid for the presentation, rather than depending on the
slides to present all your information for you.
 Make sure that the information on the slides does not distract the audience
from your spoken presentation.
 Don’t overload the slides. Include only the most important and meaningful
information. Make each slide as simple and as concrete as possible.
 Try to evoke emotions. For example, use unexpected facts or scenarios to
capture the attention of your audience.
 Keep your presentation friendly and conversational.
 Interact with the audience as you present the information.
 Add images and other visual content that complements the presentation.
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Reporting HR Data
1.3: Workforce Planning

and Employment Strategies

Knowledge:
Behaviors: 03. Maintain, file and process HR forms (for example, notices,
announcements, new hire forms and salary forms)
10. Assist managers in updating standard job descriptions in order to

match any changes in job requirements
Skills & Knowledge: 03. Documentation requirements for employees and their
employment
04. Management of HR documents (for example, managing files,

scheduling for records retention)
07. Employment best practices (for example, the best ways to recruit,
select and retain employees)
13. Different ways to classify employees(for example, workers who

are full time, part time, temporary, or those who receive payment
by the day)
Section 1.3: Workforce Planning and
Employment Strategies
Introduction ................................................................................................................................129
Workforce Planning...................................................................................................................129
Benefits of Workforce Planning ...............................................................................................131
Role of HR in Workforce Planning ..........................................................................................131
Four-Step Process for Workforce Planning .............................................................................131
Job Analysis ................................................................................................................................134

Job Analysis Benefits ...............................................................................................................136
Writing Job Descriptions and Specifications ...........................................................................136
Recruitment and Selection ........................................................................................................142
Employment Procedures ...........................................................................................................142

Staffing Options to Consider ....................................................................................................143
Employment Contracts, Records and Documentation .............................................................147
Module 1: HR Administration Section 1.3: Workforce Planning and
Introduction
An organization’s success is built on the quality of its employees. Often, it is the
job of HR administration to recruit talented employees for positions and to ensure
employees support the goals and vision of the organization. To be viable,
workforce planning and employment strategies must be assimilated into the
organization’s strategic objectives. In so doing, HR professionals must consider
both short- and long-term needs of the organization so that staffing requirements
can be anticipated in a timely manner.

 The scope of responsibilities related to workforce planning
 How to conduct a job analysis
 Employment strategies that can offer innovative solutions for your resource
needs
 How to maintain records for employees
Workforce Planning
Workforce planning is a disciplined process used to analyze an

organization’s workforce and to prepare for future staffing needs.
Workforce planning helps HR determine whether future skill needs will
be met by recruiting, by training or by outsourcing the work.
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Organizations should conduct a regular and thorough workforce planning

assessment so that staffing needs can be measured, that training and development
goals can be established and that contingent workforce options can be used.
Workforce planning examines the type of work organizations will do in the future
and how that work will be performed. Workforce planning should consider
internal factors such as employees’ skills and abilities and external factors such as
technologic advancements, social, economic and political conditions. Figure 3-1
illustrates these considerations for workforce planning.
Figure 3-1. Workforce Planning Considerations
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Benefits of Workforce Planning
Many HR professionals believe that the ultimate benefit from workforce planning
is a vibrant, internal employee environment that transcends the boundaries
between business units and geographies. Additional benefits of workforce
planning are listed here:
 Allows managers to anticipate change rather than be surprised by events
 Provides managers with strategic methods for addressing present and
anticipated workforce issues
 Prepares HR for recruitment needs, restructuring events, downsizing
impacts and retraining
Role of HR in Workforce Planning
HR departments are typically responsible for many of the workforce planning

activities. Workforce planning is often a large-scale effort that requires budgeting
and resourcing. Senior management and leaders should be involved, so they can
contribute to the workforce planning process and provide the support you may
need. Several best practices for your workforce planning efforts are listed here:
 Designate a specific member of the HR team to manage the process.
 Find a leader to champion the plan.
 Involve major stakeholders in the workforce planning process.
 Align the plan with the company’s strategic business plan.
 Coordinate the workforce plan with succession planning and career
development initiatives.
 Make workforce planning an ongoing activity, with continuous evaluation
of changes in the internal and external environment that may affect the
organization’s staffing needs.
Four-Step Process for Workforce Planning
Use the four-step process shown in Figure 3-2 to help guide your workforce
planning.
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Figure 3-2. Workforce Planning Process

(Society for Human Resource Management, Practicing the Discipline of Workforce Planning
2010)
Supply Analysis
The purpose of supply analysis is to analyze the organization as it currently exists

and to identify the supply of labor and skills that are essential to the organization.
The supply analysis should evaluate the number of employees and workforce
demographics such as retirement projections.
A supply analysis also involves making projections of attrition due to the

following factors:
 Resignations
 Retirements
 Internal transfers
 Promotions
 Involuntary terminations
By examining these factors, a profile can be developed to predict what will

happen if no action is taken in recruiting, training or outsourcing.
Demand Analysis
The purpose of the demand analysis is to forecast the organization’s future

workforce composition. This forecast should take into consideration a wide range
of business issues, as shown in Figure 3-3.
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Figure 3-3. Demand Analysis
Gap Analysis
The next step in the process compares the supply model with the demand model
to identify gaps between the composition of the current workforce and future
workforce needs. See Figure 3-4.
Figure 3-4. Gap Analysis
The workforce planning professional may want to categorize a variety of future

scenarios and then select the future that is most likely to occur, with contingency
planning for alternative futures. When conducting this analysis, be sure to identify
the additional number of employees with requisite skills and knowledge who will
be needed and employees who will no longer be needed because of limited skills
and knowledge.
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Solution Analysis
Solution analysis is the process of creating strategies to close the gaps identified
during the gap analysis. Strategies may include the actions listed here:
 Recruiting
 Training and retraining
 Using contingent staff
 Outsourcing
The approaches selected will depend on whether the organization will need to
expand, contract, restructure or rely on contingent staff to meet new workplace
demands.
After a plan has been created, have leaders evaluate whether the plan can
anticipate and respond to future needs so that sound business decisions can be
made and executed. Performance indicators will include the following measures:
 Will the solution lead to profitability?
 Will the organization achieve a return on investment?
 Will the solution lead to productivity?
For additional information on workforce planning, see Module 2: Recruitment

and Selection.
Job Analysis
A job analysis is the process of gathering, examining and interpreting data about
the job’s tasks and responsibilities. HR professionals conduct job analyses during
workforce planning and other employment activities such as hiring individuals,
evaluating current employees, accommodating persons with disabilities and
improving workplace efficiencies.
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A job analysis evaluates the job, not the person doing the job.
The final product from a job analysis is an understanding of all duties and
responsibilities, a percentage of time spent for each group of tasks, the job’s
relative importance in comparison with other jobs, the knowledge, skills and
abilities (KSAs) needed to perform the job and the conditions under which the
work is completed.
A job analysis requires the cooperation of the employee in the position, his or her
manager(s) and coworkers. Figure 3-5 lists the tasks to complete when conducting
a job analysis.
Figure 3-5. Job Analysis Tasks (Society for Human Resource Management, Job Analysis: How
Do I Conduct a Job Analysis to Ensure the Job Description Actually Matches the Duties
Performed by the Employee in the Job? 2010)
© 2012 SHRM 135

If there is more than one person doing the same job, make sure to observe and
obtain feedback and information from more than one person. You will want to
compare your findings with the employees and managers until you have an
accurate reflection of the job duties and responsibilities.
Job Analysis Benefits
Job analysis serves a wide variety of uses, as shown in Figure 3-6.
Figure 3-6. Uses of Job Analysis
Writing Job Descriptions and Specifications
The data you gather from a job analysis can be used to help write job descriptions
and specify the qualifications employees need in order to be successful in their
© 2012 SHRM 136

job roles. When writing and updating job descriptions, HR professionals should
work directly with managers who have specific knowledge of the job role.
Job descriptions are tools for workforce planning, recruiting, determining

salary ranges and levels or grades, establishing job titles, creating
employee’s job goals and conducting performance reviews.
Job descriptions can also be used for career planning and, in some countries, for
meeting legal requirements for compliance purposes. In some cases, having
written job descriptions that accurately reflect the employee’s job duties and
responsibilities can prevent legal issues. Organizations should audit their job
descriptions every few years, usually in conjunction with a compensation study
and whenever the organization’s purpose, mission or structure changes.
A well-written job description summarizes the most important features

of a job, including a description of the work that details the required
tasks, knowledge, skills, abilities, responsibilities and reporting structure.
The following outlines the benefits job descriptions provide organizations:

 Defines the jobs for performance planning, transfer, promotion, staff
planning and career
 Uses standard formats that allow for consistent application
 Gives employees written definitions of their jobs
 Provides reliable sources for comparing job salary surveys
 Helps organizations move swiftly to increase or replace staff due to
increased business or turnover
 Helps the people responsible for workflow to perform systematic analyses
of organizations’ work processes from start to finish (Society for Human
Resource Management, Job Analysis: How Do I Conduct a Job Analysis to
Ensure the Job Description Actually Matches the Duties Performed by the
Employee in the Job? 2010)
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Elements of Job Descriptions
Job descriptions are typically written by HR with input from management and
should include the following elements.
Summary
The summary is a four- or five-sentence overview that summarizes the purpose

and objectives of the job. The summary section also covers the primary
responsibilities of the job, the results the worker is expected to accomplish and the
degree of freedom to act (for example, independently or under direct supervision).
Figure 3-7 is an example of a summary for a Director of Commercial Sales.
Figure 3-7. Job Description: Summary
Essential Functions
The essential functions are the tasks, duties and responsibilities of the job. The list
often includes statements explaining why the function is required. Figure 3-8 is an
example of essential functions for a Director of Commercial Sales.
Figure 3-8. Job Description: Essential Functions
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Nonessential Functions
Nonessential functions are desirable but unnecessary aspects of the job that could
be reassigned to other employees if needed. Answering the following questions
can help HR professionals determine if a function is nonessential:
 How often must the function be performed?
 Can the function be performed by another employee?
 Can the function be eliminated or outsourced?
Figure 3-9 shows examples of nonessential functions for a Director of

Commercial Sales.
Figure 3-9. Job Description: Nonessential Functions

Knowledge, Skills and Abilities (KSAs)
KSAs are the specific competencies required for job performance. Figure 3-10
provides several KSAs for a Director of Commercial Sales.
Figure 3-10. Job Description: KSAs
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Supervisory Responsibilities
Supervisory responsibilities include the scope of the person’s authority, including

a list of job positions that report to the supervisor.
Working Conditions
Working conditions should list the environment in which the job is performed,
especially any unpleasant (or dangerous) conditions.
Minimum Qualifications
Minimum qualifications include the minimum knowledge, skills and abilities

required to enter the job.
Success Factors
Success factors are personal characteristics that contribute to an individual’s

ability to perform well in the job. Figure 3-11 provides two success factors for a
Director Commercial of Sales.
Figure 3-11. Job Description: Success Factors
© 2012 SHRM 140

Helpful Resources for Writing Job Descriptions
Various resources are available for HR professionals to help develop job

descriptions, including SHRM Online, http://www.shrm.org, and O*NET, the
Occupational Information Network. O*NET, http://online.onetcenter.org, is the
replacement for the Dictionary of Occupational Titles (DOT).
O*NET moves occupational information into the technological age. It provides a

comprehensive database of worker attributes and job characteristics applicable in
both the public and private sectors and a common language for defining and
describing occupations. O*NET’s flexible design also captures rapidly changing
job requirements.
The goal of O*NET is to improve the quality of dialogue among people who
communicate about jobs in the economy, generate employment statistics and
develop education and training programs. Employer hiring requirements will have
the same meaning for the following groups:
 HR practitioners
 Workers
 Education and training developers
 Program planners
 Students
Job Specifications
A well-written job description is the basis for writing effective job specifications.
Job specifications can be a separate section of the job description or a separate
document.
A job specification identifies the qualifications necessary for an

incumbent to be able to perform the job.
Job specifications must be carefully worded and reflect what is necessary for
satisfactory performance (see Figure 3-12). For example, if three years of
© 2012 SHRM 141

experience and a bachelor’s degree in business would suffice, don’t list six years
of experience and a master’s degree in finance.
Figure 3-12. Job Specifications
Recruitment and Selection

Following the job analysis, the organization recruits and selects the most qualified
candidate for an open position.
Recruitment is the process of attracting, screening and hiring qualified people for
a job. Selection is the process of hiring the most suitable candidate for a job. HR
professionals should follow best practices in the following tasks:
 Developing a recruiting strategy
 Developing internal and external recruitment sources
 Becoming familiar with the most current recruiting tools and technologies
 Gathering the information needed to make a selection decision
Detailed information about best practices in recruitment and selection is presented in

Module 2: Recruitment and Selection.
Employment Procedures
One of the primary responsibilities of HR is to manage the daily needs of an
organization’s staff. Staffing responsibilities are considerable and often touch
every milestone of an employee’s career, from signing an employment contract
through retirement. If HR professionals are expected to respond quickly and
© 2012 SHRM 142

within legal limits, they must have an understanding of employment options and
how these can apply to individual employees.
Staffing Options to Consider
Today’s labor market presents many different ways to staff an organization with
talent. It is best to discuss these options with the leaders in your organization and
to consider the contractual and legal implications for each option. You should
have terms such as full time and part time clearly defined and documented. Figure
3-13 provides descriptions of three traditional staffing options.
Staffing Option Description
Full time Employees scheduled to work a full workweek on an

ongoing basis; benefit eligibility depends on the
organization.
Part time Employees scheduled to work less than a regular

workweek on an ongoing basis; benefit eligibility depends
on various factors (for example, number of hours worked).
Independent Self-employed individuals hired on a contract basis for

contractor specialized services. Independent contractors generally
have a high degree of independence, judgment, skill and
discretion. They are compensated on a contract or fee
basis.
Figure 3-13. Traditional Staffing Options
Flexible Staffing
As organizations look for cost-effective and creative ways to recruit talent and to
ensure the organization’s success and growth, flexible staffing offers employers
several desirable alternatives.
© 2012 SHRM 143

Also referred to as alternative staffing, flexible staffing uses alternative

recruiting sources and workers who are not regular employees.
Figure 3-14 shows several situations of how flexible staffing can provide a
solution for your workforce needs.
Figure 3-14. Flexible Staffing Scenarios
Figures 3-15 and 3-16 summarize important characteristics for some of the more
prevalent types of flexible staff, organized according to whether the employees
are on an organization’s payroll or administration functions are outsourced to
staffing firms.
© 2012 SHRM 144

Flexible Staffing Options Offered by the Organization
Type Description
Temporary assignments Employees hired to work on a specified job to

supplement the regular workforce on a short-
term basis or for a specified period of time.
Temporary employees or Employees hired to work directly on a

floaters company’s payroll for a short period of time,
which may require employees to float between
positions or departments.
On-call workers Employees who report to work only when

needed.
Seasonal workers Employees hired to perform seasonal work in a

variety of industries such as agriculture,
construction, tourism and recreation.
Figure 3-15. Flexible Staffing Options Offered by the Organization
Flexible Staffing Options through Outsourcing
Type Description
Finite temporary help Workers recruited, screened and employed by a temporary

help firm. The firm assigns individuals to work at client
sites for a finite duration such as covering an employee’s
medical leave.
Figure 3-16. Flexible Staffing Options through Outsourcing (continued to next page)
© 2012 SHRM 145

Type Description
Temp-to-hire programs Workers hired on a temporary basis, usually through a

temporary placement firm. Employees understand they
may be offered regular employment if they perform
competently.
Contract workers Highly skilled workers supplied by a firm for long-term

projects. A contract defines the terms of agreement for
services provided by the worker.
Figure 3-16. Flexible Staffing Options through Outsourcing (concluded)
Legal Considerations for Flexible Staffing
The risk of assuming that an individual will not be regarded as your employee
could be significant. In some countries, if an organization misclassifies workers,
the organization may be required to pay fines and to provide workers with
retroactive benefits available to regular employees. Organizations should check
with legal sources to be sure they are compliant.
Alternate Work Schedules
Organizations may depart from the traditional workday or workweek to improve

organizational productivity and employee morale by giving employees increased
control over the hours they work. This approach can help employees balance the
demands of their personal life and work life. They can remain employed and keep
their skills current and still have the flexibility they require to take care of their
personal needs.
The use of alternative work schedules can also benefit the organization. Some
potential benefits include savings on overtime payments, work assignment
flexibility, increased productivity, reduced fatigue and lower rates of absenteeism.
Descriptions of flexible work arrangements are summarized in the Figure 3-17.
© 2012 SHRM 146

Type Description
Flextime Employees work an established number of hours per week

with varying starting and ending times.
Compressed workweek Employees work a compressed full week in fewer than five
days.
Regular part time Employees work less than full-time hours.
Job sharing Two part-time employees share one full-time job.
Phase retirement Employees gradually reduce the number of work hours

before full retirement.
Telecommuting Employees use electronic computing and

telecommunications equipment.
Working from home Employees work from their home rather than in the
company office(s).
Figure 3-17. Alternative Work Schedules
Employment Contracts, Records and Documentation
Once an organization decides on a staffing arrangement, the terms of the

agreement should be put into writing. Reaching consensus on the specific
mechanics of the arrangement requires attention to detail.
© 2012 SHRM 147

Figure 3-18. Agreements
The best agreement is one that accurately and precisely reflects the underlying
transaction. HR may need to work with legal counsel who are experienced in
writing staffing contracts when defining the terms for staffing.
Employment Contracts
A written contract helps clarify employment terms and avoid misunderstanding

and misinterpretation. While oral employment agreements are generally just as
enforceable as written ones, some terms can become hard to prove if one side
disagrees with specific terms or outright denies having agreed to the terms.
When contracts are put in writing, they should be designed to meet the needs of
the organization and the employee. Even with written contracts, any local and
national laws apply.
There are many items to consider in drafting a written employment contract.

Specific contract terms will vary based on the organization, the job and any
applicable laws. The following list names some items that may be covered in an
employment contract:
 Terms and conditions of employment
 General duties and job expectations of the employee
 Confidentiality and nondisclosure terms
 Invention or non-piracy clauses
© 2012 SHRM 148

 Noncompete clauses
 Change of control
 Terms for resignation/termination
 Relocation
 Severance provisions
 Appropriate signatures and dates
Maintaining Employee Records
Organizations have their own unique employment record maintenance practices.

Employee records can be maintained in paper form, scanned or completed and
maintained electronically. No matter what format is used, the maintenance,
security and retention requirements should be standardized and adhere to related
laws (Society for Human Resource Management, Complying With Workplace
Records and Reporting Requirements 2010).
Figure 3-19 illustrates a typical employee life cycle and the major milestones at
which HR professionals should generate and maintain employee records.
Figure 3-19. Employee Life Cycle
© 2012 SHRM 149

Audit Checklists
HR must give special consideration to where and how to maintain files, limiting
access to protect applicants and employees from discrimination, identity theft,
breach of privacy and any other legal violations. In some cases, HR may use
checklists to ensure the policies are being met. Figure 3-20 is an example of audit
checklist for personnel files.
Figure 3-20. Audit Checklist for Personnel Files (Society for Human Resource Management,
Audit: Personnel Files: Employment (Personnel) Records Audit Checklist 2010)
© 2012 SHRM 150

Documenting Employee Performance and Corrective Action
For legal purposes, performance documentation is among the most

important items in an employee’s file. Current performance information
helps the supervisor justify the comments in the performance appraisal.
Documentation of employee performance can show the reasoning that led

to actions such as an increase in pay or a termination.
The following describe two common documentation practices:

 Performance diary: A performance diary is a record of crucial incidents
or tasks that are performed by the employee.
 Performance records: Performance records are notes that contain
performance indicators such as unit measures, quantity and quality
measures, and accounting and cost measures. Performance records should
relate to the employee.
All performance documentation must be specific, objective, accurate and

consistent.
The following guidelines will assist in your documentation efforts:

 Document as situations occur.
 Keep performance notes on all employees.
 Document job-related observations.
 Use objective criteria.
 Support your observations with facts.
 Focus on the deficiencies, not the perceived underlying cause.
 Avoid emotion; write with respect.
 Avoid conclusions; provide facts for others to use in reaching logical
conclusions.
© 2012 SHRM 151

Remember that others may read your comments, so be sure that your
documentation is accurate and objective and that it focuses on behavior. Well-
written documentation can provide the following benefits:
 Improve employee performance
 Assist in communication with employees
 Help identify training and career development activities
 Reward and recognize good performance
Records Management Programs
Reporting requirements are often confusing, and organizations may not

understand what records to keep and for how long. A records management
program can help reduce this burden. To help determine the requirements for a
records management program, ask the following questions:
 What data and records currently exist?
 Where are the records stored?
 What records need to be kept and for how long?
 Who should have access?
 Is our record maintenance process efficient and compliant?
 What system will work best to ensure compliance with changing
requirements?
© 2012 SHRM 152

An effective records management program is the blueprint for compliance with

laws and regulations. A number of main elements should be considered when
developing, implementing and maintaining a records management program:
 Definition of record
 Retention schedule
 Access
 Storage and format
 Security and privacy
 Compliance with laws on record retention
 Careful and timely destruction of documents
 Consistent policy implementation and periodic audits (Society for Human
Resource Management, Complying With Workplace Records and
Reporting Requirements 2010)
Electronic Records
Your organization’s records management program can include a policy that

provides broad guidance concerning paper documents and electronically stored
data. Electronic data includes e-mail, web pages, word-processing files, computer
databases and any other information that is stored on a computer and that exists in
a medium that can only be read through the use of computers. It can also include
hidden electronic data left behind when a manager adds or deletes text to a
performance review, formulas employees used for making spreadsheet
calculations, edits to a memorandum and other unintentionally stored data.
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© 2012 SHRM 154

1.4: Change Management and
Business Process Improvement
for HR Professionals

Knowledge:
Behavior: 07. Answer or refer questions from employees as the first level of
support
09. Monitor projects and suggest improvements (for example, ways

to recruit better applicants; resources for internal and external
training; ways to improve insurance, benefits, or compensation
plans)
Skills & Knowledge: 02. Change management concepts including terms and factors,
resistance to change and communication techniques (but not
including the implementation process)
Section 1.4: Change Management and
Business Process Improvement for HR
Professionals
Introduction ................................................................................................................................157
Change Management .................................................................................................................157

Managing Change ....................................................................................................................157
Change Process Theory ............................................................................................................158
Managing Change in Organizations .........................................................................................159
HR’s Key Role in Managing Change .......................................................................................162
Change Drivers .........................................................................................................................163
Project Management ..................................................................................................................167

Common Project Characteristics ..............................................................................................168
Common Project Phases and Roles ..........................................................................................169
Project Planning Tools .............................................................................................................170
Project Success .........................................................................................................................172
Quality Improvement Methods and Analysis .........................................................................173

Quality Standards .....................................................................................................................173
Quality Improvement Theories and Methods ...........................................................................174
Data Gathering and Analysis Methods .....................................................................................178
Benchmarking ..........................................................................................................................182
Module 1: HR Administration Section 1.4: Change Management & Business Process
Improvement for HR Professionals
Introduction
Change is constant in the world today for organizations and the people working in
them. It is important for organizations to adopt a planned process that uses the
principles of behavioral science to improve the way their organization functions.
This process is called organizational development.

 HR’s role in communicating and managing change in organizations
 Project planning and management
 Business process improvement activities
Change Management
Managing Change
HR professionals need to develop the skill of managing change. Change is the

process of alteration or transformation that individuals, groups and organizations
experience for external or internal reasons. Change may be the result of a large-
scale strategic planning movement or of the introduction of operational changes
such as a new e-mail system. HR should be involved in managing the people
issues resulting from change.
The key to managing the change process is to be proactive, rather than reactive.
Participating in strategic planning allows HR professionals to have an impact on
upcoming change initiatives.
© 2012 SHRM 157

Organizations have to be flexible enough to adjust to consumer demands in order

to succeed in today’s competitive economy. If an organization cannot change, it
will be replaced by another organization that expects changing needs.
Organizations that consistently do better than their competitors are not only open
to change but also have an underlying motivation to profit from change.
Change Process Theory
The change process theory explains the dynamics of organizational change.

Understanding these dynamics allows HR professionals to offer the proper
initiative to address the change. Figure 4-1 represents social psychologist Kurt
Lewin’s three stages of the change process.
Figure 4-1. The Stages of Change Process Theory (Dessler 2008)
Unfreeze the current state: The purpose of this stage is to get people to accept
that the change will occur. Reducing factors that work against change is crucial at
this stage.
Move toward the new state: During the second stage, the focus is on getting
people to alter their behavior.
Refreeze the new state: Once the change has been carried out and generally
accepted, the focus should be on reinforcing and maintaining the changes. The
focus is on making the new idea a regular part of the organization (Dessler 2008).
© 2012 SHRM 158

Conditions That Make Change Possible
In their article, The Psychology of Change Management (2003), Emily Lawson

and Colin Price identify several conditions that make it easier for people to get to
the point where they will consider or try a new way of doing things:
 Shared purpose. If people believe in the overall purpose and reason for
the change, they will make an effort to change themselves.
 Reinforcement systems. The following support factors must be present
and must match the desired change initiative:
 Structures
 Management processes
 Encouragement
 Measurement
 Communication
 Consistent role models. The presence of a role model makes change real
and demonstrates that change is possible. Many role models (in addition to
managers and executives) need to be present throughout the organization to
keep the message of change alive until it becomes part of the way the
organization operates (Lawson and Price 2003).
Managing Change in Organizations
In a business environment characterized by constant change, it is no longer

enough for an organization to accept change. An organization must know how to
embrace change, that is, how to adapt and make changes quickly, effectively and
economically, with as little negative effect on the stakeholders (the organization,
shareholders, employees and communities) as possible (Jellison 2006).
© 2012 SHRM 159

The J Curve of Change
In Managing the Dynamics of Change: The Fastest Path to Creating an

Engaged and Productive Workforce, Jerald M. Jellison writes: “Change
suggests progress, growth, success and also the possibility of uncertainty, failure
and fear. The fundamental challenge of implementing change is how to help
people through their fears and doubts so they experience the joys of growth and
success. Knowing how to deal with these human aspects of change is important to
your success as a manager and leader” (2006).
To deal with these human dimensions of change, Jellison introduces the J Curve
of Change. The J Curve of Change describes people’s performance, thoughts and
emotions as they deal with change. As shown in Figure 4-2, first there is a drop in
performance, followed by a ragged period of limited progress and then a steep
climb in performance improvement.
Figure 4-2. The J Curve of Change (Jellison 2006)
© 2012 SHRM 160

Jellison defines five stages in the J Curve of Change:

 Stage 1: The plateau. Before change is announced, employees are on a
performance plateau, following conventional patterns where they are
comfortable with the routine and have mastered their work. Resistance
appears when change is announced and continues to grow with varying
intensity as realization of the change moves into Stage 2.
 Stage 2: The cliff. As employees are forced to do things differently, the
Stage 1 pattern is reversed: failures now outnumber successes. The greater
the difference between the new and old ways of doing things, the greater
the drop in performance. Resistance becomes intense in Stage 2.
Employees are openly opposed to the change and express their desire to
return to the old ways.
 Stage 3: The valley. This is the stage where the shift between the old and
new ways of doing things can be observed. In the first half of Stage 3, net
performance is still decreasing but at a slower rate. Employees’ negativity
also decreases. Uncertainty still exists. As employees move into the second
half of Stage 3, successes begin to outnumber failures, and cautious
optimism appears.
 Stage 4: The ascent. Performance improves remarkably, and the curve
rises almost as rapidly as the earlier descent. Skills are sharpened,
inefficiencies are eliminated, and problems are considered solvable
challenges rather than insurmountable barriers. Employees are confident
and motivated, driving performance higher.
 Stage 5: The mountaintop. In Stages 2, 3 and 4, performance was below
Stage 1 level. Now performance surges beyond its past highs as employees
find new and creative ways to apply the new approach and to invent new
solutions to old problems (Jellison 2006).
© 2012 SHRM 161

Activation
Activation is designed to promote early positive experiences, so the J Curve of

Change becomes more like a checkmark: moving the person from resistance to
conversion. Leaders can use the following key aspects of activation to change
Resisters into Doers and Believers:
 Break the change down into small steps.
 Front-load rewards.
 Make it safe to make mistakes.
 Provide guidance and training.
 Encourage involvement.
 Sympathize with negative feelings.
 Make it easy to get started.
 Stay committed to implementing the change.
The challenge for a leader or coach is to sympathize with those in Stage 1 and
help others through the tough times. The leader’s main responsibility is in the first
half of the J Curve—meeting regularly with people and communicating often. As
employees achieve success, leaders should encourage celebration of results, so
employees will be ready for the next change. “Even the boldest mountaineer
pauses at the peak to savor the view” (Jellison 2006).
HR’s Key Role in Managing Change
HR plays a key role in helping employees develop flexibility during change,

focusing on the following actions:
 Involve employees in the change process, so they will be more committed
to the outcome of change initiatives.
 Communicate with employees and top management throughout the
process.
 Educate employees that change is an ongoing and necessary process.
 Expect resistance and find ways to manage it.
© 2012 SHRM 162

 Show personal commitment, and present a positive attitude toward the

changes.
 Reinforce change with incentives.
 Use peer and group influence to show support for the change.
 Ensure that top management is visible and supportive of change initiatives.
 Remind top management that it has discussed and processed the changes
for a longer period of time than the rest of the organization; it will take
time for others in the organization to arrive at the same place as top
management.
Change Drivers
Drivers of global organizational change and organizational development activity

and their impact are described in Figure 4-3.
Drivers of Change and

Impact
Organizational Development Efforts
Leadership or business strategy Changes in leadership and business strategy

changes often go hand in hand and may lead to some of
the additional changes listed here:
 Process improvements
 Mergers and acquisitions
 Organizational expansion
 Value creation efforts
Mergers and acquisitions Organizational development support may be

needed when a new group is brought into the
organization. International merger and
acquisition activities often require integration of
different national and organizational cultures.
Figure 4-3. Drivers of Organizational Change

© 2012 SHRM 163


Impact
Process improvements Quality and reduced time-to-market initiatives

are often significant reasons for organizational
change.
Cost reductions Cost reductions produce immediate financial

benefits for the organization. Efforts to reduce
costs may include the following:
 Reduce inventory
 Identify/use lower cost resources
 Evaluate suppliers
 Rationalize or renegotiate
Organizational expansion When an organization expands, HR

professionals should be involved in the planning
and carrying out of activities related to the
following factors:
 Start-up
 Planning
 Development
 Training
Including HR will ensure strategic alignment

and assist in the risk analysis of global
expansion activities.
Figure 4-3. Drivers of Organizational Change

© 2012 SHRM 164


Impact
Value creation Value creation efforts tend to be long range,

but they are important to the continued
organizational growth.
Quick threat response Organizations must be prepared to respond

immediately across borders and around the
world if any one of the following occurs:
 A competitor acts
 Technology changes
 Legal requirements are revised
Figure 4-3. Drivers of Organizational Change (Kotter 1996)

(concluded)
Figure 4-4 shows an integrated view of Lewin’s and Kotter’s change strategy
models. It was developed by human resource practitioner Cesar Aguirre to
effectively explain the theoretical and practical aspects of the change management
process (Aguirre 2007). HR professionals may find this view helpful in describing
the total process of change.
Adapted by Cesar Aguirre—The Human Assets Group Corp., 2006 (Aguirre 2007).
Figure 4-4. An Integrated View of Change Strategy
© 2012 SHRM 165

As explained earlier in this section, most models for change include some aspects
of Lewin’s model by describing the following:
 Activities that prepare for change (Unfreeze)
 Activities essential to making the actual change possible (Move)
 Activities or steps that focus on acceptance and adoption of the change
(Refreeze)
The model developed by John Kotter (Kotter 1996) describes change management
techniques for successfully carrying out the change.
 Create a sense of urgency.
 Assemble a strong guiding team.
 Provide a clear vision.
 Over-communicate.
 Empower action.
 Ensure short-term successes.
 Consolidate progress.
 Institutionalize.
The following recommendations may help to support over-communication

during change processes:
 Develop a written communication plan.
 Communicate consistently and frequently.
 Identify HR as a point of contact for employee questions.
 Plan enough time for providing clear responses.
 Use multiple communication channels (for example, speaking, writing,
Intranet, training bulletin boards).
 Communicate all important change information as soon as the
information is available.
 Clearly communicate the vision, the mission and the objectives of the
change management effort.
© 2012 SHRM 166

Checklist for Assessing Readiness for Change
HR professionals can assist organizations in evaluating readiness and planning for

change by asking questions such as those shown in Figure 4-5.
Figure 4-5. Checklist for Assessing Readiness for Change
Project Management
Project management is a discipline that involves planning, organizing and
managing resources to bring about the successful completion of specific project
goals and objectives. It requires skill to oversee a project from start to finish.
A project team is a group of people who come together for a specific project.
© 2012 SHRM 167

Common Project Characteristics
A project is a series of tasks and activities. Projects vary in their duration and
complexity; however, all projects have the characteristics listed here:
 Stated goal and objectives
 Schedule with defined start and end dates
 Budget that establishes limits on the dedicated use of resources, both
monetary resources and human resources
Let’s look at an HR project example shown in Figure 4-6.
Common Project Characteristics HR Example
Stated goal and objectives: An HR manager defines a goal to audit all job
descriptions and to reclassify employees following
All projects are established to fulfill
a merger between two organizations. Key
some need or requirement in the
objectives are to do the following:
organization. Within each project,
 Review all job descriptions.
there is a goal to be reached.
 Make changes to the job descriptions as
Objectives outline a path for
appropriate to reflect new responsibilities
achieving the goal.
under the merged organization.
 Reclassify employees as necessary.
 Communicate and explain the changes to
employees, supervisors and managers.
Schedule: The HR manager establishes a completion date for

six months following the merger.
Projects have a timeline that
finishes in a target completion date.
Figure 4-6. Common Project Characteristics (continued to next page)
© 2012 SHRM 168

Common Project Characteristics HR Example
Resource budget: A project team is established that includes the HR

manager, a compensation specialist and a staffing
All projects will use various
specialist. Together they determine that they will
resources (people, equipment, time
need administrative help to make the necessary
and money).
changes to the job descriptions.
Figure 4-6. Common Project Characteristics (concluded)
Common Project Phases and Roles
Projects have similar phases and roles, including the following:

 Conception: The project idea is born, and goals and objectives are
established. Senior management lend support as a project sponsor is needed
to support the project’s efforts and ensure success. The purpose of a written
project charter includes the following:
 Describes the sponsorship
 Provides a basis for measurement of the project’s success
 Aligns the project with organizational strategy
 Selection of manager and team: Managing a project involves many
responsibilities, which can be categorized into three main roles:
 Interpersonal: The project manager is a leader and liaison, with top
priorities building team norms and fostering harmony.
 Informational: The project manager is a spokesperson who gathers and
spreads information and is responsible for helping team members
communicate effectively.
 Decisional: The project manager allocates resources, negotiates differences
and encourages project progress.
© 2012 SHRM 169

 Planning, scheduling, monitoring and control: Throughout this phase of

the process, the project manager creates a project schedule and assigns
resources, and the work begins. The project manager is then responsible for
the following tasks:
 Overseeing the quality of work, the progress against the schedule and the
use of resources needed to complete the project
 Paying attention to risks and obstacles that could delay the project’s
progress
 Taking action to mitigate risk and to remove obstacles
 Completion: In the same way the project conception was documented in a
charter, project completion should be documented in a report that describes
the following:
 Accomplishments and gaps
 Observations for future success
 Next steps
 Evaluation: Project managers may conduct evaluations at various points
throughout the process. At a minimum, project effectiveness should be
assessed at the end of the process, by referring to the goals and objectives
defined at project start.
Project Planning Tools
Project managers and their team members use a variety of tools and techniques to
plan, schedule and manage their projects. Two tools most commonly associated
with project management are Gantt charts and program evaluation and review
technique (PERT) charts.
© 2012 SHRM 170

Gantt Chart
The Gantt chart is also known as a horizontal bar chart, a milestone chart or an
activity chart. The Gantt chart graphically displays steps in a project in order by
start date and plots their expected duration with start points and end points. Each
activity includes the amount of work required to proceed from one point in time to
another. Gantt charts are used to plan a project or to monitor the progress of a
project. Figure 4-7 shows an example of a Gantt chart.
Figure 4-7. A Sample Gantt Chart
Program Evaluation and Review Technique (PERT) Chart
A program evaluation and review technique (PERT) chart is a project

management tool used to schedule, organize and coordinate tasks within a project.
It is generally used for very large, complex projects.
A PERT chart presents a graphic illustration of a project. Circles or rectangles

represent project milestones and are linked by arrows to show the sequence of the
tasks. When building the PERT chart, two inputs are required:
 Tasks required to complete the project
 Sequence of the tasks
© 2012 SHRM 171

Figure 4-8 is a sample PERT chart. Tasks that must be completed in sequence (A,
B, C, E and F) are called dependent or serial tasks. These tasks take the longest
time to complete and compose the critical path (that is, these tasks are crucial).
For the whole project to be completed and referred to on time, critical path tasks
must be completed on time. Task D is not dependent on other tasks and can be
completed at the same time as the other tasks. It is referred to as a parallel or
concurrent task.
Figure 4-8. Sample Section of a PERT Chart
Project Success
To help ensure project success, here are some considerations that should be
followed in any project:
 Continuous communication. Open, two-way communication is necessary
throughout the entire project. The project manager should constantly
update and explain the project to management, to customers and even to
the project team; however, each person on the project team should also be
responsible for this communication. Communication updates should be
incorporated into the project plan.
 Identification of success factors. The project team should identify the
factors in the organization that will help them reach the project objectives.
 Use of proven methodology. The project team should follow a consistent
project plan and methodology that has been proven to produce results.
 Use of contractors. If using third-party contractors, their role must be
clearly defined.
© 2012 SHRM 172

For more information on project management go to

http://www.pmi.org/Business-Solutions.aspx.
Quality Improvement Methods and Analysis

Quality Standards
A number of methods for determining quality in organizations have been used in

recent years. In many countries, national standards are the most familiar and
therefore the most commonly used. The International Organization for
Standardization (ISO) is the world’s largest developer of international standards.
The goals of ISO are to provide the following:
 A common basis for continuous improvement
 Defect prevention/variation and waste reduction
 A starting point for a closer working relationship among suppliers
The main purpose of ISO is to enhance and help trade between countries. Using
International Standards means that organizations can develop products and
services that are widely accepted internationally. Therefore, organizations using
International Standards can compete on many more markets around the world.
For more information on ISO, go to http://www.iso.org/iso/home.html.
© 2012 SHRM 173

Quality Improvement Theories and Methods
Quality assurance, customer satisfaction and continuous improvement are key

objectives for organizations that provide products and services. Over the past
thirty years several quality-related concepts and methods have been introduced
and used by many organizations in order to more systematically and continuously
improve the quality of their customer value proposition (CVP).
 Systems Theory
 TQM (Total Quality Management)
 Six Sigma
 Lean Six Sigma
Systems Theory
The systems theory is common in organizational development and is crucial to

achieving quality. A system is composed of interacting parts that work together to
achieve a goal. A system is meant to take in inputs, process them and produce
outputs, as shown in Figure 4-9.
Figure 4-9. System
© 2012 SHRM 174

According to the systems theory, organizations need to understand the

relationship between input, process and output and the environment in which
they occur. This understanding will help the organization improve its processes,
making them more efficient and cost-effective.
Total Quality Management (TQM)
Total quality management (TQM) is a strategic, integrated management system

for achieving customer satisfaction that involves all managers and employees. It
uses methods to continuously improve an organization’s processes. Such a system
can provide the following benefits:
 Find and eliminate problems that interfere with quality.
 Identify customer(s) and satisfy their needs.
 Eliminate waste.
 Encourage pride and teamwork.
 Create an environment that encourages creativity.
TQM is closely associated with the Japanese continuous improvement concept

known as Kaizen. Kaizen is a Japanese business philosophy advocating the need
for continuous improvement in quality, technology, processes, company culture,
productivity, safety and leadership.
Six Sigma
Six Sigma is a strategy that identifies and removes the causes of defects and errors
in manufacturing and business processes. This strategy originated in the 1980s
and uses data and facts to measure performance of a process or a product. Six
Sigma targets three main areas:
 Improving customer satisfaction
 Reducing cycle time
 Reducing defects
© 2012 SHRM 175

Figure 4-10. History of Six Sigma (Pande and Holpp 2002)
Six Sigma lends itself well to manufacturing, but it is increasingly used in

financial industries, health care, government, public education and other
environments. Here are some examples:
 A hospital system studied variations and made improvements in patient
care practices, patient costs and hospital utilization. Other areas of focus
were billing errors, excess inventory, excess overtime and employee
turnover.
 A debt collection agency gathered historical information and solved
process problems, which improved debt collection rates.
 The HR function of a service agency reduced the cycle time of recruitment,
the payroll processing cycle, the number of employees working on
weekends and employee attrition.
To achieve Six Sigma, a process must not produce more than 3.4 defects per
million opportunities. A Six Sigma defect is defined as anything outside of
customer specifications; a Six Sigma opportunity is the total number of chances
for a defect.
© 2012 SHRM 176

Six Sigma uses two processes, DMAIC and DMADV:

 DMAIC (define, measure, analyze, improve, control) is an improvement
system for existing processes falling below specifications and looking for
incremental improvement.
 DMADV (define, measure, analyze, design, verify) is an improvement
system used to develop new processes or products at Six Sigma quality
levels.
Both Six Sigma processes are carried out by two groups:

 Six Sigma Green Belts (employees)
 Six Sigma Black Belts (project leaders)
The processes are overseen by Six Sigma Master Black Belts (quality leaders).
Lean Six Sigma
Lean Six Sigma is a strategy that eliminates waste and improves process flows.
Lean focuses on resource optimization through logistical coordination and
inventory minimization. The difference between Lean Six Sigma and Six Sigma is
as follows:
 Lean Six Sigma is about eliminating waste, taking time out of processes
and creating better flow.
 Six Sigma is a business strategy built around the concept that organizations
gain a competitive edge by reducing variations, thus defects. Eliminating
variations is a long and involved process.
To make a decision about whether to use Lean Six Sigma or Six Sigma tools, you
can look at the types of business problems that need to be solved.
© 2012 SHRM 177

Lean Six Sigma tools are more appropriate if the following business problems
exist:
 There seems to be a lot of waste.
 There is a need to minimize inventories and redundancies.
 There is a need to improve work flows.
 There is a need to speed up processes.
 There are human mistakes.
Six Sigma tools are more appropriate if the following business problems exist:
 There are quality issues.
 There is too much variation.
 There are complex problems.
 There are challenging root cause identifications.
 There are numerous technical considerations.
For more information on Six Sigma go to

http://www.isixsigma.com/sixsigma/six_sigma.asp.
Data Gathering and Analysis Methods
Improvement efforts begin with understanding the problem. In some cases, the
problem may be evident and can be easily fixed, while in other cases the problem
may involve many business functions and input from thousands of employees.
The tools outlined below are often used to help gather and analyze data for
improvement initiatives:
 Process-flow analysis
 Cause-and-effect diagram
 Histogram
 Scatter diagram
 Pareto chart
 Gantt chart
The following paragraphs describe each of these tools in detail.
© 2012 SHRM 178

Process-Flow Analysis
A process-flow analysis (or flowchart) is a diagram of the steps involved in a

process. This diagram shows a process and its outputs. Figure 4-11 illustrates a
process flow for the assembly of a pen.
Figure 4-11. Process Flowchart
Cause-and-Effect Diagram
A cause-and-effect diagram (or Ishikawa diagram or fishbone diagram) maps the

factors that affect a problem or a desired outcome. HR professionals use cause-
and-effect diagrams to explain employee turnover or to better understand a
process failure. Figure 4-12 shows a cause-and-effect diagram.
© 2012 SHRM 179

Figure 4-12. Cause-and-Effect Diagram
Histogram
A histogram is a graph that shows how a single type of measurement is

distributed. The data is represented by rectangles of varying heights, with the
rectangles usually touching. Data that is normally distributed has a histogram that
is bell-shaped. Many other distributions do not follow this pattern and can still be
depicted by a histogram. Figure 4-13 is an example of a histogram.
Figure 4-13. Histogram
© 2012 SHRM 180

Scatter Diagram
A scatter diagram shows possible relationships between two variables. For

example, an HR professional wants to find out if there is a relationship between
years of education and amount of income. The years of education are placed on
one axis and the amount of income on the other. In the scatter diagram example in
Figure 4-14, the amount of each factor rises along an imaginary diagonal line. The
level of education and the amount of income are rising together. The scatter
diagram makes it easy to see points or conditions that do not fall near this line.
Figure 4-14. Scatter Diagram
Pareto Chart
A Pareto chart is based on the Pareto Principle, which states that 80% of effects
come from 20% of causes. A Pareto chart is a vertical bar graph where the bar
height shows the frequency or impact of causes. Figure 4-15 is a sample Pareto
chart.
© 2012 SHRM 181

Figure 4-15. Pareto Chart
Gantt Chart
A Gantt chart, described previously in this section, is helpful for analyzing project
timelines and for tracking your data analysis processes.
See Figure 4-7 for an example of a Gantt chart.
Additional charts and diagrams are presented in Section 1.2: Gathering, Measuring
and Reporting HR Data.
Benchmarking
Benchmarking is the process of measuring key criteria that can be compared

across organizations. Benchmarks are useful because they provide insights into
the ways other organizations manage similar functions. An organization can
benchmark data for almost any aspect of its operation.
© 2012 SHRM 182

Benchmarking, depicted in Figure 4-16, involves two organizations that have

previously agreed to share information about their processes or operations. Any
organization has the right to retain information considered private. The companies
may or may not be competitors. Third-party services are often used when the
direct sharing of information may breach confidentiality, privacy or competition
regulations.
Figure 4-16. Benchmarking
The benchmark you use must be comparable to the function or situation you are
assessing. For example, turnover can differ widely from organization to
organization and from branch to branch within an organization.
The industry and the number of employees in an organization can impact

human capital metrics. When comparing your organization to others, be sure that
the other organizations are in similar industries and have similar employee
numbers.
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Kinds of Benchmarking
Organizations choose to compare themselves to other organizations for many

different reasons. The benchmarks are based on a very wide range of factors, from
energy use to research and development expenditures. The following describes
four kinds of benchmarking:
 Internal benchmarking: when comparisons are made inside the
organization
 Competitive benchmarking: when comparisons are made against
competitors
 Industry benchmarking: when the organization’s standards are compared
to the standards of other organizations in the same industry
 World-class benchmarking: when the organization’s level of
achievement is compared to the achievement of the best organizations in
the world, regardless of industry (Hindle 2008)
HR Benchmarking
Benchmarking can be applied to the HR function. Figure 4-17 lists examples of

human resource criteria that may be helpful for your organization to benchmark.
Benchmark Examples
 Health care cost per employee  Turnover rate
 Pay and benefits as a  Turnover cost
percentage of operating  Time to fill jobs
expense  Human value added
 Cost per hire
 Return-on-training investment
Figure 4-17. Human Resource Benchmark Examples

(Society for Human Resource Management 2006)
In some situations, you will need to gather or exchange comparison data quickly.
Informal benchmarks provide a useful initial measure. For example, social
© 2012 SHRM 184

networks and Internet platforms allow people around the world to post questions
and get answers quickly and easily. Informal benchmarks are less exact, but they
are often faster and less expensive.
There is a difference between the terms benchmarking and competitive

analysis. Competitive analysis compares a product from the organization with a
competitor’s product. Characteristics and prices of both products are compared.
Benchmarking not only compares price and characteristics but may also compare
additional factors such as how the product is designed, developed and
distributed.
Benchmarking Limitations
Benchmarking is a difficult process that demands commitment for success.

Consider the following limitations before deciding to benchmark:
 Availability of competitors that are suitable for comparison
 Difficulties in comparing data
 Constraints in resources, such as time, money and expertise
 Resistance from staff (Business Performance Improvement Resource 2011)
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1.5: Organizational Policies,

Procedures and Regulations

Knowledge:
Behavior: 04. Make sure the organization follows legal and industry
regulations
Skills & Knowledge: 08. Organizational policies and procedures
10. Confidentiality and privacy rules that apply to employee records,

company data and individual data
Section 1.5: Organizational Policies,
Procedures and Regulations
Introduction ................................................................................................................................189
The Influence of Law on the Organization ..............................................................................189
Jurisdiction ...............................................................................................................................193
Legal Areas Monitored by HR..................................................................................................193

Laws of Employment ...............................................................................................................195
Compensation and Benefit Laws ..............................................................................................196
Occupational Health and Safety ...............................................................................................196
Anti-Discrimination, Harassment and Fair Work Laws ...........................................................197
Exploring the Legal and Regulatory Issues for Your Organization .........................................197
Considerations Involving Legal and Regulatory Environments ..............................................198
HR Ethics and Professional Standards ....................................................................................205

HR’s Role in Promoting Organizational Ethics .......................................................................205
Corporate Social Responsibility (CSR)....................................................................................212
Policies, Procedures and Work Rules ......................................................................................219

HR Responsibilities for Workplace Policies, Procedures and Work Rules .............................219
Confidentiality and Privacy Regulations .................................................................................222

Privacy Protection ....................................................................................................................222
Developing Employee Privacy Programs ................................................................................224
Module 1: HR Administration Section 1.5: Organizational Policies, Procedures and
Regulations
Introduction
Legal systems impact an organization’s mission and ability to conduct its business
activities. The legal and regulatory environment is often complex, which can
provide a challenge for HR management. To be effective, it is crucial for HR
professionals to conduct a comprehensive review of related laws and to
understand how these laws affect the organization’s business activities and
employees.

 The influence of law on the organization
 Legal areas monitored by HR professionals
 HR ethics and professional standards
 Policies, procedures and work rules
 Confidentiality and privacy regulations
The Influence of Law on the Organization
HR professionals must be proficient learning about related laws and applying

these laws to employment practices. For example, if your organization is required
to follow certain safety and health laws, these laws will direct how your safety
practices are shaped and enforced.
If your organization is conducting business abroad, you will need to understand

the laws of not only your country but also the laws of countries where your
organization has a presence. Figures 5-1 through 5-3 demonstrate how laws across
country borders can impact your organization.
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Regulations
Figure 5-1. Example 1 of Laws across Country Borders
Seeking Legal Advice
Each of the previous examples requires the HR function to carefully evaluate the
legal and regulatory environment in the context of the organization’s strategic
mission. It is recommended you seek expert legal advice for specific legal
disciplines and the laws of specific countries. Legal professionals can help you
identify potential concerns, mitigate undesirable consequences and ultimately
avoid litigation.
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Regulations
The complexities of legal and regulatory issues are also reflected in the
legal profession. Lawyers are able to practice law within predetermined
geographies and specialties. As an HR professional, you will often seek
advice from more than one lawyer. Or your organization’s legal counsel
may engage additional experts.
Rule of Law
The rule of law states that all citizens are subject to the laws of their country, that
no individual is above the law, and that everyone must obey the law. Due process
protects citizens against abuses of power by governments and deprivation of their
rights.
There are three major legal systems of the world. Definitions are listed in Figure
5-4. Many national legal systems are actually hybrids, blending civil, common
and religious laws.
Type of Description
Law
Civil Civil law is based on written codes, such as laws, rules or regulations
created by legislative bodies. The law is applied in a deductive
manner to each matter brought before a legal court, which will make
a decision by applying the specific language of the directive to each
specific case. Civil law is the most prevalent form of law.
Common Common laws have evolved over time through court decisions and
legal precedence among English-speaking people. Common law is
created by judges, unlike civil law, which is created by legislators.
Religious Religious laws are based on religious beliefs and codes.
Figure 5-4. Legal Systems of the World
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Regulations
For those organizations conducting business abroad, HR should seek legal advice
for how international and extraterritoriality laws may apply to HR issues.
Definitions for each type of law are described in Figure 5-5.
Type of Law Description
International law International law involves both the relationships between

nations and the treatment of individuals within national
boundaries. Jurisdiction usually comes from treaties,
conventions, pacts, protocols and covenants. Nations may
also enter into joint agreements regarding such employment-
related issues as totalization (alignment of pension plans) and
visas.
Extraterritoriality Extraterritoriality law is defined with the following two

law definitions:
 Being exempt from local law, or having immunity

from the laws of the country in which one is living
 The extension of the power of a country’s laws over

its citizens outside that country’s sovereign national
boundaries
For example, the United States has enacted a series of laws

that relate to employment. Under certain circumstances, these
laws govern the non-United States’ operations of United
States’ organizations.
Foreign compulsion exception applies when a law of an

organization's home country does not apply because it is in
conflict with laws of the country where the organization is
doing business.
Figure 5-5. Legal Systems of the World

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Regulations
Directly versus Indirectly Binding Law
An international law or treaty directly binds the nation-states that are

participants, not their individual citizens. These states are bound to
change these legal obligations into national laws.
For organizations and their employees, these international or

supranational laws and agreements are indirectly binding.
Jurisdiction
Jurisdiction refers to the right and power to interpret and to apply the law, often
within a certain geographical region. The question of jurisdiction may directly
affect some organizations. Under territorial jurisdiction, a legal body may decide
cases based on any activity that occurs within its borders (with some exceptions).
Because some organizations operate across more than one jurisdiction,

they are liable to a litigation phenomenon called jurisdiction or forum
shopping. This situation occurs when plaintiffs bring their suit in a
jurisdiction that is more likely to be sympathetic to their claims.
The change in jurisdiction may mean expanded discovery rules will

apply. The organization’s documents and communications may become
public, and global reputations may be damaged in the process.
Legal Areas Monitored by HR

Many federal laws, common laws and international laws help frame the
relationship between organizations and employees. These laws protect and secure
the rights of employers as well as employees, both union and nonunion.
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Regulations
HR professionals often play a key role in employee relations by developing

policies and procedures, supportive communication and training programs. HR
helps keep the entire organization compliant.
The legal environment monitored by HR typically includes, but is not limited to,
the areas identified in Figure 5-6. These legal areas are described in the sections
to follow.
Figure 5-6. Legal Areas Monitored by HR
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Regulations
Laws of Employment
Laws of employment typically address the following employment conditions:

 Work rules: Work rules include items like hours worked, time off and
length of shifts.
 Redundancy: Redundancy (also known as layoff) refers to instances in
which employment ends due to reductions in the number of employees
needed, relocation of the facility or other situations.
 Termination: Termination refers to instances when an employee’s
employment ends either for voluntary reasons (quitting, end of contract,
mutual agreement) or involuntary reasons (misconduct, disciplinary).
 Employment contracts: The employment contract law includes both the
legal aspects of the agreement between the employee and employer as well
as cultural influences.
 Immigration and/or citizenship laws: Many countries have various levels
of restriction regarding employment of nonnationals of their country. These
laws often apply to government employment, the military and other
positions.
 Labor or industrial laws, customs and practices: These laws address
various issues concerning employment conditions. The customs and
practices include conditions that cannot be directly attributed to a written
law or to terms in the employment contract. Two examples are described in
Figures 5-7 and 5-8.
Figure 5-7. Local Customs versus Department Policy
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Regulations
Figure 5-8. Local Practice versus Employment Agreement
Compensation and Benefit Laws
Compensation (also called remuneration) and benefit laws describe the conditions
for how employees are compensated (or remunerated) and the benefits accorded
employees as part of their employment. These laws vary greatly from country to
country. Legislation has been enacted for the following reasons:
 To arrange a minimum wage
 To govern overtime pay
 To protect employees from wage discrimination
 To decide how compensation is taxed
HR professionals should have a thorough understanding of compensation and

benefits laws for all jurisdictions where the organization has a presence.
Occupational Health and Safety
Organizations operating in the twenty-first century must comply with laws,

regulations, minimum requirements and recommended industry best practices
regarding the management of occupational health, environmental, safety and
quality aspects across the value chain.
In the International Labour Organization (ILO) health, safety and environment

(HSE) guidelines, every employee has a right to a safe workplace, safe
environment and competent supervision, among others. Because of the nature of
HSE regulations and the need to ensure strict compliance, HR plays a primary
role in managing the accountability process.
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Regulations
Some countries have practices that are quite lax in comparison to those in other
countries. In these cases, employers expect the HR professional to advise and
develop policy to ensure that in their place of work employees know they are
highly regarded.
Anti-Discrimination, Harassment and Fair Work Laws
Anti-discrimination, harassment and fair work laws vary from country to country.
These laws may be influenced by cultural and societal norms. HR professionals
should have a thorough understanding of anti-discrimination, harassment and fair
work laws for all jurisdictions where the organization has a presence.
The HR professional’s responsibility is to develop policy and practices consistent

with the corporate culture to ensure employees of their care and also to be seen as
a preferred and best practice employer.
Exploring the Legal and Regulatory Issues for Your Organization
Identifying the legal and regulatory issues for your organization requires a
disciplined and ongoing process. The five steps outlined in Figure 5-9 can help
guide your exploration.
Figure 5-9. Identifying Legal Issues for Your Organization
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Regulations
Throughout the five-step process, seek the advice of your organization’s legal
counsel to help with the following:
 Identifying issues
 Interpreting related laws
 Ensuring that the policies and procedures are compliant
In addition, the following additional resources can help you understand local laws
and regulations:
 Chambers of commerce, boards of trade or business networks
 Law schools (both the schools’ libraries and faculty)
 Consultants
 Legal firms
 Industry associations
Considerations Involving Legal and Regulatory Environments
Figure 5-10. Anonymous Quote
There are many questions you need answered as you identify the legal and
regulatory issues for your organization. The following worksheets provide a list of
questions you can use to inventory the parameters of your legal environment.
There are three worksheets. Each worksheet contains questions that pertain to one
dimension of the legal environment. Figure 5-11 summarizes the purpose for each
worksheet.
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Regulations
Primary Question Answered by Purpose

Worksheet
Worksheet 1: Where does the  Identify the localities where the

organization operate? organization has a presence.
 Evaluate if additional jurisdictional
issues exist.
Worksheet 2: What does the  Identify how the products or

organization produce? services provided by the
organization impact the legal
environment.
 Locate regulations specific to your
organization’s industry.
 Determine how the products or
services produced impact employee
work conditions.
Worksheet 3: What are the  Inventory the laws and regulations

parameters of the laws affecting that affect employee and labor
employee and labor relations? relations.
 Focus on the laws and regulations
monitored by and relevant to HR.
Figure 5-11. Worksheet Summary
Worksheet 1: Where Does the Organization Operate?
Directions: Figure 5-12 contains exploratory questions about where your

organization has a presence. Your responses represent the potential geographical
areas whose laws should be considered as part of your legal environment.
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Regulations
Exploratory Question Your Response
What is your location? Country State, Province, etc.
Where does the organization Country State, Province, etc.

have other physical
locations? For example,
divisions, headquarters,
offices, plants, warehouses,
etc.
To where does the Country State, Province, etc.

organization export products
or services?
From where do your Country State, Province, etc.

suppliers import materials,
goods or services to the
organization?
Figure 5-12. Worksheet: Organization’s Geographical Presence
Worksheet 2: What Does the Organization Produce?
Directions: Figure 5-13 contains exploratory questions about laws and

regulations associated with the products or services produced by your
organization. These responses identify laws and regulations that impact your
organization’s strategic planning. Depending on the number of territorial
jurisdictions identified in the previous worksheet, it may be necessary to complete
more than one production worksheet.
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Regulations
What industry-specific regulations, tariffs,

etc., guide your organization?
Carefully consider the locations of

production facilities. Are there territorial List the countries whose regulations should
jurisdiction considerations? be considered.
What laws or regulations address

requirements about employee training or
credentials?

production facilities. Are there territorial List the countries whose regulations should
be considered.
jurisdiction considerations?
What industry regulations or mandates

relate to employee safety? To handling of
materials?

List the countries whose regulations should
production facilities. Are there territorial
be considered.
jurisdiction considerations?
Figure 5-13. Worksheet: Summary of Industry-Specific Laws and Regulations

© 2012 SHRM 201

Regulations
Is your organization affected or influenced

by laws with respect to intellectual property
rights? If so, what laws apply?
List the countries whose regulations should

be considered.
What other industry-specific legal issues

should be considered?
Figure 5-13. Worksheet: Summary of Industry-Specific Laws and Regulations

(concluded)
Worksheet 3: Labor Laws and Codes Worksheet
Directions: Figure 5-14 provides exploratory questions about laws and

regulations associated with labor laws and codes. Depending on the number of
territorial jurisdictions identified in the earlier worksheet, it may be necessary to
complete more than one labor laws and codes worksheet.
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Regulations
What laws guide the

contract of employment?
List the countries whose regulations should be considered.
What laws guide hiring

practices?
What laws impact time

worked? Time off?
What laws guide wages and

compensation?
Figure 5-14. Worksheet: Summary of Labor Laws and Codes

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Regulations
What laws apply for labor

relations?
What laws influence health

and safety? Of employees?
At the workplace?
What laws influence

workplace closure? Transfer
of ownership? Corporate
restructuring?
Figure 5-14. Worksheet: Summary of Labor Laws and Codes

(concluded)
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HR Ethics and Professional Standards

Today’s investors are very concerned with the ethical practices of the
organizations in which they choose to invest. Investors and customers alike
closely scrutinize how organizations conduct their business. They are asking the
types of questions as shown in Figure 5-15.
Figure 5-15. Ethical Questions
Ethics is a system of moral principles and values that creates appropriate conduct.
In a business environment, the rules or standards of ethical behavior should rule
the conduct of the following members of the organization:
 Officers
 Directors
 HR professionals
 All employees
HR’s Role in Promoting Organizational Ethics
HR plays an important role in organizational ethics. Ethical issues in HR raise

fundamental questions about fairness, justice, truthfulness and social
responsibility, but ethical issues can be difficult to resolve.
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Regulations
Often, HR’s role includes the following tasks:

 Deciding on the organization’s ethics policy
 Establishing supportive procedures and training
 Creating a culture where ethics is valued and violations will result in
disclosure
 Conducting investigations and using discipline, when required
HR should be involved enough in organizational operations to be able to

recognize ethical violations. HR should be seen as a responsible management
party to whom violations may be reported. Sometimes HR professionals must be
risk takers to effectively fulfill these responsibilities. Many ethical situations are
not clear-cut and require experience and expertise to come up with a workable
solution.
Reporting Ethical Violations
In accordance with the law, organizations should create a quick, effective and
consistently applied method for a nonsupervisory employee to report ethical
violations without retribution (whistle-blowing). HR should take a leading role in
responding to, investigating and internally resolving these reports. Figure 5-16
provides a sample procedure that an organization could create for the reporting of
ethical violations.
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Regulations
Step Action
Step 1  Employee directs concerns to his or her immediate supervisor within five
(5) working days of the date the incident occurred.
 Supervisor responds to the complaint within five (5) working days.
Step 2 If the problem is not resolved by the initial meeting:

 Employee submits a written complaint to the department head within five
(5) working days and forwards a copy of the letter to HR.
 The letter must include the following information:
Description of the incident
o Date the incident occurred
o Suggestions for resolution
o Date the employee met with the immediate supervisor
o Copy or summary of the immediate supervisor’s response
Step 3 The department head takes the following steps:

 Schedules a meeting with the employee within five (5) working days to
discuss the complaint
 Issues a decision within five (5) working days of the meeting
Step 4 If the employee is dissatisfied with the decision of the department head:
 Employee appeals the decision in writing to HR within five (5) working
days.
 HR investigates the complaint.
 HR calls a meeting with the parties directly involved to facilitate a
resolution.
Figure 5-16. Process for Reporting Ethical Violations

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Regulations
Step Action
Additional  If the employee fails to initiate a timely appeal, the problem will be
Guidance considered settled.
 The conflict resolution procedure can only be initiated by an individual
and not by a group of employees.
 The organization has the right to impose appropriate disciplinary action
for any conduct it considers to be disruptive or inappropriate.
 No employee will be retaliated against for filing a complaint under this
procedure.
Figure 5-16. Process for Reporting Ethical Violations

(Society for Human Resource Management, Conflict Resolution Policy and Procedure 2010)
(concluded)
Ethics Hotline
A whistle-blower or ethics hotline is a helpful tool for employees to report ethical

violations. A whistle-blower/ethics hotline provides the following benefits:
 Provides a confidential way for employees to report issues to management
 Lessens the potential for retaliation
 Reduces the possibility of inappropriate or illegal actions
HR’s Role in Creating an Ethical Environment
How do HR professionals manage the dilemmas they face when dealing with
ethical issues in the workplace? How can they give advice to their organizations
about the options available? Creating and enforcing an organizational code of
ethics is one way.
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A code of ethics can be defined as principles of conduct within an

organization that guide decision making and behavior. This code is the
foundation from which organizational norms and attitudes arise. These
norms are important in all aspects of the organization, including the
following:
 New employee training
 Performance standards
 Organizational planning
The common frame of reference provided by a code of ethics is very

important while an organization is working on a strategic planning
process.
Below are steps that organizations can take to establish an ethical workplace:
 State corporate values in no more than a few sentences. Ensure the values
are published and understood by employees and customers alike.
 Act according to the published values.
 Conduct ethical awareness training for employees.
 Outline specific responsibilities for decision making to ensure
accountability.
 Encourage open discussion about controversial issues, ethical questions
and anything that may fall into gray areas.
 Do not allow retaliation against those who voice ethical concerns in
good faith.
 Use corrective discipline, as required.
 Have clear policies regarding conflicts of interest.
The process of creating an ethical environment should always begin at the top of
the organization. An ethical environment should receive continuous reinforcement
from leadership at all levels.
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Who Handles Ethical Issues?
There are many people within the organization whose involvement in ethics
issues is critical. These include the following roles:
 Chief executive officer (CEO): The first and most important is the chief
executive officer of the organization. The CEO should establish the
necessary ethical standards and conduct business in a manner consistent
with those standards.
 Chief financial officer (CFO): The CFO must ensure that all the
organization’s financial records are accurate. Financial records are an
essential part of ethics compliance.
 Internal auditing group: Along with the organization’s external auditors,
these individuals also ensure accurate reporting and compliance.
 General counsel: The organization’s general counsel provides important
legal guidance and is also responsible for corporate and governmental
compliance.
 Chief human resources officer (CHRO): The CHRO assists in the
development of the following ethics issues:
 Policy
 Training
 Enforcement
 Ombudsperson or chief ethics officer: The ombudsperson or chief ethics
officer oversees the ethics function. The ethics officer can be effective by
doing the following:
 Reporting to the CEO and the board of the organization
 Being highly visible
 Being a dedicated confidential resource
 Chief risk officer (CRO): The CRO of an organization is the person
responsible for the effective control of significant risks to the organization.
A main priority for the CRO is to ensure that the organization is in full
compliance with applicable regulations. This position may also deal with
the following:
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 Insurance
 Internal auditing
 Corporate investigations
 Fraud
 Information security
If corporate ethics includes legal compliance, ethical conduct and corporate social
responsibility, it is helpful to group these matters under one corporate officer. If
these responsibilities are divided among several officers, different approaches
may result.
The chief ethics officer communicates standards of conduct in terms of

organizational values and culture and instills these standards throughout the
organization. This position may also be involved with the ethical sensitivity of
major organizational decisions. Ideally, an effective ethics officer would be
consulted on business issues that pose value-laden decisions. However, this
person should not be the only one responsible for ethics. All levels of
management must support policy development, training and enforcement.
The SHRM Code of Ethical and Professional Standards
The SHRM Code of Ethical and Professional Standards in Human Resource

Management, originally developed in 1972, was revised in November 2007 to
reflect changes in the HR profession. It provides useful and practical guidance in
ethical decision making.
The reputation of HR professionals depends on each of us serving the needs of

our various stakeholders in the most morally responsible manner possible and
leading our individual organizations to conduct business in an equally responsible
manner. The six provisions of the code, outlined in Figure 5-17, apply specifically
to SHRM members.
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Regulations
Figure 5-17. SHRM Code of Ethics Provisions
Visit the SHRM website at http://www.shrm.org/ethics for additional information

on ethics.
Corporate Social Responsibility (CSR)
Today, organizations are more aware of social practices and of how business can
impact people, communities and the environment and have a lasting economic
influence. HR professionals must be familiar with trends that relate to corporate
social responsibility (CSR) and recognize how CSR efforts can support
organizational goals and values.
To explain the case for CSR, John Elkington developed the concept of the three
pillars. The three pillars concept provides three criteria for organizational success:
People, Planet and Profit. This concept is illustrated in Figure 5-18 (Savitz 2006).
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Figure 5-18. CSR Strategy
Examples for these three CSR strategy pillars include the following:
 People provide fair and beneficial business practices toward labor and the
community in which a corporation conducts its business.
 Planet provides sustainable environmental practices.
 Profit provides lasting economic impact to the economic environment, not
just internal profit.
More organizations are now including CSR as one of their core organizational
strategies. In his book, The Triple Bottom Line, Andy Savitz compares
corporate focus in 1950s and 1970s to today’s focus on CSR. This comparison is
illustrated in Figure 5-19.
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Figure 5-19. Comparison of Corporate Focus in 1950s, 1970s and Today (Savitz 2006)
In other words, today an organization's responsibility should be to its

stakeholders, rather than to its shareholders. Organizations should focus on social
causes that align with their businesses to create shared value across their
stakeholders (Porter and Kramer, Strategy and Society: The Link Between
Competitive Advantage and Corporate Social Responsibility December 2006).
Philanthropy
One way to demonstrate CSR is through philanthropy. Philanthropic activities are

increasing among modern organizations that believe their success depends on the
support of society. By participating in philanthropic activities, organizations can
make long-term investments in causes that help society while enhancing the
company’s reputation with stakeholders.
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Philanthropy is often recognized through implementation of corporate citizenship

programs such as establishing a charitable fund, staffing volunteer programs and
partnering with nonprofit organizations. More and more organizations recognize
that including corporate citizenship in their goals and objectives fosters
sustainable growth. Figure 5-20 lists the goals and benefits of corporate
citizenship programs.
Figure 5-20. Goals and Benefits of Corporate Citizenship Programs
A recent trend in citizenship programs is to seek a charitable organization that

offers opportunities for its employees to volunteer without incurring
administrative costs. These programs form a partnership of citizenship and
sustainability. Figures 5-21 through 5-23 show examples of successful programs.
Figure 5-21. Example 1 of a Corporate Citizenship Program (Society for Human Resource
Management, The Changing Face of CSR Partnerships 2010)
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Figure 5-22. Example 2 of a Corporate Citizenship Program (Society for Human Resource
Management, The India Way 2010), (Bartlett and Ghoshal 2002), (Tata Sons, Ltd. 2008)
Figure 5-23. Example 3 of a Corporate Citizenship Program (Walmart 2010)
For more information on the financial performance of leading sustainability-driven

companies worldwide, visit the following websites:
 Human Development Index (HDI): http://hdr.undp.org/
 Environmental Sustainability Index (ESI): http://sedac.ciesin.columbia.edu/
 Environmental Performance Index (EPI): http://epi.yale.edu/
 Genuine Progress Index (GPI) Atlantic: http://www.gpiatlantic.org/
 Dow Jones Sustainability Indexes: http://www.sustainability-index.com/
 FTSE4Good Index: http://www.ftse.com/
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Environmental Sustainability
Many corporations are working toward environmental sustainability goals.

Sustainable development can be defined as “meeting today’s needs without
hampering future generations” (Wirtenberg, Russell and Lipsky 2008).
Sustainability projects generally target environmental issues, such as the

following:
 Climate change
 Water shortages
 Energy conservation
 Health care (Schwab 2008)
The United Nations collaborating center, called the Global Reporting Initiative,
has published the Sustainability Reporting Guidelines to promote benchmarking
standards for sustainability. More than 1,500 organizations have adopted these
guidelines (Global Reporting Initiative 2011).
HR’s Role in Implementing CSR
HR can do the following to support the implementation of the organization’s CSR

strategy:
 Help create an ethical management and staff through hiring:
 Include scenario-based values questions in the interview process.
 Perform reference and background checks to learn about the applicant's
past behavior and integrity.
 Emphasize the company’s adherence to its code of conduct.
 Examine transgressions for organizational significance:
 Consider the possibility that the work environment may have contributed to
the transgression.
 Correct any flaws in the ethical infrastructure of the organization.
 Serve as a connection with the organization’s communities:
 Identify opportunities for social engagement, and establish partnerships.
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 Promote volunteer opportunities, and identify employee expertise with

community need.
 Ensure that employees and suppliers understand and support the
organization’s ethical code by using the following techniques:
 Issue regular communications about the organization’s CSR policy to all
stakeholders.
 Train management to use ethical criteria in evaluating employee
performance.
 Reward employees for ethical actions under difficult conditions.
 Plan periodic reviews of suppliers’ compliance with the organization’s
CSR policies and standards of ethics.
 Review all HR policies and practices to ensure consistency with the
organization’s values and CSR strategies.
 Institute volunteer programs.
For more information about the international guidelines for CSR, visit the following
websites:
 The Organization for Economic Co-operation and Development (OECD)
Guidelines for Multinational Enterprises based on International Labour
Organization (ILO) Conventions: http://www.oecd.org
 The Global Reporting Initiative (GRI) guidelines for creating a GRI
Sustainability Report: http://www.globalreporting.org
 The United Nations Global Compact's ten principles addressing employee
legal rights, labor and environmental issues:
http://www.unglobalcompact.org
 The International Organization for Standardization (ISO) 26000 Social
Responsibility certification process: http://www.iso.org
© 2012 SHRM 218

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Policies, Procedures and Work Rules

Policies, procedures and work rules help an organization achieve its long-term
plans. HR is a key player in the creation and successful deployment of
organizational policies, procedures and work rules.
Any discussion of work rules requires an understanding of policies and

procedures. Work rules are specific to an organization; they are shaped by internal
factors. Organizations use fewer work rules now than they have in the past. Many
organizations are finding that employees’ self-confidence and productivity are
often best nurtured when employees have the freedom to make their own
decisions.
Collective bargaining agreements often address the terms and conditions of

employment. These terms and conditions include the following:
 Work rules
 Discipline procedures
 Opportunities to pursue grievances
 The right to employment opportunities and jobs
Organizations may send clear statements and policies showing the values the
organization will support, but these actions do not change the terms agreed upon
in the workers’ agreement.
HR Responsibilities for Workplace Policies, Procedures and Work Rules
The concepts behind the words policies, procedures and work rules are
interrelated, but the terms do have different meanings. Often the HR professional
must translate how policies, procedures and work rules apply to day-to-day
interactions and activities.
Policy
A policy is a method to help guide and make decisions. Policies are general in
nature, whereas procedures and work rules are more specific to a given situation.
© 2012 SHRM 219

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Figure 5-24: Example of a Policy
Properly conceived and carried out, policies are intended to help management and
employees make intelligent decisions. The decisions should be consistent with
those policies. Policies provide a basis for HR management practices and a
framework within which these practices are established.
The meaning of policies is not standardized. Here are examples:

 In large organizations, policies may be documented in an employee
manual. These written policies become the basis for consistent conduct.
 In small organizations, policies that guide conduct are often considered an
unwritten code of conduct. Policies in smaller organizations are passed on
through observations or word of mouth.
If an organization does not intend to abide by a policy, the policy should not be
published. Keep in mind that a written policy provides credibility only if it is
backed up by actions.
Policies, written or unwritten, are not permanent. The HR function must

periodically review policies and revise those that are out of date; however,
frequent changes in policies may suggest management problems.
Procedures
A procedure is a detailed, step-by-step description of the method of handling an

activity. Procedures are more specific than policies. A procedure often provides
details of the what, when, where and who for a given situation.
© 2012 SHRM 220

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Figure 5-25: Example of a Procedure
Work Rules
Work rules reflect management decisions regarding specific actions to be taken,

or avoided, in a given situation. Work rules and procedures are similar because
they are both intended to guide action and to leave no room for interpretation.
Figure 5-26: Example of a Work Rule
Employee Handbooks
Employers can use a variety of methods to communicate policies, procedures and

work rules to employees. Employee handbooks are the most popular format. They
are usually available online. Many organizations also distribute hard copies to
new employees on their first day of work. The handbook explains major HR and
employee policies and procedures and describes the employee benefits.
An employee handbook can be effective in providing information to the

employee. It has proven to be useful for the following reasons:
 Properly orients new employees
 Helps maintain consistency among supervisors
 Reduces the number of misunderstandings over workplace policies
 Supports disciplinary action and avoids charges of unlawful discrimination
 Potentially reduces the need for employees to seek out union representation
© 2012 SHRM 221

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Most employee handbooks include similar types of information. Specific policies,

procedures, programs and other items will vary. An employee handbook may
include (but is not limited to) the categories outlined below:
 Introductory information
 Employment information
 Compensation
 Time off
 Employee benefits
 Leaving the organization
 Other information
Confidentiality and Privacy Regulations

Every organization has a need to keep certain information confidential. HR
typically maintains sensitive employee data and information relating to employee
and management issues. As a result, HR professionals must understand relevant
privacy laws and develop processes and procedures to secure and safeguard
sensitive employee data.
Privacy Protection
Because of the nature of their jobs, HR professionals have access to employees’

private and confidential information. They also hear management decisions, like
layoffs, in advance in order to make preparations. Any leakage of information can
easily result in one of the following consequences:
 Theft (for example, national identification number)
 Use of confidential information against someone (salary, medical issues
and performance appraisals)
 The spread of information from employee to employee before management
approves the message
 Loss of trust in the HR department
© 2012 SHRM 222

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In some countries, private information is protected by law:

 In the United States (US), age and medical information is protected by law,
and any information shared is subject to punishment by law.
 In the European Union (EU), the Directive on Protection of Personal Data
protects employees’ personal data and impacts employers in how personnel
records are kept, how personal information is disclosed and whether
personal data is transferred to third parties or outside the EU.
 In the United Kingdom (UK), the Data Protection Act is related to
personnel records and restricts the collection, retention and use of
information.
 The Privacy Act of Australia covers the public, private and health sectors
and includes ten National Privacy Principles that must be followed. The act
governs how organizations should collect, store, use and disclose personal
information and gives certain rights to Australian citizens, such as the right
to know what information an organization holds about them and the right
to correct it if it is wrong.
To keep records and information safe, here are some basic precautions for HR
employees:
 Prepare procedures about confidentiality and ensure they are effectively
communicated.
 Train your HR employees on confidentiality.
 Stay current on legal requirements and regulations about confidentiality.
 Categorize the confidential data, and authorize staff accordingly.
 Only allow authorized entry to the area where you keep employee data.
 Be cautious about authorization of database users. (For example, if you are
using an enterprise resource planning (ERP) database that all employees
have access to, a mistake in authorization may cause confidential
information to become available for everyone to see.)
 Carry out all investigations and disciplinary actions with the utmost
confidentiality.
© 2012 SHRM 223

Regulations
In addition, you should take precautions at your workspace and at home:

 Do not leave your computer without locking it.
 Do not leave confidential information on the screen before you leave your
workspace, even when you lock the computer. For example, you may come
back to your desk with someone to work on a different task. When you
unlock your computer, the confidential information will still be displayed.
 Do not share your password or write it down where it can be seen.
 Do not leave confidential paperwork on your table or throw confidential
papers in the trash without destroying them first.
 Pay attention to who is around when you talk on the phone if you are
talking about confidential issues.
 Keep job applications confidential regardless of any relationship you may
have with the applicant’s current employer.
 Do not discuss employee information and workplace issues with friends.
Additional information about security is provided in Module 6: Health, Safety,

and Security.
Developing Employee Privacy Programs
Laws and regulations will dictate what data must be protected on behalf of the
employees, but your organization will develop its own unique processes for
carrying out these laws. Figure 5-27 provides guidelines for developing employee
privacy programs.
© 2012 SHRM 224

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Developing an Employee Privacy Program
 Analyze all business processes that involve personal employee data.

 Eliminate the collection of data that is not put to use, and restrict access by
individuals without a legitimate need for it.
 Decide how to handle requirements related to notice, legitimacy (that is,
consent) and access.
 Develop strategies for overcoming other significant compliance risks.
 Formalize procedures for the business processes that have been identified.
 Document all employee data flows, including those that will remain
unchanged.
 Create a privacy policy.
 Include robust monitoring and enforcement mechanisms.
 Educate the entire workforce on the privacy policy and procedures that
have been established. Transactions involving personal employee data are
not limited to the HR department.
 Monitor the internal and external environments (for example, new business
initiatives and privacy regulations, respectively) for potential impact on the
company’s privacy program.
Figure 5-27. Checklist for Developing an Employee Privacy Program
© 2012 SHRM 225

Regulations
You have completed Module 1: HR Administration. Next, if you feel ready, go

to the Online Learning Center and check your knowledge by completing the Case
Studies, Module 1 Practice Test and the Cumulative Practice Test. Also try the
Terminology Quiz to check your knowledge of terminology.
© 2012 SHRM 226

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© 2012 SHRM 229

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© 2012 SHRM 231

Module 1: HR Administration Index
Index
Aguirre, Cesar ......................................... 165 cloud computing........................................ 76
alternate work schedules ......................... 146 code of ethics .................. 208, 209, 210, 212
application service provider (ASP) ........... 76 compensation ..... 38, 42, 61–62, 80, 93, 113,
137, 148, 169, 222
ASP ............ See application service provider
competencies ............. 39, 41, 42, 44, 70, 139
audit checklist ................................. 123, 150
confidentiality and privacy ..................... 222
balanced scorecard .................... 120–21, 122 employee privacy programs ................ 224
privacy protection ................................ 222
Barlett, Christopher A. .............................. 44
corporate social responsibility (CSR) ..... 212
benchmarks ....................................... 182–85 corporate citizenship programs ........... 215
applied to the HR function .................. 184 environmental sustainability ............... 217
kinds .................................................... 184 HR's role ...................................... 208, 217
limitations ............................................ 185
cost per hire ............................................. 184
benefits . 9, 32, 35, 60, 71, 74, 80, 93, 106–7,
118, 136, 137, 146, 164, 175, 184, 208, cost-benefit analysis .......... 93, 117, 118, 119
215, 221–22
cost-benefit ratio ............................. 117, 118
Boring, Scott C.......................................... 63
CSR .........See corporate social responsibility
break-even analysis ......................... 115, 119
data analysis .............................................. 92
break-even point...................................... 119 qualitative .............................................. 93
quantitative ............................................ 93
budgeted headcount ................................ 113
data gathering and analysis methods
cause-and-effect diagram .......... 178, 179–80 cause-and-effect diagram .................... 179
Gantt Chart .......................................... 182
change drivers ......................................... 163 histogram ............................................. 180
Pareto Chart ......................................... 181
change management ................................ 157
process-flow analysis .......................... 179
assessing readiness for change ............ 167
scatter diagram .................................... 181
HR's role .............................................. 206
in organizations ................................... 159 deductive reasoning ............................ 88–89
change process theory ............................. 158 Deloitte Consulting ................................... 63
change strategy models ........................... 165 demand analysis ...................................... 132
charts and graphs....................................... 94 descriptive statistics .................................. 94
© 2012 SHRM 232
digital divide ....................................... 74, 77 financial measures ................................... 115
e-Learning ..................................... 68, 75, 77 financial statement analysis ............ 115, 120
electronic record keeping .......................... 75 flexible spending ............................... 143–46
electronic signatures.................................. 75 flexible staffing ................................. 143–46
Elements for HR Success .................... 14–17 frequency distributions........................ 94, 96
Elkington, John ....................................... 212 full-time............................... 37, 81, 143, 147
employee engagement ............................... 65 Gantt Chart ...................................... 171, 178
employee handbooks ......................... 221–22 gap analysis ..................................... 133, 134
employee life cycle ................................. 149 generational differences ............................ 63
employee records .............................. 82, 149 Ghoshal, Sumantra .............................. 44, 58
employment branding ............................... 60 global integration ...................................... 58
employment contract ............... 142, 147, 148 globalization .............................................. 69
employment procedures .......................... 142 Gronstedt, Anders See The Gronstedt Group,
Inc.
environmental scanning ............................ 33
budgeted headcount .......................... 113–14
essential functions ................................... 138
headcount method
ethics and professional standards .... 189, 205 strengths and weaknesses .................... 114
ethical questions .................................. 205
reporting ethical violations (whistle health and wellness programs ................... 64
blowing) ........................................... 206
SHRM Code of Ethical and Professional histogram............................. 95, 96, 178, 180
Standards ......................................... 211
Hofstede, Geert ................................... 73–74
European Union ................................ 75, 223
Hofstede’s dimensions of culture.............. 73
evaluation metrics ....................... See metrics
HR ethics and professional standards
experimental design .................................. 92 code of ethics ....................................... 212
ethics hotline ....................................... 208
experimental research process ............ 88, 91 HR’s role ............................................. 208
scientific method ................................... 91 who handles ethical issues? ................. 210
step 1: problem analysis ........................ 91
step 2: hypothesis formulation .............. 92 HRIS ......... See human resource information
step 3: experimental design ................... 92 system (HRIS)
step 4: data collection ............................ 92
step 5: data analysis ............................... 92 human capital .................................. 4, 64, 82
measurement of ..................................... 65
© 2012 SHRM 233

human resource (HR) Jellison, Jerald M. ................................... 160

administrative role ................................... 8
job analysis.............................................. 136
human resource information systems (HRIS) definition ............................................. 134
................................................................. 8 job description ............................... 136–38
globally .................................................. 81
help with administrative role ................... 9 job descriptions . 136–38, 136–38, 141, 168–
HRIS applications ................................. 79 69
skill banks and skill tracking systems ... 81 benefits ................................................ 137
elements ............................................... 138
human resource management (HRM) ......... 4 writing ................................................. 136
definition ................................................. 4
evaluation metrics ............................... 110 job specification ...................................... 141
human resources (HR) ................................ 4 jurisdiction 65, 192, 193, 196, 197, 200, 202
creating an ethical environment .......... 208
current expanded role .............................. 7 Kaplan, Robert .......................................... 48
ethics and professional standards ........ 189
evaluation metrics ................................. 45 knowledge management................ 83, 82–84
historical perspective ............................... 5
knowledge management systems .............. 82
implementing CSR .............................. 217
legal areas monitored by ..................... 193 knowledge, skills and abilities (KSAs) .. 135,
metrics ................................. 47, 57, 64, 87 139
operational role ........................................ 8
role in outsourcing ................................. 61 KSAs ...... See knowledge, skills and abilities
role of HR in implementing strategy ..... 44
role of HR in workforce planning ....... 131 laws ......................................................... 189
strategic role ............................................ 7 anti-discrimination, harassment and fair
work ................................................. 197
hypothesis formulation.............................. 92 compensation and benefit .................... 196
identifying the legal issues .................. 197
independent contractor ............................ 143 influence of law on the organization ... 189
influence on the organization .............. 197
inductive reasoning ............................. 88, 89
laws across country borders ................ 190
International Organization for occupational health and safety ............ 196
Standardization (ISO) .................. 173, 218 of employment..................................... 195
International Society of Certified Employee Lawson, Emily ........................................ 159

Benefits Specialists ............................... 63
Lean Six Sigma ......................... 174, 177–78
interviews .......................................... 59, 107
learning management systems (LMS) ...... 68
ISCEBS ............. See International Society of
learning organization ................................ 69
Certified Employee Benefits Specialists
learning portals.......................................... 69
ISO .......... See International Organization for
Standardization legal and regulatory environments .......... 198
J Curve of Change ............................. 160–62
© 2012 SHRM 234
legal systems of the world....................... 191 front-back structure ............................... 54

functional structure ................................ 52
Lewin, Kurt ............................................. 158 geographic structure .............................. 53
matrix structure ..................................... 54
Li, Charlene............................................... 66 product structure .................................... 52
LMS ......... See learning management system outsourcing ...... 39, 41–43, 61, 132, 134, 145
administrative .......................................... 8
local responsiveness ............................ 51, 58 cosourcing ............................................ 42
flexible staffing ................................... 143
M&A ............... See mergers and acquisitions
HR's involvement .................................. 43
Madia, Sherrie A. ...................................... 60 insourcing ............................................. 42
internal challenge .................................. 42
matrix structure ................................. 177–78 reasons to outsource .............................. 42
mean .............................................. 98, 97–98 Pareto Chart .............................. 178, 181–82
measures of association........................... 102 part-time .............................. 32, 81, 143, 147
measures of central tendency .................... 94 performance audits .......................... 120, 122
measures of variation ........................ 94, 101 performance documentation.................... 151
median ............................................... 98, 100 performance measures .............. 47, 115, 120
mergers and acquisitions (M&A)...... 35, 163 PERT ..... See program evaluation and review
benefits and risks ................................... 36 technique
HR's due diligence........................... 36–37
policy....................................................... 219
metrics9, 45, 57, 64, 65, 78, 85, 87, 88, 111–
12, 115 Price, Colin ............................................. 159
initial considerations ........................... 110
primary research.................................. 88, 90
mission statement .................... 26–27, 26–27
privacy programs .................................... 224
mode.......................................................... 98
problem analysis ....................................... 91
nonessential functions ............................. 139
procedure 142, 189, 194, 198, 206, 208, 219,
nonfinancial measures ............................... 48 220
Norton, David ........................................... 48 process-flow analysis .............................. 179
O*NET .................................................... 141 product structure ................................. 52–54
offshoring ................................................ 141 program evaluation and review technique

..................................................... 170, 171
operational role of HR ................................ 8
project management .......... 69, 167, 170, 171
organizational structure ............................. 51 common project characteristics ........... 168
© 2012 SHRM 235

common project phases and roles........ 169 ROI......................... See return on investment
data gathering and analysis methods ... 178
definition ............................................. 167 rule of law ............................................... 191
project planning tools .............................. 170 Savitz, Andy............................................ 213

Gantt Chart .......................................... 171
PERT Chart ......................................... 171 scatter diagram.............. 103, 125, 178, 181
project success ........................................ 172 scientific method ....................................... 91
qualitative data analysis secondary research ........................ 88, 90–91

description of ....................................... 105
individual or panel interviews ............. 106 selection ............................................ 59, 142
quality improvement ............................... 173 SHRM ........See Society of Human Resource

quality standards .................................. 173 Management
theories and methods ........................... 174
SHRM Code of Ethical and Professional
quantitative data analysis .......................... 93 Standards ............................................. 211
charts and graphs ................................... 94
Six Sigma .................................. 174, 175–78
description of ......................................... 93
descriptive statistics............................... 94 skill banks and skill tracking systems ....... 81
frequency distributions and tables ......... 96
measure of association .................... 102–3 social media ........................................ 60, 66
measure of central tendency .................. 96
measure of variation ............................ 101 social network ........................................... 70
observational ....................................... 108
organizational records ......................... 108 Society for Human Resource Management
surveys and questionnaires .................. 107 ......................................................... 14–17
tests ...................................................... 108
Society for Human Resource Management
questionnaires ................................... 90, 107 (SHRM) ................................................. 56
records management programs ............... 152 solution analysis ...................................... 134
recruitment .. 8, 32, 59, 60, 81, 131, 142, 176 staffing .......... 59, 68, 113, 130, 131, 143–44
options ................................................. 143
reliability ........................... 32, 88–89, 108–9
explanation of ...................................... 108 stakeholders.... 22, 23, 25, 43, 45, 68, 69, 72,
internal consistency ............................. 109 120, 131, 159, 211, 214, 218
parallel forms....................................... 108
rater agreement .................................... 109 standard deviation ................................... 101
test/retest.............................................. 109
start-up .............................................. 30, 164
remote project collaboration ..................... 69 definition ............................................... 31
scope of the HR professional’s
reporting methods ................................... 125 responsibilities ................................... 31
return on investment ............................... 115 statistics ............................... 93, 94, 104, 141
descriptive statistics............................... 94
© 2012 SHRM 236

inferential statistics .............................. 104 managing E-mail ................................... 21

techniques for ........................................ 18
strategic alliances ................................ 29, 39
time to fill................................................ 184
strategic HR management ......................... 22
TNC................. See transnational corporation
strategic plan ..................................... 26, 115
total quality management (TQM) ........... 175
strategic planning ................ 43, 44, 157, 200
total rewards ........................................ 63, 80
strategic planning process ................... 23–26
TQM............... See total quality management
strategy development ................................ 28
actions.................................................... 28 training . 66–71, 77, 79, 91, 92, 93, 100, 109,
market entry strategy ............................. 28 120, 130, 131, 132, 134, 184, 201
trends ..................................................... 67
strategy evaluation .................................... 44
actions.................................................... 44 transnational corporation (TNC) ............... 58
activity versus results ............................ 45
benchmarks............................................ 46 trends .... 4, 47, 56–59, 61–67, 72–73, 72–74,
cost control versus value creation ......... 46 115, 212
analysis of .............................................. 73
strategy formulation .................................. 26 compensation and benefits .................... 61
conducting trend research...................... 72
strategy implementation ............................ 43 globalization .......................................... 58
role of HR .............................................. 44 human resource measurement and metrics
........................................................... 64
strengths, weaknesses, opportunities, threats in employee engagement ....................... 65
(SWOT) analysis ............................. 24, 33 in staffing............................................... 59
training and development ...................... 66
supply analysis ........................................ 132
turnover cost............................................ 184
surveys .............................. 9, 66, 90, 93, 105
validity ........................................ 72, 88, 108
systems theory......................................... 174
virtual-world simulations .......................... 70
technological skills.............................. 74, 77
webinar ...................................................... 71
technology .. 9, 25, 28, 35, 42, 48, 50, 59, 66,
74 whistle blowing ....................................... 206
advances in ............................................ 74
digital divide.......................................... 77 work rules................................ 189, 195, 219
human resource information systems .... 77
knowledge management systems .......... 82 work/life balance ........................... 19, 57, 64
monitoring ............................................. 74
technology skills .................................... 77 workforce planning ........................... 129–32
benefits ................................................ 131
time management ...................................... 17 definition ............................................. 129
effective meetings ................................. 20 role of HR ............................................ 131
© 2012 SHRM 237

Module 2: Recruitment and Selection ........................................................................................ iii
Acknowledgements .................................................................................................................... vi
Module 2 Body of Knowledge .................................................................................................. vii
Module 2 Purpose Statement .............................................................................................................. vii
Module 2 Recruitment and Selection .................................................................................................. vii
Section 2.1: Workforce Planning and Staffing ............................................................................2

Introduction ..................................................................................................................................3
Organizational Requirements .......................................................................................................4
Defining Staffing Needs........................................................................................................................ 4
Anticipating Staffing Needs .................................................................................................................. 5
Promoting the Organization .................................................................................................................. 6
Employment Branding .......................................................................................................................... 6
Employee Value Proposition ................................................................................................................ 8
Approach to Staffing ....................................................................................................................9
Trends in Staffing ................................................................................................................................. 9
Diversity and Inclusion Considerations .............................................................................................. 10
Legal Considerations in Global Staffing ............................................................................................. 11
Developing the Staffing Plan .....................................................................................................14
The Role of the Staffing Plan .............................................................................................................. 14
Gathering the Staffing Data ................................................................................................................ 14
Designing the Staffing Plan ................................................................................................................ 16
Section 2.2: Job Analysis and Documentation ..........................................................................20

Introduction ................................................................................................................................21
Job Analysis ...............................................................................................................................22
Gathering Job Analysis Data............................................................................................................... 23
Outcomes of the Job Analysis ............................................................................................................. 26
Job Documentation .....................................................................................................................27
Job Descriptions .................................................................................................................................. 27
Job Specifications ............................................................................................................................... 30
Guidelines for Writing Job Descriptions and Specifications .............................................................. 32
Job Competencies ............................................................................................................................... 33
Section 2.3: Recruitment .............................................................................................................39

Introduction ................................................................................................................................40
Starting the Recruiting Process ..................................................................................................41
Developing Recruiting Strategies and Sources ..........................................................................42
Recruiting Strategies ........................................................................................................................... 42
Internal Recruitment Sources .............................................................................................................. 45
External Recruitment Sources ............................................................................................................. 52
Recruiting Technology ...............................................................................................................56
Job Databases ...................................................................................................................................... 56
Networking Sites ................................................................................................................................. 57
Mobile Marketing ............................................................................................................................... 58
Video Conferencing ............................................................................................................................ 59
Section 2.4: Selection ...................................................................................................................63

Introduction ................................................................................................................................65
Overview of the Selection Process .............................................................................................65
Step 1: Pre-Screen ......................................................................................................................66
CVs and Application Forms ................................................................................................................ 66
Pre-Employment Tests ........................................................................................................................ 69
Other Pre-Screening Tools .................................................................................................................. 70
Qualifications and Eligibility .............................................................................................................. 71
Applicant Notification......................................................................................................................... 72
Step 2: Track ..............................................................................................................................72
Step 3: Interview ........................................................................................................................73
Types of Interviews............................................................................................................................. 73
Guidelines for Interviews .................................................................................................................... 77
Step 4: Evaluate ..........................................................................................................................79
Interview Feedback ............................................................................................................................. 79
Background Investigations .................................................................................................................. 79
Step 5: Select ..............................................................................................................................81
Reliability and Validity of Selection Tools and Methods ................................................................... 81
Realistic Job Previews ........................................................................................................................ 82
Step 6: Offer ...............................................................................................................................84
Contingent Job Offer........................................................................................................................... 84
Employment Offer .............................................................................................................................. 84
Offer Negotiation ................................................................................................................................ 85
Employment Contracts........................................................................................................................ 85
Handling Nonselected Candidates ...................................................................................................... 86
Section 2.5: New Hire Onboarding.............................................................................................88

Introduction ................................................................................................................................89
New Employee Orientation ........................................................................................................89
Before the Employee’s Arrival ........................................................................................................... 89
Orientation/Induction .......................................................................................................................... 90
New Employee Orientation Checklist................................................................................................. 91
Supervisor Orientation Checklist ........................................................................................................ 92
New Employee Onboarding .......................................................................................................93
Onboarding Roles and Responsibilities .............................................................................................. 94
Evaluating the Effectiveness of Onboarding....................................................................................... 98
Section 2.6: Recruitment Metrics .............................................................................................104

Introduction ..............................................................................................................................105
Using Recruitment Metrics to Measure Business Impact ........................................................105
Evaluating the Effectiveness of Recruiting Efforts ........................................................................... 105
More Staffing Metrics ....................................................................................................................... 110
Workforce Analytics and Reporting ................................................................................................. 115
Bibliography ...............................................................................................................................118
Index ............................................................................................................................................122
Acknowledgements

Sameer Khanna, GPHR, HRMP
Vice President and Head HR – Region India, Ericsson India Pvt. Ltd.
New Delhi, India


Diane M. Dowlin, SPHR, GPHR, CCP, Patchara Popaitoon

GBA, CMS, CEBS Researcher/Teacher/Lecturer, School of
International Human Resources Director, Management University of Bath
FIS Claverton Down, Bath, United Kingdom
Aparna Rajesh, MBA, GPHR
Cigdem Ozdemir Evren, MBA, HRBP HR Manager, Lafarge
HR Generalist, FNSS Defense Systems Dubai, United Arab Emirates
Ankara, Turkey
Howard A. Wallack, MA, MSc, GPHR
Arturo Gaitán Nicholls Vice President, Global Business
Human Resource Analyst, Bancolombia Development (acting), Society for Human
Bogota, Colombia Resource Management
Alexandria, Virginia
Nancy Kaysarly, PHR
OED Advisor, International Management
Consulting Company
Cairo, Egypt
For your convenience, the Body of Knowledge for Module 2: Recruitment

and Selection is provided on the following pages.
Module 2 Purpose Statement
Purpose Statement for Recruitment and Selection:
HR professionals in recruitment and selection should possess a combination of

behaviors and skills/knowledge that relate to the full process of finding potential
employees through preparation for the new hire’s arrival. These include
managing the job requisition process, providing information on possible jobs to
individuals and groups, managing the interview process and coordinating the
final selection of the employee.
Module 2 Recruitment and Selection
content related to Module 2: Recruitment and Selection.
Important behaviors for recruiting and selecting employees:
01. Manage the process to request jobs (for example, make sure requisitions are approved , get
approval for the number of positions to be filled, monitor open positions)
02. Support managers in developing job descriptions and keep records of job requirements
03. Provide contact between recruiters and hiring managers (for example, prepare job listings,
share appropriate information with the hiring manager and recruiter)
© 2012 SHRM vii

05. Identify ways to find new hires (for example, advertisements and web sites)
06. Choose a group of potential applicants for managers to interview (for example, read resumes
and conduct phone interviews)
10. Promote the organization to potential applicants (for example, attend job or career fairs,
recruit at colleges and universities)
11. Organize assessments of applicants (for example, schedule and score assessments, share
results)
12. Coordinate the final selection process (for example, schedule interviews with managers,
check references)
13. Coordinate the employment offer (for example, start date, salary, benefits)
14. Prepare for the new hire’s arrival (for example, get identification documents and required
forms, set up email address)
15. Manage database of applicants (for example, track the sources of applicants and the results of
the recruiting and selection process, decide where to store information about candidates for
possible future employment)
16. Report recruiting metrics (for example, the number of applications received, the number of
candidates interviewed, the number of applicants hired)
17. Coordinate orientations for new employees (for example, discuss the company’s expectations
for the position, review the employee handbook, explain the benefit plans)
© 2012 SHRM viii

Important knowledge and skills for recruiting and selecting employees:
01. How government requirements affect recruitment and selection
02. Job functions and responsibilities in the organization and industry
03. Recruitment methods (for example, advertising , job fairs and outsourcing)
04. Procedures to review applications and watch applicants’ progress, including tracking systems
11. Recruiting process (job announcement, initial applicant review, interviews, assessments,
selection, job offer and orientation)
12. Processes for transferring or promoting employees within the organization
13. Diversity and inclusion (for example, diversity of demographics, culture and location)
© 2012 SHRM ix
© 2012 SHRM x
2.1: Workforce Planning

and Staffing

Knowledge:
Behavior: 10. Promote the organization to potential applicants (for example,

attend job or career fairs, recruit at colleges and universities)
Skills & Knowledge: 01. How government requirements affect recruitment and selection
11. Recruiting process (job announcement, initial applicant review,

interviews, assessments, selection, job offer and orientation)
13. Diversity and inclusion (for example, diversity of demographics,

culture and location)
Section 2.1: Workforce Planning and
Staffing
Introduction ....................................................................................................................................3
Organizational Requirements .......................................................................................................4

Defining Staffing Needs ...............................................................................................................4
Anticipating Staffing Needs .........................................................................................................5
Promoting the Organization .........................................................................................................6
Employment Branding .................................................................................................................6
Employee Value Proposition ........................................................................................................8
Approach to Staffing......................................................................................................................9
Trends in Staffing .........................................................................................................................9
Diversity and Inclusion Considerations .....................................................................................10
Legal Considerations in Global Staffing ....................................................................................11
Developing the Staffing Plan .......................................................................................................14

The Role of the Staffing Plan .....................................................................................................14
Gathering the Staffing Data ........................................................................................................14
Designing the Staffing Plan........................................................................................................16
Module 2: Recruitment and Selection Section 2.1: Workforce Planning and Staffing
Introduction
Workforce planning is the process of identifying and analyzing the
organization’s need for human capital to allow for the achievement of the
organization’s goals. This process includes the following actions:
 Forecasting the future composition of the workforce
 Identifying any gaps between the current and future staff
 Deciding how to close those gaps
 Determining how to meet the staffing needs
Organizations should conduct a regular and detailed workforce planning

assessment. The goal is to create the best staffed and trained workforce that can
respond to the needs of the organization.
Effective workforce planning offers the following benefits to an organization:

 Easily accessing employee data to locate talent anywhere in the
organization
 Finding the best use for each employee
 Recruiting passive job candidates (Society for Human Resource
Management, Practicing the Discipline of Workforce Planning 2010)

 Determining organizational requirements
 Promoting the organization
 Developing the staffing plan
© 2012 SHRM 3
Organizational Requirements
Defining Staffing Needs
According to the Corporate Leadership Council, many HR departments do not

have a formal staffing strategy that examines the organization’s business cycle
and forecasts staffing needs. However, effective organizations must anticipate
both organizational staffing needs and actual talent supplies.
Flexibility is one key to defining staffing needs. The state of the economy can
change rapidly and unpredictably. Organizations that respond quickly will have
the most success with recruiting and hiring the best talent.
Another key trait is being proactive. Organizations must develop strategic

workforce plans that allow them to avoid future surpluses or shortages in the
workforce.
Organizations should take the following actions to define their staffing needs over
the long term:
 Incorporate economic indicators into forecasts of talent supply and
demand.
 Retain staff with a strong employee value proposition (discussed later in
this section).
 Consider hire-back deals, alumni networks and paid sabbaticals to rebuild a
workforce. (Corporate Leadership Council, Models for Strategic Staffing
Processes 2003)
© 2012 SHRM 4
Anticipating Staffing Needs
The HR professional has the responsibility of anticipating the staffing needs of the
organization. This responsibility includes managing the communication of
staffing issues and changes within the organization. As part of the staffing
strategy, HR should consider the following factors:
 Estimates of increases or decreases in the organization’s growth, output
and revenue
 Estimates of corresponding changes in talent needs
 Projections of future vacancies
 Estimates of the internal and external availability of talent (Corporate
Leadership Council, Models for Strategic Staffing Processes 2003)
Examples of issues that can impact future staffing needs include the following.
A persistent shortage of people is a shortage that is not linked to a specific event

and that spans several years. Persistent shortages often occur in the health care
field (for example, nurses) and in the education field (for example, qualified
teachers).
A temporary reduction in staff can occur when an organization undergoes

restructuring and must decrease the number of staff for a short time. When the
restructuring is complete, the intent of the organization is to rehire the staff. The
HR professional must organize this reduction and keep in communication with
both the organization’s leadership and the staff who are being temporarily fired.
A temporary reduction can also occur due to a sudden increase in available jobs.
One example was the need to prepare for technical issues with the start of a new
century in the year 2000. Organizations had difficulty finding and keeping
experienced employees in their information technology departments.
© 2012 SHRM 5
A permanent reduction in staff requires thoughtful communication with all

employees in the organization, particularly those involved in the reduction. HR
professionals can focus on designing and providing job placement information.
Promoting the Organization
An organization’s workforce planning process should include a consideration of

how the organization is perceived by potential applicants and why applicants
would want to work for the organization. Employment brands and employee
value propositions are two effective tools for promoting the organization to
applicants.
Employment Branding
Employment branding is the process of positioning an organization as a desired

employer in the labor market. This process is a key part of an organization’s
efforts to attract and retain the best talent. An employment brand creates an image
that makes people want to work for and stay working for the organization.
The increasing importance of employment branding is reflected in a survey from

the UK-based organization People in Business. Between 2006 and 2010, the
number of specialist support managers leading employment brand projects nearly
tripled, from 10% to 28% (CLC Human Resources 2010). In addition, 43% of the
organizations in the survey reported using employment brand strategies to guide
the organization’s overall HR strategy (Woods 2010).
Branding is becoming meaningful as the demand for skilled workers increases

and the talent marketplace undergoes significant transformation. Technology is
changing the job search and recruiting processes, making the need for
employment branding even greater.
© 2012 SHRM 6
Organizations have the following motivations for developing an effective

employment brand (Woods 2010) (Corporate Leadership Council, The
Implementation and Impact of Employment Branding 2003):
 Distinguishing the organization as a desired employer
 Attracting the best talent
 Providing candidates with a clear vision of the organization’s culture
 Retaining qualified talent
 Improving the brand’s external reputation
 Increasing employee engagement
 Maintaining consistency and presenting a unified image across the
organization
HR professionals must recognize that implementing an employment brand takes

time. Sophy Pern, director of People in Business, cautions that “[employment]
brand management is a long-term investment; it’s not a short-term project”
(Woods 2010).
Building an effective employment brand is based on the following four

strategies:
 Making sure that all key stakeholders work toward the same objective
 Involving senior management to show the organization’s commitment to
the employment brand
 Ensuring that the employment brand reflects the organization’s culture
 Selecting appropriate metrics to measure the impact of employment
branding (CLC Human Resources 2010)
How can an organization promote the employment brand? Specific opportunities

include the following:
 Represent the organization at career fairs and universities.
 Offer internship programs and scholarships.
 Sponsor training conferences.
© 2012 SHRM 7
 Place media advertisements in venues such as print, television, radio and

the Internet.
 Use social media to keep a positive perception of the organization in the
news.
More information about trends in employment branding can be found at the

following websites:
 http://www.shrm.org/Research/FutureWorkplaceTrends/Documents/10-
0028%20India_Article_Employer_brand_v5.pdf
 http://www.shrm.org/Publications/Books/Pages/CulturalFitFactor.aspx
Employee Value Proposition
Organizations select the talented people they want to hire. However, talented
people also select the organization they want to work for. An organization’s
employee value proposition (EVP) answers the question: Why would a talented
person want to work for the organization?
The EVP is the foundation of employment branding. An organization’s EVP

must accomplish the following:
 Align with the organization’s strategic plan, vision, mission and values
 Create an image that attracts and retains people
 Provide an accurate picture of employment for employees and candidates
An EVP promotes the benefits of working for an organization. Examples of

benefits include the following:
 Compensation
 Mobility
 Opportunity for creativity or innovation
 Social responsibility
The Corporate Learning Council divides the employee value proposition into five
categories that can be leveraged into significant attraction and commitment
© 2012 SHRM 8
benefits. For example, organizations with an effective EVP had high levels of
commitment in 30 to 40% of employees. Organizations with a less effective EVP
had high levels of commitment from less than 10% of employees (Corporate
Leadership Council 2010).
Organizations can face some challenges in delivering their EVP. These challenges
 A change in employee preferences (for example, employees seeking
different rewards or opportunities)
 A change in how the EVP affects commitment
 Poor delivery of important EVP initiatives (Corporate Leadership Council
2010)
Approach to Staffing
Trends in Staffing
Staffing is defined as the act of selecting, hiring and training people for specific
jobs. This definition includes both hiring and firing employees.
A 2009 SHRM report on future workplace trends (Society for Human Resource
Management, Future Insights: The Top Trends According to SHRM's HR Subject
Matter Expert Panels 2009) identified trends related to staffing management,
including the following:
 Many workers are available (although not always qualified) to apply for
many jobs. However, some jobs are harder to fill and require a competitive
recruitment strategy.
 Workforce planning will be affected both by availability of qualified
workers and by changes in retirement patterns.
 HR needs to build competency in selecting and managing third-party
products and services.
© 2012 SHRM 9
 Sustaining the employment brand is crucial for recruitment and retention

regardless of the employment market and economic/business conditions.
 Employers are increasingly using multiple selection measures—including
panel interviews, reference checks and work sample tests.
For extensive additional information on staffing trends, see Module 1: HR

Administration, Section 1.1: Strategic HR Management and Business
Trends.
In response to these trends, how can organizations focus their efforts on attracting
the best and most qualified people? The Corporate Learning Center recommends
the following actions steps:
 Write clear and effective job postings to attract qualified candidates.
 Target passive candidates to expand the pool of applicants and to reduce
competition from other recruiters.
 Analyze your recruiting sources and focus on the ones with the highest
return on investment. (CLC Human Resources 2010)
Diversity and Inclusion Considerations
Figure 1-1. The Importance of Diversity and Inclusion (Society for Human Resource
Management, Jackson: Diversity, Inclusion a Moral and Business Imperative 2010)
© 2012 SHRM 10
HR professionals face some challenges in relation to diversity and inclusion

initiatives:
 Communicating to business leaders how diversity and inclusion efforts
impact the organization’s financial goals
 Providing clear definitions and promoting understanding of diversity and
inclusion throughout the organization
 Focusing too much on compliance (Society for Human Resource
Management, Diversity, Inclusion a Moral and Business Imperative 2010)
HR professionals should take the following actions to integrate diversity and

inclusion into the organization:
 Use social networking to help create a workforce that can navigate
different cultures, countries and companies
 Connect diversity and inclusion to strategic business outcomes
 Encourage diversity practitioners to develop strong business skills and
global experience
 Help mitigate division between different groups and cultures
 Increase the credibility of diversity and inclusion initiatives in the
organization by dealing with difficult issues (Society for Human Resource
Management, Diversity, Inclusion a Moral and Business Imperative 2010)
Legal Considerations in Global Staffing
Many unique employment issues are raised by global and cross-border

organizations. The HR professional must take the following actions:
 Identify what matters.
 Understand the risks and obstacles of noncompliance.
 Find solutions for compliance.
The HR professional should seek legal counsel regarding any uncertainties related
to the content of any laws, regulations or practices (especially in countries with
less developed legal systems).
© 2012 SHRM 11
Figure 1-2 provides examples of key legislation affecting global staffing.
Key Legislation Basic Provisions

 Provides for mandatory
Brazil: Federal Constitution and
employment rights
Labor Code
 Covers hours of work,
employment contracts and
termination of employment
 Attempts to ensure that no
Canada: Employment Equity
Canadians are denied jobs for
Act
reasons unrelated to their abilities
 Requires preferential treatment in
employment practices for four
designated (protected) groups:
women, people with disabilities,
Aboriginal peoples and visible
minorities
 Specifies the rights and obligations
China: 2008 PRC Employment
of the parties to employment
Contract Law
contracts to protect the lawful
rights and interests of workers and
to build and develop harmonious
and stable employment
relationships
Figure 1-2. Key Legislation Affecting Global Staffing (continued to next page)
© 2012 SHRM 12
Key Legislation Basic Provisions

 Ensures the effective mobility of
European Union: Council
workers within the European
Regulation 1612/68
Union
 Founded on the general principle
of eliminating any direct or
indirect discrimination based on
nationality
 Sets minimum rates of wages in
India: Minimum Wages Act
certain types of employment
 Regulates employment
Mexico: Federal Labor Law
relationships in Mexico
 Mandates minimum employment
conditions that an employer must
provide to employees
 Applies to anyone working in
Mexico, without regard to
nationality or where the employee
was hired
 Specifies employment rights
United Kingdom: Employment
related to maternity, paternity and
Act, 2002
adoption leave; flexible working;
minimum dismissal procedures
and disciplinary and grievance
procedures; union learning; Equal
Pay Act questionnaires; and fixed-
term work
Figure 1-2. Key Legislation Affecting Global Staffing (concluded)
© 2012 SHRM 13
Additional information about global employment laws can be found at the

following websites:
 NATLEX, a global database of labor, social security and human rights-
related legislation maintained by the International Labour Organization:
http://www.ilo.org/dyn/natlex/natlex_browse.home
 Global Legal Information Network (GLIN), a public database of official
texts of laws, regulations, judicial decisions and other complementary
legal sources contributed by governmental agencies and international
organizations: http://www.glin.gov
Developing the Staffing Plan

The Role of the Staffing Plan
A staffing plan provides an organization with the following benefits:

 Provides a strategic basis for making HR decisions
 Allows organizations to anticipate change
 Provides strategic methods for addressing current and future workforce
issues
 Can lead to significant cost savings, improved efficiencies and increased
productivity
The staffing plan creates a practical link between HR strategic plans and day-to-
day staffing activities. The focus of the staffing plan is on short-term
implementation.
Gathering the Staffing Data
Different approaches exist for gathering staffing data. Most approaches include a
needs analysis and the creation of tactical objectives. These two components
provide the information to create the staffing plan.
© 2012 SHRM 14
Staffing Needs Analysis
A staffing needs analysis provides a systematic approach to anticipate the demand

for talent and the available supply. The outcome of the analysis is data that HR
professionals can use to help ensure the organization is appropriately staffed. The
needs analysis usually forecasts needs within a one-year to three-year time frame.
Figure 1-3 shows the four-step process for analyzing staffing needs.
Figure 1-3. Staffing Needs Analysis (Society for Human Resource Management, Practicing the
Discipline of Workforce Planning 2010)
 Supply analysis identifies the supply of labor and skills essential to the
organization.
 Demand analysis forecasts the organization’s future workforce
composition.
 Gap analysis compares the supply with the demand to identify gaps
between the composition of the current workforce and future workforce
needs.
 Solution analysis is the process of creating strategies to close the gaps
identified during the gap analysis.
Organizations may label these steps differently or consolidate some activities.

However, any staffing analysis must collect all the information necessary to
develop a staffing plan.
The four-step process is covered in detail in Module 1: HR Administration,

Section 1.3: Workforce Planning and Employment Strategies.
© 2012 SHRM 15
Tactical Objectives
The needs analysis identifies high-priority gaps between supply and demand.
These gaps become the basis for defining tactical objectives. HR professionals use
tactical objectives to accomplish the following:
 Close high-priority gaps in the short term
 Specify in measurable terms which gaps must be closed and when
Objectives are not synonymous with goals. Goals usually refer to broader and
longer-term endpoints. Objectives support goals by answering the question: How
do we reach the desired endpoint? Objectives are measureable statements of
future expectations that include a deadline for completion. The two terms should
be used consistently throughout the organization.
A common approach for developing tactical objectives is the acronym SMART.

Ask yourself if the objectives meet the following conditions:
 Specific
 Measurable
 Achievable
 Realistic
 Time-based
Designing the Staffing Plan
The needs analysis and the tactical objectives are used to design the staffing plan.
A staffing plan describes how the tactical objectives will be achieved through the
delegation of tasks and the application of resources. The organization’s planning
approach should have the following features:
 Be consistent with other HR planning initiatives
 Be collaborative and easily understood by all participants
 Be accepted by those responsible for implementing the plan
Figure 1-4 shows the common elements of a staffing plan.
© 2012 SHRM 16
Staffing Plan Element Purpose
Statement of purpose  Documents the previous components of

the staffing plan
 Establishes the goals and targets for the

remainder of the staffing plan
Stakeholders  Identifies key decision makers and others

who should be involved in the
development of the plan
Activities and tasks  Describes what needs to be accomplished

and the timeline for completion
 Notes relationships among activities,

tasks and deliverables
Team members  Identifies the people who have been

assigned or have volunteered to work on
specific activities, tasks and deliverables
Resources  Documents financial and nonfinancial

resources required for implementing the
plan
Figure 1-4. Elements of a Staffing Plan (continued to next page)
© 2012 SHRM 17
Staffing Plan Element Purpose
Communication plan  Notes specific approaches and

responsibilities for the following tasks:
o Communicating initial details
o Monitoring the plan
o Requesting ongoing feedback
Continuous improvement  Develops a process to review the extent

to which tactical objectives are achieved
 Identifies ways to continuously improve

the plan
Figure 1-4. Elements of a Staffing Plan (concluded)
© 2012 SHRM 18
2.2: Job Analysis and

Documentation

Knowledge:
Behaviors: 02. Support managers in developing job descriptions and keep

records of job requirements
Skills & Knowledge: 02. Job functions and responsibilities in the organization and
industry

Recruiting cycle (from announcement to job offer)
Section 2.2: Job Analysis and
Documentation
Introduction ..................................................................................................................................21
Job Analysis ..................................................................................................................................22

Gathering Job Analysis Data ......................................................................................................23
Outcomes of the Job Analysis ....................................................................................................26
Job Documentation ......................................................................................................................27

Job Descriptions .........................................................................................................................27
Job Specifications .......................................................................................................................30
Guidelines for Writing Job Descriptions and Specifications .....................................................32
Job Competencies .......................................................................................................................33
Module 2: Recruitment and Selection Section 2.2: Job Analysis and Documentation
Introduction
The success of any organization depends on each employee’s performance on the
job. To make the recruitment and selection process effective, both employees and
employers must have a clear concept of what a given job is and a clear language
to communicate about the job.
A job analysis is a study of the major tasks and responsibilities of jobs in an

organization. Job analysis is the foundation of many HR functions and activities.
Effective HR practices depend on a thorough understanding of how jobs are
performed (Society for Human Resource Management, Job Analysis 2009).
Figure 2-1 shows the integral role of job analysis in HR.
Figure 2-1. Roles of Job Analysis in HR
© 2012 SHRM 21

 The job analysis
 Three outcomes of the job analysis: job descriptions, job specifications and
job competencies
Figure 2-2 illustrates how the different components of the job fit together.
Figure 2-2. Job Components
Job Analysis
A job analysis helps you determine the following information:
 The importance of each task and responsibility
 How the job relates to other jobs in the organization
 The performance qualifications for the job
 The conditions under which the work is performed
The general purpose of the job analysis is to understand the requirements of a job
and to develop a pay structure. All jobs must be interrelated to accomplish the
organization’s vision, mission, goals and objectives. Job analysis is the first step
toward that end.
© 2012 SHRM 22
Gathering Job Analysis Data
A job analysis measures the job, not the person doing the job.
How often should job analysis data be gathered?

 A job analysis for current positions should be completed on a regular and
ongoing basis. At a minimum, a job analysis is needed when there is a
vacancy or every two years.
 A follow-up assessment for new positions should be completed within six
months to one year after the job is filled.
Relevant Information
The data you collect for a job analysis should clarify the following aspects of the
job:
 Essential and nonessential tasks, duties and responsibilities
 Knowledge, skills, and abilities
 Mental and physical attributes required for the job
 Level of responsibility in the job (supervision received and given)
 Work environment (including equipment used, hazards and general
physical conditions that may affect the work)
This data will help differentiate the job from other jobs in the organization.
What do we mean by knowledge, skills, and abilities?

 Knowledge: the information necessary for task performance
 Skills: the level of expertise needed for task performance
 Abilities: the capabilities necessary to perform the job
These three key elements are commonly abbreviated as KSAs.
© 2012 SHRM 23
Primary Source
When you collect data for a job analysis, a primary source can provide valuable
information from personal experience. A primary source is a source who is as
close as possible to the topic you are researching. For a job analysis, primary
sources include the following:
 The employees who currently perform the job
 The managers who supervise others who perform the job
If many employees perform the same job, be sure the data sample is
representative of the target population to ensure that your job analysis conclusions
are valid.
For additional information on sampling, see Module 1: HR Administration,

Section 1.2: Gathering, Measuring and Reporting HR Data.
Collection Methods
Most organizations use more than one method for collecting primary source data.
Figure 2-3 summarizes some common data collection methods.
Method Description Benefits

 Directly observe  Provides a realistic view
Observation
employees performing of the daily tasks and
the tasks of a job. activities performed in a
 Record observations. job
 Translate observations  Works best for short-
into the necessary KSAs. cycle jobs in production
Figure 2-3. Common Data Collection Methods (continued to next page)
© 2012 SHRM 24

 Conduct a face-to-face  Uses predetermined
Interview
interview in which the questions
interviewer obtains the  Adds new questions
necessary information based on the response of
from the employee about the employee being
KSAs needed to perform interviewed
the job.  Works well for
professional jobs
 Use a questionnaire to  Produces reasonable job
Open-ended
ask job incumbents and requirements because
questionnaire
their managers about the input is solicited from
KSAs necessary to both employees and
perform the job. managers
 Combine the answers and  Works well when a large
publish a composite number of jobs must be
statement of job analyzed with limited
requirements. resources
Figure 2-3. Common Data Collection Methods (concluded)
Sample job analysis forms can be found at the following SHRM websites:
 http://www.shrm.org/TemplatesTools/Samples/HRForms/Articles/Pages/
CMS_001973.aspx
 http://www.shrm.org/TemplatesTools/Samples/HRForms/Pages/JobAnaly
sisForm.aspx
 http://www.shrm.org/TemplatesTools/Samples/HRForms/Articles/Pages/
CMS_011001.aspx
© 2012 SHRM 25
Outcomes of the Job Analysis
A job analysis usually results in the three outcomes shown in Figure 2-4.
Element Description
Job descriptions Summarize the most important

features of a job, including the
following:
 Required tasks
 Knowledge, skills and
abilities
 Responsibilities
 Reporting structure
Job specifications Describe the qualifications

necessary for a job holder to perform
the job successfully
Job competencies Describe the attributes or behaviors

of employees required for success in
an organization, workgroup or job
Figure 2-4. Outcomes of the Job Analysis
Job descriptions, specifications and competencies are described in more detail

below.
For additional information on job analysis, see Module 1: HR Administration,

Section 1.3: Workforce Planning and Employment Strategies.
© 2012 SHRM 26
Job Documentation
Job documentation involves the creation of job descriptions, specifications and
competencies.
Job Descriptions
A job description is a written document describing an employee’s work

activities. (Organizations in different countries may use different names for the
job description, such as “role profile” or “role description.”)
Job descriptions are used to document job content. These descriptions have many
uses, as shown in Figure 2-5.
Figure 2-5. Uses of Job Descriptions (Society for Human Resource Management 2004)
© 2012 SHRM 27
Challenges
A major challenge with job descriptions is presenting them in a consistent way for
different jobs. Difficulties with consistency can be caused by the following issues:
 A large number of employees
 An inefficient job description process
 The different responsibilities and duties of different jobs
Inconsistent job descriptions can lead to hiring people who are poorly equipped to
perform the job functions successfully (Corporate Leadership Council, Job
Description Creation and Review 2003).
Considerations for a Global Environment
Job descriptions have some additional purposes in a global environment:

 Matching the employee to the right job to avoid inappropriate cross-border
transfers
 Comparing salaries across countries so that jobs with the same description
have the same salary
 Providing the basis for reliable statistics about job types and projected
needs across the organization
 Helping compare and align business processes across countries
Elements of Job Descriptions
Most job descriptions include the elements shown in Figure 2-6. But, not every
element will appear in every job description.
© 2012 SHRM 28
Job Element Description

 Job title
Job identification
 Department or location
 Date the job description was completed
 Approvals
 Who the position reports to
Summary Overview (four or five sentences) that summarizes

the purpose and objectives of the job, including the
following:
 Primary responsibilities
 Expected results
 Degree of freedom (for example, works
independently or works under direct
supervision)
Essential functions Tasks, duties and responsibilities of the job
Nonessential functions Desirable but not essential aspects of the job
KSAs Minimum knowledge, skills and abilities required

to perform the job satisfactorily
Supervisory Extent of authority, including a list of who reports

responsibilities to this position
Working conditions Environment in which the job is performed,

especially hazardous or difficult physical
conditions
Figure 2-6. Elements of the Job Description
© 2012 SHRM 29
Job Specifications
A job specification is a written description of the minimum qualifications

required to perform a specific job. A job specification should reflect what is
necessary for satisfactory performance, not what the ideal candidate should have.
Job specifications can be generated during the preparation of the job description.
These specifications are often included as part of the job description document.
Examples of job specifications include the following:

 Experience
 Education
 Training
 Licenses and certification (if required)
 Mental abilities and physical skills
 Level of organizational responsibility
As you determine the job specifications, be sure to distinguish between essential

functions and nonessential functions of the job. Documenting the essential
functions will help support your decision of who is qualified for a job.
Figure 2-7 shows an example of job specifications for a Marketing Manager.
© 2012 SHRM 30
Job Specifications
 Manage all details of the request for proposal process (RFP) and
workflow including coordinating all responses to insure appropriateness
of response.
 Write and edit RFP responses.
 Determine priorities of responses when receiving more than one
response.
 Provide technical guidance to other team members on RFP procedures.
 Maintain library of RFP documentation and update as needed.
 Prepare accurate monthly reports of all departmental expenditures.
 Research information request from the Vice-President.
Figure 2-7. Sample Job Specifications for a Marketing Manager (Society for Human Resource
Management, Marketing Manager (Sample Job Description), n.d.)
For additional information on job descriptions and specifications, see Module 1:

HR Administration, Section 1.3: Workforce Planning and Employment
Strategies.
© 2012 SHRM 31
Guidelines for Writing Job Descriptions and Specifications
Job descriptions and job specifications must be based on the specific duties and
responsibilities that are performed within the organization.
Some basic guidelines for writing job descriptions and specifications are listed in
Figure 2-8.
Guidelines for Writing Job Descriptions and Specifications

 Give jobs realistic and descriptive titles.
 Keep the summary short (no more than four or five sentences).
 List only the most important duties, tasks or responsibilities.
 Identify the essential job functions. (If you include nonessential job
functions, indicate which functions are essential and which are not.)
 Review the KSAs to be sure they are job related.
 Secure approvals and dates.
 Include appropriate disclaimers (for example: the job description may
be changed at any time).
Figure 2-8. Guidelines for Writing Job Descriptions and Specifications
In some organizations, writing the job description is the task of the department
that is hiring a new employee. In these cases, the human resources department can
provide guidance in the form of training and consultation on the elements of the
job description and on how to include organizational and department-specific
messages.
A number of standard job description packages (both paper based and computer
based) are available. These packages can provide the HR professional with a
starting point for establishing consistency in job descriptions and specifications.
© 2012 SHRM 32
Resources available to help HR professionals develop job descriptions include the

following:
 http://www.shrm.org (Society for Human Resource Management)
 http://online.onetcenter.org (O*NET, the Occupational Information
Network). O*NET provides a comprehensive database of worker
attributes and job characteristics applicable in both the public and private
sectors and a common language for defining and describing occupations.
Job Competencies
Job competencies are the observable and measurable skills, behaviors and
knowledge that are needed to succeed in a specific job. Some organizations use
the term “competencies” interchangeably with the knowledge, skills and abilities
needed to perform a job successfully (Dessler 2008). However, competencies are
more than basic KSAs. An employee usually develops competency at a job over a
period of time. Therefore, job competencies represent the accumulation of
multiple abilities and traits and knowledge required for success.
A competency-based job analysis describes a job in terms of competencies

instead of job duties. The focus is on what the employee or team must be
competent to do in order to perform the job.
Identifying Job Competencies
Several methods may be used to identify job competencies. One way is by

completing the sentence in Figure 2-9 (Dessler 2008).
Figure 2-9. Identifying Job Competencies
© 2012 SHRM 33
Behavioral interviews are another common way to identify job competencies.
Additional information about behavioral interviews can be found at the following

website: http://www.shrm.org/hrdisciplines/staffingmanagement/Articles/
Pages/CMS_006200.aspx.
For additional information about behavioral interviews, see Section 2.4:

Selection.
For additional information on using interviews to gather data, see Module 1: HR

Administration, Section 1.2: Gathering, Measuring and Reporting HR Data.
Finally, professional organizations sometimes publish generic lists of

competencies.
Job Competency Examples
Sample job competencies for a head of marketing position include the following:
 Business understanding
 Market understanding
 Targeting and designing
 Building customer loyalty
Elements for HR Success
The Society for Human Resource Management, as part of a multi-year research

and development effort, has identified the following nine core competencies for
successful HR professionals:
 Human Resource Technical Expertise and Practice
 Relationship Management
 Consultation
 Organizational Leadership and Navigation
© 2012 SHRM 34
 Communication
 Global and Cultural Effectiveness
 Ethical Practice
 Critical Evaluation
 Business Acumen
For additional information on core competencies for successful HR professionals,

see Module 1: HR Administration, Section 1.1: Strategic HR Management
and Business Trends.
© 2012 SHRM 35
© 2012 SHRM 36
2.3: Recruitment

Knowledge:
Behaviors: 01. Manage the process to request jobs (for example, make sure
requisitions are approved , get approval for the number of
positions to be filled, monitor open positions)
03. Provide contact between recruiters and hiring managers (for

example, prepare job listings, share appropriate information with
the hiring manager and recruiter)
05. Identify ways to find new hires (for example, advertisements and
web sites)
15. Manage database of applicants (for example, track the sources of

applicants and the results of the recruiting and selection process,
decide where to store information about candidates for possible
future employment)
Skills & Knowledge: 03. Recruitment methods (for example, advertising , job fairs and
outsourcing)

12. Processes for transferring or promoting employees within the

organization
Section 2.3: Recruitment
Introduction ..................................................................................................................................40
Starting the Recruiting Process ..................................................................................................41
Developing Recruiting Strategies and Sources..........................................................................42

Recruiting Strategies ..................................................................................................................42
Internal Recruitment Sources .....................................................................................................45
External Recruitment Sources ....................................................................................................52
Recruiting Technology.................................................................................................................56
Job Databases .............................................................................................................................56
Networking Sites ........................................................................................................................57
Mobile Marketing .......................................................................................................................58
Video Conferencing ...................................................................................................................59
Module 2: Recruitment and Selection Section 2.3: Recruitment
Introduction
Recruitment is the process of attracting, screening and hiring qualified people for
a job. The goal is to attract a pool of qualified candidates, some of whom will
later be given job offers.
Recruitment consists of two crucial factors. One factor is attracting the

appropriate quantity of applicants. The other factor is attracting quality applicants.
The starting place for determining who is qualified should be a carefully prepared
job analysis, job description and job specification. These three documents are
needed to establish selection criteria, evaluate applicants and screen out those who
do not meet the minimum qualifications needed for the job.
For additional information on the job analysis, job description and job
specification, see Section 2.2: Job Analysis and Documentation.

 Recruitment strategies and sources—including internal and external
recruitment methods
 Recruiting technology to help the HR professional
© 2012 SHRM 40
Starting the Recruiting Process

The recruiting process starts with getting approvals for opening a job requisition.
The job requisition is a request to hire a person for an open position. Job
requisitions usually include the following information for candidates:
 Job description
 Job level
 Job location
The requisitions also include information required for HR professionals, such as

cost estimates and headcount information. Headcount refers to the number of
employees an organization has on its payroll.
Requisition forms and approvals may be known by different names in different

organizations. Generally these forms and approvals are required for the following
actions related to the job opening:
 Authorizing the recruitment of full-time, part-time, temporary and contract
employees
 Authorizing filling a position that has been vacated by the transfer or
termination of a current employee
 Authorizing creating a new position that is not currently filled by an
employee (Society for Human Resource Management, Recruiting:
Recruitment and Selection Policy and Procedures 2011)
HR professionals, together with recruiting professionals, have the following

responsibilities during the job requisition process:
 Securing the necessary approvals for any action related to the open position
 Before the job advertised, ensuring that the information on the job
requisition is accurate and that it represents the organization appropriately
© 2012 SHRM 41
Developing Recruiting Strategies and Sources

Recruiting Strategies
After job requisitions are approved, the next step is to develop a recruiting
strategy. Developing a strategy means establishing a specific plan of action for
meeting your recruitment objectives (Society for Human Resource Management,
Recruiting and Attracting Talent: A Guide to Understanding and Managing the
Recruitment Process 2009). Figure 3-1 suggests questions your organization
should ask while developing a recruiting strategy.
Figure 3-1. Strategy Development Questions
HR professionals must select appropriate sources to identify prospective

candidates. The organization can choose either to look internally within the
organization or to seek candidates externally. The choice between internal and
external recruitment sources depends on the organization’s needs, culture and
philosophy. The advantages and disadvantages of each approach are discussed
later in this section. Many experts advocate a balance between the two sources.
In choosing a recruiting strategy, be aware that what works for one organization
may not apply to another. However, certain general guidelines can help improve
your recruiting effectiveness. Figure 3-2 provides a checklist of suggested
guidelines.
© 2012 SHRM 42
Figure 3-2. Checklist for Recruiting Effectiveness
Employment branding is a recruiting strategy that is covered in detail in Section

2.1: Workforce Planning and Staffing.
Build a Candidate Pipeline
Building a candidate pipeline means developing a pool of applicants that will be

available when a job opening needs to be filled. A candidate pipeline has crucial
value to an organization. However, organizations must first know what they are
looking for (Society for Human Resource Management, Build a Talent Pipeline
for Diverse Leaders 2007).
Consider the following strategies for starting and maintaining effective candidate
pipelines:
 Let potential candidates know that your organization may be interested in
hiring them if an appropriate job position becomes available.
 Let management know when exceptional talent is available.
 Consider creating a new position for a very strong candidate who may not
match your organization’s current job openings.
 Keep your pipeline to a manageable size (Pritchard 2006).
© 2012 SHRM 43
Consider Flexible Staffing Options
Flexible staffing offers organizations a cost-effective and creative way to recruit

talent.
Also referred to as alternative staffing, flexible staffing uses alternative

recruiting sources and workers who are not regular employees.
Flexible staffing can be based on either schedule flexibility or location flexibility.

Schedule flexibility includes situations such as compressed workweeks and part-
time options. Location flexibility includes working remotely from a location other
than the main office or worksite.
Reasons to consider flexible staffing options for your organization include the
following situations:
 A shortage of available workers for open positions
 Seasonal workload demands
 Organizational upturns and downturns that make permanent headcounts
impractical
 Special projects that demand specific skills
Flexible staffing offers organizations the following benefits:

 Improved job commitment over a one-year period
 Decreased health problems or complications that impact the employee’s
work (Society for Human Resource Management, Workplace Flexibility
Has Bottom Line Implications 2008)
For additional information on flexible staffing, see Module 1: HR

Administration, Section 1.3: Workforce Planning and Employment
Strategies.
© 2012 SHRM 44
Internal Recruitment Sources
Organizations can fill open positions through internal promotions and transfers.
This internal recruitment allows the organization to capitalize on its investment in
recruiting, selecting and developing its current employees. Figure 3-3 lists several
advantages and disadvantages of recruiting internally.
of Recruiting Internally of Recruiting Internally
 Allows management to easily  Limits the number of
assess the candidate’s potential qualified candidates
performance, attendance  May result in the organization
record, and strengths and becoming too internally
weaknesses focused
 Allows management to  Can potentially decrease
identify employees who are employee morale and
interested and ready for career motivation if the job is given
advancement to a preselected candidate
 Reduces the time needed for
the employee to adjust to the
position and to the
organization
 Can decrease the time and
cost of recruitment
Figure 3-3. Advantages and Disadvantages of Recruiting Internally (Stredwick 2005)
Figure 3-4 suggests issues that HR professionals should consider as part of the
internal recruitment process.
© 2012 SHRM 45
Figure 3-4. Issues to Consider During Internal Recruitment
Methods of Recruiting Internally
Effective methods of recruiting internally include the following:

 Job postings
 Skills assessment tools
 Employee databases
 Employee referrals
Job Postings
A job posting is an internal system that allows employees to respond to a job

opening for a specific position. A posting should provide a brief description of the
job, including significant job duties and minimum qualifications, education and
experience. Job postings can be communicated through bulletin board notices,
newsletters, memos, electronic bulletins or the company Intranet.
© 2012 SHRM 46
In some cases, jobs are not advertised externally until employees have an
opportunity to respond to the posting. In other cases, jobs may be simultaneously
advertised externally to speed up the hiring process.
Job postings have several advantages:

 Allows all qualified employees to compete for positions
 Alerts candidates to advancement opportunities in the department or the
organization
 Allows the organization to reduce the costs of recruiting
 Accommodates seniority by establishing qualifications and other position
requirements
Skills Assessment Tools
The human resource information system (HRIS) is technology that supports

human resources functions. HRIS can be used as a source for internal recruitment.
HRIS skill banks and skill tracking systems can generate computerized employee
profiles and skill inventories. These inventories provide a list of candidates who
have the needed knowledge, skills and abilities. Having a complete record of each
employee’s qualifications provides the following benefits:
 Allows organizations to scan records quickly and to locate qualified
candidates
 Increases the likelihood of a good match between the job and the employee
For additional information on human resource information systems, see Module

1: HR Administration, Section 1.1: Strategic HR Management and Business
Trends.
Employee Referrals
An employee referral program is a recruiting strategy that rewards current

employees for referring qualified candidates for open positions (Society for
© 2012 SHRM 47
Human Resource Management, Employee Referral: What Is an Employee

Referral Program 2009).
Figure 3-5 shows the potential value of using employee referrals.
Figure 3-5. The Potential Value of Employee Referrals (Society for Human Resource
Management, Recruiting and Attracting Talent: A Guide to Understanding and Managing the
Recruitment Process 2009)
Employee referral programs are most effective when used together with other
recruitment methods.
For a sample employee referral form, see the following website:

http://www.shrm.org/TemplatesTools/Samples/HRForms/Articles/Pages/1CMS_
007172.aspx.
Internal Movement
Internal movement refers to the movement of employees from one job to another
within the organization.
We will look in more detail at the following forms of internal movement:

 Promotions
 Demotions
 Relocations
 Transfers
 International assignments
© 2012 SHRM 48
Promotions
In most organizations, a promotion is an advancement of an employee's rank,

usually with greater responsibility and more money. Some reasons for promotion
 Assuming new and different duties of a different position at a higher level
 Assuming a position that involves increased responsibilities and the
acquisition of additional knowledge, skills or abilities in the same line of
work
HR, together with line management, should develop a natural progression of jobs
whenever possible. This progression provides employees with a career path for
future growth that can also be used as a basis for promotion from within.
However, HR management should not create jobs simply to provide a path of
upward mobility. Artificial career paths can lead to unrealistic expectations and
unnecessary organizational structure and costs.
Demotions
A demotion is moving an employee back or laterally to a position that is better

suited to his or her talents. Demotions can occur for several different reasons:
 Staff reductions, consolidations or reorganizations
 An attempt to move an underqualified employee to a more suitable position
 An employee’s request (For example, an employee may not want to
continue as a supervisor or may request a part-time schedule.)
Relocations
Relocation means moving an employee to another location for work. This

relocation can be within the country or to another country.
The organization should consider several factors related to relocations:

 The cost to the organization
 The employee’s willingness to accept the relocation
© 2012 SHRM 49
 The impact on the employee’s family (including employment opportunities

for the spouse)
 The need for an orientation program to adjust employees and their families
to the new location
Transfers
Often employees transfer to other divisions within an organization. Transfers are

usually considered a lateral move with no salary adjustment. Transfers can be
initiated by either the employee or management and may involve a move to a
different geographic location, function or organizational line.
Reasons for transfers include the following:

 The employee desires change but does not want to leave the organization.
 The organization finds a better match between the employee’s abilities and
the organization’s staffing needs.
 The transfer helps the organization balance staffing and reduces the need
for terminations.
International Assignments
An international assignee is a person who moves to a new country to work on an

international assignment. Figure 3-6 lists examples of types of international
assignees whom organizations use to staff their global operations.
© 2012 SHRM 50
Types of International Assignees General Description
Short-term assignee The employee works in a new

country for a specified period of time
(usually between three months and a
year).
Long-term assignee The employee is relocated to a new

country (usually for longer than one
year).
Permanent assignee Most of the employee’s career is

spent moving from one international
assignment to another.
Returnee The person is already employed by

the organization and returns to the
home country to work.
Figure 3-6. Examples of Types of International Assignees
Reasons for organizations to make an international assignment include the

following:
 Filling an open position
 Transferring technology or knowledge
 Developing an employee’s career
 Analyzing the market for the organization’s products or services (Society
for Human Resource Management, Managing International Assignment
2009)
© 2012 SHRM 51
Employees may view an international assignment as stopping the upward progress

of their career path. That perception can be changed by including these six
components in an international assignment:
 Make professional training available to spouses. The International
Assignee Research Project reports that 71% of international assignees say
that spouse counseling and support are important.
 Support the assignee’s children with programs that familiarize them with
the country’s schools and culture. A Global Trends survey found that
children’s education is one of the most important family challenges with an
international assignment.
 Provide continuing professional development and education.
 Maintain a strong connection between the assignee and the home office
and provide reassurance that the assignee will still be considered for
promotions.
 Require assignees to return to the home office during vacation time to
reconnect with coworkers and management.
 Clearly communicate the need for the assignment and how the assignee
will fit into the organization when the assignment is complete. (Society
for Human Resource Management 2000)
External Recruitment Sources
Organizations can fill open positions through external recruitment sources. Figure
3-7 lists several advantages and disadvantages of recruiting externally.
© 2012 SHRM 52
of Recruiting Externally of Recruiting Externally
 Brings new ideas and talent  May result in poor placements
into the organization  Increases recruitment costs
 Helps the organization fill  May cause morale problems
needed competencies for internal candidates
 Provides cross-industry  Requires longer orientation or
insights adjustment time
 May reduce training costs
(with experienced hires)
Figure 3-7. Advantages and Disadvantages of Recruiting Externally
During the external recruitment process, HR or the lead recruiter plays the liaison
role between the hiring manager and the external recruitment source. As a liaison,
the recruiter is the main contact point in the recruitment process and facilitates the
communication between the organization and the external recruitment source.
Candidates from outside an organization may be found through a wide variety of

sources. Figure 3-8 lists a number of common external recruiting methods and
sources.
External Recruiting
Description
Sources
Advertising (print and Advertising includes print publications, kiosks, billboards, radio
nonprint media) advertisements and television advertisements.
Figure 3-8. Examples of External Recruiting Sources (continued to next page)
© 2012 SHRM 53
External Recruiting
Description
Sources
Agencies Recruiting agencies can be in-country or global vendors who

provide pre-screened candidates quickly. Examples include the
following:
 Contract agencies provide a pool of workers for long-
term projects.
 Temporary agencies offer a contract relationship with an
external staffing firm to supply talent through temporary
service arrangements.
Career sites (on an Career sites offer interactive use of the organization’s website
organization’s website) for branding, communication and relationship building (for
example, posting current employee profiles and providing
opportunities for individuals to create a profile).
Community awareness Community awareness promotes awareness of the

organization’s brand and identifies the organization as a premier
place to work (for example, participation in community
volunteer programs, humanitarian events, local job fairs and
local school events)
Educational institutions Organizations can post job openings on college and university
website job boards, at on-site job fairs and at on-site interviews.
Global internships Global internships are partnerships with global exchange

programs to gain access to interns.
Figure 3-8. Examples of External Recruiting Sources (continued to next page)
© 2012 SHRM 54
External Recruiting
Description
Sources
Government agencies Government agencies are online and on-site conduits between
employers and job seekers.
Online social networks Online sites such as Facebook, LinkedIn and MySpace help
and blogs expand an organization’s talent database, extend the
employment brand and acquire top talent.
Outplacement services Outplacement services maintain job sites or job boards for
people who are displaced due to layoffs.
Personal networking Personal networking means contacting and developing

relationships with people in various locations to share
information, names and other data about prospective candidates.
Trade and professional Trade and professional organizations provide placement

organizations services where employers can post and advertise positions. For
example, HR associations (such as the Canadian Council of
Human Resources Association) offer online boards and
publications where employers can post and advertise positions.
Figure 3-8. Examples of External Recruiting Sources (concluded)
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Recruiting Technology
How people apply for jobs and how recruiters look for candidates is changing
rapidly (Society for Human Resource Management, Recruiting Goes Mobile
2009). Recruiting is relying more on technology to reach and communicate with
potential candidates. Many recruiters are using social networking sites and online
job boards as more cost-effective ways to fill open positions (Society for Human
Resource Management, The Effect of High-Tech Solutions and Social
Networking on the Recruiting Process 2010).
We will look in more detail at the following forms of recruiting technology:

 Job databases
 Networking sites
 Mobile marketing
 Virtual CVs
 Video conferencing
Job Databases
Many job boards are available on the Internet. Examples include the following
websites:
Australia
 http://www.seek.com.au
Canada
 http://www.monster.ca
 http://www.canadajobs.com
 http://www.workopolis.com
India
 http://www.monsterindia.com
 http://www.naukri.com
 http://www.clickitjobs.com
© 2012 SHRM 56
Latin America
 http://www.bumeran.com
Mexico
 http://www.bumeran.com.mx
Singapore
 http://www.jobstreet.com.sg
United Kingdom
 http://www.milkround.com
Networking Sites
Figure 3-9. Report on the Impact of Online Technologies (Society for Human
Resource Management, Report: Social Networks Catching On as HR Tool 2008)
Organizations are increasingly using social networking sites—such as LinkedIn,

Facebook and Twitter—to reach a larger pool of applicants, to increase the speed
of the recruiting process and to reduce recruiting costs.
Guidelines for using networking sites include the following:

 Use networking sites to complement your existing recruitment channels—
not to replace them.
 Create a job applicant process that directs qualified applicants from the
networking site to the organization’s website.
© 2012 SHRM 57
 Assess candidates on skill sets beyond their ability to navigate the social
networking sites (Society for Human Resource Management, Recruiting
Strategies for Social Media 2010).
Mobile Marketing
In 2011 the number of mobile phone subscriptions reached five billion, according
to the United Nations’ International Telecommunications Union (Touré 2011).
Many job candidates are now using their mobile phones to search for job
information. Organizations can use these low-cost methods of reaching candidates
through mobile marketing:
 Short messaging services such as Twitter allow users to send very short
text messages to a restricted audience. Organizations can use these sites to
update candidates about open positions.
 Organizations can add quick response (QR) tags to their recruiting
advertisements. Candidates use the cameras on their mobile phones to take
a picture of the QR tag. The candidate then e-mails the tag to the
organization, which quickly sends job information back to the candidate.
 Image recognition technology is more flexible than QR tags. This
technology allows candidates to take a mobile phone picture of any image
selected by the recruiter (for example, a sign at a job fair). The candidate e-
mails the picture to the recruiter, and the recruiter sends relevant
information back to the phone’s Internet browser. (Society for Human
Resource Management, Reaching Smart Prospects on their Smart Phones
2009)
Reaching candidates through text messages on their mobile phones offers several
benefits:
 Increased efficiency
 Broader reach
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 Immediacy (Society for Human Resource Management, Recruiting on the

Run 2010)
Video Conferencing
Video conferencing used video conference equipment to bring together workers

from widely scattered locations. Organizations are increasingly using this
recruiting technology in job interviews.
Video technology is generally not used for initial screenings of candidates. Video
conferencing is generally better suited for interviewing the best applicants,
particularly if the candidate and the organization are more than a half day of travel
apart. In that case, a video conference can save the organization time and money
(Bolch 2007).
Figure 3-10 lists some advantages and disadvantages of video conferencing.
of Video Conferencing of Video Conferencing
 Speeds up the search process  Technical problems, such as
 Eliminates the cost of travel lags in transmission
 Reduces time demands on  Discomfort with the
applicants technology
 Difficulty with staying
engaged with the candidate
Figure 3-10. Advantages and Disadvantages of Video Conferencing (Bolch 2007)
© 2012 SHRM 59
© 2012 SHRM 60
2.4: Selection

Knowledge:
Behaviors: 06. Choose a group of potential applicants for managers to interview

(for example, read resumes and conduct phone interviews)
11. Organize assessments of applicants (for example, schedule and

score assessments, share results)
12. Coordinate the final selection process (for example, schedule

interviews with managers, check references)
13. Coordinate the employment offer (for example, start date, salary,
benefits)
15. Manage database of applicants (for example, track the sources of

applicants and the results of the recruiting and selection process,
decide where to store information about candidates for possible
future employment)
Skills & Knowledge: 04. Procedures to review applications and watch applicants’
progress, including tracking systems

Section 2.4: Selection
Introduction ..................................................................................................................................65
Overview of the Selection Process ..............................................................................................65
Step 1: Pre-Screen ........................................................................................................................66

CVs and Application Forms .......................................................................................................66
Pre-Employment Tests ...............................................................................................................69
Other Pre-Screening Tools .........................................................................................................70
Qualifications and Eligibility .....................................................................................................71
Applicant Notification ................................................................................................................72
Step 2: Track ................................................................................................................................72
Step 3: Interview ..........................................................................................................................73

Types of Interviews ....................................................................................................................73
Guidelines for Interviews ...........................................................................................................77
Step 4: Evaluate............................................................................................................................79
Interview Feedback ....................................................................................................................79
Background Investigations .........................................................................................................79
Step 5: Select .................................................................................................................................81

Reliability and Validity of Selection Tools and Methods ..........................................................81
Realistic Job Previews ................................................................................................................82
Step 6: Offer .................................................................................................................................84

Contingent Job Offer ..................................................................................................................84
Employment Offer ......................................................................................................................84
Offer Negotiation .......................................................................................................................85
Employment Contracts ...............................................................................................................85
Handling Nonselected Candidates .............................................................................................86
Module 2: Recruitment and Selection Section 2.4: Selection
Introduction
After HR and line managers have identified and recruited qualified candidates for
an open position, they need to gather the information needed to make a selection
decision.
Selection is the process of hiring the most suitable candidate for a job.
This section examines each step of the selection process in detail.
Overview of the Selection Process

Figure 4-1 shows the six steps of the selection process. Each step is designed to
narrow the field of applicants down to the most qualified people. More
information is gathered about prospective candidates during each step. With this
information, employers can match the prospective employees’ qualifications to
the organization’s requirements.
Figure 4-1. The Selection Process
© 2012 SHRM 65
Your organization may not always conduct all the steps in the order shown in
Figure 4-1. However, this is an example of the selection process used by many
organizations. A discussion of each step follows.
Step 1: Pre-Screen
The first step of the selection process is to pre-screen the pool of candidates. Pre-
screening means examining or interviewing applicants before further selection
takes place.
CVs and Application Forms
Pre-screening begins with analyzing the candidate’s curriculum vitae (CV) and/or
application form. Efficient pre-screening by HR has the following important uses:
 Identifies who fits the minimum selection criteria
 Provides a source of questions for the interviewer and for reference checks
 Ensures that line management spends time interviewing only qualified
candidates
CVs/Resumes
The curriculum vitae, also known as a resume, highlights the candidate’s

strengths. Figure 4-2 shows a CV checklist that can help evaluate the CVs you
receive.
© 2012 SHRM 66
Figure 4-2. CV/Resume Analysis Checklist
Application Forms
A good application form is one that is complete, easy to read and easy to review.
Figure 4-3 identifies the information usually found on the application form.
Application Information
 Basic personal data (name, address and phone number)
 Education, training and special skills
 Work history, with dates of employment
 References and authorization to check them
 Authorization to verify all information
 Statement regarding truthfulness of information
 Candidate signature
Figure 4-3. Application Information
© 2012 SHRM 67
Many HR professionals believe candidates should submit an application form in

addition to a resume, for the following reasons:
 The resume provides information the candidate wants you to know; the
application provides information you want to know.
 The application form may indicate if the candidate has exaggerated
accomplishments on the resume.
 The candidate’s signature on the application form serves as legal
verification that the information is correct and truthful.
Warning Signs
Figure 4-4 identifies warning signs that indicate potential problems with a CV or
application form. The presence of warning signs does not necessarily mean that a
candidate should be rejected. However, additional information is needed before
making a final decision on the application.
Figure 4-4. Warning Signs in CVs and Application Forms
© 2012 SHRM 68
Pre-Employment Tests
Pre-employment testing is a useful screening tool for many organizations. An

appropriate pre-employment test has the following features:
 Is job relevant
 Is valid (that is, measures what it claims to measure)
 Is reliable (that is, measures consistently)
 Helps the organization make more effective employment decisions about
candidates
Follow these guidelines when creating or using pre-employment tests:

 Use reliable and valid assessment instruments and procedures.
 Use assessment tools that are appropriate for the target population.
Additional information about reliability and validity can be found in Module 1:

HR Administration, Section 2: Gathering, Measuring and Reporting HR
Data.
Following are some examples of pre-employment tests.
Aptitude Tests
Aptitude tests assess the candidate’s ability to learn a new skill. For example, a
candidate for a factory assembly job may be asked to take a manual skill test.
Cognitive Ability Tests
Cognitive ability tests assess skills the candidate has already learned. One kind of
cognitive ability test is the performance test (also known as the work sample test).
There are several kinds of cognitive ability tests. Typing tests are one simple
example. Another example is asking an editor to edit a brief section of the
organization’s policy manual.
© 2012 SHRM 69
Personality Tests
Personality tests assess the candidate’s social interaction skills and patterns of
behavior. These tests report what can be described as traits, temperaments or
dispositions. Some tests focus on characterizing an individual as being within the
normal ranges of adult functioning. Others focus on identification of abnormal
behavior.
Psychomotor Tests
Psychomotor tests require a candidate to demonstrate a minimum degree of

strength, physical dexterity and coordination in a specialized skill area. This test is
appropriate only if the job’s essential functions require such abilities.
Other Pre-Screening Tools

Phone calls and work reference checks are two other tools that HR professionals can use
to pre-screen candidates.
Pre-Screening Phone Calls
A phone call with the candidate can be a time-effective form of pre-screening. In

a few minutes, interviewers can accomplish the following:
 Verify the candidate’s background, experience and availability.
 Describe the job in greater detail and answer questions.
 If both the interviewer and candidate are still interested, ask the candidate
to come to the organization for a pre-screening interview.
Work Reference Checks
Always obtain the candidate’s permission before conducting work reference

checks.
Former employers, clients and colleagues can provide in-depth information about
the candidate’s work. The most informative references will be from former or
© 2012 SHRM 70
current supervisors, who will know the candidate’s work and will have observed
the candidate performing a similar job.
Reference checking has several important purposes:

 To achieve better hiring fits
 To confirm the honesty and accuracy of the resume
 To protect the substantial investment that an organization makes when
hiring
An example of an employment reference check form is available at the following

website: http://www.shrm.org/TemplatesTools/Samples/HRForms/Articles/
Pages/CMS_019909.aspx.
Intercultural Assessment Tools
An increasing number of intercultural assessment tools help organizations pre-

screen the right people for international assignments or positions in multicultural
situations. These tools identify the candidate’s adaptability and intercultural
competence. Examples include the following two assessment tools:
 In Canada: the International Personnel Assessment tool (iPASS)
 In the Netherlands: the Multicultural Personality Questionnaire (MPQ)
(Society for Human Resource Management, Assessment Instruments for a
Global Workforce 2007)
Qualifications and Eligibility
Some organizations request verification of the candidate’s academic qualification.

For example, candidates may be asked to provide verification that they attended
the educational institution listed on the resume or application form.
Employment eligibility varies according to local employment laws.
© 2012 SHRM 71
Applicant Notification
Whenever possible, keep applicants informed of their status and avoid any
lengthy delays. If you are slow to contact a pre-screened qualified candidate, that
candidate may be hired by another organization.
Both the recruiter and the administrative process can impact an applicant’s overall
impression of the organization. To maintain a positive and professional image for
the organization, make applicant notification a priority.
Step 2: Track
The second step of the selection process is to track the pre-screened applicants.
An applicant tracking system (ATS) is a software system that helps an

organization recruit employees. Many applicant tracking systems support the
following tasks:
 Storing and processing resumes
 Making the job requisition process more efficient
 Providing reporting metrics that allow organizations to apply their
recruiting budget more effectively
Recently the ATS has also evolved into a platform for services such as video
interviewing, background checking, assessment testing, onboarding, and as a link
to social media sites (Society for Human Resource Management, Applicant
Tracking Systems Evolve 2011).
Commonly used applicant tracking tools include products from Taleo and
Kenexa.
Another option for tracking applicants is outsourcing the task to an external

agency. In this case, recruiting professionals act as a liaison between external
agency recruiters and internal hiring managers or other internal stakeholders
© 2012 SHRM 72
involved in the recruiting process. The recruiting professional has the following
additional responsibilities:
 Serve as a point of contact within the organization to communicate job
requirements and recruiting processes to the agency
 Ensure that the applications received from the agency are tracked to the
organization’s job database and are consistent with the external candidate
application process
Step 3: Interview
The third step of the selection process is to interview the qualified candidates.
Types of Interviews
Interviews determine how well the candidate meets the needs of the organization.
Organizations tend to use interviews for qualifying candidates more than any
other procedure in the selection process.
Interviews can range from short pre-screening interviews (20 minutes or less) to
long in-depth interviews (one hour or more). Figure 4-5 identifies the differences
between pre-screening and in-depth interviews.
Pre-Screening Interviews In-Depth Interviews

 Usually 20 minutes or less  Usually one hour or more
 Usually conducted by HR  Usually conducted by line
 Useful when an organization managements
has a high volume of applicants  May be divided into several in-
for a job and face-to-face depth interviews by both line
interviews are needed to judge managers and potential
pre-qualification factors colleagues
Figure 4-5. The Differences between Pre-Screening and In-Depth Interviews
© 2012 SHRM 73
There are many styles of in-depth interviews. Three styles that we will discuss are
the behavioral interview, the competency-based interview and the structured
interview.
Behavioral Interview
The behavioral interview is the most common type of interview. Figure 4-6
describes the behavioral interview.
Description Comments
 The interviewer focuses on  Provides insight into how the
how the applicant previously candidate handled past job-
handled situations (real related situations
experiences, not hypothetical  Allows the interviewer to probe
ones). more than with traditional
 The interviewer asks very interview questions
direct questions to determine if
the individual possesses the
skills necessary for the job.
Figure 4-6. The Behavioral Interview
The premise of the behavioral interview is that past performance is the best
predictor of future performance.
For example, an interviewer may ask a candidate for a management position to

describe a situation in which the candidate coached a difficult employee. The
candidate gives an example that illustrates past performance, while the
interviewer looks for the following three key pieces of information:
 A description of the situation or task
 The action taken
 The result or outcome
© 2012 SHRM 74
Figure 4-7 provides examples of questions used in behavioral interviews.
Figure 4-7. Examples of Questions for Behavioral Interviews
Competency-Based Interview
Competencies are the skills, behaviors and knowledge that are needed to succeed
in a specific job. Figure 4-8 describes the competency-based interview.
 The interviewer asks questions  Provides insight into the
that are based on real situations candidate’s proficiency in a
related to the competencies for particular competency
the position.  Gathers information that is
 The interviewer asks the predictive of what the
candidate to provide an candidate’s behavior and
example of a time he or she performance is likely to be in
demonstrated the competency. the position
Figure 4-8. The Competency-Based Interview (Hoevemeyer 2005)
© 2012 SHRM 75
Examples of questions used in competency-based interviews are shown in Figure

4-9. The questions focus on a competency in change management.
Figure 4-9. Examples of Questions for Competency-Based Interviews

(Hoevemeyer 2005)
Structured Interview
Figure 4-10 describes the structured interview.
 The interviewer asks every  Ensures that similar
candidate the same questions. information is gathered from all
Follow-up questions may be candidates
different.
Figure 4-10. The Structured Interview (continued to next page)
© 2012 SHRM 76
 The interviewer stays in control  Gives each candidate the same
of the interview. opportunity to create a good
impression
 Works best when the
interviewer wants to ensure that
the same questions are asked of
all candidates
Figure 4-10. The Structured Interview (concluded)
Different types of questions can be used in the structured interview. The key is
that the interviewer asks every candidate the same group of questions.
Guidelines for Interviews

Before the interview, use the checklist in Figure 4-11 to prepare for your conversation
with the candidate.
Figure 4-11. Pre-Interview Checklist (Society for Human Resource Management, Interview: Pre-
Interview Checklist 2011)
© 2012 SHRM 77
During the interview, take the actions described in Figure 4-12. These actions will
help put the candidate at ease and will increase the likelihood of an effective
interviewing experience.
Action Description
Establish rapport. Tell the candidate what to expect during the interview.
Establish an environment that encourages the candidate to relax
and to provide information.
Listen carefully. Frequently summarize or paraphrase what you hear to make

sure you understand what the candidate is saying. You should
observe and listen more than you talk.
Make smooth transitions An organized, logical interview works best for both you and the
from one topic to another. candidate. Cover a topic area thoroughly and then move on to
the next area.
Observe nonverbal Be aware of facial expressions, gestures and body positions.

behavior. This applies to both you and the candidate.
Take notes. Taking notes will help you remember your impressions and
significant pieces of information from the interview. However,
stay engaged with the candidate, and don’t make notes directly
on the application form or resume.
Conclude the interview. Tell the candidate what the next step in the process will be.
Figure 4-12. Guidelines for an Effective Interview
© 2012 SHRM 78
Step 4: Evaluate
The fourth step of the selection process is to evaluate the candidates.
Interview Feedback
It is good practice to speak with the candidate following the interview, elicit their feedback,
answer related questions, and get a sense of the candidate’s overall interest. Examples of
questions to ask may include:
 How do you feel about the interview?
 What was your impression about the organization?
 What questions do have about the role? Was the role as you expected?
 How interested are you in the position? (Brown and Swain 2009)
Additionally, this is a good time to provide honest and concise feedback for the
candidate’s future employment. Be certain to provide feedback that is meaningful
allowing the applicant to understand their strengths and weaknesses in
comparison to the job requirements.
Background Investigations
Background investigation is the process of authenticating the information

supplied to a potential employer by a job applicant in his or her resume,
application and interviews. Organizations that conduct thorough background
investigations usually make better hiring decisions and may avoid negligent hiring
claims. Negligent hiring involves hiring a candidate who the employer knew (or
should have known based on a reasonable investigation of the candidate’s
background) posed a risk to others in the workplace.
HR professionals often conduct the background investigations. These

investigations should be the same for candidates applying for the same job. Make
© 2012 SHRM 79
sure a clear connection exists between the background investigations and the
requirements of the job.
Common background investigations include the following.
Internet Search
An Internet search on the candidate's name, especially using an Internet search

engine such as Google.com, helps the organization confirm candidates’ claims
about their jobs, performance, awards and other information. Sites such as
LinkedIn may also serve to check the candidate’s consistency in claims about job
history and achievements.
Criminal Background Check
Organizations conduct criminal background checks for the following reasons:

 To determine if the candidate has a history of criminal convictions that
may disqualify her or him from consideration
 To increase the quality of applicant hiring
 To reduce the possibility of theft and embezzlement
Credit History Checks
Credit history checks should be conducted only on the following candidates:

 Candidates for positions of financial responsibility (such as accounting and
finance professionals)
 Candidate for positions that involve handling significant amounts of
currency or other valuables
If your credit reports are acquired from external vendors, the organization must
comply with any applicable credit check laws.
© 2012 SHRM 80
Step 5: Select
The fifth step in the selection process is selecting a candidate to fill the open
position.
Selection of the most qualified candidate will be based on the interviews,

evaluations, and tests conducted in Steps 3 and 4 of the selection process.
A tie breaker is a method used to select a preferred candidate when two or more
candidates are considered equally qualified. The job requirements will help you
determine what particular categories are the most important. The winning
candidate should be the one who scores higher in the most consequential
categories.
In some cases the decision must be based on a personality fit. The wrong fit leads
to an unhappy employee, manager and team. The right fit can energize the
environment and lead to a happy employee, manager and team. Often the head of
the department or the organization must make the final decision about the right fit.
Reliability and Validity of Selection Tools and Methods
Hiring the wrong person for the job is a costly mistake. Selection errors can
impact the organization’s human capital management plan, employee morale,
management time, training budgets, productivity and profitability. Just as
reliability and validity were critical parts of the pre-screening process, you must
also establish the reliability and validity of the selection tools and methods.
Establishing Reliability
Reliability is the ability of an instrument to measure consistently. For example, if

an applicant takes a motor skills test twice, the scores should be similar (allowing
for the effect of practice). If the scores differ significantly, the test may not be
reliable.
© 2012 SHRM 81
Perfect reliability is difficult to achieve. The following types of errors can lead to
inconsistent results:
 Failure to measure some aspect of an important attribute
 Irrelevant questions in an interview or on a test
 Different time limits for candidates in an interview or on a test
Establishing Validity
Validity is the ability of an instrument to measure what it is intended to measure.

For example, a typing performance test is probably a valid prerequisite for
applicants who will be expected to do typing (such as for a position in an
administrative processing center).
Realistic Job Previews
The cost of hiring and training an employee is substantial. Therefore, providing a

realistic job preview (RJP) is in the best interest of the candidate and the
organization.
A realistic job preview informs candidates about all aspects of the job and the
work environment. For some candidates, the RJP can occur earlier in the selection
process, during the interview.
The RJP has three purposes:

 Gives candidates as much information as possible, so they can make an
informed decision about their suitability for the job
 Gives organizations an opportunity to portray the job objectively—
including both favorable and unfavorable factors
 Increases the possibility of a good match between the candidate and the
organization
For example, an RJP may include:

 Written job descriptions
 Observations of employees
© 2012 SHRM 82
 Interviews with future coworkers

 Job-related videos
 Simulations that replicate the working conditions
Types of Realistic Job Previews
Organizations can create realistic job previews in a variety of ways, including the
following:
 Tours of the workplace. A walk-through of the workplace provides a
candidate with an accurate impression of the work environment.
Candidates can determine their comfort level with the physical format (for
example, cubicles or traditional offices, break areas and cafeterias) and
with noise levels.
 Job simulations. Candidates may experience a simulation of the job in
order to determine their suitability. For example, an applicant for a clean-
room manufacturing position can wear the clean-room attire that is
required several hours a week.
 Video presentation. A candidate may view a video presentation before
starting to work for an organization. The video can portray the history of
the company, the organizational culture, and a discussion of benefits and
the path of a typical day.
Benefits of RJPs
A wise saying applies to realistic job previewing: It pays to tell the truth. An
effective RJP has the following features:
 Dispels unrealistic expectations and accurately represents organizational
realities
 Promotes an informative exchange between the candidate and the
organization.
 Encourages self-selection
 Helps increase job satisfaction
 Helps prevent disappointments
© 2012 SHRM 83
 Reduces post-entry stress

 Reduces employee turnover
Step 6: Offer
The last step of the selection process is offering the position to the most qualified
candidate.
Contingent Job Offer
Organizations may make a job offer that is contingent on the candidate passing
certain tests or meeting certain requirements. This is known as a contingent job
offer. The tests or requirements can include the following:
 Medical examination
 Physical fitness test
 Psychological test
Employment Offer
An employment offer should quickly follow the selection of the most qualified
candidate. Mishandling this part of the process can result in losing the candidate
to another organization or can give the employment relationship a negative start
even if the candidate accepts the position.
An employment offer is formally communicated through an offer letter.

Employment offers must be worded carefully. Figure 4-13 provides a simple list
of guidelines for the offer letter.
© 2012 SHRM 84
Offer Letter Guidelines

 Use a standard letter that has been
approved by the legal department.
 Clearly state the terms of the offer and any
contingencies.
 Establish a reasonable acceptance
deadline.
 Clearly state the acceptance details (for
example, requiring a signature returned on
a duplicate copy of the offer letter).
Figure 4-13. Offer Letter Guidelines
Offer Negotiation
In some countries, the offer letter is followed by little or no negotiation. Both the
candidate and the organization will have a mutual understanding about what the
offer letter will include before the formal offer is made. In other countries, the
offer letter may be the starting point of a long negotiation.
After the negotiations are complete, the offer and contract of employment may be
finalized.
An employment contract is an agreement between the organization and an

employee that explains the employment relationship.
A written contract helps clarify employment terms. The specific terms will vary
based on the organization, the job and applicable local laws. The following list
provides examples of items commonly covered in an employment contract:
 Terms and conditions of employment
© 2012 SHRM 85
 General duties and job expectations of the employee

 Confidentiality and nondisclosure terms
 Terms for resignation or termination
 Relocation
 Severance provisions
 Appropriate signatures and date
What is the difference between an offer and a contract? The legal distinction may
vary from country to country. In general, an offer is not legally binding and can
be retracted at any time. A contract confers specific legal obligations on both the
organization and the new employee. In some counties, the contract can be very
difficult to break without significant costs.
Involve legal counsel in developing any offer letter or contract for the
organization.
Handling Nonselected Candidates
Candidates who are not selected for the open position should be notified
promptly. A personal phone call or letter is the preferred method for such
notifications. However, standardized rejection letters may be necessary when
there are numerous applicants. If possible, add a paragraph to the letter showing
that the organization has given careful thought to the candidate and to the
selection. For example, the letter can indicate that the selection was a difficult
decision and that the deciding factor was due to the need for a specific skill or
competency in the candidate. The candidate is more likely to feel respected and to
retain a positive impression of the organization.
© 2012 SHRM 86
2.5: New Hire Onboarding

Knowledge:
Behaviors: 14. Prepare for the new hire’s arrival (for example, get identification
documents and required forms, set up email address)
17. Coordinate orientations for new employees (for example, discuss

the company’s expectations for the position, review the
employee handbook, explain the benefit plans)
Section 2.5: New Hire Onboarding
Introduction ..................................................................................................................................89
New Employee Orientation .........................................................................................................89

Before the Employee’s Arrival ..................................................................................................89
Orientation/Induction .................................................................................................................90
New Employee Orientation Checklist ........................................................................................91
Supervisor Orientation Checklist ...............................................................................................92
New Employee Onboarding ........................................................................................................93

Onboarding Roles and Responsibilities .....................................................................................94
Evaluating the Effectiveness of Onboarding ..............................................................................98
Module 2: Recruitment and Selection Section 2.5: New Hire Onboarding
Introduction
Research on orientation and onboarding shows that a positive start at an
organization has the following benefits for employees:
 Creates enthusiasm
 Reduces anxiety
 Encourages social connections
To support that positive start, a key task for HR professionals is to arrange and
complete all administrative details before the new employee arrives (Corporate
Leadership Council 2004).

 New employee orientation
 New employee onboarding
 HR’s role in facilitating the employee’s successful transition into the new
environment
New Employee Orientation

Before the Employee’s Arrival
Employees play a key role in helping an organization meet its goals and
objectives. Many organizations begin to inform new employees about their roles
before the employees arrive for their first day of work. Offer letters and new hire
welcome packages are the most common methods of communicating information
to the new employee before the start date.
© 2012 SHRM 89
Typical contents of a new hire welcome package include the following:

 Welcome letters (for example, from the organization’s CEO, president and
human resources department)
 Payroll information
 Policies manual
 Benefits information
 Benefits enrollment forms (Corporate Leadership Council 2004)
In addition to sending the welcome package, the organization should take the
following steps to prepare for the employee’s arrival:
 Communicate. Contact the employee and provide a personal welcome.
 Set up the work area. Verify that the employee’s office space is ready and
that the computer, telephone and any other necessary equipment are
arranged.
 Schedule ahead. Ensure that an orientation program is in place (University
of California, Davis, Human Resources 2010).
Orientation/Induction
Orientation, also known as induction, is the first step in the formal process of
training employees. Through orientation, employees become familiar with the
organization, their department, their coworkers and their job.
Orientation programs usually span one to two days. The orientation provides new
employees with three types of information:
 Organizational information
 Policies, procedures and benefits
 Work context (including job procedures)
The purpose of the orientation program is to ease the employee’s transition to a

new environment. During the orientation, the employee can establish relationships
with coworkers and develop a sense of belonging to the organization. The
© 2012 SHRM 90
employee also gains a realistic image of the job. An effective orientation program
helps the employee quickly become a productive and contributing member of the
organization.
Orientation programs can be divided into a general orientation and a department

orientation. HR is usually responsible for the general orientation and can also
provide input to the manager on the department orientation. However, the
manager is responsible for ensuring that employees understand how they will
contribute to their department and how they fit into the organization structure.
Figure 5-1 shows who usually conducts each type of orientation and lists typical
activities.
Figure 5-1. Responsibilities and Activities for General and Department Orientations
New Employee Orientation Checklist
Figure 5-2 provides a sample checklist for the new employee orientation.
© 2012 SHRM 91
Figure 5-2. Sample New Employee Orientation Checklist (Society for Human Resource
Management, New Hire: Orientation Checklist #1 (All), n.d.)
Supervisor Orientation Checklist
Figure 5-3 provides a sample checklist for supervisors conducting a new

employee orientation.
© 2012 SHRM 92
Figure 5-3. Orientation Checklist for Supervisors
New Employee Onboarding

Onboarding is the process of helping new employees learn the organization’s
policies, procedures and culture in addition to their job responsibilities.
Onboarding includes both the orientation and the first three to twelve months of
employment.
The purpose of the onboarding process is to provide the employee with a positive
start at the organization. This positive start can have many benefits; including
increasing the employee’s enthusiasm, helping reduce anxiety and helping the
employee connect with coworkers (Corporate Leadership Council 2004).
Successful onboarding programs generally include the following factors:

 Active rather than passive participation by new employees
© 2012 SHRM 93
 Onboarding spread out over a period of time

 Use of checklists to ensure that all important material is covered
 Avoidance of information overload
Onboarding Roles and Responsibilities
During onboarding, HR professionals, the hiring manager, coworkers and others

learn more about the new employees and further integrate them into the
organization in the following areas:
 Organizational culture and norms
 Organizational goals and objectives
 Specific functional areas in the organization
 Departmental and job expectations
 Available work resources and tools
 Mentor options
 Performance management systems
 Work/life balance and support resources
What specific activities should take place during onboarding? Figure 5-4 provides
a list of best practices included in a successful onboarding process.
© 2012 SHRM 94
Activity Description
Help the new Plan the new employee’s first week and verify that the
employee feel following tasks are complete:
welcome  E-mail and phone are functioning.
 A clean work space is available.
 Business cards are ready.
Clearly define roles Ensure that new employees understand their roles and
and responsibilities their responsibilities.
Socialize and Provide new employees with the opportunity to meet their
integrate with the coworkers. This can be accomplished by team lunches,
team cross-departmental meetings and/or a mentor program.
Modify the For example, all management employees will need both a
onboarding process review of organizational policies and programs and also
to meet the needs of information on how to administer these policies and
different groups of programs.
employees
 Establish an evaluation process using surveys or
Create a formal
interviews with new employees about their
evaluation system
experiences.
 Hold a more formal performance discussion after
three to six months.
 Encourage the employee to discuss problems, and
find ways to provide support.
Figure 5-4. Best Practices in a Successful Onboarding Process
© 2012 SHRM 95
Figure 5-5 lists general guidelines for delegating onboarding responsibilities to

different departments and people.
Responsible Onboarding Responsibilities

Departments/People
Corporate Services  Site information (for example, cafeteria and fitness

center)
 Phone access
Facilities
 Workspace preparation
 Onboarding coordination
Human Resources
 Alerting functional groups of new employee’s
start date
 Background checks
 New employee orientation
 New employee paperwork
 Work hours
 History and background of the organization
 Review of the organizational chart
 Facility tour
 Computer at workstation
Information
 E-mail
Technology
 Intranet access
 Passwords
 Systems access
 Voice mail
 Creation of new employee paperwork
Legal
 Creation of new employee policies
Figure 5-5. Delegation of Onboarding Responsibilities to Different Departments and People

(continued to the next page)
© 2012 SHRM 96
Responsible Onboarding Responsibilities

Departments/People
 Health questionnaire
Occupational Health
 Pre-placement examination (where required)
Services
 ID badges
Safety and Security
 Parking identification ticket
 Security access to buildings
 Vehicle registration
 Team interactions
Coworkers
 How to accomplish tasks
 How to find and requisition tools and equipment
 Mission, vision and values
Management
 Strategic goals and objectives of the organization
 High-level review of roles and responsibilities
 Description of organizational culture
 Introductions to coworkers and others within the
Mentor
organization
 Review of informal rules and policies
 Answers to day-to-day questions
 Work behaviors, standards and expectations
Supervisor
 Introductions to coworkers and others within the
organization
 Department tour
 Review of roles and relationships within
department
Figure 5-5. Delegation of Onboarding Responsibilities to Different Departments and People

(concluded)
© 2012 SHRM 97
Talya N Bauer, Ph. D., in the Society for Human Resource Management
Foundation’s Effective Practice Guidelines Series−On Boarding New
Employees examined on-boarding practices. Figure 5-6 summarizes a sample
onboarding program. The program components were developed to be distributed
to either all employees or incoming executives from the first day on the job and
throughout the first year of employment.
Figure 5-6. Sample Onboarding Components (Bauer 2010)
Evaluating the Effectiveness of Onboarding
The effectiveness of the onboarding program can be related to the amount of

turnover in the first year of employment. Onboarding programs can help
© 2012 SHRM 98
employees adjust to the new environment by introducing them to coworkers,

lessening feelings of isolation and providing a better understanding of
expectations and future opportunities.
HR professionals can evaluate their organization’s onboarding initiatives using

metrics that include the following:
 Turnover/retention rates. Compare retention rates for various groups. For
example, what is the retention rate for employees who began their
employment in 2011 compared to employees who began in 2010?
 Retention threshold. Track the point at which most new employees tend
to exit the organization. For example, if most new employees exit within
the first 90 days of employment, the organization can conduct exit
interviews to determine the cause of the early exit.
 Performance measures. Compare the performance of groups provided
with different onboarding experiences. For example, one group is provided
with one week of onboarding experiences and a second similar group is
provided with a full month.
 Formal/informal feedback. Ask new employees open-ended questions to
determine their satisfaction with the onboarding process and the
organization.
 Flexibility. Flexibility and adaptability allow your organization to provide
employees with an optimal work environment.
Figures 5-7 and 5-8 provide a sample new hire survey that can be used to obtain
new employee feedback.
© 2012 SHRM 99
Figure 5-7. Sample New Hire Survey (Society for Human Resource Management, Survey: New
Hire Survey, n.d.)
© 2012 SHRM 100

Figure 5-8. Sample New Hire Survey (Society for Human Resource Management, Survey: New
Hire Survey, n.d.)
© 2012 SHRM 101

© 2012 SHRM 102

2.6: Recruitment Metrics

Knowledge:
Behaviors: 16. Report recruiting metrics (for example, the number of

applications received, the number of candidates interviewed, the
number of applicants hired)
© 2012 SHRM 103

Module 2: Recruitment and Selection Section 2.6: Recruitment Metrics
Section 2.6: Recruitment Metrics

Introduction ................................................................................................................................105
Using Recruitment Metrics to Measure Business Impact ......................................................105

Evaluating the Effectiveness of Recruiting Efforts ..................................................................105
More Staffing Metrics ..............................................................................................................110
Workforce Analytics and Reporting ........................................................................................115
Introduction
Recruiting and acquiring talent has a large economic impact on an organization.
Talent is what moves the organization forward and helps the organization achieve
strategic success. This is true whether the organization’s operations are for profit,
not for profit, governmental or nongovernmental.
HR is responsible for collecting workforce metrics. Organization leaders are

interested in these metrics and in how HR’s talent management impacts the
organization’s financial goals.
Many HR professionals only analyze and report activities. However, workforce

metrics and tools are useful beyond simply measuring talent acquisition. The HR
professional must also report what the activities accomplish. The data can be used
to provide insights that improve talent management decisions, which improves
organizational effectiveness. Metrics used in this manner are valuable in
developing workforce planning strategies that place the right people in the right
place at the right time.
This section examines some of the traditional workforce metrics used by HR.
Using Recruitment Metrics to Measure Business Impact

Evaluating the Effectiveness of Recruiting Efforts
The metrics collected by HR provide data that the organization can use to make
key decisions. Recruitment metrics should take both a short- and long-term view
and should help the HR department contribute to the goals and objectives of the
organization.
The yield ratio is a valuable metric for evaluating the effectiveness of recruiting
efforts. A yield ratio compares the number of applicants at one stage of the
© 2012 SHRM 105

recruiting process to the number of applicants at the next stage. This ratio helps
you determine how many candidates you will need, the cost of recruiting methods
and the return on investment (ROI).
Common yield calculations include the following ratios:

 Qualified candidates to total candidates
 Minority candidates to total candidates
 Offers extended to qualified candidates
 Offers extended to final interviews
 Offers accepted to offers extended
Figure 6-1 provides the data for a simple yield ratio calculation.
Figure 6-1. Sample Situation for Yield Ratio Calculation
Figure 6-2 shows the formula for calculating the yield ratio of qualified
candidates to total candidates.
Figure 6-2. Yield Ratio Calculation
The yield ratio of qualified candidates to total candidates is 10%.
© 2012 SHRM 106

This information provides measureable and quantifiable data that help the HR
professional better estimate recruiting efforts and costs. Figure 6-2 shows that 100
potential candidates are needed to find 10 qualified candidates. This information
helps forecast the amount of effort required to fill a position.
Analyzing the Cost of Recruiting
Cost per hire is the traditional measure of recruiting costs. Cost per hire is the
amount of money needed to recruit a new employee. This metric is calculated by
dividing the total costs of all hires by the number of new hires, as shown in Figure
6-3.
Figure 6-3. Cost of Hire
What are the total costs? This category includes all costs associated with
recruiting. Figure 6-4 shows both direct and indirect costs.
© 2012 SHRM 107

Direct Costs Indirect Costs

 Advertising  Involvement of
 Recruiter salaries managers
 Agency fees  Impact of unfilled
 Referral incentives vacancies on
 Recruitment materials coworkers
 Screening  Lost productivity
 Training  Decline in morale
 Overtime
 Travel
 Signing and referral
bonuses
Figure 6-4. Direct and Indirect Costs of Recruiting
A concern with the cost-per-hire metric is that it oversimplifies the costs of hiring.
Cost of hire groups the costs of hiring for all types of employees. Mixing types of
employees can misrepresent the true costs of hiring for a specific position. For
example, the cost per hire would not be the same for senior-level employees,
supervisors and lower-level employees. A better approach is to calculate the cost
per hire by employee type.
Recruitment costs must be weighed against both short- and long-term recruiting
objectives. From a short-term perspective, ongoing efforts can be more expensive
than intensive, last-minute efforts. However, from a long-term perspective,
ongoing efforts can be more cost-effective over time by providing a steady source
of well-qualified candidates.
Figure 6-5 shows examples of possible yield ratios and cost-per-hire data for two
different recruiting sources.
© 2012 SHRM 108

Local University Electronic Job Board
Applications generated 20 300
Yield ratio of interview 15/20 or 75% 20/300 or 6%

offers
Yield ratio of job hires to 5/15 or 33% 3/20 or 15%

interviews
Total cost-per-recruitment 5,000 660

source
Cost per hire 1,000 220
Figure 6-5. Examples of Cost-Per-Hire Data for Two Different Recruiting Sources
The data in Figure 6-5 demonstrate that the recruiting source can directly impact
the cost of recruiting. A source analysis provides a better understanding of the
effectiveness of different recruiting sources. The source yield is calculated as
shown in Figure 6-6 (Society for Human Resource Management, Source Yield:
SHRM Metric of the Month 2007).
Figure 6-6. Source Yield
© 2012 SHRM 109

The benefits of each recruitment method depend on factors such as the following:
 The length of time needed to fill the position
 The number of qualified candidates generated by the recruitment method
 The effect of staff time
Organizations should analyze the cost and effectiveness of each recruiting source
and make the appropriate changes in its recruiting process.
More Staffing Metrics
Many HR professionals are examining their recruiting data in more detail to

accomplish the following:
 To better understand the value of their recruiting processes
 To ensure that these processes are properly aligned with the organization’s
goals (Garvey 2005)
Using a matrix of staffing metrics gives organizations a fuller perspective of the

recruiting process. However, the metrics that provide the most valuable data vary
from organization to organization. The metrics that are best for your organization
will depend on many factors, including the organization’s goals and objectives
(Garvey 2005).
We will look in detail at the following staffing metrics:

 Days to fill
 Headcount
 Human capital value added
 Return on investment
 Turnover rate
 Vacancy rate
© 2012 SHRM 110

Days to Fill
Days to fill (also known as time to fill) is the average number of days required to
hire a person for an open job position.
Figure 6-7 shows the formula for days to fill.
Figure 6-7. Days to Fill
What is the value of this information?

 HR professionals can determine a realistic amount of time for hiring new
employees.
 Managers can plan how to redistribute work to existing employees while
the position is open.
 The organization can complete resource and budget planning.
HR professionals must be aware that increasing the speed of hiring can decrease
cost efficiency and quality. However, increasing cost efficiency can decrease the
quality of the hire and the speed of hiring. Similarly, a focus on increasing quality
may decrease cost efficiency and the speed of hiring. Figure 6-8 portrays the
relationship among these three variables.
© 2012 SHRM 111

Figure 6-8. Factors Influencing Recruitment (Richards 1995)
Many other factors can impact days to fill for international operations, including
the following:
 The type of employee for example, international assignee or local hire)
 Level of employee (for example, executive, supervisor or lower level)
 Legal compliance in specific countries
 Labor market conditions
 Assignment logistics (for example, visas, work permits and predecision
trips)
 Culture
 Compensation and benefits offerings
Headcount
Headcount is the number of people on the organization’s payroll. The headcount

includes temporary workers on the organization’s payroll and employees on
temporary leave of absence. The headcount does not include independent
contractors or temporary workers on an agency’s payroll (Society for Human
Resource Management, How to Determine Turnover Rate 2009).
The headcount provides a number for one moment in time (for example, on June
1 the headcount was 35,000). Headcount rises and falls as employees leave and
are replaced, but these changes are usually small. Large changes in headcount are
© 2012 SHRM 112

not the result of employee turnover; they are the result of operational changes that
drive the demand for talent. Examples of operational changes include expansions,
acquisitions, Greenfield operations and divestures.
Retention and productivity improvements can also influence headcount.
Return on Investment
Return on investment (ROI) is a performance measure used to evaluate the

financial outcome of an investment. ROI equals the difference between the
benefits that an asset or project delivers and the costs of the asset or project, as
shown in Figure 6-9. This metric helps HR professionals optimize investments in
recruitment, motivation, training and development.
Figure 6-9. Return on Investment
Additional information on return on investment can be found in Module 1: HR

Administration, Section 1.2: Gathering, Measuring and Reporting HR Data.
© 2012 SHRM 113

Turnover Rate
The turnover rate measures the rate at which employees leave an organization.
Figure 6-10 shows the formula for the monthly turnover rate.
Figure 6-10. Turnover Rate
Vacancy Rate
The vacancy rate measures the rate at which positions open as a result of
employee turnover. Vacancy rate can be calculated for one position, one division
or the entire organization. Figure 6-11 shows the formula for the vacancy rate.
Figure 6-11. Vacancy Rate
Human Capital Value Added
This metric measures how the workforce’s knowledge, talent and skills add value
to an organization. Figure 6-12 shows the formula for human capital value added.
Figure 6-12. Human Capital Value Added
© 2012 SHRM 114

Workforce Analytics and Reporting
Figure 6-13. Using Workforce Analytics (Roberts 2009)
Workforce analytics refers broadly to the metrics used in determining the

effectiveness of HR functions. As reported by Bill Roberts in HR Magazine,
workforce analytics should be based on facts: the use of data, metrics, statistics
and scientific methods (Roberts 2009). This information helps an organization
draw conclusions from its HR data quickly and efficiently.
Workforce analytics is considered particularly vital for the most strategic talent
management tasks, such as the following:
 Recruiting the right employees
 Measuring employees’ performance
 Helping employees develop
 Compensating employees effectively
Many organizations are outsourcing the entire recruiting life cycle from end to
end. As a result, outsourcing vendors become responsible for workforce analytics
that support the organization’s long-term goals. For example, the vendor should
use selection tools that result in reduced early turnover for the organization
© 2012 SHRM 115

(Society for Human Resource Management, For Recruitment Outsourcing

Success, Mind the Metrics 2007).
Data marts and data warehouses are two tools that organizations use to help
collect workforce data for analysis. Figure 6-14 shows features of these tools.
Data Mart Data Warehouse

 A data mart is a collection of  A data warehouse integrates
data based on the reporting data from multiple systems—
needs of a specific group. for example, financial, sales
 Data marts are usually heavily and HR—based on the
indexed for ease of use. reporting needs of the entire
organization.
 Data warehouses are usually
not indexed because of the
volume of information.
Figure 6-14. Data Marts and Data Warehouses
Many vendors offer products for transforming workforce data into strategic
reports. One example is Oracle’s PeopleSoft Workforce Analytics. This product is
vendor-independent; you can use data from other human resource information
systems as well as from PeopleSoft data. The product provides analytics on
workforce demographics, compensation, benefits, turnover and training (Society
for Human Resource Management, Workforce Analytics: Strive for More Than
Standard HR Reports 2007)
© 2012 SHRM 116

You have completed Module 2: Recruitment and Selection. Next, if you feel
ready, go to the Online Learning Center and check your knowledge by
completing the Case Studies, Module 2 Practice Test and the Cumulative
Practice Test. Also try the Terminology Quiz to check your knowledge of
terminology.
© 2012 SHRM 117

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© 2012 SHRM 119

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© 2012 SHRM 120

—. "Workforce Analytics: Strive for More

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brand-increasing-importance
© 2012 SHRM 121

Module 2: Recruitment and Selection Index
Index
applicant notification ................................ 72 diversity and inclusion considerations 10–11
application forms ................................ 66–68 employee referrals ............................... 46, 47
aptitude test ............................................... 69 employee value proposition ................ 4, 6, 8

benefits .................................................... 8
background investigations ........................ 79 categories ................................................. 8
challenges ................................................ 9
behavioral interviews .......................... 74–75 corporate use ........................................... 8
candidate pipeline ..................................... 43 employment branding ................................. 6
cognitive ability test .................................. 69 employment contracts ......................... 12, 85
competency-based interview ............... 74–76 employment offer ...................................... 84
contingent job offer ................................... 84 evaluating candidates ................................ 79
background investigations ..................... 79
corporate learning council........................... 8 interview feedback ................................ 79
cost efficiency ......................................... 111 external recruitment .................................. 52
advantages and disadvantages ............... 53
cost per hire ......................................... 107–9
external recruiting sources .................... 53
credit history check ................................... 80
flexibility ......................................... 4, 44, 99
criminal background check ....................... 80
flexible staffing ......................................... 44
curriculum vitae (CV) ............................... 66
formal/informal feedback.........................See
CV ................................ See curriculum vitae
gap analysis ............................................... 15
data ............ 3, 23–25, 55, 67, 23–25, 115–16
headcount ............................ 41, 44, 110, 112
common data collection methods .......... 24
gathering job analysis data .................... 23 HRIS ......... See human resource information
gathering staffing data ........................... 14 system
data marts and data warehouses .............. 116 human capital value added .............. 110, 114
demand analysis ........................................ 15 human resource information system (HRIS)
............................................................... 47
demotions .................................................. 49
© 2012 SHRM 122

intercultural assessment tools ................... 71 employment contract ....................... 12, 85

employment offer .................................. 84
internal movement .................................... 48 handling nonselected candidates ........... 86
offer negotiation .................................... 85
internal recruitment ............................. 45–47
advantages and disadvantages ............... 45 job postings ................................... 10, 46–47
internal movement ................................. 48
methods of ............................................. 46 job requisition ............................... 41–42, 72
reasons for ............................................. 51
job specifications .................... 22, 26, 30–32
international assignments ........ 48, 50–52, 71 examples ................................................ 30
guidelines for writing ............................ 32
Internet search ........................................... 80
knowledge, skills, abilities ............ 23, 29, 47
interviewing candidates ................ 59, 66, 73
behavioral interview .............................. 74 KSA.............. See knowledge, skills, abilities
competency-based interview ................. 75
differences between prescreening and in- legal considerations in global staffing ...... 11
depth interviews ................................. 73
feedback ................................................ 79 metrics ......................... 72, 99, 105, 110, 115
guidelines .............................................. 77 cost per hire ......................................... 107
structured interview ............................... 76 days to fill ............................................ 111
headcount ............................................ 112
job analysis.......................................... 21–26 human capital value added .......... 110, 114
collection methods................................. 24 return on investment ............................ 113
definition ............................................... 21 source yield ......................................... 109
outcomes of ........................................... 26 turnover rate ........................................ 114
purpose of .............................................. 22 vacancy rate ......................................... 114
relevant information .............................. 23 yield ratios ........................................... 108
job competencies ..................... 22, 26, 33–34 mobile marketing ...................................... 58

definition ............................................... 33
examples ................................................ 34 networking sites ........................................ 57
Identifying ............................................. 33
new employee onboarding ....See onboarding
job databases ............................................. 56
new employee orientation ..... See orientation
job descriptions ............................. 22, 26–32
challenges .............................................. 28 nonselected candidates .............................. 86
considerations for a global environment 28
observation method ................................... 24
definition ............................................... 27
elements of ............................................ 28 offer negotiation ........................................ 85
job documentation ..................................... 27 onboarding .............................. 72, 89, 93–99
best practices ......................................... 95
job offer ............................................... 40, 84
definition ............................................... 93
contingent job offer ............................... 84
delegating onboarding responsibilities .. 96
© 2012 SHRM 123

evaluating the effectiveness of .............. 98 realistic job previews (RJP) ...................... 82

purpose .................................................. 93 benefits .................................................. 83
roles and responsibilities ....................... 94 purpose .................................................. 82
sample new hire survey ......................... 99 types ...................................................... 83
sample onboarding program components
........................................................... 98 recruiting costs ................................. 107, See
open-ended questionnaire ......................... 25 recruiting strategy ............................... 42, 47

candidate pipeline .................................. 43
orientation ......................... 50, 89, 90–93, 96 checklist for recruiting effectiveness..... 43
before the employee’s arrival ................ 89 flexible staffing options ......................... 44
definition ............................................... 90
new employee orientation checklist ...... 91 recruiting technology .......................... 56, 59
purpose .................................................. 90 job databases ......................................... 56
supervisor orientation checklist ............. 92 mobile marketing................................... 58
networking sites..................................... 57
people in business ....................................... 6 video conferencing ................................ 59
performance measures .............................. 99 recruitment

definition ............................................... 40
permanent reduction.................................... 6 starting the process ................................ 41
persistent shortage ....................................... 5 recruitment metrics ................................. 105
personality test .......................................... 70 recruitment sources ....................... 42, 45, 52

external recruitment............................... 52
pre-employment tests ................................ 69 internal recruitment sources .................. 45
prescreening candidates reference check ....................... 10, 61, 66, 70
applicant notification ............................. 72
application forms ................................... 67 reliability ............................................. 69, 81
CVs and application forms .................... 66
definition ............................................... 66 relocation............................................. 49, 86
other prescreening tools ........................ 70
pre-employment tests ............................ 69 resume ................................................. 67–68
qualifications and eligibility .................. 71
warning signs......................................... 68 retention rates ............................................ 99
prescreening phone call............................. 70 retention threshold .................................... 99
primary source .......................................... 24 return on investment (ROI) ............. 106, 113
promotion ............................................ 45, 49 RJP ........................See realistic job previews
psychomotor test ....................................... 70 Roberts, Bill ............................................ 115
qualifications and eligibility ..................... 71 ROI......................... See return on investment
© 2012 SHRM 124

selecting candidates .................................. 81 staffing plan .................................... 3, 14–18

realistic job previews ............................. 82 comment elements ................................. 16
reliability and validity of selection tools designing ............................................... 16
and methods ....................................... 81 gatheringdatafor .................................... 14
role of .................................................... 14
selection
definition ............................................... 65 staffing strategy....................................... 4–6
selection process ....................................... 65 structured interview .................................. 74

overview ................................................ 65
step 1: prescreen .................................... 66 supply analysis .......................................... 15
step 2: track ........................................... 72
step 3: interview .................................... 73 temporary reduction .................................... 5
step 4: evaluate ...................................... 79
step 5: select .......................................... 81 tracking applicants .................................... 72
step 6: offer............................................ 84
transfer .................................... 28, 41, 45, 50
skills assessment tools............................... 47
trends in staffing ......................................... 9
SMART (smart, measurable, achievable,
turnover rate .................................... 110, 114
realistic, time-based) ............................. 16
vacancy rate .................................... 110, 114
solution analysis ........................................ 15
validity ................................................ 69, 81
source yield ......................................... 67–68
video conferencing .............................. 56, 59
staffing
definition ................................................. 9 welcome package ................................ 89, 90
staffing approach ......................................... 9 workforce analytics ........................... 115–16
diversity and inclusion considerations .. 10
legal considerations ............................... 11 workforce planning .... 3, 6, 9, 15, 26, 31, 43,
trends ....................................................... 9 105
benefits .................................................... 3
staffing data ............................................... 14 definition ................................................. 3
staffing metrics............................ See metrics writing guidelines...................................... 32
staffing needs .................................... 3–5, 15 yield ratio ............................................ 105–6
anticipating .............................................. 5
defining.................................................... 4
© 2012 SHRM 125

Module 3: Employee Relations and
Communications
Module 3: Employee Relations and Communications .............................................................. iii
Purpose Statement ............................................................................................................................... vii
Body of Knowledge ............................................................................................................................ vii
Section 3.1: Communication in the Workplace...........................................................................1

Introduction ..................................................................................................................................4
Communicating with Employees .................................................................................................5
Importance of Communication ............................................................................................................. 5
Developing Your HR Communication Skills ....................................................................................... 8
Know Your Audience ........................................................................................................................... 9
What Does HR Need to Communicate? .....................................................................................10
Communicating Benefits..................................................................................................................... 11
Communicating an Emergency Plan ................................................................................................... 12
Cross-Cultural Communication..................................................................................................15
Barriers to Effective Communication ................................................................................................. 16
Communication and Language across Cultures .................................................................................. 17
Cultural Styles of Communication ...................................................................................................... 19
Cross-Cultural Working Teams .......................................................................................................... 21
Methods of Communication .......................................................................................................22
Flow of Communication throughout the Organization ....................................................................... 22
Choosing a Communication Method .................................................................................................. 23
Communicating through Technology.........................................................................................26
Employee Feedback ...................................................................................................................31
Mechanisms for Collecting Employee Feedback ................................................................................ 31
Informing Employees during Difficult Times..................................................................................... 35
Section 3.2: Laws Affecting Employee and Labor Relations ...................................................38
Introduction ................................................................................................................................39
The Influence of Law on Employee Relations ...........................................................................40
Introduction to Employment Law ....................................................................................................... 40
Compensation and Benefits Laws ....................................................................................................... 42
Occupational Health and Safety Laws ................................................................................................ 44
Anti-Discrimination, Harassment and Fair Work Laws ..................................................................... 46
Intellectual Property Laws .................................................................................................................. 47
Employment Contracts........................................................................................................................ 49
Laws Affecting Global Workforce Organizations .....................................................................52
International Human Rights and Labor Standards .............................................................................. 53
Trade Agreements and Treaties .......................................................................................................... 55
Global Mobility ................................................................................................................................... 56
Unions Across Borders ....................................................................................................................... 61
Organizational Polices and Employee Relations .......................................................................62
Defining Policies and Procedures ....................................................................................................... 62
Writing Policies and Procedures ......................................................................................................... 64
Communicating Policies and Procedures ............................................................................................ 65
Section 3.3: Creating a Positive Work Environment ................................................................71

Introduction ................................................................................................................................72
Employee Engagement ...............................................................................................................72
Employee Engagement versus Job Satisfaction .................................................................................. 72
Levels of Employee Engagement ....................................................................................................... 73
Employee Engagement Drivers .......................................................................................................... 74
Engaging Employees across Cultures ................................................................................................. 74
Identifying Employee Engagement Barriers ....................................................................................... 75
Communication Strategies for Engaging Employees ......................................................................... 76
Positive Workplace Culture .......................................................................................................78
Early and Effective Onboarding Practices .......................................................................................... 79
Trusting Environment ......................................................................................................................... 79
Reward and Recognition Programs ..................................................................................................... 80
Work/Life Balance Programs .............................................................................................................. 86
International Assignee Support ........................................................................................................... 89
Creating a Friendly Workplace Environment ..................................................................................... 92
Section 3.4: Managing Employee Behavior Issues ....................................................................96

Introduction ................................................................................................................................97
Discipline Process ......................................................................................................................97
Performance Problems .............................................................................................................103
Investigate the Performance Issue..................................................................................................... 103
Conduct the Performance Meeting ................................................................................................... 104
Take Corrective Actions ................................................................................................................... 104
Document Results ............................................................................................................................. 104
Complaint Review, Investigation and Resolution ....................................................................107
Complaint Review ............................................................................................................................ 107
Investigating a Complaint ................................................................................................................. 107
Alternative Dispute Resolution Process and Procedures .................................................................. 110
Dealing with Workplace Violence .................................................................................................... 111
Escalating Issues ............................................................................................................................... 113
Managing Employee Conflicts .................................................................................................113
Interpersonal versus Task Conflicts .................................................................................................. 113
The Cultural Components of Conflict ............................................................................................... 116
Handling Employee Terminations............................................................................................117
Types of Terminations ...................................................................................................................... 117
HR Responsibilities with Termination Activities ............................................................................. 120
Exit Interviews .................................................................................................................................. 120
Bibliography ...............................................................................................................................122
Index ............................................................................................................................................126
Acknowledgements

Diane M. Dowlin, SPHR, GPHR, CCP, GBA, CMS, CEBS
International Human Resources Director, FIS


Cigdem Ozdemir Evren, MBA, HRBP Patchara Popaitoon

HR Generalist, FNSS Defense Systems Researcher/Teacher/Lecturer, School of
Ankara, Turkey Management University of Bath
Claverton Down, Bath, United Kingdom
Arturo Gaitán Nicholls
Human Resource Analyst, Bancolombia Aparna Rajesh, MBA, GPHR
Bogota, Colombia HR Manager, Lafarge
Dubai, United Arab Emirates
Nancy Kaysarly, PHR
OED Advisor, International Management Howard A. Wallack, MA, MSc, GPHR
Consulting Company Vice President, Global Business
Cairo, Egypt Development (acting), Society for Human
Resource Management
Sameer Khanna, GPHR, HRMP Alexandria, Virginia
Vice President and Head HR – Region India,
Ericsson India Pvt. Ltd.
New Delhi, India
For your convenience, the Body of Knowledge for Module 3: Employee

Relations and Communication is provided on the following pages.
Purpose Statement
Purpose Statement for Employee Relations and Communication:
HR professionals in employee relations and communication should possess a

combination of behaviors and skills/knowledge that include promoting HR
policies and procedures and communicating with employees through individual
approaches, such as exit interviews, and group approaches, such as a company
web site or a rewards program.
Body of Knowledge
content related to Module 3: Employee Relations and Communication.
Important behaviors for employee relations and communications:
01. Communicate information to the company about HR policies and procedures (for example,
announcements about organizational changes such as structure, safety and security, or legal
requirements)
02. Support company sponsored activities and awards to encourage a positive work environment
(for example, employee appreciation and rewards, company social gatherings, sports teams
or clubs)
03. Collect information about employees’ work experiences by conducting final exit interviews
before employees leave the organization, and conduct surveys about employee attitudes,
© 2012 SHRM vii

04. Complete the assigned tasks when an employee leaves the organization due to voluntary or
involuntary terminations
05. Respond to employee’s questions or concerns about workplace issues (for example,
employment concerns, company HR policies, complaints, retirement questions, payments)
06. Enforce HR policies and procedures (for example, explain and make sure that employees
comply with the employee handbook)
07. Maintain regular communication with employees (for example, through newsletters, or the
company website)
Important knowledge and skills for employee relations and communication:
01. How to encourage and keep employees (employee engagement techniques)
02. Methods and processes for collecting employee feedback (for example, employee attitude
surveys or final exit interviews before leaving the organization)
03. Effects of employment and labor law (for example, minimum wage, rules for terminating
employees, establishing unions or work councils, people with disabilities and rules against
discrimination)
04. How to handle conflicts (for example, addressing the problems of individual employees and
knowing when to involve senior staff)
05. Issues affecting work-life balance (for example, flexibility of hours, telecommuting)
06. Issues of behavior in the workplace (for example, absences, discipline, workplace violence,
or harassment)
© 2012 SHRM viii

08. Methods for increasing disciplinary action needed for work-related behavior, including
procedures for ending employment
09. Event planning
© 2012 SHRM ix
© 2012 SHRM x
3.1: Communication in the
Workplace

Knowledge:
Behaviors: 01. Communicate information to the company about HR policies and

procedures (for example, announcements about organizational
changes such as structure, safety and security, or legal
requirements)
03. Collect information about employees’ work experiences by

conducting final exit interviews before employees leave the
organization, and conduct surveys about employee attitudes,
05. Respond to employee’s questions or concerns about workplace

issues (for example, employment concerns, company HR
policies, complaints, retirement questions, payments)
07. Maintain regular communication with employees (for example,

through newsletters, or the company website)
Skills & Knowledge: 02. Methods and processes for collecting employee feedback (for
example, employee attitude surveys or final exit interviews
before leaving the organization)
Section 3.1: Communication in the
Workplace
Introduction ....................................................................................................................................4
Communicating with Employees ..................................................................................................5

Importance of Communication.....................................................................................................5
Developing Your HR Communication Skills...............................................................................8
Know Your Audience...................................................................................................................9
What Does HR Need to Communicate? .....................................................................................10

Communicating Benefits ............................................................................................................11
Communicating an Emergency Plan ..........................................................................................12
Cross-Cultural Communication .................................................................................................15

Barriers to Effective Communication ........................................................................................16
Communication and Language across Cultures .........................................................................17
Cultural Styles of Communication .............................................................................................19
Cross-Cultural Working Teams .................................................................................................21
Methods of Communication ........................................................................................................22

Flow of Communication throughout the Organization ..............................................................22
Choosing a Communication Method..........................................................................................23
Communicating through Technology ........................................................................................26
Employee Feedback .....................................................................................................................31

Mechanisms for Collecting Employee Feedback .......................................................................31
Informing Employees during Difficult Times ............................................................................35
Module 3: Employee Relations and Communication 3.1: Communication in the
Workplace
Introduction
Imagine you’ve been charged with creating a human resources (HR) function
within your organization. First, you want to be sure the human element of the
organization is aligned with the overall business strategy. Next, you have the
enormous task of planning for services, creating budgets, establishing
infrastructures and identifying resources to support the needs of your workforce.
Now imagine that all the planning is complete and that everyone within the HR
function understands the processes, the great benefits offered, the employee
programs being rolled out and how to respond to employee needs. You’re left
wondering: how will employees know about these great offerings?
What’s missing from your planning? A communication strategy is missing from

your planning. In order for a successful HR function to service an organization’s
constituents, there needs to be an effective way to communicate with employees
and to collect ongoing feedback for continual improvement efforts.
Communication does not start and stop within the HR function. There are
numerous stakeholders and partners to involve, namely leadership. In this section
you will explore the importance of an organization-wide communication strategy
and how this strategy cascades down to the HR function. You will learn about
what you may want to communicate to your constituents and also about methods
for delivery and feedback.
This section examines the following:

 Communicating with employees
 What HR needs to communicate
 Cross-cultural communication concepts
 Methods for communicating
 Using technology for communications
© 2012 SHRM 4
Workplace
Communicating with Employees

Importance of Communication
Employees want to be kept informed, but most companies do a poor job of

communicating and keeping employees involved, especially over distances,
across time zones and in different languages. Employees in most organizations
continue to state that they are not aware of the company’s strategies, direction or
key initiatives. Furthermore, people leaving the organization often cite a lack of
communication and a feeling of being cut off from the company as primary
reasons for their departure.
Most human resource professionals and business leaders agree that a formalized
communication strategy is essential to effective and consistent business
operations. With a formal and comprehensive communication strategy,
organizations can ensure the following:
 Consistent messages are delivered
 Messages support a recognizable employment brand
 Messages express the organization’s mission, vision and culture
HR is often responsible for managing the flow of critical information throughout

the organization. Whether the purpose is merely to update employees on new
policies, prepare for an emergency, share achievement or listen to employee
concerns, HR is a principal function of an organization’s communication strategy.
Benefits of Effective Communication
Research shows that organizations that communicate effectively with their

employees financially outperform those that do not. According to a study
conducted by Watson Wyatt Worldwide (now Towers Watson), organizations that
“communicate with courage, innovation and discipline, especially during times of
economic challenge and change, are more effective at engaging employees and
achieving desired business results” (Watson Wyatt 2009/2010).
© 2012 SHRM 5
Workplace
The study included 328 organizations worldwide that represented 5 million

employees. Results found that those companies with highly effective
communication strategies had 47% higher total returns to shareholders compared
with companies with less effective communication strategies.
In addition to financial advantages, communication strategies can create a culture

where employees are more productive and loyal. Figure 1-1 lists some of these
advantages, as well as the disadvantages of ineffective communication.
Effective Communication Ineffective Communication

 Builds employee morale  Leads to damaged work
 Helps employees understand expectations relationships
of their employment  Decreases trust
 Creates commitment and loyalty  Fosters anger and hostility
 Allows employees to give feedback  Provides a basis for
 Reduces potential grievances and misunderstandings
misunderstandings  Reduces opportunities for success
 Increases efficiencies and reduces costs
Figure 1-1. Effective verses Ineffective Communication

(Society for Human Resource Management, Managing Organizational
Communication 2010)
Elements of an Organization-Wide Communication Strategy
Organizational leadership should set the tone for organization-wide

communication. This process involves creating a communication strategy. When
organizations have a communication strategy in place, leaders can quickly convey
messages and put action plans in place when the need arises. Those organizations
with a disorganized approach to communicating often waste time deciding who
should communicate and the methods for how to reach employees.
© 2012 SHRM 6
Workplace
An organization-wide communication strategy should be adaptable and include a

top-down approach, a budget and processes for conveying messages and methods
for feedback. These elements are described in Figure 1-2.
Figure 1-2. Elements of a Communication Strategy

Constituencies
Everyone in the organization has a role in making a communication strategy

work. Senior leaders are ultimately responsible for setting the tone and for
establishing an organizational culture. Managers are responsible for carrying out
daily communication with their employees and for relating to their peers and
colleagues. Both leaders and managers should be coached on their role in
ensuring effective organization-wide communication.
Part of HR’s role may be to manage and provide communication training for
leaders and managers. A strong training component will not only equip leaders to
communicate effectively with their teams and colleagues but also help them
understand the appropriate communication channels and protocols.
© 2012 SHRM 7
Workplace
In addition to training, HR may have other responsibilities when it comes to its

role in communication. These may include the following:
 Responding to employee communication issues
 Dealing with external communications such as media
 Measuring and quantifying results of communication strategies
Employees also play a major role in a communication strategy and have a

responsibility to voice concerns and issues, provide feedback and listen
effectively (Society for Human Resource Management, Managing Organizational
Communication 2010).
Developing Your HR Communication Skills
With so much at stake in your ability to communicate effectively, it makes sense

to put thought and effort into developing your communication skills. According to
Elaine Varelas from Keystone Partners, there are five guiding principles you can
use to help you become a more effective communicator:
 Address the difficult issues in an honest and concise manner. Problems

can escalate if they are not addressed in a swift manner. While it may
make you feel uncomfortable to discuss poor performance issues or
questionable ethical actions, you are leaving your organization vulnerable
if you do not have the difficult discussions.
 Select the appropriate method to deliver the message. Carefully

consider the method most appropriate to send a message. This includes
using the correct messenger as well. For example, information about an
acquisition is best delivered by a senior manager, not by a line manager.
 Praise in public; reprimand in private. People appreciate recognition.

Look for opportunities to provide encouragement for a job well done. The
opposite is true when there is criticism to share. Behaviors need to be
addressed; however, respect the dignity of the person whom you are
© 2012 SHRM 8
Workplace
reprimanding. Consider cultural preferences when praising in public and

also when sharing criticism.
 Be honest. To be honest you need to be able to determine the truth and to

convey it accurately. Wanting to be honest doesn’t make you honest.
Honesty requires conscious practice.
 Communicate on a regular basis. Communication should be part of a

routine. When it is part of your work cycle, communication is easier to
manage and less daunting. (Varelas 2008)
Know Your Audience
In any communication strategy, identifying audience issues is a key task in

ensuring effectiveness. In the example of an organization downsizing, there could
be many audience types each requiring a different message and delivery method.
The following list provides five possible examples of audience types for
downsizing in an organization:
 Audience 1: Employees who will lose their job
 Audience 2: Employees who will tell other employees that they will lose
their jobs
 Audience 3: Employees whose work requirements may increase because
of downsizing
 Audience 4: Employees not impacted
 Audience 5: Managers who have groups impacted or not impacted by
downsizing
You should also consider the size of your audiences, which may guide the
methods you use. For example, if it is anticipated that a given audience will have
many questions regarding downsizing and the personal implications, keeping
meeting sizes small may be preferred so that questions can be adequately
addressed.
© 2012 SHRM 9
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Diverse Audiences
Organizations may have multiunit operations, with worksites across cities and
even across countries. The more geographically dispersed and interdependent
these groups are, the greater the challenges are for creating a cohesive
communication strategy.
Audiences may have differing perceptions and expectations when giving or

receiving information due to age, disability, ethnicity, gender and race. These
differences should be evaluated when developing messages for a broad audience.
What Does HR Need to Communicate?

Communication starts with a message, and for HR functions there are often many
messages to deliver to constituencies and therefore many opportunities to seek
feedback. The more complex the organization, the greater the need for HR to
manage the flow of communication, so it is inclusive, timely and effective.
Review the topics outlined in Figure 1-3, and for those topics relevant to your
organization, ask yourself: what understanding is necessary for my audience, and
what do I want my audience to do with this information?
HR Topics
Benefits Holiday calendar Emergency plan
Organization’s goals and Employee surveys New employee orientation

mission
Figure 1-3. HR Topics for Communication (continued to next page)
© 2012 SHRM 10
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HR Topics
Organization’s values Rewards system Employee news
Organizational policies Employee handbooks Community involvement &

social responsibility
Organizational initiatives Safety and security Employee programs
Figure 1-3. HR Topics for Communication (concluded)
Let’s explore in more detail two of the topics listed in Figure 1-3, benefits and
emergency plan.
Communicating Benefits
Even if a company offers an outstanding benefits package, it won’t achieve a

return on investment if the employees fail to understand what is offered and how
the benefits can support their lives and the lives of their families.
Employees should be considered consumers of benefits, and communications

should reflect this perspective so that employees feel empowered to make
decisions that suit their needs.
There are a variety of ways HR can communicate benefits information to

employees. Examples include employee handbooks, organizational websites and
employment contracts. HR must be careful to communicate consistently and
accurately across channels and also remember to update the information as it
changes.
One-on-One Communication
Sending brochures or attending a seminar may not be enough for your employees.
You can’t assume employees will read through a folder of materials and have a
full understanding of how the benefits will support their lifestyles. One-on-one
© 2012 SHRM 11
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communication is the best way for employees to identify the choices that best
meet their individual needs and to plan for how they will use the benefits.
Compare an employee who has a family of four and is preparing to retire in eight
years with an employee who just started his or her first job. Their needs are likely
to be very different. It is important to look at your employee base from a
demographic basis and to determine how to best communicate information that is
relevant to them.
Communicating Financial Information
HR professionals must be careful about how they position financial planning such
as retirement benefits. Avoiding the appearance of a fiduciary relationship is
critical, as there could be legal implications. Communicate the basic offerings,
answer questions and then use third-party providers that are qualified to assist
employees.
Education Conducted by Third-Party Providers
In many cases, suppliers of benefits such as health care and financial planning
offer education programs for employees. There are advantages to these
educational programs as outlined below:
 Savings on expenses
 Educating employees on options
 Educating employees on processes and tools
When employees understand how benefits can help secure their futures, they are
more likely to participate in the plans and to recognize the value of working at the
organization (Society for Human Resource Management, Benefits Choices:
Educating the Consumer 2011).
Communicating an Emergency Plan
In an emergency, the ability to communicate with your employees can be

disrupted. You may not have the ability to communicate through e-mail, or
© 2012 SHRM 12
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perhaps your phone and fax capabilities are out of service. These difficulties can
occur at a time when communication with your employees is most critical.
When considering your emergency preparedness and response plan, explore your
current communication tools and establish primary and secondary ways to reach
employees. If the phone system is out of service, could you use e-mail or post
information to your Intranet site? Make a list of the ways you can stay connected,
and be sure employees know what the alternatives are in an emergency.
The goal of your communication plan is to keep people informed and working
together to move forward. This can be an additional challenge for employees
working from a remote location who may not understand what is happening at
another worksite. The following identify considerations for creating an emergency
communications plan:
 Identify who your constituents are in an emergency. Include clients if

necessary.
 Identify the kinds of information and resources your constituents need in

an emergency.
 Assess how you would react to restricted access to your workplace.
 Talk with other organizations in your industry or geographic area, and

analyze their response plans.
 Identify information that constituents would need in an emergency.
It may be helpful to run a focus group with leaders, safety and security personnel,
managers and employees to discuss alternative communication channels and key
information to disseminate to employees in a time of crisis.
© 2012 SHRM 13
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Leveraging Technology to Communicate During an Emergency

The Internet
The Internet is a reliable way to stay connected with employees across your
organization during an emergency. Because you’re not dependent on a single
location, provider or server, the Internet offers channels and forums to gather and
collaborate. Even if you cannot get to your office, you may still be able to connect
from home, at a local school or at a library.
Internet-based communication tools such as e-mail, instant messaging, online

collaboration sites and social networking should all be considered as alternative
ways to connect with employees. If one communication system goes down, you
should have sufficient backup to continue with business operations. Be sure to
coordinate these initiatives with your technology department.
Your Internet or Intranet site can offer a powerful means of communication. The
key is to get employees in the habit of going to your web location on a regular
basis. If your site is seldom updated and not maintained, employees are less likely
to access this communication forum during an emergency.
Telephone Notification Chain
If your telephone service is still working, activate a telephone notification chain,

and forward instructions to employees on your team. Make sure that employee
names and phone numbers, including cell numbers, are stored and secured and
can be accessed by appropriate personnel during the emergency.
Hotlines
A hotline, also referred to as an automatic signaling service, is a communication

link in which a phone call is directed to a prerecorded message. Hotlines are
another way to disseminate information, but employees must know the hotline
number. If employees don’t know the hotline number, they should know to check
the Internet, voice mail, instant messaging, e-mail, TV, radio, print or company
call centers for hotline numbers.
© 2012 SHRM 14
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Text Messages
Many cell phones today also work with e-mail to support text messaging. This
beeper-like service may still function when normal phone and pager systems are
down. Create a group list in your e-mail program with the cell phone numbers in
the format needed to send them as text messages. This way, you can quickly
communicate with all your employees by sending just a single e-mail message
(Society for Human Resource Management 2007).
For more information on ways to communicate HR topics, please see Managing

Organizational Communication at the following website:
http://www.shrmindia.org/managing-organizational-communication.
Cross-Cultural Communication
When communication occurs between people of two or more cultures, it is termed
cross-cultural communication. While effective cross-cultural communication is
possible, it cannot be approached in the same manner as domestic communication
or communication between individuals who share the same culture.
There are numerous renowned models describing the communication process.

Exploring these models may help mitigate the challenges that can arise when
communicating across cultures. Common to most of these models are the
elements illustrated in Figure 1-4.
© 2012 SHRM 15
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Figure 1-4. Model of Two-Way Communication
Problems arise when what the communicator says differs from what the receiver
hears. Because the sender is translating thoughts into words and the receiver is
translating words into thoughts, many opportunities for misinterpretation exist.
Barriers to Effective Communication
Information doesn’t always flow intact from communicator to receiver. Barriers

can influence how information is received and interpreted. Figure 1-5 lists several
barriers to effective communication.
Barrier Description
Frame of Different individuals can interpret the same communication

reference differently, depending on previous experiences.
Selective Individuals tend to block out new information, especially if it

listening conflicts with existing beliefs.
Figure 1-5. Barriers to Effective Communication (continue to next page)
© 2012 SHRM 16
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Barrier Description
Value Individuals assign an overall worth to a message prior to

judgments receiving the entire message.
Source Individuals weigh the actions and words of the communicator

credibility based on the amount of confidence they have in that person.
Language The same word may mean entirely different things to different
people.
Filtering Information is manipulated so that the receiver perceives it as

positive.
Cultural Different perspectives may lead to misperception and

differences miscommunication.
Communication Different forms of communication are preferred because of

preferences differences in interest, education, occupation, ability and culture.
Figure 1-5. Barriers to Effective Communication (concluded)
Communication and Language across Cultures
Language represents our primary vehicle for expressing thoughts and ideas, and it
can both restrict and expand communication. In some languages, for example,
there is no word for the color gray, which other languages associate with the color
between black and white. In these cultures, gray is either not perceived to exist or
is expressed differently. Similarly, other languages contain different words to
describe the love between siblings, between friends and between married partners.
Colors often have interesting uses and meanings across cultures. In China, red is a
very positive color; it connotes happiness, warmth and good things. In Hong
Kong, red envelopes are used to disperse lucky money during the celebration of
© 2012 SHRM 17
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the New Year. In Chile, yellow roses are associated with contempt. Sending a gift
of yellow roses communicates that the sender does not like the recipient.
Time and personal space also have a role in communicating across cultures. For
example, in some countries like China and Japan, punctuality is considered
important and being late would be considered an insult. However, in countries
such as those in South America and the Middle East, being on time does not carry
the same sense of urgency. The concept of personal space also varies from
country to country. In certain countries, it is considered respectful to maintain a
distance while interacting. However, in other countries, personal space is not as
important.
Sounds represent another culturally sensitive area that may often be overlooked
during communication and negotiation. An acronym that is commonly used or
accepted in one country may, when spoken, produce a sound that is inappropriate
or offensive in a different language.
These examples of the cultural connotations of colors, numbers, time, space and
sounds have broad implications, not just for interpersonal and face-to-face
communication but also for organization-wide communication and human
resource development programs. HR professionals have an obligation to help their
organizations avoid pitfalls when choosing themes, objects, colors, numbers,
acronyms, process nicknames and other aspects of organizational effectiveness
programs. Here are several pitfalls to be aware of and to avoid when
communicating:
 Colloquialisms, buzzwords, acronyms and idioms
 Local expressions that do not translate cross-culturally
 Multiple meanings of words
 Biases
In addition, HR should be aware of naming conventions across cultures such as

differences in surname, family name, given name and preferred name.
© 2012 SHRM 18
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Cultural Styles of Communication
Culture influences more than just the words and phrases used for communication.
With respect to cross-cultural communication, the context of the communication
is as important as, and sometimes more important than, the content.
In The Silent Language (1990), Edward T. Hall explores cultural factors as they
relate to communication. In particular, he distinguishes between high- and low-
context cultural factors.
Expectations for individuals functioning within each context are described in

Figure 1-6.
Figure 1-6. Cultural Context (Hall, The Silent Language 1990)
Low-Context Style of Communication
In a low-context culture, very little is taken for granted. As a result, more

explanation may be needed. While this means more explanation is required, it also
means there is less chance of misunderstanding.
© 2012 SHRM 19
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When communicating with people accustomed to low context, consider the

following and adapt your communication style as necessary:
 The focus is on the specifics of what is said or written.
 A handshake is insufficient; contracts are important.
 People look for content, not what surrounds the content.
 Information is held very closely and shared on a need-to-know basis.
 Body language may not be acknowledged as having a significant impact on
the content of the message.
 Clarity of communication in words is paramount, and open dialogue with
probing questions is acceptable.
 Sometimes openly challenging someone you disagree with is admired.
(Hall, Beyond Culture 1976)
Countries with low-context cultures include Germany, Sweden, Denmark,
North American countries and the United Kingdom.
High Context Style of Communication
In a high-context culture, there are many contextual elements that help people
understand the rules. As a result, much is taken for granted. This communication
style may be very confusing for a person who does not understand the unwritten
rules of the culture.
When communicating with employees accustomed to high context, consider the

following and adapt your communication style as necessary:
 What is unsaid but understood carries more weight than what is verbalized
or written.
 Personal relations add to business.
 It isn’t only what people talk about that’s important, but also the tone of
voice, where the conversation takes place and so forth.
 People share more information and expect to have a constant flow of input.
 People tend to be indirect. Listeners are expected to interpret statements
and questions.
© 2012 SHRM 20
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 There are many nonverbal nuances, including gestures and voice quality.
 Speaking eloquently but indirectly is valued. (Hall, Beyond Culture 1976)
Cross-cultural communication will always involve more than just the words and
language being used. Differing preferences for high context or low context have a
significant impact on understanding and comprehension, trust, negotiations and
many other aspects of interpersonal relationships.
Countries with high-context cultures include China, Japan, Arab countries, Spain
and Greece. Most Latin American countries also have high-context cultures. An
example of a high-context Latin American country is Brazil.
Cross-Cultural Working Teams
Getting work done in teams requires a free flow of accurate information and open,
productive relationships with employees. But that’s easier said than done in a
diverse workplace where many cultures collide.
Teams are considered homogeneous if they share the same cultural background
and heterogeneous if the members come from different cultural backgrounds.
Heterogeneous teams are often virtual teams. Because team members may not
share the same values, beliefs, attitudes and approaches to decision making, they
face additional challenges and may require different types of support than
homogeneous teams, especially during the start-up phase.
Challenges faced by heterogeneous teams may include the following:

 Geographic distances: To be successful and to overcome the
challenges of distance, virtual teams must make maximum use of
technological tools.
 Time differences: Virtual teams may struggle to find the most effective
method of managing time. They can choose to work in real time or work
at any time from a shared archive. Depending on the nature of their task,
© 2012 SHRM 21
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teams may find it most effective to use a combination of the two

approaches.
 Language differences: When team members must use a second or third
language to participate, their ability to contribute may be compromised.
Such teams may benefit from applying the suggestions for high- and
low-context styles discussed earlier.
Methods of Communication
Part of developing and executing communication plans is to select the best
methods for delivering any given message to and from employees. With so many
choices, such as face-to-face meetings, electronic media, print and social media,
the decision becomes quite complex.
Flow of Communication throughout the Organization
When considering how to convey your message, be sure the content of the
message is appropriate for the delivery method. For example, critical
announcements from leadership that impact the entire organization should take a
top-down approach. For other messages, the following communication methods
may be appropriate:
 Top down: Information flows from higher to lower levels in an
organization.
 Bottom up: Information flows from lower to higher levels in an
organization.
 Horizontal: Information flows among peers, within a team or group, or
across functions in an organization.
 Network: Information flows along a predetermined set of links through an
organization (for example, e-mail routed on a network).
 Informal: Informal communication channels (actually, ad hoc networks)
provide assorted facts, opinions, suspicions and rumors—information that
normally does not travel through the organization’s formal channels.
© 2012 SHRM 22
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Choosing a Communication Method
When selecting the best communication vehicle, organizational leaders will want
to consider three key variables:
 Timing. The timing of the information may be important in cases such as
selling a business unit or finalizing a major acquisition.
 Location. Employees’ location will affect the method of communication.
Ask: are all employees in one building, at multiple sites or working
remotely?
 Message. Another issue that affects the decision is the sensitivity of the
information. For downsizing information, most professionals agree that
face-to-face meetings are the best means of communication, but location
and the number of employees involved may be determining factors for
other alternatives. (Society for Human Resource Management, Managing
Organizational Communication 2010)
Employee Handbooks
The employee handbook is typically used to communicate the organization’s

mission, values and goals as well as standard operating procedures, guidelines and
policies. The handbook helps establish an organizational culture and employment
brand.
Traditionally, employee handbooks have been in print format; however, more

organizations are publishing handbooks in an online format, allowing for quick
updates and easy accessibility.
We will further explore the details included in Employee Handbooks in Section

3.2: Laws Affecting Employee and Labor Relations.
Newsletters
More often today, HR functions are reaching employees through online

newsletters that can be published on a regular basis such as weekly or monthly or
© 2012 SHRM 23
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whenever there is news to share. Newsletters are used to communicate new

information about the company, its employees and new products and services.
Newsletters also help build unity among employees in the following ways:
 Newsletters provide employees at all levels with the same news delivered
at the same time. From an employee’s perspective, knowing you are
receiving the same news as leadership encourages a sense of community.
 Newsletters allow employees to feel connected on a personal level by
hearing about recent marriages, new births, graduations and achievements.
Organization-Wide Meetings
Organization-wide meetings are a good option when it is important to gather

employees together to share news, to celebrate successes or to communicate
information that affects all employees.
These meetings generally are most effective when employees are physically
located in one geographic area where employees can attend together.
Alternatively, these kinds of meetings can be held electronically via webinars or
teleconferences.
At his company’s quarterly meeting, Adam Rizika enjoys seeing his CEO, Dick
Harrison, in action. “He likes people to come out with difficult questions, and he
likes responding to them ad lib,” says the director of marketing, Asia-Pacific, for
Parametric Technology Corp. “He can also talk in incredible detail about what our
competitors are doing and how we are approaching them. When you hear him
talking, you say, ‘Hey, we are on top of this’” (Woodward 2006).
Telephone
The telephone is a traditional method of communication and is best used for

simple exchanges of information once relationships are established. Combined
with online tools such as conference calling and virtual meetings, the telephone is
still a powerful method of communication.
© 2012 SHRM 24
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Informal Communication
One of the most used and undermanaged tools for employee communication is
informal discussion. Informal meetings, phone calls and online discussions are an
easy and inexpensive way for employees to get the latest news unfiltered by
management, and they continue to be a source for employees learning about the
current happenings across the organization.
Organizations should be mindful that informal communication can lead to gossip,

which in turn can impact productivity. Having a consistent and strong system of
communication from leadership is often the best way to manage gossip and to
inform employees of the facts.
In-Person Meetings
Meeting in person with employees is the preferred method for relaying sensitive
or confidential information.
In-person meetings are ideal to communicate compensation and benefits issues.

Either HR or line managers should take the time to meet with individual
employees in a comfortable, confidential setting to discuss sensitive topics such as
those listed below:
 Job grade changes
 Raises
 Individual benefits issues
 New policies or procedures that directly affect that employee
 Policy infractions
While in-person meetings may be based on a written document, the affected

employee should feel free to ask questions and should leave the meeting having
had all questions answered and understanding the compensation or benefits issue
discussed.
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Good employee communication helps increase employees’ awareness that their

employer is attempting to create internal equity, ensure competitiveness and
reward individual performance.
Communicating through Technology

Today the face of HR is often a website, rather than a person. Almost all firms
now provide universal access to HR services through technology-based
applications, dramatically changing the practice of communication for human
resource professionals. Those organizations that combine effective HR
communication processes with effective HR technology are likely to be more
productive and more profitable than those that do not.
In the following sections, we will explore technology tools HR can use to

communicate with employees.
Human Resource Information Systems (HRIS)
Many organizations are moving toward portals such as human resource

information systems (HRIS) to deliver HR services and to communicate with
employees. These portals often provide access to third-party providers and act as
a centralized location for communicating information. The following information
is often found on HRIS portals:
 Employee handbooks
 Benefits information
 Company newsletters
 Training and development resources
 Emergency planning
 General business updates
 Standard operating procedures
 Recruitment and selection resources
 Compensation information
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Self-service applications are often part of an organization’s HRIS and continue to

evolve in sophistication and use. More often, organizations are paying employees
electronically and posting pay statements and benefits summaries online. Paper
statements of direct deposits and benefits will decrease as the number of
employees participating increases.
Virtual Team Meetings
Increases in travel expenses, technological improvements and the proliferation of

virtual teams have caused organizations to rely more heavily on remote and
virtual communication. All nonverbal aspects of the communication are lost when
employees are engaged in virtual or audio-only communication. In these
situations, it becomes especially important to attend to and manage verbal aspects
of the communication such as pace, tone of voice, accent and word selection.
Virtual meetings can combine a variety of tools, so you can hear coworkers, see
coworkers and also see the information being discussed. The concept of virtual
meetings is illustrated in Figure 1-7.
Figure 1-7. Virtual Team Meetings
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According to Karen Cvitkovich, managing director, global talent development for

Aperian Global, it is crucial to establish protocol for virtual meetings. Protocol
may include the following rules:
 Speak slowly.
 Don’t interrupt.
 Listen to understand.
 Speak as though remote participants are in the room.
 Don’t use a computer or text messages during meetings.
 Don’t wear pajamas to meetings. (Society for Human Resource
Management, Set Ground Rules for Virtual Team Communications 2008)
Depending on the situation and the applications you have available within your
organization, you can combine a variety of tools to suit the virtual situation. Some
useful technological applications and their potential value in supporting virtual
teams are described in Figure 1-8.
Situation Application
Meetings Web meetings, video teleconferencing and

teleconferences
Daily Telephone, voice mail, chat and discussion

communications forums, e-mail, instant messaging, Voice-
over-Internet Protocol (VoIP)
Collaborative Word-processing programs, groupware

writing
Figure 1-8. Tools for Virtual Teams (continued on next page)
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Situation Application
Project platforms Portals, project sites, dedicated Intranet pages

for posting project information, deliverables
and resources
Project Integrated suites of tools for shared work

productivity suite products, project schedules, version and
quality control, surveys and polling
Team building Simulations and activities designed for team

building and enhanced project
communications, social networking software
Figure 1-8. Tools for Virtual Teams (concluded)
Social Media
Social media is now a common term, and many individuals use social media sites
not only for personal use but also for business communication tools. Listed below
are examples of popular social media sites across the globe:
 Facebook: Popular worldwide
 Twitter: Popular worldwide
 Hyves: Popular in the Netherlands
 renren: Popular in China
 Orkut: Popular in Brazil
For HR, social media provides a number of advantages:

 Assists in recruiting top talent
 Promotes branding to internal and external constituents
 Links employees to customer contact
 Connects employees to coworkers, managers, and leaders
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Some organizations are adopting social networking tools internally for knowledge
capture and sharing, informal learning, collaboration, communication and
engagement.
An Aberdeen Group study of more than 500 organizations, released in June 2009
and titled HR Executive’s Guide to Web 2.0, notes that many organizations have
workforces spread out among various locations and workgroups that often include
vendors and customers. The study concludes: “Business executives (HR and non-
HR) are realizing that these new realities require a rethinking of the talent
management lifecycle, and of the new tools they can use to manage this diverse
and dispersed workforce” (Society for Human Resource Management,
Developing a Social Business Network 2010).
The study reported on Manheim Auctions Inc., a company with 30,000 employees
that remarkets vehicles for auto dealers, manufacturers, rental car operators and
others. Manheim’s 200-person HR team is dispersed and includes staff in
Australia. Lilicia Bailey, senior vice president and chief people officer, shared
two examples where Manheim uses online technology:
 The HR team uses an online community to share ideas and to develop a
dialogue on common issues. For instance, they’re revising the employee
handbook through instant collaboration.
 A group of assistant general managers at all offices are using the
community function to discuss ways to transform the business in the future.
These managers tend to be younger and comfortable using these tools.
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Employee Feedback
Figure 1-9. Dale Carnegie Quote
Two-way communication plays an essential role in a comprehensive HR strategy.

Listening to employee issues and concerns contributes to a loyal and productive
workforce. Through listening, HR can learn about employee relations issues and
attitudes toward terms and conditions of employment.
Mechanisms for Collecting Employee Feedback
Organizations should have a formal process to gain direct, nonhierarchical

information about employees’ views of organizational effectiveness as well as
about specific policies and practices. Most organizations develop feedback
mechanisms to provide a reality check on management’s beliefs about the
perceptions of employees.
Organizations have a variety of feedback and communication mechanisms they

can use, but for these mechanisms to be effective, they must be backed with
commitment by leadership. In the following sections, we will explore several
examples of feedback mechanisms.
Surveys
Surveys ask employees to provide opinions on fair treatment, recognition and

appreciation, quality of supervision, working conditions, job demands, job
© 2012 SHRM 31
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security, adequacy of communication and satisfaction with compensation, benefits

and other conditions of employment.
Many organizations use norms from other organizations to benchmark the results
from these surveys and then to focus on internal continuous improvement from
survey to survey.
Employee Suggestion Systems
Employees often know better than management how waste can be eliminated,
how hazards can be avoided or how improvements can be made. Suggestion
systems offer individual employees the opportunity to provide management with
ideas for improving the workplace or any of its processes.
To help ensure success, a suggestion system should be publicized, and

suggestions should be collected and evaluated regularly. A suggestion system
should have established rules and provisions for judging the merits of the
suggestions submitted.
Employee Focus Groups
A focus group is a small group (normally six to twelve people) invited to actively
participate in a structured discussion with a facilitator. Focus groups typically last
from one to three hours, depending on the topic and purpose.
Focus groups serve a variety of purposes for HR. They are often used as a follow-
up to a survey. They can provide an in-depth look at specific issues raised during
a survey. In this respect, focus groups collect qualitative data that enriches
quantitative survey results. However, focus groups may also be used
independently of any survey to learn how employees feel about a specific
program or issue.
Lunch with Management
Some organizations host periodic lunch events in which employees are invited to
have a lunch with management. This type of feedback method can be intimidating
© 2012 SHRM 32
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and should be voluntary. There are a few simple ways to increase engagement and
ensure the dialogue is meaningful:
1. Keep the lunch casual to increase the comfort level of participants.
2. Establish a seating arrangement to encourage dialogue.
3. Provide participants with a few business-focused questions they should come

prepared to discuss during the meal.
4. Ask participants what they thought about the event afterward in order to make
improvements to future events. (Society for Human Resource Management,
Expert: Workplaces Need Continuing Dialogue 2011)
Management Visits
Management visits are regularly scheduled visits at certain locations within the
organization. A designated employee should act as a guide during the visit,
introducing team members and pointing out key projects. Management should ask
questions about project work and encourage employees to share their
accomplishments and challenges. Management should record their findings and
communicate back to the team on any action steps required.
Accessible Leadership
Leaders will receive more feedback from employees if they keep their doors open,
frequent the hallways and engage in informal conversations with employees.
Leaders should provide multiple channels for open dialogue such as online tools,
in-person meetings, phone calls or even a written note. Most employees don’t
want to ask questions or pass along new ideas to a stranger (Society for Human
Resource Management, Expert: Workplaces Need Continuing Dialogue 2011).
Exit Interviews
An exit interview is typically conducted when an employee is terminating

employment with the organization. Exit interviews can also be conducted when an
employee transfers internally.
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Exit interviews provide an opportunity to gain honest information on employment

conditions within the organization. Employees can offer objective feedback on the
conditions or patterns of management behavior that may have contributed to an
employee's decision to leave.
Interviews are often conducted by an HR professional. Questions should focus on

the business needs of the organization. Sample questions may include:
 How were you recruited?
 Was the job presented correctly and honestly?
 What was your supervisor’s management style like?
 What did you like and dislike about the organization?
 Why did you decide to leave, and how was the departure handled?
There are several alternative ways to conduct exit interviews. Alternative

approaches are listed below.
Outsourcing: Some organizations outsource the exit interview process to

professionals who can conduct online or telephone interviews anonymously, if
desired, and present organization-wide data using meaningful metrics.
Online Surveys: There are a number of different websites and software programs
that provide online surveys to resigning employees. For example, after HR enters
information into the system regarding a resigning employee, an e-mail is
generated asking the resigning employee to participate in an online survey. Data
is anonymously generated along with reporting options and metrics.
According to David Darling, vice president of HR for Teavana, an organization

with locations in Mexico and the United States, automating and outsourcing exit
interviews can be especially useful for companies with spread-out employees and
small HR departments. Darling shares data with managers and uses the
information for training opportunities (Society for Human Resource Management
2006).
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Informing Employees during Difficult Times
When employers are considering downsizing, pay reduction or other tough

decisions, a communication strategy is the most integral piece to change
management. The best way to lessen the blow to morale and productivity is to
communicate early, frequently and honestly.
Announcing all the bad news upfront is usually advised. Although this is a
difficult undertaking, it allows everyone to adjust more quickly and prepare for
the next steps. Employees need to feel that management is being open and honest
with them, and the best way to do that is to state the facts in a sensitive manner
(Society for Human Resource Management, Isn’t How You Communicate to Staff
Just as Important as the Information You Want to Share? 2010).
During tough times, trust is crucial. To build trust, employees need to believe that
the organization is forthcoming with factual information. When employees don't
trust the organization they work for, productivity can be lost. The following
outlines three ways in which organizations can suffer when there is mistrust:
 Employees may leave the company. Losing valuable employees can
make it even harder for a company to get through tough times.
 Employees may become complacent and unproductive, adding a level of
risk to the organization.
 Employees may begin to become angry and hostile. This discontent can
quickly spread throughout the organization.
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In late 2008, Watson Wyatt Worldwide surveyed senior communicators in

companies across a broad range of industries to learn how they communicated
with employees during the financial crisis. Survey findings show:
“…employers are increasing communication about organizational

performance and solvency, as well as pay and benefits. Using a variety of
traditional communication channels, as well as social media, senior
leaders are hoping to allay employees’ fears and increase trust levels.
However, in many cases frontline managers are not reinforcing and
interpreting these messages for specific work groups. Nevertheless, most
employers who are measuring communication effectiveness feel that
taking the initiative to communicate during these challenging times is
improving employee engagement and productivity” (Watson Wyatt 2008).
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3.2: Laws Affecting Employee

and Labor Relations

Knowledge:
Behaviors: 05. Respond to employee’s questions or concerns about workplace

06. Enforce HR policies and procedures (for example, explain and

make sure that employees comply with the employee handbook)
Skills & Knowledge: 03. Effects of employment and labor law (for example, minimum
wage, rules for terminating employees, establishing unions or
work councils, people with disabilities and rules against
discrimination)
06. Issues of behavior in the workplace (for example, absences,

discipline, workplace violence, or harassment)
Section 3.2: Laws Affecting Employee
and Labor Relations
Introduction ..................................................................................................................................39
The Influence of Law on Employee Relations ...........................................................................40

Introduction to Employment Law ..............................................................................................40
Compensation and Benefits Laws ..............................................................................................42
Occupational Health and Safety Laws .......................................................................................44
Anti-Discrimination, Harassment and Fair Work Laws .............................................................46
Intellectual Property Laws .........................................................................................................47
Employment Contracts ...............................................................................................................49
Laws Affecting Global Workforce Organizations ....................................................................52

International Human Rights and Labor Standards .....................................................................53
Trade Agreements and Treaties ..................................................................................................55
Global Mobility ..........................................................................................................................56
Unions Across Borders ...............................................................................................................61
Organizational Polices and Employee Relations .......................................................................62

Defining Policies and Procedures...............................................................................................62
Writing Policies and Procedures ................................................................................................64
Communicating Policies and Procedures ...................................................................................65
Module 3: Employee Relations and Communication Section 3.2: Laws Affecting Employee
and Labor Relations
Introduction
Failure to implement fair and legal employment practices may damage an
organization’s reputation. This is a particular risk for high-profile organizations.
For example, human rights and labor organizations have widely criticized
organizations on issues such as their diversity policies and substandard working
conditions in their global supply chain.
In addition to ethical motives, there are a variety of legal and practical reasons for
why organizations remain ethical, including the following:
 Comply with local, national and global laws and standards
 Comply with corporate social responsibility (CSR) standards
 Provide fair and decent working conditions for employees
 Limit legal liability for business risks
 Respond to labor issues in a consistent and swift manner
For HR professionals, the law often guides your daily activities and how you
respond to issues that arise. Whether you’re talking through terms of a contract,
helping someone prepare for maternity leave or responding to a domestic violence
incident, laws can help guide your actions.
For purposes of this discussion, we will define laws in general terms and discuss
how these laws may impact employee relations. It is important for you to assess
your own geographic location, related labor laws and how these laws apply to
your organization’s unique circumstances.

 The influence of laws on employee relations
 The laws affecting global workforce organizations
 Organizational policies and employee relations
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Section 1.5: The Influence of Law on the Organization contains a self-directed

activity that provides a framework for determining your organization’s legal
environment. If you have completed this activity, consult your completed
worksheets as you determine what laws and regulations apply for workplace
conditions and employment practices. Use this opportunity to refine your
responses by adding laws and regulations that apply to your organization.
In addition, Section 1.5 provides details on the major world legal systems and
levels of law. You may want to review this information for this discussion.
The Influence of Law on Employee Relations

Introduction to Employment Law
Employment law is defined as the body of laws, rulings and precedents that
address the legal rights of and restrictions for employees and their organizations.
Employment law may be organized into two subcategories:
 Collective labor law: Relates to the relationship between employee,

employer and union if necessary.
 Individual labor law: Concerns employees' rights at work and through

the contract for work.
As an HR professional, you will need to understand the laws that regulate the
relationships with your employees. Some of the more common employee relations
topics that may have legal implications are listed below:
 General employment law
 Employment agreements
 Contracts
 Wages (including minimum wages)
 Working time
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 Sick leave
 Vacation leave
 Maternity leave
 Noncompetition clauses
 Individual dismissals
 Collective agreements
 Unions
 Work counsels
 International Labour Organization (ILO)
When determining the scope of the laws significant to your organization, you
must consider the places where your organization has presence, along with any
other jurisdictional implications. Exploratory questions to ask when determining
which employment laws apply include those listed in Figure 2-1.
Figure 2-1. Exploring Employment Laws
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Knowing the law and applying the law are equally important. For example, when
thinking about legal considerations for employee work time, you first need to
understand how the law defines a standard workweek and any restrictions on
overtime and regulations for wages. In addition, you need to know what the
repercussions are for violations, how to manage reporting and the processes you’ll
use for compensation. While this is just one example, you can see the various
ways in which the law can influence many facets of HR operations.
In the following sections, we will explore categories of employment laws and

define key terms. These topics are categorized as follows:
 Compensation and benefits laws
 Occupational health and safety laws
 Anti-discrimination, harassment and fair work laws
 Intellectual property laws
 Employment contracts
As we explore each category of employment law, please remember that the

explanations provide guidelines to help you understand potential implications on
employee relations. These explanations may not be applicable to all countries, and
you should consult with legal professionals to determine if and how these laws
apply to your organization.
Compensation and Benefits Laws
Compensation and benefits laws provide conditions for how the organization will
pay and offer benefits to employees. These laws vary greatly from country to
country. Examples of laws that fall under this category include the following:
 Minimum wage requirements
 Application of overtime pay rates
 Protection from wage discrimination
 Regulations with respect to how wages are taxed
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The locations where your organization has a presence continue to apply when
evaluating compensation and benefits programs. Carefully consider the locations
of production facilities, and determine if there are territorial jurisdiction
considerations. Exploratory questions to ask when determining what laws apply
for compensation and benefit programs include those listed in Figure 2-2.
Figure 2-2. Exploring Compensation and Benefits Laws
HR’s Role Supporting Compensation and Benefits Laws
As an HR professional, you should be thoroughly familiar with the legal and

regulatory environment associated with compensation and benefit laws. Figure 2-
3 outlines related responsibilities for HR.
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Examples of HR Responsibilities
Post notices: Some jurisdictions have requirements that

employers must post notices about employees’ rights in areas of
the workplace that are conspicuous and accessible to all
employees.
Provide training: Some laws require training on the basic

concepts of equal employment opportunity and other aspects of
employee relations. Training is designed to educate employees
and raise awareness about lawful, appropriate and respectful
conduct in a diverse workforce (Society for Human Resource
Management, Introduction to the Human Resources Discipline of
Employee Relations 2012).
Maintain records and reporting: Laws and regulations can

govern numerous aspects for employee records management. HR
polices must include how these records are protected, what
information is kept and when the records are disposed of and
how.
Figure 2-3. HR Responsibilities Related to Compensation and Benefit Laws
Occupational Health and Safety Laws
Occupational health and safety laws are often intended to ensure employers
provide employees with an environment free from hazards, such as exposure to
toxic chemicals, excessive noise, mechanical dangers, heat or cold stress or
unsanitary conditions. Organizations must comply with laws, regulations,
minimum requirements and recommended industry best practices regarding the
management of occupational health, environmental, safety and quality aspects
across the value chain.
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The locations where your organization has a presence and the products or services
produced apply when creating occupational health and safety policies, processes,
practices and programs. Exploratory questions to ask when determining what laws
and regulations apply for occupational health and safety include those listed in
Figure 2-4.
Figure 2-4. Exploring Occupational Health and Safety Laws
HR’s Role in Supporting Occupational Health and Safety Laws
The health and safety of employees is a vital component of employee relations.

Essential contributions by the HR function for employee health and safety may
include the responsibilities outlined in Figure 2-5.
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Examples of HR Responsibilities
Conduct risk assessments: Risk Align hiring practices: HR should

assessments should evaluate the work with managers to ensure
organization’s overall risk and employees have the required skills
identify best practices for and knowledge with respect to
reducing workplace injuries and workplace safety and health.
illness.
Establish policies: HR is often Provide education and training:

responsible for establishing HR should ensure employees have
organizational policies based on required training to maintain a safe
related health and safety laws. environment.
Enforce notification and Implement safety inspections: HR

record-keeping procedures: must ensure safety inspections are
HR should notify agencies or carried out and appropriately
authorities of occupational documented per safety laws and
accidents and diseases as organizational policies.
dictated by the law.
Figure 2-5. HR Responsibilities Related to Occupational Health and Safety Laws
Anti-Discrimination, Harassment and Fair Work Laws
Anti-discrimination law refers to the law concerning people's right to be treated

equally. Some countries mandate that in employment, in consumer transactions
and in political participation people should be dealt with on an equal basis
regardless of sex, race, ethnicity, nationality, sexuality and sometimes religion
and political views.
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Anti-discrimination, harassment and fair work laws vary from country to country.
These laws may be influenced by cultural and societal norms. HR professionals
should have a thorough understanding of anti-discrimination, harassment and fair
work laws for all jurisdictions where the organization has a presence.
HR’s Role in Supporting Anti-Discrimination, Harassment and Fair Work Laws
The demographic composition of the workforce is rapidly changing. Responding

to these changes in the workforce affects recruitment, staffing, employee
retention, talent management and employee development programs.
For HR professionals, implementing organization policies, procedures and

practices that adhere to anti-discrimination, harassment and fair work laws
supports the changes that are continuing to evolve.
Intellectual Property Laws
Most businesses own intellectual property (IP). IP could include knowledge on

how to operate specialized machinery, information about an application or even
the recipe for organic bread. While some IP is protected by patents, registered
designs or registered trademarks, a substantial part of a company's IP is
knowledge contained in the minds of employees.
The World Intellectual Property Organization (WIPO) divides intellectual

property into two categories:
 Industrial property: Includes patents, trademarks and industrial designs
 Copyright: Includes literary and artistic works such as novels, poems,
films, musical works, paintings, photographs and architectural designs
(World Intellectual Property Organization n.d.)
HR’s Role in Protecting an Organization’s IP
HR professionals should know what methods are reasonable to protect an

organization. Methods to protect IP require research and due diligence. For
example, in some regions and countries, when an employee invents something at
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work, the invention is not necessarily the property of the organization. As a

protective measure, HR should include a separate written agreement as of the date
of hire for all employees regarding patents, trade secrets, copyrights and
trademarks.
Trade Secrets
A trade secret is any confidential business information that provides an

organization with economic value. Trade secrets can include manufacturing or
industrial secrets and commercial secrets. According to WIPO:
“The unauthorized use of such information by persons other than the

holder is regarded as an unfair practice and a violation of the trade secret.
Depending on the legal system, the protection of trade secrets forms part
of the general concept of protection against unfair competition or is based
on specific provisions or case law on the protection of confidential
information” (World Intellectual Property Organization n.d.).
HR can help protect an organization’s trade secrets through written agreements

with employees and independent contractors. HR can create a trade secret
protection program with the following actions:
 Limit the number of individuals who have knowledge and access to trade
secrets.
 Keep trade secrets secure through physical or electronic means.
 Provide a training program to protect your trade secrets. (Society for
Human Resource Management, Type of Intellectual Property Dictates
Protection Needed 2008)
IP Global Standards
The World Trade Organization’s (WTO) Agreement on Trade-Related Aspects

of Intellectual Property Right (TRIPS) introduced intellectual property rules.
This agreement attempts to narrow the gaps in the way rights are protected around
the world and to bring them under common international rules. The agreement
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establishes minimum levels of protection that each government must give to

fellow WTO members.
The agreement covers five common issues:

 How basic principles of the trading system and other international
intellectual property agreements should be applied
 How to give adequate protection to intellectual property rights
 How countries should enforce those rights adequately in their own
territories
 How to settle disputes on intellectual property between members of the
WTO
 Special transitional arrangements during the period when the new system is
being introduced (World Trade Organization 2011)
Employment contracts are common in most countries, although the format of the
agreements may vary. Listed below are a few examples:
 Employees in the European Union are guaranteed, under EU Directive
91/533, the right to a written description of employment terms within two
months of hiring. This description could include a pay slip (also called a
pay stub). If no written contract is provided, a contract is implied.
 Chinese law requires that employees receive written contracts within one
month of hiring. In the absence of a written contract, a contract will be
implied.
 In Mexico, written contracts are required for all levels of staff, including
temporary and part-time workers.
 In Portugal, contracts may be verbal or implied by the fact that an
employee is receiving a paycheck.
 In the United States, the principle of at-will employment means that
individual employment contracts are the exception rather than the rule.
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In some countries such as those in the Middle East, the service contract may
contain a provision subjecting the employee to a probation period according to the
employer policy. Often, the policy stipulates that the probation period will not
exceed what the labor law states within the same country. Usually, the employee
will not be subjected to more than one probation period with the same employer.
In the meantime, the contract may be terminated within the probation period if it
has been proved to any party that the other party did not or cannot fulfill the
agreed responsibilities. In this case, the given notice should not be less than what
the labor law states. The notice period during a probation period is usually shorter
than in normal time.
Implied Contracts
Implied contracts have terms derived from statutory or common law, from
collective agreements or from local norms for the job, employer and country. The
terms of implied contracts vary by country. These implied terms may include the
following:
 Minimum notice of termination
 Entitlement to full pay when sick
 Restrictions on what can be required of an employee; for example,
requiring an employee to do only the current job in the current location
under the current schedule
 Benefits in kind
 Payment terms
 Loyalty terms (for example, noncompete and confidentiality pledges)
 Commitment of both sides to refrain from actions likely to undermine trust
and confidence (for example, equitable treatment, attention to procedures)
Amending Contracts
Employment terms are defined by contract. Therefore, an employer should amend

the contract to change employment terms (for example, pay, hours and duties). In
certain situations, an employer’s options for changing contracts may be limited.
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Contracts concluded through collective bargaining require renegotiation with

unions.
An employer seeking to change employment terms for workers after a purchase or

merger will be restricted by acquired rights laws—unless the employer can prove
economic hardship. The TUPE regulations in the United Kingdom, for example,
require an employer to demonstrate economic, technical or organizational reasons
for changes in employment or termination; an employer faces consequences if the
reasons given are proved to be false. The strategy of amending contracts by firing
and rehiring under new terms may not be legally defensible and may be
considered an arbitrary unfair dismissal.
Union Agreements and Contracts
Trade unions and labor unions are common and can often influence work
conditions. A trade union or labor union is an organization of workers designed to
achieve common goals such as better working conditions. Workers elect union
leaders who can negotiate terms of a working agreement, including wages, hours
and terms and conditions of employment. The employer and union leaders agree
on working terms, and these terms are specified in a binding contract.
Unions in Europe are influential and are characterized by the following:

 Industry-wide: Unions in Western Europe tend to be industry-wide and
not necessarily at the organizational level. Because unions are often
industry specific, employers tend to bargain through employer associations
rather than as an individual employer.
 Scope of bargaining: European agreements tend to be concise and allow
the organization to institute more generous terms. (Dessler 2008)
Union Contract Provisions
If a union represents employees, a day is set for the organization and union
leaders to meet and to negotiate a labor agreement. This agreement will contain
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specific provisions covering wages, hours and terms and conditions of

employment.
The actual contract may be lengthy and include the following sections:
 Management rights
 Union security and payroll dues deductions
 Grievance procedures
 Arbitration of grievances
 Disciplinary procedures
 Compensation rates
 Hour-of-work and overtime policies
 Benefits
 Health and safety provisions
 Employee security seniority provisions
 Contract expiration date (Dessler 2008)
Laws Affecting Global Workforce Organizations

In a globalized economy, an organization’s relationship with its workforce may be
influenced by many layers of employment-related laws and regulations. There are
three primary considerations for HR professionals in managing global employee
relations:
 HR professionals must be aware of country-specific laws from all
applicable levels of jurisdiction. In China, for example, employers must
pay into a city-administered education fund. In Canada, federal law usually
cedes jurisdiction to provincial law. Employers in an EU member state
must be mindful of EU regulations, directives and local national statutes.
 HR professionals should understand and help international assignees
comply with various permit and visa conditions. These conditions may
differ depending on specific trade agreements between the home and host
countries.
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 HR professionals should research international agreements on labor, human

rights and corporate social responsibilities and assess how these apply to
the organization’s employment policies.
International Human Rights and Labor Standards
Efforts have been made by international institutions, such as the International

Labour Organization (ILO) and the Organisation for Economic Co-operation and
Development (OECD), to address employee rights through international
legislations and standards.
The ILO standards, in particular, serve as the foundation for the vast majority of
employment laws and acceptable management practices throughout the world,
and they should, therefore, play a key role in business decision making. It is
important for HR professionals to understand these labor principles and, more
importantly, their impact throughout an enterprise’s worldwide operations.
There are two distinct types of ILO standards:

 Conventions are international treaties that are legally binding once ratified.
 Recommendations are nonbinding guidelines designed to assist countries in
the implementation of ratified conventions.
The ILO has adopted more than 180 Conventions and more than 190
Recommendations. They cover such topics as basic worker rights, industrial
relations and conditions of work.
The ILO has identified eight core labor standards:

 Freedom of association and the right to organize. The right to form
and join unions without interference from public authorities or
authorization by employers
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 The right to organize and bargain collectively. Protecting employees

from discrimination or retaliation related to union activity and requiring
employers to negotiate with unions
 Forced labor. Prohibiting all forced and compulsory labor, except for
military service, prison and emergencies (for example, war, natural
disaster)
 Abolition of forced labor. Prohibiting forced labor as a means of
political coercion or punishment, retaliation for strikes, workforce
mobilization, labor discipline and discrimination
 Minimum age. Prohibiting the hiring of children too young to have
completed compulsory schooling and limiting employment in hazardous
work to those eighteen and older
 Prohibition and immediate elimination of the worst forms of child
labor. Prohibiting any work likely to be harmful to the health, safety and
morals of children
 Equal remuneration. Requiring equal pay and benefits for men and
women
 Discrimination (employment and occupational). Prohibiting
discrimination in hiring, training and working conditions and requiring
employers to promote equality of opportunity and treatment
While the main users of international labor standards are the ILO's constituents,
global organizations have found these standards to be useful tools. Increasing
consumer interest in the ethical dimensions of products has led multinational
organizations to adopt these governing conditions in their production sites and
those in their supply chains.
For a listing of ILO constituents and standards, please see http://www.ilo.org.
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Trade Agreements and Treaties
One of the major factors contributing to the rapid increase in cross-border

economic activity has been the passage of international trade agreements
removing many barriers to the movement of capital, goods and sometimes people.
Some trade agreements have been formed specifically to facilitate the growth of
emerging markets. Agreements may be bilateral, meaning between two countries,
or multilateral/regional. World Trade Organization (WTO) statistics show the
rapid increase in the number of regional trade agreements worldwide. Since the
creation of the WTO in 1995, more than 240 agreements have been reached, in
addition to the 124 notifications of agreement received by the WTO’s
predecessor, the General Agreement on Tariffs and Trade (GATT). The WTO
reports that nearly all its members participate in one or more regional trade
agreements.
Trade agreements may affect the work of global HR in a number of ways:

 Eased visa requirements may increase talent mobility.
 Taxation and pension provisions may provide savings to enterprises and
international assignees, and they will affect internal processes.
 Recognition of intellectual property rights will help control some risks due
to loss of patented or copyrighted processes or content and increase transfer
of knowledge throughout the global organization.
 Changes in trade and investment barriers may lead to workforce
expansions, reductions or transfer in different areas of a multinational
enterprise.
 Offshoring and outsourcing may be used more freely.
 Talent management issues and priorities may change as certain tasks are
transferred from one country to another.
 Greater internationalization will require more integration within global
organizations.
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 Accession to a trade agreement may involve harmonizing regulations

among participants, which may trigger institutional changes that affect
employment regulations and processes, such as changes in wage and
working conditions.
Global Mobility
Increasingly people are looking across borders for work; it’s not just multinational
employees being assigned to another country. The increase in employees working
across borders identifies a greater need for organizations to set up processes for
global mobility.
Ensuring employees are able to work safely and legally outside their home
country involves much planning. Employee relations issues to consider include
the following:
 When can employees travel, and how long can they stay?
 What can they do while in the host country?
 How will they be paid?
 How will they receive benefits?
 What are the tax considerations?
 How long can they stay?
Human resource professionals and corporate counsel are confronted with a maze
of legal and regulatory issues in multiple countries that must be considered before
moving employees across borders. These issues include (see Figure 2-6):
 Immigration laws
 Laws of employment
 Compensation and benefit regulations and laws
 Tax and social insurance regulations and laws
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Figure 2-6. Legal Considerations for a Global Workforce
Work Assignments
The nature of the work being done and the length of stay may influence the legal
requirements of traveling from one country to the next. Figure 2-7 outlines
different types of work assignments.
Assignment Description
Long-term assignment Involves relocation from one country to another

for a period of one year or more
Short-term assignment Involves relocation from one country to another

for a period of time lasting from six months to
one year
Localized transfer Cross-border assignment during which the

employee is ultimately transitioned to
permanent local status
Figure 2-7. Types of Work Assignments (continued to next page)
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International commuting Cross-border assignment during which the

employee commutes frequently to the home
country
Extended business travel Cross-border assignment during which the

employee does not relocate but travels regularly
to the assignment location
Figure 2-7. Types of Work Assignments (concluded)
Obtaining Visas and Work Permits
Once an individual is chosen for an assignment, the organization needs to move

quickly to secure the necessary visa. Requirements and processing times vary by
country. Start by contacting the host country’s consulate or embassy for
information on visa requirements.
To locate information on embassies and consulates around the world, go to

http://www.embassyworld.com.
Following is a list of generic visa types that may be required depending on the
nature of business to be conducted in a particular country:
 Work permit. Authorizes paid employment in a host country. Work
permits are often handled by a Ministry of Labor or equivalent government
labor agency.
 Work visa. Authorizes entry into a country to take up paid employment.
 Dependent visa. Permits family members to accompany or join employee
in country of assignment.
 Multiple-entry visa. Permits multiple entries into a country.
Treaties or other agreements may include provisions related to visa requirements

and procedures that facilitate travel across borders. Often, as indicated in the
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discussion of trade agreements, treaties will include reciprocal visa programs, in

which visa-free travel may be permitted under certain circumstances. The
following are two examples of reciprocal visa agreements:
 Asia-Pacific Economic Cooperation (APEC): The APEC Business
Travel Card (ABTC) provides multiple, precleared entry into participating
countries and express immigration processing upon arrival. Cardholders
need not apply for visas or entry permits each time they travel to any of the
APEC nations.
 North American Free Trade Act (NAFTA): Through NAFTA,
Americans, Canadians and Mexicans may work within each other’s
countries, within certain conditions.
European Union
There are twenty-seven member states of the European Union (EU). Citizens of
the EU have the freedom of movement and residence and the right to work in any
position other than civil service and related posts.
The European Union does not issue passports, but the passports issued by its
members share certain common design features.
HR’s Role in Visa Requirements
HR professionals are often responsible for overseeing and assisting employees in

the application process for visas. Figure 2-8 summarizes these responsibilities.
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HR’s Strategic Roles HR’s Tactical Responsibilities
Know the company’s risk, liabilities Anticipate roadblocks in the visa

and burden of employing foreign application process.
nationals.
Understand the legal repercussions Know the visa application process in

for noncompliance. different countries.
Develop a comprehensive Comply with record keeping and

compensation and immigration tracking.
strategy for global staffing and
international recruitment.
Plan proactively to deal with delays. Coordinate visa process with

specialists (mainly specialized law
firms).
Figure 2-8. HR’s Responsibilities with Visas
Taxation
When an employee lives in a host country, it is natural to assume that the host
country may seek to tax the employee’s compensation. Many jurisdictions have
provided income tax relief for short-term assignments. Understanding how these
rules work in any particular country is key to effective tax planning.
According to the Global Mobility Handbook published by Baker and McKenzie,

taxation issues can be complex for a number of reasons, as listed below:
 The income tax, social insurance and other relevant laws of more than one
jurisdiction are involved.
 Many jurisdictions have special rules that apply to the cross-border transfer
of employees.
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 Many income tax issues revolve around the employee’s citizenship,

nationality or residency.
 The provisions of an income tax treaty or other international agreement
may apply to reduce the employee’s liability for income tax and social
insurance. (Baker & McKenzie 2010)
Permanent Establishment
One key issue that should be evaluated when employees are assigned in another
country is whether the structure will inadvertently create a permanent
establishment. In such cases the employer may be considered to be doing
business in the host country and may be subject to corporate income tax on an
allocable amount of its net income.
An organization that unintentionally creates a permanent establishment abroad

may be obligated to file tax returns with a foreign tax agency, to observe local
accounting standards for foreign tax purposes and to pay higher taxes on a
worldwide basis. The existence of a permanent establishment may also trigger
registration, filing and publication (Baker & McKenzie 2010).
Unions Across Borders
As a result of globalization, the presence of international unions has expanded.

Nevertheless, as many unions have discovered, the historical, culture and legal
influences of different jurisdictions often mean that unions will occupy very
different roles in a society, depending on the jurisdiction. In some countries, like
China, unions remain very much aligned with the central government and the
cultural legacy of overseeing a harmonious work environment. In other countries,
like Germany, the legacy of work counsels often prevents the influence or
penetration of international unions. In some northern European countries, unions
are tasked with managing and administering the social benefits of employees, a
role usually held by the government itself. While unions are generally accepted to
represent a collective, rather than individual, employment bargaining relationship,
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the actual practice and mandate of a union still varies significantly from country
to country.
Trends in Membership and Density
While the absolute numbers of union members have increased in the past decade,
the broader global trend reflects an overall decrease in union density. Union
density refers to the percentage of the total workforce that is unionized, and in the
vast majority of countries around the world, union density has been on the
decline.
Union density remains highest in Scandinavian countries, while among the

developed nations, France and the US have the lowest density; in certain countries
unions are illegal. One reason cited for the decline in union density during a time
of gains in union membership is the migration of manufacturing jobs from
developed to developing nations, coupled with unions increasingly targeting
service sector jobs. Another common trend at the global level is the significantly
higher levels of unionization in the government sector or public sector-related
employment as compared with the private sector.
Organizational Polices and Employee Relations

Your organization’s policies must be customized to reflect your industry,
geographic location and the organization’s goals and values. Employment laws
vary by region of operation, and certain industries have special considerations.
When creating policies, know how the law applies to your organization and factor
in the culture of your organization.
Defining Policies and Procedures
A policy is a formal statement of a principle or rule that employees must follow.

Each policy addresses an issue important to the organization's mission or
operations. Policies are written as statements or rules.
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A procedure tells employees how to assess and interpret a policy. Policy is the
"what," and the procedure is the "how to." Procedures are written as instructions,
in logical, numbered steps.
At a minimum, organizations should have policies and procedures created for the
following topics:
 Employee information
 Performance management
 Hiring procedures
 Holidays
 Hours of work
 Leaves of absence
 Overtime
 Termination
 Vacation
 Benefits program
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Writing Policies and Procedures
Key steps in writing a policy and procedure document are outlined in Figure 2-9.
Figure 2-9. Process for HR Writing Policy
Essential Content
The following is essential content for your policies:

 Policy name
 Effective date of the policy and date of any revisions
 Purpose of the policy (what it is intended to promote or achieve)
 Main policy statement
 Definitions of any main concepts or terms used in the policy
 Eligibility or scope (which groups of employees are covered by the policy)
 Scope of permissible exceptions and who is responsible for making
exceptions to the general application of the policy
 Positions in the organization responsible for implementing and monitoring
the policy (HR Council for the Nonprofit Sector n.d.)
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Legal Assistance
It may be in the best interest of your organization to seek legal assistance when
creating policies and procedures. A qualified legal professional can determine if
there are legal implications in the wording of the policy and in any implied
actions. Legal professionals can also help identify what should be included in
your policies and procedures and help minimize legal liabilities.
For example, even though some laws may guide the following employment
policies and procedures, it may be in the best interest of the organization to
specify policies for the following:
 Access to personal records
 Anti-nepotism or no-spouse rules
 Searches on employer property
 In-house investigations
 Solicitation, bulletin board and e-mail rules
 Travel policies
 Attendance, punctuality and dependability
 Performance evaluations
 Payment of wages
 Employer property (Society for Human Resource Management, Writing an
Employee Handbook Is Not for the Faint of Heart 2010)
Communicating Policies and Procedures
The name of your policy and procedure document will depend on your audience
and on the content you wish to communicate. Some organizations use multiple
documents to focus on certain content areas so that critical information is not lost
within hundreds of pages of documentation. Here are three examples that are
commonly used to document policies and procedures.
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Employee handbook: An employee handbook is written for employees. It is

often written using a simple layout to easily reference organization policies and
procedures and is a vehicle for familiarizing employees with basic company
policies and benefits programs. An employee handbook also addresses the general
expectations of the company, including acceptable and unacceptable behavior and
disciplinary measures.
Policies and procedures manual: A policies and procedures manual is more

comprehensive than an employee handbook and details every aspect of company
policy, the procedures for following those policies and the forms necessary to
complete each process. A policies and procedures manual is a reference tool for
managers and supervisors. This documentation is much more complete in detail
than the employee handbook and should be used for backup when more
information is needed to explain a policy or when a deeper understanding of a
process is desired. As a benefit to management, the manual can contain references
to applicable laws that correlate to each policy. Managers and supervisors then
have access to the rationale for the policies, thus providing them with assistance
for enforcement (Society for Human Resource Management, Employee
Handbooks: What is the Difference Between Employee Handbooks and Policies
and Procedures Manuals? 2008).
Codes of conduct: Outlines the standards to which the employer expects its
employees to adhere. For example, a code of conduct may include policies and
procedures related to bribery, workplace violence and accurate reporting.
Statements of Understanding
Some organizations ask employees to sign statements of understanding for certain

policy and procedure documents. This is often put into practice for code of
conduct documents. In these instances, employees may be asked to sign a
statement of understanding to acknowledge that they have read, and that they
comprehend and agree to abide by, the code of conduct set forth by the
organization. If a statement of understanding is part of your processes, be sure
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you have a consistent plan for tracking who has received and signed the
statements.
Distribution
Ensure that employees have an up-to-date copy of each policy and procedure that
is relevant to their job or that the policies and procedures manual is kept in a
central place, such as online, where all employees can easily access it. If there are
significant updates to policies, require employees to sign the statement.
Ongoing Communication
When necessary, provide communications to employees about different aspects of

policies and how these policies apply to their daily activities. Communication can
be in the form of a short e-mail, an update to a website or an extensive training.
Send short communications to employees outlining different aspects of a policy

that could be misinterpreted or easily overlooked. Encourage employees to ask
their manager or supervisor for information about the policy, particularly about
how the policy impacts them individually (HR Council for the Nonprofit Sector
n.d.).
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3.3: Creating a Positive

Work Environment

Knowledge:
Behaviors: 02. Support company sponsored activities and awards to encourage a

positive work environment (for example, employee appreciation
and rewards, company social gatherings, sports teams or clubs)
03. Collect information about employees’ work experiences by

conducting final exit interviews before employees leave the
organization, and conduct surveys about employee attitudes,
05. Respond to employee’s questions or concerns about workplace

Skills & Knowledge: 01. How to encourage and keep employees (employee engagement
techniques)
02. Methods and processes for collecting employee feedback (for

example, employee attitude surveys or final exit interviews
before leaving the organization)
and Labor Relations
05. Issues affecting work/life balance (for example, flexibility of

hours, telecommuting)
09. Event planning

Section 3.3: Creating a Positive Work
Environment
Introduction ..................................................................................................................................72
Employee Engagement ................................................................................................................72

Employee Engagement versus Job Satisfaction .........................................................................72
Levels of Employee Engagement ...............................................................................................73
Employee Engagement Drivers ..................................................................................................74
Engaging Employees across Cultures ........................................................................................74
Identifying Employee Engagement Barriers ..............................................................................75
Communication Strategies for Engaging Employees .................................................................76
Positive Workplace Culture ........................................................................................................78

Early and Effective Onboarding Practices .................................................................................79
Trusting Environment ................................................................................................................79
Reward and Recognition Programs ............................................................................................80
Work/Life Balance Programs .....................................................................................................86
International Assignee Support ..................................................................................................89
Creating a Friendly Workplace Environment ............................................................................92
Module 3: Employee Relations and Communication Section 3.3: Creating a Positive
Work Environment
Introduction
Research shows that when employees work in a positive work environment, with
the right resources to do their job, the result is more satisfied customers and
increased competitive financial performance for the organization. Today,
organizations are turning to HR to create and sustain a workplace culture with
people management practices and initiatives that encourage, recognize and reward
behavior focused on quality performance.

 Employee engagement
 Characteristics of a positive workplace culture
Employee Engagement
Employee Engagement versus Job Satisfaction
Employee engagement is defined as “the extent to which employees commit to

something or someone in their organization, how hard they work and how long
they stay as a result of that commitment” (Lloyd Morgan 2004).
In contrast, job satisfaction, a term sometimes used interchangeably with

employee engagement, is defined as how an employee feels about his or her job,
work environment, pay and benefits.
Let’s compare the terms and explore how an employee can be satisfied with a job
without being engaged in the job.
Satisfied employee: These employees are getting everything they wish: a steady
paycheck, benefits, sick leave and paid vacation. Their workload is fair, and they
like the people they work with. Their actual contribution to the well-being of the
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organization in terms of innovation, creativity and productivity is negligible. But

these employees are satisfied.
Engaged employee: These employees are enthusiastic about their work, creative
and innovative. These employees feel camaraderie with coworkers and feel
responsible for the organization’s success. These employees may show a lower
level of satisfaction for various reasons. But these employees are contributing and
adding value.
The most valuable employees today are those that are both satisfied and engaged.
Levels of Employee Engagement
Engaged employees work harder and are more loyal. Understanding the types of
engagement provides perspective into employee behaviors that can either
positively or negatively affect organizational success. Figure 3-1 describes the
levels of employee engagement.
Level of Employee Description

Engagement
Engaged employees Engaged employees work with enthusiasm and feel a

connection to their organization. They drive innovation and
move the organization toward goals.
Not-engaged Not-engaged employees are essentially unproductive. They

Employees are going through daily motions without energy or
enthusiasm.
Figure 3-1. Levels of Employee Engagement (continued to next page)
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Level of Employee Description

Engagement
Actively disengaged Actively disengaged employees are unhappy at work and are
Employees also busy acting out their unhappiness. Every day, these
workers undermine what their engaged coworkers
accomplish.
Figure 3-1. Levels of Employee Engagement (concluded)

(Gallup, Inc. 2006)
Employee Engagement Drivers
An increased demand for work/life balance and the changing relationship between
employers and employees are driving the need for HR professionals to understand
what employees need and want. The following provides a list of current trends to
consider:
 The needs, wants and behaviors of the talent pool are driving changes in
attraction, selection and retention practices.
 The traditional employee-employer relationships are evolving into
partnerships.
 There is an increased demand for work/life balance programs.
 HR has a greater role in promoting the link between employee performance
and its impact on business goals (Lockwood 2007).
Engaging Employees across Cultures
While the factors listed above may be universal, to effectively promote

engagement, HR leaders will need to be aware of country, regional and cultural
differences when designing employee engagement and commitment initiatives.
Here are several key drivers for various countries:
 Canada: Competitive base pay, work/life balance and career advancement
opportunities
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 Germany: The level of autonomy

 India: Focus on the reputation of the organization as a good employer
 Japan: The caliber of coworkers
 Netherlands: The collaborative environment
 United States: Competitive health benefits
These differences suggest that each country and/or culture has certain factors seen
as important in the workplace (Lockwood 2007).
Identifying Employee Engagement Barriers
Part of HR’s role is to determine barriers that prevent employees from engaging
in their work. The Gallup organization has identified twelve indicators that link
employee engagement with positive business outcomes and profitability. These
indicators, known as the Q12, describe the twelve key expectations that when
satisfied form the foundation of strong feelings of engagement. These involve
items such as employee expectations of their supervisor, perceived support and
work environment. Gallup explains when employees are engaged, they are more
likely to perform, come to work and add value to the organization (Gallup, Inc.
2008, 2010).
The Q12 includes the following questions. The answers you receive from your
employees can help you determine what is working and what is not working when
it comes to employee engagement.
1. Do you know what is expected of you at work?
2. Do you have the materials and equipment you need to do your work right?
3. At work, do you have the opportunity to do what you do best every day?
4. In the last seven days, have you received recognition or praise for doing good
work?
5. Does your supervisor, or someone at work, seem to care about you as a
person?
6. Is there someone at work who encourages your development?
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7. At work, do your opinions seem to count?

8. Does the mission/purpose of your organization make you feel your job is
important?
9. Are your associates (fellow employees) committed to doing quality work?
10. Do you have a best friend at work?
11. In the last six months, has someone at work talked to you about your
progress?
12. In the past year, have you had opportunities at work to learn and grow?
(Gallup, Inc. 2008, 2010)
Communication Strategies for Engaging Employees
One simple way to improve engagement and productivity is to increase employee

involvement in communication efforts and to provide feedback on the
organization’s operations and leadership. Here are several examples of strategies
used by other organizations to engage employees through communication efforts.
Employee action committees: HR can help create ad hoc groups of frontline

employees who are trusted by their peers and are comfortable speaking up and
offering their opinions. Members of employee action committees focus on
providing the unfiltered feedback that surveys often don’t capture.
Provide training on two-way communication practices: HR professionals can

help build communication competencies through training and development. For
example, HR can offer training to managers and leaders to help develop skills in
facilitating open-ended discussions, fostering a team-based work environment and
encouraging transparency in the workplace.
Build communication competencies into performance management

expectations: HR can help establish the stage for increased feedback by building
communication competency expectations into the performance management
process. For example, managers can be expected to demonstrate skills in
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responding to and acting on direct feedback (Society for Human Resource

Management, Expert: Workplaces Need Continuing Dialogue 2011).
Cross-Generational Communication Strategies
“Companies can use distinct communication strategies to engage workers on a

generational level,” advises Mike Ryan, senior vice president of client strategy at
Madison Performance Group, a provider of employee engagement and sales
incentive marketing programs (Society for Human Resource Management, New
Rules of Engagement for Boomers—and Echo Boomers 2011).
Ryan refers to echo boomers as the “first generation to grow up with computers at
home and were plugged into the Internet revolution from the start. This powerful
generation is now entering positions of authority and is in the unique position of
competing with their ‘parent’s’ generation in the workplace,” Ryan observes.
To address this generational shift, management must recognize these differences

and adjust communication practices. “It’s all in the positioning,” Ryan explains,
noting two practical ways to adjust:
 Managers should partner with the younger generation to help leverage their
entrepreneurial skills, so they can be seen as the enabler for their success
and not an obstacle. Ryan believes, “Jobs will then take on new dimensions
for Echo Boomers, demanding more of their engagement, attention and
loyalty.”
 Managers should show workers they are respected and rewarded for their
loyalty. “Many Boomers are contemplating the next phase in life and might
lose intellectual curiosity—show them that their work is still fascinating,"
Ryan advises. (Society for Human Resource Management, New Rules of
Engagement for Boomers—and 'Echo Boomers' 2011)
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Positive Workplace Culture

Organization culture is the characteristic values, traditions and behaviors
employees share. When thinking about your organization’s culture, you may want
to explore some of the questions listed in Figure 3-2.
Figure 3-2. Workplace Culture
Research shows that organizations with a positive workplace culture, combined

with safety and resources, are more likely to have engaged employees.
Consequently, such organizations are more likely to attract and retain the best
talent and to have higher levels of engagement. Some HR initiatives that facilitate
a positive workplace culture include the following:
 Early and effective onboarding engagement
 Trusting environment
 Reward and recognition programs
 Work/life balance programs
 International assignee support
 Friendly workplace environment
We will explore each of these in more detail in the sections to follow.
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Early and Effective Onboarding Practices
The practice of onboarding new employees is making headlines across the media.
Few companies give much thought to creating the right onboarding experience,
but studies have shown employees are more likely to stay with an organization
after three years if they’ve experienced a worthwhile onboarding program.
When HR views onboarding as an opportunity to engage employees from their

first day of employment, HR can achieve the following:
 Assimilate employees into the organization’s culture, processes and values
 Increase retention through greater employee loyalty and commitment
 Provide employees with the tools to be successful (Society for Human
Resource Management, Managing the Employee Onboarding and
Assimilation Process 2012)
Today’s forward-thinking organizations are looking beyond the traditional

onboarding approaches and including innovative ways to engage employees from
the start.
Trusting Environment
Trust is built on understanding. Leaders can create understanding by clarifying

what the organization wants and what leaders can offer employees. As an HR
professional, you can promote trust in two ways:
 Lead by example.
 Provide managers and leadership with the coaching, training and resources
needed to build trust throughout the organization.
According to Stephen Covey, the author of The Speed of Trust: The One Thing
That Changes Everything, there are thirteen common behaviors of trusted
leaders around the world:
 Talk straight.
 Demonstrate respect.
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 Create transparency.
 Right wrongs.
 Show loyalty.
 Deliver results.
 Get better.
 Confront reality.
 Clarify expectation.
 Practice accountability.
 Listen first.
 Keep commitments.
 Extend trust.
Remember that the thirteen behaviors always need to be balanced by each other
and that demonstrating behaviors in the extreme such as “talk straight” can be
viewed as a flaw (Society for Human Resource Management, How the Best
Leaders Build Trust 2009).
Reward and Recognition Programs
Reward and recognition programs can facilitate a positive workplace environment

and, hence, a strong engagement between the employee and the organization. For
a program to be effective, however, it must create value. Creating value means
that the recognition or reward must directly link to a performance component, or
it will be insignificant. Consider the questions in Figure 3-3 before implementing
a rewards program.
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Figure 3-3. HR Considerations for Reward and Recognition Programs
The types of recognition and reward programs are endless. The following describe
only a few of the many ideas used across organizations today.
Spot awards: Spot award programs recognize employees on an impromptu basis

for their effort or achievement. This award can be presented right away when a
manager notices an employee doing something worthy. Spot awards can be
presented at larger meetings, so the employee can be recognized by peers.
Team achievement awards: Team achievement awards recognize teams that

have completed a special project, met a milestone or demonstrated a collaborative
effort.
Social recognition: Social recognition are informal manager-employee

exchanges such as praise, approval or expressions of gratitude for good
performance. For some managers, praising employees is a natural part of their
employee interaction. For other managers, this may not be part of their
management style and may require coaching and development.
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Financial incentives: Financial incentives provide employees with a monetary

gift in recognition of their achievements. Financial incentives can include gift
certificates, cash rewards, merchandise and variable pay.
Nonfinancial incentives: Nonfinancial incentives provide employees with an

award not tied directly to a financial gain, such as work/life benefits, thank-you
notes, special award ceremonies, lunches with an organizational leader, bouquet
of flowers or even an office with a window.
Cross-Cultural Considerations
What is considered a reward in one culture may be considered distasteful in

another. For example, in Japanese and Scandinavian cultures, selecting an
individual employee for recognition is problematic and may result in
demotivation. With cultural guidelines in mind, global HR professionals may
choose from a variety of nonfinancial recognitions, including the following:
 Assignment to project teams or global task forces that provide
opportunities for greater visibility within the organization, exposure to
other parts of the organization and skill development
 Allowing employees more autonomy and self-direction in their work
assignments
 Opportunities to supervise other employees or to try different jobs
 Access to a high-performer development program
 Enhanced job tools or resources such as subscriptions to professional
journals
Creating Reward and Recognition Programs
When creating rewards and recognition programs, follow these five guiding
principles:
 Align rewards and recognition with your organization’s goals and
values: Rewards and recognition are most successful when they are
aligned with the organization’s stated mission, vision, values and goals. If
employees see a clear connection between what management says is
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important and what is actually rewarded at work, the reward will hold a
greater value.
 Be sincere and simple: Be sure that the recognition and awards are
appropriate for your culture and that the message is honest and sincere.
One of the easiest and most effective ways to show appreciation is through
a thank-you note.
 Ensure the meaning matches the effort: An employee who recently
closed a million-dollar deal may not feel appreciated if he or she receives
a coffee mug. Beware of canned incentive programs. Organization
cultures differ greatly, and what works in one environment may fail in
another. The reward must be meaningful to the individual receiving it.
 Adapt the program when necessary: Certain groups of employees may
not be motivated by all of the organization’s incentives. For example,
some employees may value a cash award, while others would place a
greater value on time off from work. Consider a variety of incentives and
recognition opportunities in order to meet the varying needs of the
workforce.
 Provide relevancy: Determine what behaviors to reward and then reward
them consistently. Be specific as to why the reward is being given and the
value the effort has on the organization.
 Act in a timely manner: Recognize and reward soon after the desired
behavior. This strengthens the link between the employee’s action and the
result to the organization. (Society for Human Resource Management
2005)
Assessing Your Organization’s Level of Appreciation
Teresa A. Daniel and Gary S. Metcalf, in their paper Fundamentals of Employee

Recognition, suggest organizations assess how well they are doing when it comes
to employee recognition by assessing their performance answering the following
questions:
 Does our organization show employee appreciation every week?
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 Does our organization measure what we reward and reward what we

measure?
 Does our organization compete between teams for incentives?
 Are employees able to select some of their project work?
 Does our organization reward on most of our organizational values?
 Do employees see our recognition and rewards as valuable?
 Do peers recognize and reward others?
 Does our organization recognize small accomplishments as well as large
accomplishments? (Society for Human Resource Management 2005)
If you answered No for the majority of the questions listed, you should reconsider
ways in which you can offer meaningful programs within your organization.
Providing Feedback from Managers to Employees
Receiving specific feedback from a manager helps employees assess personal

performance. Feedback can also clarify how an organization operates and its
expectations for future goals. A lack of feedback can cause an employee to
become anxious and to look for another job.
Obtaining feedback across geographic areas presents certain challenges:

 In virtual organizations, employees and leaders may be separated
physically. Opportunities for seeking feedback may be fewer, and
misunderstandings through e-mail and voice mail may increase.
 In complex and technical organizations, leaders may not have sufficient
expertise to deliver meaningful feedback. Consequently, they may devise
ways to secure third-party feedback from a respected source.
To help determine the most effective form of feedback, managers should

understand the communication patterns seen across different cultures. Figure 3-4
outlines different communication patterns and how these patterns translate into
styles of feedback.
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Communication How Communication Patterns Translate into Styles of Feedback

Patterns
 Relies on implicit communication
High context
 Appreciates the meaning of gestures, posture, voice and context
 Relies on explicit communication
Low context
 Favors clear and detailed instructions
 In a conflict or with a tough message to deliver, favors getting
Direct
your point across clearly even at the risk of offending or hurting
 In a conflict or with a tough message to deliver, favors
Indirect
maintaining a cordial relationship at the risk of
misunderstanding
 Displays emotions and warmth when communicating
Affective
 Establishes and maintains personal and social connections
 Stresses conciseness, precision and detachment when
Neutral
communicating
 Observes strict protocols and rituals
Formal
 Favors familiarity and spontaneity
Informal
Figure 3-4. How Communication Patterns Translate into Styles of Feedback (Rosinski 2003)
Another significant challenge, especially for organizations with a global presence,

is cultural diversity. Cultural differences can affect the degree of need for
feedback and inhibit employees from seeking necessary feedback.
M. F. Sully de Luque and S. M. Sommer, in the article The Impact of Culture

on Feedback-Seeking Behavior, propose that feedback-seeking behavior was
influenced by four dimensions of cultural variability:
 High/low status: Feedback seeking by a subordinate might be perceived
by a supervisor as an insult that causes loss of face. In these cultures, peer
feedback may be more practical.
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 Specific/holistic: Supervisors in holistic cultures may be reluctant to

deliver feedback that might damage the harmony of the employee
relationship. Employees from specific cultures are more likely to
compartmentalize their request for feedback and direction and not see it as
a loss of face.
 High/low tolerance for ambiguity: Employees in a culture with low
tolerance for ambiguity need feedback in order to allay anxiety.
 Individualism/collectivism: This dimension of cultural difference affects
whether the individual or the entire group will be singled out for feedback.
Some researchers also believe that individualist cultures prefer positive
feedback while collective cultures prefer information about mistakes (Sully
de Luque and Sommer 2000).
The reward programs developed by HR should accommodate these special needs

and allow local operations to adapt systems to their cultural requirements.
Work/Life Balance Programs
As patterns of work continue to shift in response to the demands of production

and trade in the global economy, major challenges have arisen. Demands on
employees are changing, which means an increase in competition for jobs and an
increase in work pressures. Employers are also affected by global competition and
face a myriad of national and international policy and law. For both employee and
employer, there is a struggle to find a balance between work and personal life
without diminishing productivity and profits.
Work/life balance programs can strengthen the engagement between the

employee and the organization. HR is often navigating work/life balance
decisions for an organization and working with leaders to determine which
programs support the well-being of employees and also provide a return on
investment.
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Figure 3-5 provides a list of options that are often categorized as work/life
balance programs.
Work/Life Examples
Balance
Programs
 Banking service  Grocery services
Convenience/
 Dinners-to-go program  Referral services for
concierge
 Dry cleaning and laundry household needs (e.g.,
services
service plumbing, electrical)
 Subsidized cafeteria services
 Career development and  Resources and referrals for
Employee
coaching education
assistance and
 Employee development  Retirement planning
employee
courses  Time management training
development
 Financial planning  Tuition assistance program
programs
 Legal assistance
 Mentoring
 Resources and referrals
for counseling
 Adoption assistance  Eldercare assistance
Family
 Backup (emergency) child  Long-term care for extended
assistance
care program family members
programs
 Child care assistance  Parenting resources and
seminars
Figure 3-5. Examples of Work/Life Balance Programs (continued to next page)
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Work/Life Examples
Balance
Programs
 Flexible work hours such  Telecommuting
Flexible work
as flextime. Flextime  Variable workweek,
arrangements
allows employees to which is sometimes
choose starting and called a compressed
ending hours but typically workweek. A
must be present in the variable workweek
office during core periods, allows employees to
such as 10 a.m. to 3 p.m. work longer hours
 Job sharing, which allows over fewer days.
two employees to share
the workload of a single
job.
 Part-time employment
 Disease management  Smoking-cessation
Wellness
program program
programs
 Fitness benefits or  Weight management
workplace fitness program
program
 Maternity and paternity  Self-funded leave
Leave of absence
leave program
 Commuting program  Ergonomics program
Miscellaneous
 Employee affinity groups  New mothers’ rooms
 Employer-sponsored  Public transportation
discounts assistance
Figure 3-5. Examples of Work/Life Balance Programs (concluded)
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Implementing Work/Life Balance Programs across Cultures
Several factors influence the benefits an organization offers in different countries.

Primary factors include the following:
 Laws: Are there laws governing work/life program offerings?
 Labor relations: Do labor contracts specify work/life provisions for
workers?
 Organizational culture: Is the organization family friendly? Are there
expectations of long hours of work for career progression?
 Maturity of the organization: Is the organization in a start-up phase or
established with the capabilities to support work/life initiatives?
 Market practice: What work/life benefits are necessary to be competitive
on a local and global scale?
International Assignee Support
The profile of the international assignee is often made up of long work hours,
frequent international travel, difficult communications across time zones, working
during vacations and disruption in family life. Unfortunately, these types of
situations often lead to failed assignments, an early return home for the assignee
or his or her transfer to another employer. With so much at risk, support for
international assignees is critical and can strengthen the engagement between
employees and the organization’s HR department (Society for Human Resource
Management, Managing International Assignments 2009).
In the paragraphs to follow, we will assume the assignee has completed pre-
departure training and preparation, and we will focus on ways to support
assignees while on assignment.
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Managing Culture Shock
Culture shock may be most significant several months after the employee begins
the assignment. In some cases, family members are most affected. Providing
spousal and family support can minimize family stress and enhance the assignee’s
productivity. Spousal support may include the following elements:
 Examining personal strengths
 Managing change
 Examining cross-cultural values
 Creating goals, both personal and professional
 Maximizing host country activities and resources
Communication Abroad
Maintaining consistent communication with the assignee throughout the

assignment will greatly reduce feelings of isolation and abandonment. Use the
various communication channels to support dialogue and information sharing.
Communication options include the following:
 Organization Intranet
 Employee website
 Virtual meetings
 Teleconferences
 E-mail
HR Support for Daily Living Tasks
Daily living activities such as banking and finding housing can become
burdensome for international assignees. HR can assist and work with managers to
ensure that assignees are not overwhelmed with work responsibilities while
orienting to their host country. Figure 3-6 provides a checklist to help the assignee
and HR prepare for daily living tasks and to determine which tasks HR can assist
the assignee in completing.
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Figure 3-6. Checklist for HR Support
Repatriation
Repatriation refers to the process of reintegrating an employee back into the home
country after an international assignment. Preparation should begin at least six
months prior to the return of assignees and their family and may include
counseling, reverse culture training and career coaching.
HR may want to provide special recognition through newsletters, e-mail or at

organizational events. This attention shows assignees they are valued and also
reinforces the value placed on the international experience.
In addition to the emotional considerations for repatriation, there are tasks related
to relocation decisions and benefit changes. HR should identify any gaps before
assignees begin their next assignment and manage these tasks for a smooth
transition.
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Creating a Friendly Workplace Environment
Esprit de corps is a concept meaning a common spirit of camaraderie,

enthusiasm and devotion among the members of a group. Think about your own
work environment. Is there a spirit of enthusiasm? If not, are there ways in which
you can create a friendly workplace environment?
According to Adrian Gostick and Chester Elton who wrote The Orange
Revolution, “If people are having fun together, they’re going to work harder, stay
longer, maintain their composure in a crisis and take better care of the
organization. And that leads us to one of the ways great teams succeed: They
lighten up and enjoy the process” (Gostick and Elton 2010).
There are ways in which HR can incorporate an esprit de corps throughout the
workplace. Your workplace culture, budget and the goal of the events will drive
what works. Here are several ideas according to Gostick and Elton:
 Provide an on-site gym where employees can interact as well as exercise.
 Sponsor trips and events such as attending football games, group picnics,
and sponsored organization outings.
 Nominate colleagues for special recognition.
 Include “employee of the month” awards for outstanding performance.
 Send e-cards to recognize who colleagues demonstrate organization
guiding principles and core competencies.
 Send a balloon bouquet for a special event.
 Allow an employee to use a coveted parking spot for a week. (Gostick and
Elton 2010)
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Event Planning
As an HR professional, you may be tasked to organize and plan an organization

event. Whether it is a holiday party, luncheon or employee recognition dinner,
you will want to plan for safety and success. Regardless of the event, ask yourself
these questions to help guide your planning efforts:
 Would the theme or timing of the event offend employees?
 What is our organization’s policy on serving alcohol?
 What are we trying to accomplish with the event?
 Does the event support our organization’s values?
 How can we promote employee involvement in the event-planning
process?
 What liabilities, including safety, should we evaluate when planning this
event?
 Is this event supported by organizational leaders?
 What is the budget for the event?
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3.4: Managing Employee

Behavior Issues

Knowledge:
Behaviors: 05. Respond to employee’s questions or concerns about workplace

06. Enforce HR policies and procedures (for example, explain and

make sure that employees comply with the employee handbook)
Skills & Knowledge: 04. How to handle conflicts (for example, addressing the problems
of individual employees and knowing when to involve senior
staff)
06. Issues of behavior in the workplace (for example, absences,

discipline, workplace violence, or harassment)

Section 3.4: Managing Employee
Behavior Issues
Introduction ..................................................................................................................................97
Discipline Process .........................................................................................................................97
Performance Problems ..............................................................................................................103

Investigate the Performance Issue ............................................................................................103
Conduct the Performance Meeting ...........................................................................................104
Take Corrective Actions...........................................................................................................104
Document Results ....................................................................................................................104
Complaint Review, Investigation and Resolution ...................................................................107

Complaint Review ....................................................................................................................107
Investigating a Complaint ........................................................................................................107
Alternative Dispute Resolution Process and Procedures .........................................................110
Dealing with Workplace Violence ...........................................................................................111
Escalating Issues ......................................................................................................................113
Managing Employee Conflicts ..................................................................................................113

Interpersonal versus Task Conflicts .........................................................................................113
The Cultural Components of Conflict ......................................................................................116
Handling Employee Terminations ...........................................................................................117

Types of Terminations .............................................................................................................117
HR Responsibilities with Termination Activities ....................................................................120
Exit Interviews .........................................................................................................................120
Module 3: Employee Relations and Communication Section 3.4: Managing Employee
Behavior Issues
Introduction
Organizations have rules that define and govern the expectations and conduct of
both management and employees. Sometimes laws define and regulate what is
acceptable and what is not acceptable. When the rules are not followed,
organizations must rely on discipline processes to encourage employees to behave
sensibly and to discourage unwanted behavior.
For HR, having a discipline process in place helps guide the course of action
when issues arise. While it is impossible to anticipate every employee issue, HR
professionals who understand the basic concepts will know how to diffuse issues,
manage the employee relationship and formulate fair outcomes.

 Discipline processes
 Processes for complaint review, investigation and resolution
 Performance problems
 Methods for managing employee conflicts
 Handling employee terminations
Discipline Process
In the context of HR, discipline is not punishment; rather, discipline refers to the
methods of management used to communicate and enforce appropriate workplace
behavior. Applying discipline in HR means clearly communicating to an
employee four important elements of information:
 Employee’s behavior or performance is not acceptable.
 Employee’s behavior or performance must change.
 Describe standards of behavior or performance expected or required.
 Potential consequences should the behavior or performance not change.
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Informal discipline usually involves verbal communication or written

documentation that is not kept in the employee’s file. More formal forms of
discipline usually involve more detailed documentation and mutual
acknowledgement that the discipline has in fact been clearly communicated and
understood. In all cases, the goal of discipline is to change behavior for mutual
benefit, not to punish.
Progressive discipline refers to a strategy of increasing the consequences when

an employee fails to change his or her inappropriate behavior. Plus, it also means
that the discipline applied should fit the seriousness of the situation. Because
progressive discipline requires systems and processes that are predetermined,
clearly articulated and applicable to all employees, progressive discipline is seen
to be fair, not arbitrary.
The ultimate consequence of discipline is the termination of employment. If,

however, the organization has followed and applied a progressive discipline
process, the positive outcome is that the organization’s culture will value the fair
and respectful treatment provided to the employee, and in most cases the
organization will be able to defend its actions if the matter were eventually
challenged from a legal perspective.
A fair and just discipline process is based on three pillars as illustrated in Figure
4-1.
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Figure 4-1. Elements of a Discipline Process (Dessler 2008)
Each pillar is described in more detail in the sections to follow.
Clearly Defined Rules and Regulations
When an employee is hired, he or she should review and agree to the

organization’s rules, policies, procedures and code of conduct. Rules and policies
should be clearly defined along with terms that could be misinterpreted. Terms
such as “poor performance” and “gross misconduct” may require additional
definitions.
For some issues such as absenteeism, it is worth the effort detailing the
organization’s policy and various procedures, so employees can differentiate
between paid time off, sick days, vacation days and unplanned absences.
A 2010 study conducted by Kronos/Mercer found that unplanned absences cost

employers a large part of their payroll budgets each year. Here are two statistics
from the study:
 The total costs of all major absence categories, including direct and indirect
costs, average 35% of base payroll. These costs range from 29% for
exempt employees, 36% for nonexempt salaried, 39% for nonunion hourly
and 38% for union hourly.
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 Incidental unplanned absences also result in the highest net loss of

productivity per day: 19% versus 13% for planned absences and 16% for
extended absences (Kronos Incorporated 2010).
Proper attendance management begins with clearly, defined policies and

centralized, sophisticated record keeping to eliminate favoritism, lax standards
and compliance issues. When defining attendance and absenteeism rules, HR may
want to include the following in policy manuals or employee handbooks:
 Expectations for employee attendance
 Definition of absenteeism
 Standards for lateness and absences
 Procedures for unplanned absences
 Attendance incentives
 Laws related to attendance and hours worked
To supplement written policies and employee handbooks, HR may offer

supervisor training for managing employee attendance.
For more information on creating and implementing rules and regulations in the
workplace, see Section 3.2: Laws Affecting Employee and Labor Relations.
System of Progressive Consequences
A system of progressive consequences is the second pillar of effective discipline.

To ensure fair and equitable management practices, follow a progressive approach
to discipline. The approach may include a range of actions as outlined below:
 Coaching or counseling: Efforts are made to ensure the employee is clear
on what is expected.
 Retraining: Sometimes training can help employees correct the problem.
 Verbal warning: A verbal warning serves as a notice of the specific acts
for which the employee is being reprimanded. Documenting the verbal
warning is always good practice.
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 Written warning: A written warning documents the history of the

problem and the previous actions taken by the employer. A written
warning should state the consequences of an additional violation. The
employee should sign the warning.
 Suspension: In most cases you should suspend an employee before
terminating an employee. Sometimes suspension is also referred to as last
chance agreement (LCA). Suspension is evidence the employee was aware
of the criticality of his or her offense. Suspension actions should be
documented and stipulate the employer has grounds to terminate. An
example of a suspension notice is provided in Figure 4-2.
 Termination: At this point in the progressive penalty process, the
employee is choosing not to comply, and the employer is following
protocol. A termination session may be required and will necessitate
detailed planning. (Muller 2009)
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Figure 4-2. Example of a Suspension Form (Society for Human Resource Management,
Discipline: Notice of Suspension 2010)
Formal Appeals Processes
In addition to clearly stated rules and progressive consequences, the disciplinary

process should have an appeals procedure. Through an appeals process,
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employees have the opportunity to challenge information used to issue

disciplinary action. The purpose of this process is to offer insight into other
circumstances that may have contributed to the employee’s performance or
conduct issues (Dessler 2008).
Performance Problems
An employee stealing from an organization is a different issue from an employee
with poor performance. Handling a performance improvement situation works
best when the HR department and line managers work together. A manager may
not always perceive an employee’s behavior accurately, and the HR department
can provide an impartial view of the circumstances and help the manager prepare
for and conduct a performance improvement meeting.
Corrective action for performance problems should not be thought of as punitive

in nature. It is an opportunity to correct unacceptable behavior and to reestablish
the relationship between the employee and the organization. By taking corrective
action early, an employee can improve performance, stay with the organization
and become a valued member of the organization.
Investigate the Performance Issue
Thorough investigations begin the process and precede corrective actions. During
the investigation, an HR representative and the line manager should talk with
witnesses and gather the relevant facts and specific details. They should also
review any related files and documents. It is important to maintain objectivity and
to keep the details of the investigation private and confidential.
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Conduct the Performance Meeting
Conduct a performance meeting in a quiet, private location with no interruptions.

Bring relevant information related to previous problems or actions. When
conducting the meeting, do the following:
 Present the facts in a straightforward fashion.
 Clarify the specific performance issue and its significance to the
organization.
 Give the employee a chance to explain his or her performance and explore
the reasons for the unacceptable performance, but do not argue with the
employee.
The focus of the first part of the meeting should be discussing the existing
situation and explaining how it violates the performance and behavior standards
of the job.
Take Corrective Actions
The second part of the meeting should address corrective actions. The employee
must understand that the current performance is unacceptable, that the behavior
must change, and that negative consequences will occur if the behavior does not
change. The manager and the employee should work together to develop and
agree to a corrective action plan. The plan should include provisions for follow-up
or monitoring of progress.
The employee should also be advised of the organization’s appeal process.
Document Results
After the meeting, document corrective actions. Be sure to include the following:
 Outline organizational expectations. Supervisors should document
specific expectations, so employees understand what is required of them.
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 State specific changes employees need to make. Outline the conduct that
needs to change. Focus on the behavior, not the person.
 Include the employee’s story. There are always two sides to a story. Good
documentation records both the employee’s side and the supervisor’s side
of a situation.
 Outline a plan. Effective documentation maps out specific goals and how
the employee is going to achieve them. The case is reviewed for potential
exceptions to employment at will and potential tort or other liability.
 List possible consequences if improvements are not made. Specifically
state the possible consequences if the employee fails to make the necessary
improvements.
 Establish a time frame. Managers should use a realistic time period when
creating a timeline for improvement.
 Follow up on documentation. Use follow-up sessions to gauge progress,
to offer feedback, and to make additional recommendations for continued
improvement.
A performance improvement plan (PIP) may be developed as a part of the

performance improvement meeting. The manager, with input from the affected
employee, develops a plan that will help the employee attain the desired level of
performance. Figure 4-3 provides an example of a format for a performance
improvement plan.
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Figure 4-3. Example of a Performance Improvement Plan Format (Society for Human Resource
Management n.d.)
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The manager’s supervisor and the human resources department should review the
plan to ensure consistent and fair treatment of employees across the organization.
The supervisor will monitor the plan and provide feedback to the employee.
Complaint Review, Investigation and Resolution

HR should treat all their employees equitably and fairly. Disciplinary procedures
should ensure that employees have the opportunity to explain and defend their
actions against charges of violation or misconduct. Complaint and disciplinary
procedures should be conducted in a private manner.
Disciplinary actions are never a simple matter. There may be a combination of

factors in addition to the specific violation that warrant careful consideration.
Concerns about protected classes and workers’ compensation are only a few
examples.
Complaint Review
When an informal or formal complaint is made, the employer should take

immediate steps to stop the alleged conflict, protect employees involved and
begin investigations. Under many laws, employers are legally obligated to
investigate certain complaints, such as workplace violence, in a timely manner.
Responsiveness to a complaint and an investigation will not only yield the best
information and evidence, but it will also enhance both the investigator’s and the
employer’s credibility (Society for Human Resource Management, How to
Conduct an Investigation 2010).
Investigating a Complaint
The following steps are part of a thorough investigation and should begin as soon
as the employer receives a verbal or written complaint. The severity of the
complaint will determine the scope of investigation.
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Step 1: Ensure confidentiality: The employer should explain to all those

involved in the investigation that all information gathered will remain confidential
to the extent required for a thorough investigation.
Step 2: Provide interim protection: If there are security issues related to the
complaint, actions should be taken to protect all those at risk of harm.
Step 3: Select the investigator: HR is the most common choice but can only be
effective if HR professionals possess the following skills:
 Ability to investigate objectively
 Interpersonal skills for building rapport with the parties involved
 Ability to pay attention to details
 Ability to maintain confidentiality
 Respect of employees
 Understanding of the law and the organization’s policies and procedures
Step 4: Create a plan for the investigation: The type of the complaint will drive
the plan for investigation. A complete plan should include an outline of the issue,
the development of a witness list, sources for information and evidence, interview
questions targeted to get crucial information and details and a process for
documentation.
Step 5: Develop interview questions: Good questions are relevant and designed
to draw out facts without leading the interviewee. Questions should be open-
ended to elicit as much information as possible.
Step 6: Conduct interviews: The investigator should remain objective

throughout the interviews. The investigator should avoid pushing the investigation
in any particular direction and should never offer any opinions. During the
interviews, the investigator should take notes.
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Step 7: Make a decision: The investigator, members of management and legal

counsel, if necessary, should make the final determination of any employment
actions that are warranted based on the investigative report. In the final
determination, the employer must consider all parties involved as well as the
organization’s processes, not just whether the accused is at fault.
Step 8: Close the investigation: Once a decision is made, the employer should
do the following:
 Notify both the complaining employee and the accused of the outcome.
 Take corrective action that is appropriate to the situation, such as discipline
or even termination.
Step 9: Develop written summary investigation results: HR should operate on

the premise that every investigation of a serious nature could potentially be
reviewed by a court. With this mindset, HR should keep accurate documentation
and evidence (Society for Human Resource Management, How to Conduct an
Investigation 2010).
Employee Monitoring
Many countries and regions have laws that regulate monitoring and seizing any
wire, oral or electronic communications. For example, in some countries, the law
requires employers to obtain written consent or provide notification to employees
that e-mails may be monitored.
Be sure your organization includes policies and procedures on monitoring

employee communications and that these policies are understood by employees.
These policies should cover the following topics:
 Telephone practices and voice mail
 Internet use, including accessing private e-mail accounts and websites
while at work
 Workplace searches
 Surveillance
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Alternative Dispute Resolution Process and Procedures
Alternative dispute resolution has developed as a way to prevent the escalation of

actions, like discipline and termination, into lawsuits.
The purpose of alternative dispute resolution (ADR) is to provide employers

and employees with a fair and private forum to settle workplace disputes.
In the last several years, ADR has gained popularity, because it often reduces the
number of simple disagreements that could wind up in court or in formal
arbitration. Using ADR processes, organizations can diffuse and resolve disputes
and ultimately avoid bad feelings, high turnover and costly litigation. Figure 4-4
outlines several ADR strategies.
ADR Strategy Description
Open-door policy Employees have the opportunity to meet with

supervisors and managers to discuss issues.
Third-party A neutral third party, from inside or outside the

investigations organization, confidentially investigates workplace
complaints and proposes resolutions.
Peer review A panel of employees, or employees and managers,

works together to resolve employee complaints.
Arbitration A process in which a neutral third party, after

reviewing evidence and listening to arguments from
both sides, issues a decision to settle the case.
Figure 4-4. ADR Strategies
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Arbitration
If the organization determines that arbitration is the best dispute resolution

strategy, HR should work to ensure arbitration is perceived as a helpful tool for
resolution and not as a corporate strategy for suppressing troublemakers.
A fair program should include an arbitrator whom all parties see as neutral and
fair. In many cases, arbitrators can award whatever relief would be available to
the involved parties if they were to settle the dispute in court, including
compensatory and punitive damages, back pay and reinstatement. The arbitrator
should provide a written opinion and include a summary of the dispute, damages
and other relief awarded, and a statement about the disposition of any statutory
claim (Society for Human Resource Management 2001).
Know the Law
Remember that methods of dispute resolution such as grievance procedures may

be defined in collective bargaining agreements, and while arbitration may be used
to resolve some conflicts, it does not preclude legal action in some countries. In
the United Kingdom, the Employment Act of 2002 describes statutory grievance
and disciplinary procedures. Failure to comply with its requirements can result in
a finding of unfair termination and an increase in compensation awarded.
Attempts at conflict management must be conducted within these legal
restrictions.
Dealing with Workplace Violence
The definition of workplace violence varies and often includes any physical
assault, threatening behavior or verbal abuse that occurs in the work setting.
Examples of workplace violence include but are not limited to the acts listed
below:
 Psychological trauma due to threats
 Obscene phone calls
 An intimidating presence and harassment of any kind
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 Acts that result in damage to company resources or capabilities

 Assaults, threats or other actions by outside parties with whom employees
have relationships and that occur at the workplace
To reduce liability and to maintain safe work environments, organizations must

comply with related laws and know what preventive measures are necessary and
what actions are required when a violent act occurs.
HR’s Response to Workplace Violence
The law and the organization’s policies will determine how to respond to
workplace violence. Responses range from immediate termination to counseling
to warnings. The following list provides ways in which HR can respond to violent
incidents:
 Provide counseling for victims.
 Provide debrief session for employees.
 Provide counseling for employees not directly involved in the incident.
 Allow employees to take a leave of absence.
 Institute new policies to prevent future acts of violence.
 Provide counseling for the victim’s family.
 Provide counseling to the aggressor/assailant.
 Aid employees in job relocations.
Following a violent incident, HR may need to adjust organization policies,

procedures and security measures in order to prevent another incident. Depending
on the incident, HR may also want to institute the following preventive measures:
 Arrange access control on a regular basis. It can take various forms,
including sign-in sheets and surveillance.
 Communicate to employees the reason for security procedures and that
precautions extend to even persons familiar to the employer, such as an
employee’s family members or friends.
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 Identify to all employees the point person or office for communicating any
potential workplace violence, threat or concern (Society for Human
Resource Management, Dealing with Violence in the Workplace 2012).
For more information on maintaining a safe work environment, please see

Module 6: Health, Safety and Security.
Escalating Issues
HR professionals need to know what they can solve themselves and what must be
referred to a higher authority. For example, workplace violence issues are serious
offenses and should be handled by more senior personnel. In these instances, it is
important to have an escalation process in place and to know when to contact
more senior personnel, the organization’s leadership, security, law enforcement
and other resources that can help you respond appropriately and prevent
liabilities.
Managing Employee Conflicts

It is inevitable: conflicts arise at work. And when they do, parties involved
usually turn to HR professionals for their expertise and guidance. HR should use
the framework of law, policies and procedures to mediate disputes and act in
consultative manner.
In managing conflict, it is crucial to first understand the source of the conflict. Is

the source based on clashes of personality and style, differences in vision and
procedure or a cultural misunderstanding? Most conflicts can be categorized as
interpersonal or task conflicts, also referred to as work-related conflicts.
Interpersonal versus Task Conflicts
The word conflict is laden with negative connotations, but many organizational
experts believe that conflict is not uniformly bad. In the study Types of
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Intragroup Conflict and Affective Reactions, Francisco Medina and his

colleagues distinguish between relationship or interpersonal conflict and task
conflict. The two conflict types are illustrated in Figure 4-5.
Figure 4-5. Types of Conflict (Medina, et al. 2005)
The difference between these types of conflict suggests that to arrive at the best
conflict resolution approach, one must first thoroughly understand the source of
the conflict. Consider the case study outlined in Figure 4-6.
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Case Study: Employee Conflict
Background Two members of a global product development team end

information every team meeting locked in conflict. The team leader
assumes that some of their differences come from their
disciplines: One is an engineer and tends to think in a
logical, step-by-step manner, while the other is a designer,
known for an intuitive understanding of the relationship
between aesthetics and user interfaces. They bring
distinctive experiences to the team.
The conflict They have each been involved in different projects that
tried different strategies with different levels of success,
and they now have definite opinions about what works and
what doesn’t. However, they also just don’t like each other.
One seeks risk, while the other avoids it. One displays
emotions openly, while the other appears dispassionate.
The Realizing the two levels of conflict, the team leader

intervention approaches each member separately and talks about their
different styles as something that can’t be changed but that
can be controlled through some ground rules.
During meetings, the team leader acts quickly when an

interpersonal conflict arises, reminding the team members
of the ground rules and directing them to the more
productive aspects of their disagreement and the pros and
cons of the approaches each is proposing.
Figure 4-6. Case Study: Employee Conflict
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Even when a conflict involves just a task, a certain amount of investigation is

required to determine the actual disagreements and to find common ground.
The Cultural Components of Conflict
Cultural differences and misunderstandings drive many conflicts for organizations

with a global presence. Even when the roots of a conflict are related to
personality, the resolution of the conflict can be complicated by cultural
differences. Different cultural norms can prevent managers and employees from
recognizing conflicts. Understanding cultural differences can help HR and those
involved find an approach that leads to resolution. Consider the following:
 Cultural differences in values and perceptions: For example, a manager
from a more task-oriented culture is assigned to a subsidiary in a country
with a more holistic, relationship-oriented culture. Problems immediately
result as the manager quickly proposes new and completely different
processes. His colleagues resist implementing the new processes.
 Cultural prejudices: Conflicts may derive not from any personal
differences or specific events but from attachments to specific groups, such
as religious, ethnic or clan groups. These conflicts can occur between
members of a workplace that appear completely homogenous to an
outsider.
 Cultural attitudes toward conflict: In a high-context culture, maintaining
dignity can complicate the resolution of conflict. For example, consider a
situation in which two members of a cross-cultural team come from
countries with different contextual needs such as high- and low-context
cultures. The team member from the low-context culture continually
interrupts and corrects the team member from the high-context culture,
who is offended but says nothing. The first team member is not aware of
the problem until a third party points it out. Then this team member makes
matters worse by bringing the issue up in front of the entire group and
apologizing, thus embarrassing the team member from the high-context
culture.
© 2012 SHRM 116

Behavior Issues
 Using the wrong conflict resolution technique: HR professionals should

become aware of the cultural filters that may influence their own choice of
conflict resolution methods. For example, an HR professional from a
culture with few differences between male and female roles needs to
recognize that women from cultures with significant differences in gender
roles may not want to participate in dispute resolution that requires open
discussion of problems. Similarly, inviting employees in conflict to discuss
their differences in an equal manner may work in an individualistic society
but not in a collectivist culture. An effective mediator may need to be
assertive and powerful.
Many forms of alternative dispute resolution (ADR) involve impartial

intermediaries or observers. Some experts have noted that neutral outsiders are
more effective in Western cultures. However, a rational dissection of a dispute
may be seen in an Arab culture as dismissing the emotional dimension of the
conflict. In this context, a partial insider may be more appropriate, someone both
sides know and trust (Leeds 1997).
Handling Employee Terminations

Types of Terminations
Employment relationships, like any other type of relationship, sometimes come to

an end. This section deals with issues related to the termination of employees.
Whether voluntary or involuntary, it is important that terminations are conducted
legally, with sensitivity, and that the rights of the employees and the organization
are upheld. Terminations generally fall into two categories: involuntary and
voluntary.
Involuntary Terminations
For cause terminations: For cause terminations occur when an employer

discharges a particular employee because of things the employee has done wrong.
© 2012 SHRM 117

Behavior Issues
Four common reasons for discharge are poor performance, attendance problems,
violations of organizational policies and serious misconduct.
Legal cause is a very specific application of the broader concept of cause.

Whereas the word and concept of “cause” can simply mean “to have a reason,”
to have legal cause actually means that the reason must fit within a very specific
and legally defined group of actions or behaviors, often quite serious in nature.
Frequently in employment contexts, the word “cause” is used without including
the preface legal. In all cases, care needs to be taken to ensure that the proper
interpretation and application of the word “cause” is being used and that the
definition is not simply assumed to be understood.
The following items may qualify as termination for cause:

 Breach of a fiduciary responsibility
 Disclosure to unauthorized persons of proprietary information regarding
the business or operations of the organization
 Failure to report to or perform work for any significant period of time
 Willful misconduct or gross negligence in the performance of duties
 Willful and repeated refusal to perform duties that have been delegated or
assigned
 Commission of a crime resulting in loss to the organization, including
theft, embezzlement, fraud or commission of any felony that brings the
organization into public disgrace
No fault terminations: Another type of involuntary termination occurs when

employees are dismissed due to no fault of their own. Common reasons for such
terminations include the following:
 Mergers and acquisitions
 Downturn in business
 Organization goes out of business
 Reorganization or restructuring
 Financial difficulties
© 2012 SHRM 118

Behavior Issues
 Plant obsolescence or relocation

 Technological developments
Possible alternatives to labor reductions include asking employees to sustain pay

cuts or to accept a reduced work schedule or offering voluntary retirement with
additional benefits.
Constructive Dismissal
Constructive dismissal (also known as constructive termination or constructive

discharge) is an important legal concept for HR practitioners to understand. While
not all jurisdictions have this law or precedent, it remains an important HR
concept to know in terms of employee morale and motivation.
A constructive dismissal may occur when the employer changes the employee’s
work or work environment in a fundamentally negative manner so as to have
breached the terms and conditions of the original undertaking of employment. To
be valid the change must be applicable in a legal sense, not simply based on the
employee’s own personal interpretation of unfairness or harassment. To be
initiated, constructive dismissal usually requires that the employee resign shortly
after the change in his or her work or workplace has occurred in order to validate
and acknowledge that a breach of contract has occurred.
Legally or motivationally constructive dismissal is a significant HR concept

because it has the potential to create numerous unintended consequences. From a
legal and financial point of view, a constructive dismissal may trigger expensive
severance packages, wrongful dismissal claims and extended legal conflicts. From
a motivational point of view, employers need to be aware that arbitrary or wilfully
fundamental changes in employment conditions can often have a serious de-
motivational effect on employees.
Examples of actions by an employer that may trigger a constructive dismissal

include the following: arbitrary demotions, reassignment to a remote geographic
© 2012 SHRM 119

Behavior Issues
work location, harassment, bullying or humiliation and unilateral changes of

substance to the terms or conditions of employment.
Voluntary Terminations
Resignations: An employee may decide to leave for better pay or career

opportunities, to relocate, to return to school or to retire. The organization may
request but generally should not require that resigning employees give a minimum
amount of notice. Employers may decide to give pay in lieu of fulfilling the notice
period when there are good reasons to do so, such as cases when the employee is
not trusted to stay at the organization.
Job abandonment: Job abandonment occurs when an employee fails to call in or

report to work for a period of time.
HR Responsibilities with Termination Activities
While each employee’s direct manager is usually responsible for the termination
action, HR must help support lawful terminations by providing coaching and
counseling to the manager and by ensuring the following is in compliance:
 Is documentation of the situation in accordance with related laws?
 Are wages and compensation decisions in compliance with related laws?
 If eligible, is the employee aware of any opportunities to continue in the
organization-provided health insurance plan and other benefits at the
employee’s own cost?
 Are employee references provided in accordance with organizational
policy?
Exit Interviews
For the organization, the exit interview is a valuable source of information about
the employment experience. It is also used to handle administrative issues, such as
delivery of the final paycheck and collection of organizational property, and gives
management a chance to address employee questions.
© 2012 SHRM 120

Behavior Issues
The timing of the meeting is important. While some employees discharged for
cause should attend an exit interview immediately after notification of
termination, it depends on the reason for termination.
Most organizations do exit interviews only in connection with voluntary

termination. These interviews are typically conducted on the employee’s last or
next-to-last day. The interview is best conducted by a neutral party who is not in
the employee’s chain of command. Employees are more likely to provide candid
input if they know that their comments will be kept confidential or anonymous.
The employer should make the effort to treat the exiting employee with
compassion and respect. The manner in which the severing of the employment
relationship is conducted can have a huge impact on how the employee copes
with the termination and whether or not the employee chooses to sue the
employer.
Protecting Your Organization’s Reputation
Disgruntled employees may spread negative misinformation that can damage an

organization’s reputation, especially after a termination. Social media is
sometimes the outlet for an employee’s anger, which consequently may prevent
new talent from considering employment at your organization.
Websites such as Hallway.com, Jobitorial.com and Glassdoor.com allow people

to anonymously share salary details about specific jobs or talk about the
interviewing and hiring experience. HR should be aware of the negative impact
but should also consider the feedback as another way to reevaluate practices and
to improve employee relations (Overman 2010).
You have completed Module 3: Employee Relations and Communication.

Next, if you feel ready, go to the Online Learning Center and check your
knowledge by completing the Case Studies, Module 3 Practice Test and the
Cumulative Practice Test. Also try the Terminology Quiz to check your
knowledge of terminology.
© 2012 SHRM 121

Module 3: Employee Relations and Communication Bibliography
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Gostick, Adrian, and Chester Elton. The
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and José M. Guerra. "Types of
Hall, Edward T. Beyond Culture. New York, Intragroup Conflict and Affective
New York: Anchor, 1976. Reactions." Journal of Managerial
Psychology 20, no. 3/4 (2005).
—. The Silent Language. New York, New
York: Anchor, 1990. Muller, Max. The Manager's Guide to HR.
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HR Council for the Nonprofit Sector. "HR 2009.
Policies & Employment
Legislation." http://hrcouncil.ca/hr- Overman, Stephenie. "Control the
toolkit/policies- Conversation." Staffing Magazine,
guideline.cfm#_secA6 (accessed 2010.
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© 2012 SHRM 122

Rosinski, Philippe. Coaching Across —. "Employee Handbooks: What is the

Cultures: New Tools for Leveraging Difference Between Employee
National, Corporate and Handbooks and Policies and
Professional Differences. Yarmouth, Procedures Manuals?" February 2,
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inuingDialogue.aspx (accessed
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magazine/EditorialContent/2010/101 Recognition." May 1, 2005.
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eEngagement.aspx (accessed August chnology/Articles/Pages/CMS_0065
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—. "Discipline: Notice of Suspension." —. "How the Best Leaders Build Trust."

November 05, 2010. February 09, 2009.
http://www.shrm.org/TemplatesTool http://www.shrm.org/hrdisciplines/or
s/Samples/HRForms/Articles/Pages/ gempdev/articles/Pages/LeadersBuil
CMS_002002.aspx (accessed August dTrust.aspx (accessed August 31,
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© 2012 SHRM 123

—. "How to Conduct an Investigation." —. "Managing the Employee Onboarding

December 6, 2010. and Assimilation Process." February
http://www.shrm.org/TemplatesTool 27, 2012.
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tanInvestigation.aspx (accessed oolkits/pages/onboardingandassimila
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es/0701hirschman.aspx (accessed nefits/Articles/Pages/EchoBoomers.a
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Discipline of Employee Relations." Plan (PIP #2)."
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oolkits/pages/introemployeerelations 1CMS_002016.aspx (accessed
.aspx (accessed September 24, August 31, 2012).
2012).
—. "Set Ground Rules for Virtual Team
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You Want to Share?" March 31, mployeerelations/articles/Pages/SetG
2010. roundRules.aspx (accessed August
http://www.shrmindia.org/isn%E2% 31, 2012).
80%99t-how-you-communicate-
staff-just-important-information-you- —. "Type of Intellectual Property Dictates
want-share (accessed September 24, Protection Needed." 2008.
2012). http://www.shrm.org/hrdisciplines/b
usinessleadership/articles/Pages/Prot
—. "Managing International Assignments." ection.aspx (accessed August 31,
September 21, 2009. 2012).
s/Toolkits/Pages/CMS_010358.aspx —. "Writing an Employee Handbook Is Not
(accessed August 31, 2012). for the Faint of Heart." July 1, 2010.
http://www.shrm.org/hrdisciplines/e
—. "Managing Organizational mployeerelations/articles/Pages/Han
Communication." March 30, 2010. dbookIsNotforSissies.aspx (accessed
http://www.shrmindia.org/managing- August 31, 2012).
organizational-communication
(accessed September 24, 2012). Sully de Luque, Mary F., and Steven M.
Sommer. "The Impact of Culture on
Feedback-Seeking Behavior." The
Academy of Management Review 25,
no. 4 (October 2000).
© 2012 SHRM 124

Varelas, Elaine. "Communication 101: World Intellectual Property Organization.

Reviewing the Golden Rules of HR What Is a Trade Secret?
Communication." Boston.com. May http://www.wipo.int/sme/en/ip_business/trad
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http://www.boston.com/jobs/hire_aut August 31, 2012).
hority/051208.shtml (accessed
August 31, 2012). —. What Is Intellectual Property?
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2009/2010. 2012).
Woodward, Nancy Hatch. "Doing Town

Hall Meetings Better ." HR
Magazine, 2006.
© 2012 SHRM 125

Module 3: Employee Relations and Communication Index
Index
absenteeism ............................................... 99 cross-cultural communication ....... 15, 19, 21
alternative dispute resolution .......... 110, 117 cross-cultural working teams .................... 21
amending contracts ................................... 50 cross-generational communication strategies

............................................................... 77
anti-discrimination, harassment and fair
work laws .................................. 42, 46–47 cultural styles ............................................ 19
arbitration .................................... 52, 110–11 dimensions of cultural variability ............. 85
code of conduct ................................... 66, 99 discipline process ................................ 97–99
collective agreements .......................... 41, 50 emergency plan ......................................... 12
collective labor law ................................... 40 employee action committees ..................... 76
communicating ... 5, 6, 11–12, 15, 18, 20, 26, employee affinity groups .......................... 88
65, 97, 113
abroad .................................................... 90 employee assistance and employee
benefits .............................................. 5, 11 development programs .......................... 87
human resource information systems
(HRIS) ............................................... 26 employee communication ............... 8, 25–26
policies and procedures ......................... 66
social media ........................................... 29 employee conflicts .................................. 113
virtual team meetings ............................ 27
employee contracts.................................... 49
communication methods ........................... 22
employee engagement ................... 36, 72–75
communication strategies................ 6, 76–77 across cultures ....................................... 18
action committees .................................. 76
compensation and benefits laws.......... 42–43 engagement barriers .............................. 75
engagement drivers ............................... 74
complaint review ..................................... 107 levels of employee engagement ............ 73
concierge services ..................................... 87 employee feedback.................................... 31

accessible leadership ............................. 33
conflict resolution ........................... 114, 117 collection mechanisms .......................... 31
exit interviews ....................................... 33
constructive dismissal ............................. 119 focus groups .......................................... 32
management lunches ............................. 32
contracts ............... 11, 20, 40, 42, 49–51, See management visits ................................. 33
suggestion systems ................................ 32
corrective actions ............................ 103, 104 surveys ................................................... 31
counseling ........................... 87, 91, 112, 120 employee handbook .................................. 66
© 2012 SHRM 126

employment agreements ........................... 40 compensation and benefits law ............. 43

employment law .................................... 42
employment contracts ............................... 42 intellectual property laws ................ 42, 47
international human rights and labor
employment law .................................. 40–42 standards ............................................ 53
occupational health and safety laws 42, 46
equal employment opportunity ................. 44 taxation ............................................ 55, 60
trade agreements and treaties ................ 55
ergonomics program ................................. 88
unions .................................................... 53
event planning ........................................... 93 visas and work permits .......................... 58
exit interviews ................................... 33, 120 leave of absence ................................ 88, 112
family assistance programs ....................... 87 long term assignment ................................ 57
flexible work arrangements....................... 88 low-context culture ............................. 19–20
focus groups .............................................. 32 managing employee conflicts ................. 113
friendly workplace environment ......... 78, 92 maternity leave .......................................... 39
general employment law ........................... 40 newsletters........................................... 23, 26
global mobility .................................... 56, 60 occupational health and safety laws .. 42, 44–
46
high-context culture .......................... 20, 116
onboarding practices ................................. 79
human resource information systems (HRIS)
............................................................... 26 organizational polices and employee
relations ................................................. 62
implied contracts ....................................... 50 codes of conduct .................................... 66
policies and procedures manual ............ 66
intellectual property (IP) laws ................... 47 statements of understanding .................. 66
international assignees ........................ 52, 89 performance problems ............................ 103

alternative dispute resolution .............. 110
interpersonal conflict ........................ 114–15 arbitration ............................................ 111
corrective actions................................. 104
investigation ........ 107, See complaint review investigations ....................................... 103
performance meeting ........................... 104
investigations .................................... 65, 103 performance problems ......................... 105
involuntary terminations ......................... 117 policies and procedures ....................... 62–67
essential content .................................... 64
job abandonment ..................................... 120 manual ................................................... 66
laws .... 23, 39–47, 51, 52, 60, 62, 65–66, 89, positive workplace culture ........................ 78
97, 100, 107, 109, 112, 120
anti-discrimination, harassment and fair relocation............................. 57, 91, 112, 119
work laws ............................... 42, 46–47
© 2012 SHRM 127

repatriation ................................................ 91 unions .................................................. 41, 53

across borders ........................................ 61
resignations ............................................. 120 agreements and contracts ...................... 51
reward and recognition programs . 78, 80–82 Unions Across Borders ....................... 61–62
short term assignment ............................... 57 unions. ....................................................... 51
sick leave ............................................. 41, 72 vacation leave............................................ 41
social media ........................................ 22, 29 visas and work permits.............................. 58
statements of understanding ...................... 66 voluntary terminations ............................ 120
surveys .............................. 10, 29, 31, 34, 76 wellness programs ..................................... 88
terminations............................... 117–18, 120 work counsels...................................... 41, 61

constructive dismissal ......................... 119
involuntary terminations ..................... 117 work/life balance programs..... 74, 78, 86–89
job abandonment ................................. 120
no fault terminations............................ 118 workplace violence ............. 66, 107, 111–13
resignations.......................................... 120 access ................................................... 112
termination for cause ........................... 118 communicating procedures ................. 113
voluntary terminations......................... 120 counseling............................................ 112
escalating issues .................................. 113
trade agreements and treaties .................... 55 HR’s response to workplace violence . 112
liability ................................................ 112
trade secrets ............................................... 48
© 2012 SHRM 128

Module 4: Compensation and Benefits ...................................................................................... iii
Acknowledgements ......................................................................................................................v
Module 4 Body of Knowledge ................................................................................................... vi
Purpose Statement ................................................................................................................................ vi
Body of Knowledge ............................................................................................................................. vi
Section 4.1: Total Rewards............................................................................................................3

Introduction ..................................................................................................................................4
Goals of the Total Rewards System .............................................................................................6
Mission and Strategy............................................................................................................................. 6
Corporate Culture.................................................................................................................................. 8
Workforce ............................................................................................................................................. 9
Equity Issues ......................................................................................................................................... 9
Compensation and Benefits Strategy .........................................................................................13
Job Evaluation ..................................................................................................................................... 13
Salary Surveys .................................................................................................................................... 15
Communicating to Employees ............................................................................................................ 17
Evaluating Effectiveness of the Total Rewards Strategy .................................................................... 19
Compensation and Benefits for International Assignments .......................................................19
Long-Term Assignments..................................................................................................................... 20
Short-Term Assignments .................................................................................................................... 21
Commuter Assignments ...................................................................................................................... 23
Trade Agreements and Treaties .......................................................................................................... 25
Section 4.2: Compensation ..........................................................................................................29

Introduction ................................................................................................................................30
Designing a Compensation System ............................................................................................30
Job Analysis ........................................................................................................................................ 31
Job Documentation ............................................................................................................................. 35
Job Evaluation ..................................................................................................................................... 40
Developing a Pay Structure................................................................................................................. 43
Compensation Systems ..............................................................................................................46
Base-Pay Systems ............................................................................................................................... 46
Pay Variations ..................................................................................................................................... 50
Pay Adjustments ................................................................................................................................. 53
Variable or Differential Pay ................................................................................................................ 55
Incentive Pay ....................................................................................................................................... 57
Pay Plans for Select Employees .......................................................................................................... 59
Payroll Function .................................................................................................................................. 62
Payroll Systems ................................................................................................................................... 64
Controlling Costs ................................................................................................................................ 66
Section 4.3: Benefits .....................................................................................................................71

Introduction ................................................................................................................................72
Deciding Which Benefits to Offer ...................................................................................................... 72
Types of Benefits .......................................................................................................................74
Benefits Needs Assessment ................................................................................................................ 74
Government Mandated Benefits ......................................................................................................... 78
Voluntary Benefits .............................................................................................................................. 82
Paid Time Off ..................................................................................................................................... 88
Work/Life Balance .............................................................................................................................. 90
Perquisites ........................................................................................................................................... 96
Metrics ................................................................................................................................................ 97
Trends in Benefits ......................................................................................................................99
Bibliography ...............................................................................................................................103
Index ............................................................................................................................................104
Acknowledgements

Vice President and Head HR – Region India
Ericsson India Pvt. Ltd
New Delhi, India



Ankara, Turkey
Nancy Kaysarly, PHR
Consulting Company
Cairo, Egypt
For your convenience, the Body of Knowledge for Module 4: Compensation

and Benefits is provided on the following pages.
Purpose Statement
Purpose Statement for Compensation and Benefits:
HR professionals in compensation and benefits should possess a combination of

behaviors and skills/knowledge that include providing information about
compensation and benefits to employees and about policies associated with time
off/leaves. They also include developing and providing the information
associated with salaries in the form of salary surveys and merit increases and/or
bonus payments.
Body of Knowledge
content related to Module 4: Compensation and Benefits.
Important behaviors for compensation and benefits:
01. Communicate information about an employee’s compensation package, when required
03. Record information about employees in HR database (for benefits or tax purposes)
04. Provide information about payment to employees for working hours and non-working hours
(for example, not working because of illness or vacation)
© 2012 SHRM vi
06. Track eligibility for time off and temporary leaves (for example, maternity, mourning, unpaid
leave)
07. Explain policies and procedures for taking time off and requesting leaves of absence
08. Coordinate activities to support employee programs (for example, programs to improve
health, tuition reimbursement or educational assistance)
09. Coordinate the completion of salary surveys from external organizations
10. Report the results of current research and available information about salaries
11. Provide data for merit increases or bonus payments
Important knowledge and skills for compensation and benefits:
01. Total compensation packages
02. Benefit programs (for example, health care plans and flexible benefits)
03. Retirement plans and programs
04. Salary surveys
06. Company-wide compensation policies (for example, wage agreements with unions or work
councils, employee categories and salary increases)
07. Contracts with service and product providers (for example, health insurance and pension
plans)
© 2012 SHRM vii

© 2012 SHRM viii

4.1: Total Rewards

Knowledge:
Behaviors: 01. Communicate information about an employee’s compensation

package, when required
04. Provide information about payment to employees for working hours

and non-working hours (for example, not working because of illness
or vacation)
07. Explain policies and procedures for taking time off and requesting
leaves of absence
09. Coordinate the completion of salary surveys from external

organizations
10. Report the results of current research and available information

about salaries
Skills & Knowledge: 01. Total compensation packages
02. Benefit programs (for example, health care plans and flexible
benefits)
04. Salary surveys
06. Company-wide compensation policies (for example, wage

agreements with unions or work councils, employee categories and
salary increases)

Section 4.1: Total Rewards
Introduction ....................................................................................................................................4
Goals of the Total Rewards System ..............................................................................................6

Mission and Strategy ....................................................................................................................6
Corporate Culture .........................................................................................................................8
Workforce.....................................................................................................................................9
Equity Issues ................................................................................................................................9
Compensation and Benefits Strategy .........................................................................................13

Job Evaluation ............................................................................................................................13
Salary Surveys ............................................................................................................................15
Communicating to Employees ...................................................................................................17
Evaluating Effectiveness of the Total Rewards Strategy ...........................................................19
Compensation and Benefits for International Assignments ....................................................19

Long-Term Assignments ............................................................................................................20
Short-Term Assignments............................................................................................................21
Commuter Assignments .............................................................................................................23
Trade Agreements and Treaties ..................................................................................................25
Module 4: Compensation and Benefits Section 4.1: Total Rewards
Introduction
 Goals of the total rewards system
 Compensation and benefits strategy
 Compensation and benefits for international assignments
Total rewards is the broadest concept that captures what employees receive in
exchange for supplying their employment services to their employer. The two main
categories of total rewards are often divided into their financial and nonfinancial
components. Financial rewards can be categorized as direct (monetary) or indirect
(benefits) forms of compensation, whereas nonfinancial rewards can include other
important forms of employment incentives like work/life balance, career development
and performance recognition.
Total rewards is often differentiated from compensation alone due to the inherent
emphasis compensation assigns to monetary or monetary-related rewards. From a
motivational perspective it is generally accepted that nonmonetary benefits can offer
equal if not greater incentives to attracting and retaining talent. Moreover, the concept
of benefits alone does not fully capture or emphasize the increasing motivational
importance of rewards like work/life balance, career development and performance-
recognition.
Nevertheless, this module emphasizes and focuses on compensation and benefits due
to the central importance these two elements have in fundamentally effective HR
administration. Compensation and benefits represent the essential foundation of an
effective total rewards system; if the foundation is not being administered effectively,
the subtleties of the other nonmonetary forms of reward will have significantly less
impact.
© 2012 SHRM 4
Consideration is an important legal concept associated with the fulfillment of a

contract. Consideration refers to anything of value that is exchanged to satisfy a
contract. The most familiar form of value is money; however, legal consideration
can take many nonmonetary forms, including physical items, services, actions
and even inactions. A legally binding contract is itself often defined in terms of
the three reinforcing steps or elements known as:
 Offer
 Acceptance
 Consideration
The compensatory notion of total rewards is closely associated with the legal
notion of consideration.
An effective total rewards system in an organization will be aligned with the

organization’s mission, vision and values. A well-designed rewards system
motivates employees to perform well, which is good for both the employees and
the organization.
 Compensation refers to all direct rewards and tangible services, including
the following:
o Base pay, usually an hourly wage or a salary
o Incentives, used to motivate employees by paying for performance
above and beyond base-pay hours
o Differentials, used to compensate employees who work during times
or at locations that are less desirable than usual
© 2012 SHRM 5
Section 4.2: Compensation provides detailed information about compensation.
Benefits are indirect rewards that employees receive by being a member

of the organization. These rewards are not based on performance. Some
benefits are required by law, but the employer provides other benefits
voluntarily.
Section 4.3: Benefits provides detailed information about employee benefits.
Goals of the Total Rewards System

To be successful, an organization’s total rewards system must meet legal
standards and be cost-effective and affordable.
The challenge for HR is to design and package a total rewards system that is
affordable, internally equitable and externally competitive while achieving the
organization’s strategic objectives. Such a total rewards system helps achieve
several important goals:
 Attracts people who can help the organization meet its mission and vision
 Retains valuable employees
 Motivates and rewards desired performance
 Spends compensation money wisely
“On the list of top eight reasons why people leave jobs, pay ranks at number
eight. People seek the opportunity to contribute, and they want to feel their
contribution is appreciated” (Manas and Graham 2002).
Mission and Strategy
The total rewards system of an organization needs to support its mission and
strategy. Therefore, the first step in developing a total rewards system is to look at
the organization’s mission and business strategy.
© 2012 SHRM 6
Larger and more mature organizations usually have a strategic business plan that
states the basic goals that guide the organization in a certain direction. Because
the total rewards system is a result of that business plan, it must be adjusted as the
plan is updated.
Smaller and newer companies may not formally define their strategies. In this
case, the HR professional may consider other indicators. For example, Figure 1-1
shows questions that will be asked when deciding where the organization is in its
life cycle.
Figure 1-1. Life Cycle Decisions
In addition to the stage at which the organization is in its life cycle, other
influences on total rewards packages include the following:
 Degree of competition
 Level of product or service demand
 Industry characteristics
Whether an organization is large or small, its rewards package should support

organizational goals and objectives. A total rewards system should attract the
© 2012 SHRM 7
right people to the right jobs and provide appropriate performance incentives to
produce engaged employees who are loyal to the organization.
Corporate Culture
According to Dennis Briscoe, Randall Schuler and Lisbeth Claus national and
organizational cultures influence perceptions with respect to rewards:
“National and organizational cultures also influence how people perceive

the value of the various rewards available in the compensation system. For
example, the culture may be performance-driven (and pay for performance
is a well-established norm) or it may be entitlement-oriented (with
longevity of service rewarded). In some cultures people are more willing
to accept risk in their compensation while in others people are quite risk-
averse. In addition, the level of uncertainty avoidance in a culture may
determine the amount of fixed versus variable pay that people will
accept.” (Briscoe, Schuler and Claus 2008)
In their attempt to achieve the total rewards system goals, organizations will
follow one of the two basic compensation approaches toward employees—the
entitlement-oriented approach or the performance-oriented approach.
Entitlement-oriented approach. Some organizations promote a caring,

protective feeling and want employees to feel as if they are a part of the family.
These organizations feel that employees are entitled to benefits such as health
care, employee assistance or disability insurance as a condition of employment.
In general, as benefits increase, there is less emphasis on individual employee

contributions and responsibility and more emphasis on the success of the
organization as a whole.
© 2012 SHRM 8
Performance-oriented approach. The compensation programs of other

organizations are more performance-driven, putting more emphasis on the
performance and contributions of individual employees.
These compensation systems emphasize performance-based pay, incentives and

shared responsibility for benefits. For example, the firm may require co-pay for
medical insurance.
Although few organizations have a compensation system that is based only on a

performance approach, the trend is moving away from the entitlement approach
toward the performance approach. Many organizations will have compensation
practices that are somewhere in the middle rather than specifically one or the
other approach.
Workforce
The rewards program must consider the type of workforce. An organization with
entry-level or unskilled workers will probably have a very different rewards
package than an organization with experienced, highly educated professionals.
One way to keep in touch with the employees’ preferences is by conducting

surveys to check their attitudes, current needs and long-term needs. Analyzing the
workforce and its characteristics will help the organization understand those
needs.
Equity Issues
Equity means fair pay treatment for employees. Equity helps to attract, motivate
and retain competent employees, making it an important concern. Individuals
responsible for developing an organization’s compensation system need to
understand how perceptions of equity are formed (Bhatia 2010).
Issues of equity influence whether employees think their pay system is fair and
equitable. Equity issues can be internal and/or external.
© 2012 SHRM 9
Internal Equity
Kanchan Bhatia describes the concept of internal equity as follows:
“Internal equity refers to the pay relationship among different

jobs/skills/competencies within a single organization. To achieve internal
consistency, the employee must believe that all jobs are paid what they are
worth. In other words, they must be confident that company pay rates
reflect the overall importance of each person’s job to the success of the
organization. For the pay rates to be internally consistent, an organization
first must determine the overall importance or worth of each job.” (Bhatia
2010)
An organization cannot successfully recruit new employees or keep existing ones

without internal equity. Employees need to see a basic fairness between what they
bring to the organization in the way of education, experience and productivity and
how the organization rewards them.
External Equity
“A firm achieves external competitiveness when employees perceive that their

pay is fair in relation to what their counterparts in other organizations earn. To
become externally competitive, organizations must first learn what other
employers are paying and then make a decision regarding just how competitive
they want to be. Then they establish pay rates consistent with this decision”
(Bhatia 2010).
When an organization is developing a total rewards system, it is very important to

maintain external equity to attract and keep employees. External equity involves
comparing an organization’s compensation levels and benefits to those of other
organizations that are in the same market and that compete for the same
employees. Employees will look at whether their total compensation equals what
they could earn at another organization for the same job, at the same level of
performance and with the same seniority.
© 2012 SHRM 10
In a majority of countries, employees can easily access salary data for their
industry, region and position on online pay comparison sites. They can also look
at the following factors online:
 Benefits
 Opportunity for advancement
 Job security
 Commuting time
 Physical environment
Pay Strategies
Organizations will compete for employees with other organizations in the same
labor market. Three factors that define labor markets are listed in Figure 1-2.
Factor Description
Industry Similar products or services
Occupation Workers with the same experience or skills
Location Workers in the same geographical area
Figure 1-2. Factors That Define Labor Markets
Based on what is known about those markets and the competition, organizations
usually decide on a pay strategy that matches, leads or lags the competition. These
pay strategies are described in Figure 1-3.
© 2012 SHRM 11
Pay Strategy Description
Lag competition  Controls labor costs by setting up pay rates below

those of other organizations
 May be used because of economic necessity
 May enable an organization to offset other higher costs
such as purchasing, distribution or sales expenses
Match competition  Most common approach

 Offers wage rates and benefits packages similar to that
of the competition
 Often referred to as being externally competitive
Lead competition  Offers higher wages and/or better benefits in an

attempt to attract and keep the best talent
 Thinks that higher-quality employees are more
productive, which makes up for the higher salaries
Figure 1-3. Pay Strategies
The correct strategy depends on two things:

 How the employees add value to the organization’s success
 The degree to which the organization can afford to pay for a particular
strategy
An organization will probably use a combination of these strategies. For example,

for critical jobs, the organization may decide to lead the competition; in other
areas, it may use a match strategy.
Organizations must keep in mind that using more than one pay strategy may
cause morale issues and lead valuable employees to seek jobs in other
organizations.
© 2012 SHRM 12
Compensation and Benefits Strategy

For the majority of organizations, business success depends heavily on
developing a total rewards strategy that enables the organization to compete cost-
effectively for talent.
HR professionals must remember that the elements in a total rewards system are
dynamic. Therefore, they need to pay close attention to the competition, because
any of the following elements can vary from year to year:
 Employment costs and conditions
 Supply and demand for talent
 Laws that affect business and employment
 Employees’ perceived value of rewards
Job Evaluation
Job evaluation supports the need for the total rewards system to advance the
organization’s strategic objectives and is related to the organization’s concern for
equity of pay. Organizations sometimes find it difficult to balance these concerns
as they attempt to maintain profit margins and meet the needs and expectations of
their workforce. Understanding the market in which they operate and using data
gained through surveys help the organization maintain equity.
There are two types of job evaluation:

 Job-content-based (internal) job evaluation
 Market-based (external) job evaluation
Job-Content-Based (Internal) Job Evaluation
In job-content-based job evaluation, the worth and pay opportunities of different

jobs are based on an appraisal of their responsibilities and requirements and their
relationship to other jobs within the organization.
© 2012 SHRM 13
Jobs can be compared to each other or to an outside standard. Job evaluation

techniques are either nonquantitative or quantitative:
 Nonquantitative methods evaluate the whole job by sequencing all jobs
within the organization by the value to the organization.
 Quantitative methods try to compare the worth of one job with another job
by evaluating the job using a variety of factors that reflect how much the job
adds value to the organization.
Section 4.2: Compensation provides the details of nonquantitative and

quantitative methods of job evaluation.
Market-Based (External) Job Evaluation
Market-based job evaluation is sometimes referred to as market pricing because

this method bases the worth and pay opportunities of different jobs on their
market value or the going rate in the marketplace. Job content or internal job
relationships may also be taken into account, but these are usually secondary
considerations.
Two advantages to market pricing are as follows:

 External competitiveness
 Provides a rational, objective basis for negotiating pay rates with
individuals and groups
There are also disadvantages to market-based pricing:

 Insufficient data and the potential for poor job matching. Obtaining pay
data may be difficult in emerging and developing markets.
 Market-based pricing is less legally defensible than job-content approaches
because it relies on survey data. Organizations need to ensure that their pay
structures are legally compliant while also enabling talent mobility.
© 2012 SHRM 14
Keep in mind that “no market information source is designed or, indeed, should
be designed to show that one salary level is the correct market rate for any given
job. It should give as clear an indication as possible of the current operating or
going range for establishing salary levels or setting pay structures and define
which factors affect the distribution of individual salaries within it” (Armstrong
and Murlis 2007).
Salary Surveys
To be competitive and affordable, an organization’s pay structure must be

designed and priced properly. Many organizations use surveys to collect the
information that will help them evaluate positions, adjust pay range structures to
remain competitive and present salary information to top management. Pay
surveys collect information on current market rates and may include the following
topics:
 Starting wage rates
 Base pay
 Pay ranges
 Incentive plans
 Overtime pay
 Shift differentials
 Vacation and holiday practices
Internal versus External Surveys
Once an organization decides it needs a salary survey, it must decide how the
survey should be designed and conducted. The organization has two choices:
 Develop and conduct an internal survey
 Look to an external source
Internal Surveys
Organizations that have available resources and expertise may choose to develop
their own internal survey to allow for more control over the survey technique and
© 2012 SHRM 15
data analysis. The advantage of an internal survey is having the ability to shape
the design, administration, data analysis and reporting as needed by the
organization. The disadvantages include the following:
 Competitors may not be willing to cooperate and to share their pay
structures.
 If no consultant is used, matching the positions may be difficult. Data from
consultancy firms may be more dependable because they work with such
data more frequently and have structured benchmarks.
If an organization decides on an internal survey, it may contract with an

independent consultant to help. The advantages to using an outside consultant are
as follows:
 The organization still maintains control over the internal survey.
 Using an outside person may place less demand on organizational
resources.
 Enlisting the help of a consultant may ease any concerns about survey
credibility.
 Recommendations from a person outside the organization are sometimes
more acceptable.
In all cases, care needs to be taken to ensure that when internal surveys are being
created and applied that doing so or participating in one does not break any
relevant jurisdictional rules related to antitrust or anti-competition laws or acts.
Internal surveys are more common in maturing (developing) markets or where

they are not conducted by third-party vendors. In some cultures, sharing
compensation data could be illegal and considered collusion (for example, in the
US, Canada and UK) because of the competitive nature of the markets—this
could be considered as controlling your employees’ potential earnings.
© 2012 SHRM 16
External Surveys
Organizations have different options available if they choose an external pay

survey. If an organization uses externally published data, it must be sure it knows
how the data were generated and when.
Other external survey options are available. Professional member groups such as
the Society for Human Resource Management (SHRM), as well as consulting
firms, conduct surveys of wage/job data for a wide range of professions,
industries and geographical areas. Depending on the type of external survey, the
organization may have limited participation and input.
Any of the following factors may be considered when an organization is

deciding between an internal or external pay survey:
 Internal time and expertise required
 Relevance/match of external surveyed jobs to the organization’s jobs
 How current the external survey data are
 Expense associated with the type of survey
Communicating to Employees
“Employee benefits can easily be taken for granted by staff, and it is therefore
important to tell them about what they are getting and its value. This can be done
in company newsletters or, better still, by means of employee benefits statements
which set out in full the scale and cost of the benefits for each individual
employee” (Armstrong and Murlis 2007).
The key to a successful total rewards program is employee communication. The

more complex the system and the more choices it provides, the greater the need
for a communication plan.
© 2012 SHRM 17
Communication is important for three reasons:

 Educating employees about the organization’s total rewards practices
 Achieving employees’ buy-in
 Supporting the organization’s goals for performance management
Direct Communication
Having a written communication plan is the first step toward communicating the
compensation plan to employees. However, direct communication is still the
preferred method in many instances. Either HR or the employee’s manager must
meet with individual employees in a confidential setting to communicate the
following compensation and benefits issues:
 Job grade changes
 Raises
 Individual benefit issues
 New policies or procedures that directly affect that employee
 Policy infractions (for example, incorrect reporting of overtime)
If the meeting is effective, the employee will feel free to ask questions and will
understand the compensation or benefits issue discussed. Good employee
communication helps increase employees’ awareness that their employer is
attempting to do the following:
 Create internal equity
 Ensure competitiveness
 Reward individual or team performance
Do not limit communication to the rollout of a new benefits or compensation

program or to an annual enrollment period (where applicable). Instead,
communicate with workers about these programs throughout the year. Doing this
will increase acceptance and participation as well as job satisfaction and morale.
© 2012 SHRM 18
Evaluating Effectiveness of the Total Rewards Strategy
How do you know if the organization’s total rewards system is effective? The
answer to this question depends on the goals of the system. As described earlier in
this section, the objectives of any organization’s total rewards system are to be
cost-effective and affordable, as well as compliant with laws and regulations.
In addition, the basic objective of the total rewards system is to offer employees a
system that encompasses the following:
 Compatible with the organization’s mission and strategy
 Matched with the corporate culture
 Appropriate for the workforce
 Externally and internally equitable
Consistently monitoring the system will pay off in the following ways:
 More cost-effective system
 More satisfied employees
 Fewer legal complications
These payoffs mean fewer compensation problems for the HR function.
Compensation and Benefits for International Assignments

People move across borders for the following reasons:
 Develop new markets and businesses
 Manage ongoing operations
 Transfer skills
 Solve problems
Trends in international assignments are showing that organizations are reducing

the number of long-term assignments while increasing the number of cross-
border, short-term and permanent assignments.
© 2012 SHRM 19
Because of the changes in international assignment programs, HR responsibilities

have also changed. It is difficult to manage compensation and benefits for the
various international assignment types. This topic describes the compensation and
benefit approaches for three international assignment types, which are defined in
Figure 1-4.
Long-term The traditional international (expatriate) assignment, usually lasting

longer than one year, involves relocating the employee and family to
the host country.
Short-term Employees go abroad for a specified period of time (usually for three
to twelve months); the family may or may not accompany the
employee.
Commuter Employees (international commuters) live in one country and work in

another country. These employees regularly commute across borders
(usually weekly or biweekly) to perform their jobs, while their
families remain at home.
Figure 1-4. International Assignment Types
Long-Term Assignments
The costs of an international assignment can be significant. Organizations look for

the most cost-effective approach to pay the assignees, but it is difficult to apply
the same approach across all markets.
Some of the differences from country to country include the following:

 Compensation practices, including bonuses
 Laws and regulations, which are constantly changing
 Social security regulations
 Employee preferences in total rewards
© 2012 SHRM 20
Organizations usually have a suite of policies and choose the one best aligned to
the reasons for the assignment and any unique requirements. Ongoing support is a
vital way to allow the employee and spouse to adjust to their new surroundings.
“Much of valuable ongoing support can be characterized as providing

guidance and mentoring for dealing with local challenges as well as career
management activities aimed at combating a possible sense of isolation that
may develop even after effective foreign site adjustment.” (Vance and
Yongsun 2006)
Short-Term Assignments
Short-term assignees are employees who are assigned to a country for a brief
time. These employees return to their home country at the end of the assignment.
The definition of a short-term assignment varies from organization to

organization. Short-term assignments often involve a period of no longer than six
months.
 Some organizations choose to make the break point at three months.
 Other organizations make the break point when the employee becomes
liable for tax in the host country (Armstrong and Murlis 2007).
Short-term assignment compensation and benefits need to be treated differently

than compensation and benefits for other types of international assignees. Short-
term assignees continue to receive their salary in their home country; their home-
country compensation package does not change. Short-term assignments of three
months or less are regarded as extended business trips. These individuals are often
paid a pure home-country salary and benefits structure.
© 2012 SHRM 21
If the assignment is longer than three months, adjustments may be similar to those
made for longer-term international assignees, such as allowances for differences
in housing expenses or goods and services. These adjustments are usually less
complex than for long-term assignees for the following reasons:
 The family usually remains at home.
 Many other costs are not necessary, such as leasing or purchasing
automobiles, country club memberships and leave for rest and recreation.
 Host-country taxation issues are usually not a problem because income is
received at home; however, adjustments may need to be made for
additional taxes due to allowances.
There has been an increase in the use of short-term assignments for a number of
reasons. Here are a few examples:
 Organizations think of short-term assignments as less costly. This is
important when organizations are trying to cut expenses and control costs.
 Many assignees do not want to move their families to potentially risky
locations.
 Because of changing demographics, more employees have responsibility
for aging parents or are part of a dual-income couple.
Short-term assignments have the following potential drawbacks:

 International assignees sometimes feel that short-term assignments are too
short to really accomplish anything.
 Local employees may not completely accept or socialize with the assignee
because they know their presence is only temporary.
 In many parts of the world, relationships are very important and take time
to build. Relationship building is a problem on a short schedule.
 The impact on the family left behind can be difficult. The spouse who stays
at home with children becomes, in effect, a single parent.
The biggest challenge with short-term assignments comes when they get
extended. Many short-term assignments start out as business trips, but when
© 2012 SHRM 22
business objectives are not met quickly, they can easily turn into unplanned long-
term assignments. This situation can cause the following compensation and
benefits problems for HR professionals:
 Difficulties in the accurate reporting of taxes and social security for both
the assignee and the organization
 Impacts on other assignment costs, such as housing (For example, housing
and other allowances may have been handled differently if the longer
assignment duration had been known at the beginning.)
Commuter Assignments
In their book, Reward Management: A Handbook of Remuneration Strategy

and Practice, Michael Armstrong and Helen Murlis describe the reasons for
commuter assignments.
“Commuter assignments have grown in popularity for two quite different

reasons:
 First, in response to the growing unwillingness of employees to
disrupt their children’s education or the career of a spouse for the
sake of a full expatriate assignment.
 Second, where the organization does not wish to enter into the cost
or commitment of a full expatriate assignment. Further, it may
believe that the employee(s) concerned would be willing and able to
travel to the work location on a Monday morning (or Sunday
evening) and return home on the Friday evening without detriment
to the work or themselves.
Such assignments are usually confined to European countries where the

relative ease of travel and work permits makes such patterns of work
manageable both for the organization and for the employee.” (Armstrong
and Murlis 2007)
© 2012 SHRM 23
In a commuter assignment, the assignee’s home-country residence is maintained.

In the host location, furnished accommodations are provided, often in a hotel or
company-owned housing.
The following are recommendations and best practices for commuter assignment
compensation and benefits:
 Direct reimbursement for meals and incidentals
 Regular travel between the home and host locations with reimbursement
for airfare or mileage
 No hardship allowance
 Travel security briefing, travel intelligence/updates and emergency
assistance provided
 Employee assistance program coverage for the employee and family
 Additional taxes incurred as a result of the commuter assignment paid by
the organization
Some organizations offer the following additional benefits to lessen the stress of
the frequent travel:
 A round-trip allowance for the spouse to visit the employee once per month
(instead of the employee returning to the home location) and, if necessary,
a stipend for child care costs
 Mobile phone allowances for family calls
 A webcam to enable more personal family communications during travel
 Business-class or upgraded travel for the employee for these reasons:
o Helps lessen the stress of frequent travel
o Makes speedy check-ins possible
o Provides access to business lounges
 A monthly stipend to assist stay-behind families with domestic tasks
previously handled by the employee
© 2012 SHRM 24
Trade Agreements and Treaties
One of the major factors causing the increase in international economic activity
has been the passing of international trade agreements. Trade agreements have
removed many of the difficulties involved in moving capital, goods and people.
Some trade agreements have been formed specifically to assist in the growth of
emerging markets.
Trade agreements now include topics such as labor and environmental standards,
human rights, technical assistance, dispute resolution and training. Trade
agreements may affect the work of HR in a number of ways:
 Eased visa requirements may increase talent mobility.
 Taxation and pension provisions may result in savings to organizations and
international assignees, and they will affect internal processes.
 Changes in trade and investment barriers may cause workforce expansions,
reductions or transfers in different areas of a multinational organization.
 Offshoring and outsourcing may be used more freely.
 Talent management issues and priorities may change as certain tasks are
transferred from one country to another.
 A trade agreement may result in matching regulations among participants.
This situation may cause institutional changes that affect employment
regulations and processes, such as changes in wage and working
conditions.
© 2012 SHRM 25
© 2012 SHRM 26
4.2: Compensation

Knowledge:
Behaviors: 01. Communicate information about an employee’s compensation

package, when required

or vacation)
09. Coordinate the completion of salary surveys from external

organizations
10. Report the results of current research and available information about
salaries
Skills & Knowledge: 01. Total compensation packages
02. Benefit programs (for example, health care plans and flexible
benefits)
04. Salary surveys
06. Company-wide compensation policies (for example, wage agreements

with unions or work councils, employee categories and salary
increases)
07. Contracts with service and product providers (for example, health
insurance and pension plans)
08. Bonus/incentive programs

Section 4.2: Compensation
Introduction ..................................................................................................................................30
Designing a Compensation System .............................................................................................30

Job Analysis ...............................................................................................................................31
Job Documentation .....................................................................................................................35
Job Evaluation ............................................................................................................................40
Developing a Pay Structure ........................................................................................................43
Compensation Systems ................................................................................................................46

Base-Pay Systems ......................................................................................................................46
Pay Variations ............................................................................................................................50
Pay Adjustments .........................................................................................................................53
Variable or Differential Pay .......................................................................................................55
Incentive Pay ..............................................................................................................................57
Pay Plans for Select Employees .................................................................................................59
Payroll Function .........................................................................................................................62
Payroll Systems ..........................................................................................................................64
Controlling Costs........................................................................................................................66
Module 4: Compensation and Benefits Section 4.2: Compensation
Introduction
As you learned in Section 4.1, total rewards refers to all forms of financial
rewards (that is, compensation and benefits) that employees receive from their
employers. Compensation refers to the financial returns and tangible services,
including salary, allowances and incentives. In this section you will learn the steps
used to design a compensation system. You will also learn what is involved in
developing a pay system that helps attract, motivate and keep valuable employees.

 How to design a compensation system
 The components of a compensation system
Designing a Compensation System
Developing a compensation system that is fair and impartial requires an

understanding of the positions in the organization. The compensation system
design process consists of four phases, as shown in Figure 2-1.
© 2012 SHRM 30
Figure 2-1. Phases of Compensation System Design Process
Job Analysis
Job analysis helps ensure that jobs within the organization are related. This is an
important step toward achieving the organization’s mission, vision, goals and
objectives.
What is the purpose of a job analysis?

 To understand the requirements of a job and to develop a pay structure
What is a job analysis?

 A systematic method of collecting information about a job and evaluating
the job requirements
© 2012 SHRM 31
What are the results of a job analysis?

 A written statement of the tasks performed in the job and the basic
qualifications:
o Education level
o Experience
o Training
o Knowledge, skills and abilities (KSAs)
The three key elements of a job analysis are the following:

 Knowledge: Information necessary for performing a task
 Skills: Level of expertise needed for performing a task
 Abilities: Capabilities needed to perform the job
These three key elements are commonly abbreviated as KSAs.
Minimum selection criteria should not include KSAs that can be taught in a
relatively short time frame (for example, a day).
Supervisors and HR work together to design a job analysis for new positions.
Time limits are usually placed on this task.
 For new positions: A follow-up assessment needs to be completed within
six months (no later than one year) after placement.
 For current positions: Job analysis needs to be completed on a regular
and ongoing basis—every two years or when there is a vacancy.
Relevant information. The purpose of collecting data for a job analysis is to help
differentiate the job from other jobs. The data needs to describe the following job
features:
 Essential and nonessential tasks and responsibilities
 Required knowledge, skills, abilities and mental and physical attributes
© 2012 SHRM 32
 Required level of responsibility in the job (supervision received and given)

 Work environment, including the following:
o Machines and equipment used
o Hazards
o General physical conditions that may affect the work
Primary source data. When collecting job analysis data, two data sources are
most important:
 Employees who are actually performing the job
 Employees who are supervising others who perform the job
If these two sources are used, the data sample will better represent the target
population, and the job analysis conclusions will be valid.
Collection tools and techniques. Most organizations use more than one method
for collecting primary source data. Deciding who conducts the job analysis will
depend on the collection method(s) chosen and the resources that are available.
© 2012 SHRM 33
Figure 2-2 summarizes various common data collection methods.
Observation  Directly observe  Provides a realistic view of

employees performing the the daily tasks and
tasks of a job. activities performed in a
 Record observations. job
 Translate observations into  Works best for short-cycle
the necessary KSAs. jobs in production
Interview  Conduct a face-to-face  Uses predetermined

interview to obtain the questions
necessary information  Adds new questions based
from the employee about on the response of the
KSAs needed to perform employee being
the job. interviewed
 Works well for
professional jobs
Figure 2-2. Common Data Collection Methods (continued to next page)
© 2012 SHRM 34
Open-ended  Use a questionnaire to ask  Produces reasonable job

questionnaire job incumbents and their requirements because
managers about the KSAs input is requested from
necessary to perform the both employees and
job. managers
 Combine the answers and  Works well when a large
publish a composite number of jobs must be
statement of job analyzed with limited
requirements. resources
Figure 2-2. Common Data Collection Methods (concluded)
Job Documentation
Job documentation, which involves creating job descriptions and job

specifications, is the second step in the process of developing a compensation
system.
Job Descriptions
Job descriptions play a crucial role in an organization’s HR system. A job

description is a written document describing an employee’s work activities.
(Organizations may use another name for the job description, such as role profile
or role description.) The uses of job descriptions as they relate to the design and
administration of a compensation system are as follows:
 Help to set up evaluation criteria for job performance
 Provide data for comparing pay with that of other organizations
 Help in assigning objective classifications or job titles to employees
 Communicate expectations to both supervisors and employees
 Improve an organization’s ability to defend unwarranted charges of
discrimination
© 2012 SHRM 35
In addition to their uses in developing compensation systems, job descriptions

bring value to many areas, as shown in Figure 2-3.
Figure 2-3. Value of Job Descriptions
Although job descriptions may vary in format, they should include the elements
shown in Figure 2-4.
© 2012 SHRM 36
Job Element Description
Job identification  Job title

 Department or location
 Date the job description was completed
 Approvals
 Who the position reports to
Summary Overview (four or five sentences) that summarizes

the purpose and objectives of the job, including the
following:
 Primary responsibilities
 Expected results
 Degree of freedom (for example, works
independently or works under direct
supervision)
Essential functions Tasks, duties and responsibilities of the job
Nonessential functions Desirable but not essential aspects of the job
KSAs Minimum knowledge, skills and abilities required to

perform the job satisfactorily
Supervisory responsibilities Extent of authority, including a list of who reports to

this position
Working conditions Environment in which the job is performed,

especially hazardous or difficult physical conditions
Figure 2-4. Elements of a Job Description
© 2012 SHRM 37
Not every component listed in Figure 2-4 will appear in every job description.
Organizations have flexibility in the format of their job descriptions.
A sample job description is provided in the Essentials of Human Resource

Management Resource Center at http://www.learnhrm.com.
Job Specifications
The written statement of the minimum qualifications required to perform a

specific job is called the job specification. The specification includes both
essential and nonessential functions and abilities:
 Experience
 Education
 Training
 Licenses and certifications (if required)
 Mental abilities and physical skills
 Level of organizational responsibility
Essential and Nonessential Functions
By analyzing a job specification, the employer can assess a job’s most important
functions and the criteria for deciding whether an individual can perform the
essential functions. The analysis process involves three steps, as shown in Figure
2-5.
© 2012 SHRM 38
Step Description
1. Get job information Includes information about the job tasks, duties and
responsibilities in terms of the following:
 Nature
 Frequency
 Intensity
 Duration
 Impact
 Perceived importance to the job
2. Analyze data The core of the process, this step reveals the job’s main
purposes. Analyzing the data includes the following:
 Distinguishing essential functions from
nonessential ones, with a focus on essential
functions
 Deciding on ways of achieving the desired job
results
3. Document conclusions Documentation must always be consistent with the results

of the analysis. Its level of detail can never exceed the
level of detail provided by the analysis. Job facts and
conclusions must be documented so they are not biased
toward people with disabilities.
Figure 2-5. Analysis of a Job Specification
Remember, it is crucial to differentiate between the job’s essential and

nonessential functions. Good job documentation supports decisions about who is
qualified for a job.
© 2012 SHRM 39
Together, job analysis and job documentation are important steps in the process of
developing pay structures for jobs. As an organization grows in size and
complexity, these steps become more critical because the resulting compensation
programs help guarantee fairness within the organization.
Job Evaluation
Job evaluation assesses the worth of a position within the organization. This
process consists of two main tasks:
 Defining the pay rate structure
 Setting pay rates equal to rates for similar jobs in other organizations
All methods of job evaluation have the same objective—to develop a system that
is measurable and realistic for deciding pay structures. Most evaluation methods
can be grouped into one of two categories:
 Nonquantitative (whole-job) methods
 Quantitative methods
Nonquantitative Evaluation Methods
Nonquantitative methods evaluate the whole job and try to place jobs in order of
value to the organization. The sequence will indicate that one job is more
important than another job, but it will not tell how much more important.
Examples of two nonquantitative methods include job ranking and job
classification.
Job Ranking
In an article for the Society of Human Resource Management, Leslie Weatherly

writes,
“The job ranking method is considered the simplest method of job evaluation. It
places jobs in order, ranging from highest to lowest in value to the organization.
The entire job is considered, rather than the individual elements.” (Weatherly
2004)
© 2012 SHRM 40
Job Classification
The job-classification method writes descriptions for each class of jobs. The jobs
are then put into the grade that best matches its class description, based on the
judgment of the evaluator. There are a few disadvantages to this method:
 Because this process is subjective, with a wide variety of jobs and job
descriptions, jobs could easily fall within more than one grade level.
 This method relies on job titles and duties and assumes the jobs are similar
among organizations. Many organizations are moving to the point-factor
method (described below) for these reasons.
Quantitative Evaluation Methods
Quantitative evaluation methods use a scaling system to show how much more
valuable one job is than another. While nonquantitative methods evaluate the
whole job, quantitative methods evaluate the job using a variety of factors—often
called compensable factors. Compensable factors reflect how much the job adds
value to the organization.
Point-Factor System
The point-factor system is a form of quantitative evaluation. It is the most

commonly used method of job evaluation. The compensable factors chosen for
the evaluation must reflect the nature of the job being evaluated. For example,
hazards and working environment would be pertinent factors in a manufacturing
setting but not as relevant in most office jobs.
© 2012 SHRM 41
The factors most commonly used in point-factor evaluations include the following:
 Skills
 Responsibilities
 Effort and physical demands
 Working conditions
 Supervision of others
HR may independently conduct the job evaluation or lead a discussion with an

internal or external committee to decide how much each factor (such as skills and
working conditions) is present in a specific job. The committee assigns points to
each factor and then adds the points to come up with an overall point value for the
job. Then they can compare the relative worth of jobs on the basis of their point
values.
The advantages of a point-factor system are listed below (Koss 2008):

 Forces an organization to quantify total points for each unique job, the true
value that the company places on this job. This process provides value
beyond just compensation.
 Forces an organization to do some real soul searching about the traits they
value in employees. This exercise has some side benefits for recruitment,
promotions and job design.
The disadvantages of a point-factor system are as follows (Koss 2008):

 If the organization requires an outside resource to design a custom system,
there will be a substantial cost in consulting fees for each 30 unique jobs
that need to be evaluated.
 A time commitment from senior management also is needed for the initial
design of the system. This generally requires at least three half-day
meetings, and then a smaller group will need to review job descriptions and
assign points.
© 2012 SHRM 42
Market-Based Evaluation
In a market-based evaluation, an organization identifies the labor market in which

it wants to compete and uses the current pay rates as the relative worth of
corresponding jobs. Although evaluating jobs on the basis of their market value is
not a true method of job evaluation, market rates are used as the standard for
developing a job-worth hierarchy. Remaining jobs that do not fit the standard are
usually put into the hierarchy based on whole-job comparisons (for example, the
job-ranking method) with the market-value jobs.
Developing a Pay Structure
After the job analysis, job documentation and job evaluation are completed, an
organization uses all the data to develop its pay structure. There are two steps to
developing a pay structure:
 Grouping jobs into pay grades
 Setting pay ranges
Grouping Jobs into Pay Grades
Pay grades are used to group jobs that have approximately the same relative
worth within the organization. All jobs within a particular grade are paid the
same rate or within the same pay range.
The purpose of pay grades is to create a pay structure for the entire organization
rather than having to set up a separate pay range for each job. The number of pay
grades an organization has will depend on the following factors:
 The size of the organization
 The distance between the highest and lowest level of job
 How clearly the organization defines and differentiates jobs
 The policies regarding pay increases and promotions
.
During the job evaluation phase, if the organization used the point-factor method,
the pay grade consists of jobs falling within a range of points. If the job-ranking
© 2012 SHRM 43
method was used, the pay grade will consist of all jobs that fall within two or
three ranks. The job-classification method categorizes jobs into classes or grades.
To be successful, there must be enough grades to distinguish jobs by relative

worth but not so many grades that the lines between grades become insignificant.
By using pay grades, management can develop a coordinated pay system without
having to create a separate pay range for each job in the organization.
Setting Pay Ranges
For each pay grade, the organization creates a pay range that sets the upper and
lower limits of compensation for employees whose jobs fit within that particular
grade. It is best to have overlap between pay ranges so that an experienced person
in a lower-grade job may be paid more than an inexperienced person in a higher-
grade job.
A maximum, a minimum and a midpoint of the pay range are set on the basis of
market data from pay surveys:
 Range minimum equals the lowest value on the job.
 Range maximum equals the highest value on the job.
 Midpoint is the middle point between the minimum and maximum rates.
The midpoint is often considered the market rate paid to an experienced,
fully performing employee.
The difference will vary with an organization’s administrative, promotion and pay
increase policies. Lower-level jobs normally have a smaller range between
minimum and maximum salaries. Entry-level employees usually have more
opportunity for promotion and tend to remain at entry level for only a short time.
Even when a pay structure is set up, an organization can usually identify a few
employees whose pay is either lower than the minimum or higher than the
maximum of their pay range. In either case, the organization needs to take steps to
bring the employee back into the organization’s pay structure. Figure 2-6
summarizes the steps to develop a pay structure.
© 2012 SHRM 44
Step Description
1 Develop a market line for all jobs, comparing the job-evaluation points or
values with the market value for comparable jobs.
2 Use the market line to decide pay grades by grouping together the jobs with
similar value to the organization.
3 Spread pay grades evenly over the points or values on the market line,
attempting to place jobs in the middle of the pay grade.
4 Calculate the pay ranges for each grade. Assuming that the jobs are placed in
the middle of the range (midpoint), set up a range spread that fits with the type
of positions and the number of grades
5 Each pay range will have a minimum, midpoint and maximum, with equal
distance between each.
6 Individual pay rates are calculated using a pay policy line that is set by the
organization. For example, in a highly competitive marketplace, an employer
may decide to hire employees at 105% of the pay structure, or 5% above the
midpoint of each range (the midpoint represents the market rate).
Figure 2-6. Developing a Pay Structure Worksheet
© 2012 SHRM 45
A typical pay structure will look something like this:

 Production employees: 10-20%
 Clerical employees: 20-40%
 Exempt employees: 35-50%
 Management employees: 45-60%
Compensation Systems
Once the job analysis, job documentation and job evaluation are completed, and
the pay structure is developed, the pay system is developed and maintained.
Base-Pay Systems
After an organization has analyzed, evaluated and priced its jobs and designed its
pay structure, the next step is to develop a pay system that helps attract, motivate
and retain employees.
To manage base pay for employees, it is important to understand the mechanics of

the organization’s base pay program and how much freedom there is within that
system. Typically, as organizations grow and mature, they need to formalize how
they manage pay as well as people. The best compensation structure is one that
fits your organization’s strategy and culture. Decisions about base pay are made
not on an individual employee basis but within the context of the organization’s
needs and operation philosophy (Jensen, McMullen and Stark 2006).
Most employees receive some type of base pay, in one of these forms:
 Hourly wage (for each hour worked)
 Salary (the same amount no matter how many hours are worked)
Base-pay systems can be structured in many different ways, as described below.
© 2012 SHRM 46
Single- or Flat-Rate System
In single-rate pay or flat-rate pay systems, each employee currently performing

the job has the same rate of pay, regardless of performance or seniority. This
system is typically used for elected government jobs or union hourly workers. The
flat rate is often set to correspond to survey data relating to the job. There may be
a training wage in a flat-rate system.
Time-Based Step-Rate System
In a time-based step-rate pay system, the rate is based on how long an employee
has been performing the job. Pay increases occur on a set schedule.
Employees are normally hired at, or given promotional adjustments to, the first
step, although people with qualifications greater than that required for the job may
be hired at a higher step. There are several types of time-based step-rate systems.
 In an automatic step-rate pay structure, the pay scale is usually divided
into a number of steps that are 3% to 7% apart. At set time periods, each
employee with the required seniority receives a one-step increase. This
system is most commonly used in union and government environments.
Figure 2-7 shows an example of a step-rate pay structure with four steps
that are 7% apart.
Figure 2-7. Automatic Step-Rate Pay Structure
 A step-rate system with variability-based performance considerations

is similar to the time-based system, except that the size or timing of
© 2012 SHRM 47
increases may vary if performance is significantly above or below standard.

For example, a very capable employee may skip steps.
 In a combination step-rate and performance structure, employees
receive increases on a step-rate basis up to the job rate. Above the job rate,
increases are granted only for above-standard performance. This system
requires resources that can develop and administer a performance appraisal
system and communicate it to employees so that they understand how they
can earn performance-based increases.
Performance-Based/Merit Pay System
In a performance-based pay system, the individual employee’s performance is the

basis for the amount and timing of pay increases. Another term for a performance-
based pay system is a merit pay system.
In a merit pay system, employees are usually hired at or near the pay range
minimum. Pay increases are tied to performance and the degree to which the
employee masters the job.
Employers using a performance-based system must be able to explain the

differences in salary increases from one employee to another. Employers must
also be able to support the performance appraisal methods that were used to
decide why an employee deserved a specific pay increase. Without such controls,
performance-based systems are difficult to justify to employees, and supervisors
could rate employees in ways that give the desired wage regardless of actual work
performance.
© 2012 SHRM 48
Productivity-Based System
In a productivity-based pay system, pay is decided based on the employee’s

output. The two examples listed here are most frequently used in manufacturing
industries:
 Straight piece-rate system. The employee receives a base wage rate and is
awarded additional compensation for the amount of output produced.
 Differential piece-rate systems. The employee receives one piece rate up
to the standard and then a higher rate once the standard is exceeded.
In assembly line work, a productivity-based system works best under the

following conditions:
 Units of output can be measured.
 A clear relationship exists between employee effort and quantity of output.
 The job is standardized, the workflow is regular and there are few delays.
 Quality is less important than quantity. If quality is important, it is easily
measured and controlled.
 Costs are known and precise.
Because these systems stress quantity of work, the quality of the work must be
closely monitored.
Person-Based System
In person-based pay, employee characteristics rather than the job performed

decide pay. In such systems, two employees may perform similar tasks, but the
person with superior knowledge or skill mastery receives more pay.
“Unfortunately paying people based on what they could do rather than on what
they produce can bankrupt the organization— unrealized potential is hard to turn
into profits” (Society for Human Resource Management 2010).
© 2012 SHRM 49
There are three basic approaches to tying base pay to people’s qualifications:
 In a knowledge-based system, pay is based on the level of knowledge the
employee has in a field. This approach is used mainly for compensating
learned professions such as scientists or teachers. Staff professionals may
also be paid this way.
 Skill-based systems base pay on the number of different skills an
employee is qualified to perform. Employees increase their pay by
acquiring new skills, even if they do not use the skills on their current
assignment. This type of system is most commonly used in a production
environment.
 Competency-based systems base pay on the level at which an employee
can operate in defined competencies, such as training other employees.
This type of system is commonly found when rewarding professional
groups of employees. (Competencies are the skills, behaviors and
knowledge that are needed to succeed in a specific job.)
A recommended article, Effectively Managing Base Pay: Strategies and

Programs for Success, by Robert J. Greene, is available at
http://www.shrm.org/hrdisciplines/compensation/Articles/Pages/CMS_005592.aspx.
Pay Variations
There are times when individual employees are paid outside the pay ranges that
are set up in the organization. Examples of these variations include the following:
 Red-circle rates
 Green-circle rates
 Pay compression
Pay structures must be reevaluated over time, and necessary changes must be
made to ensure they remain internally equitable and externally competitive.
© 2012 SHRM 50
Red-Circle Rates
Red-circle rates are rates above the range maximum.
Here are some examples of when red-circle rates may occur:

 Long-term employees who reach the maximum rate in their range or jobs
in which promotion opportunities are rare.
 Employees who are bumped down to a lower-level job, rather than getting
laid off, but their salary is not reduced. Sometimes a red-circle rate is
frozen until the pay structure is increased enough so that the rate falls
within the range.
 A manager who is paid at the top of the job range, but there are no
openings at the next job range. In this case, bonuses are sometimes used to
increase the manager’s take-home pay.
If red-circle rates become common in the organization, the organization’s pay

ranges may lag the market and may need to be reexamined.
Green-Circle Rates
Green-circle rates are the opposite of red-circle rates—an employee’s pay is

below the minimum of the range.
Generally, employees in this situation should be given pay raises to get them into
the range as soon as they meet the minimum requirements for the position.
© 2012 SHRM 51
Pay Compression
Pay compression, or “salary compression, which means longer-term employees’

salaries are lower than those of workers entering the firm today, is a creature of
inflation. Prices (and starting salaries) go up faster than the company’s salaries,
and firms need a policy to handle it” (Dessler 2008).
Pay compression usually occurs for one of the following reasons:

 Beginning salaries are raised due to increases in the minimum wage or
inflation. Therefore, new hires can make the same as employees with more
experience who began at a lower wage.
 Labor market pay levels increase more rapidly than an employer’s pay
adjustments. An example would be hiring an inexperienced systems
engineer at or close to what more experienced systems engineers earn
because of an increase in competitive hiring rates. If the inexperienced
systems engineer is paid more than the experienced ones, salary inversion
occurs.
 There is not enough difference between pay levels. This situation allows an
employee making overtime to have a larger net pay than that of a
supervisor, even though the base pay of the employee is less than the
supervisor’s pay.
To offset the effects of pay compression, organizations can do the following:

 Match the market in pay rates for all employees, not just new hires.
 Provide other benefits to employees affected by pay compression.
 Continuously evaluate survey data and update pay ranges accordingly.
 Provide incentive plans for managers.
 Increase the amount of time off.
 Provide longevity bonuses.
 Monitor salaries for inflation.
 Install a more aggressive merit pay program.
© 2012 SHRM 52
Pay Adjustments
Some organizations use a technique that integrates performance appraisals and

pay adjustments. Figure 2-8 is an example of a pay adjustment matrix that helps
guide decisions on salary increases. As you can see, an employee in the lower half
of the range who has a performance appraisal rating of “fully meets standards”
would be eligible for a 3% to 4% raise.
Position of Pay Rate in Position of Pay Rate in

Performance Rating
“Below Midpoint” Range “Above Midpoint” Range
Outstanding 7–8% 5–6%
Significantly exceeds 5–6% 3–4%

standards
Fully meets standards 3–4% 1–2%
Does not fully meet 0% 0%

standards
Figure 2-8. Pay Adjustment Matrix
Other pay adjustment techniques include the following:
Cost-of-Living Adjustments (COLAs)
The purpose of a cost-of-living increase is to protect the employees’ purchasing

power against rising inflation. These increases are given to all employees, either
in equal cents per hour or as a percentage of their current pay.
General Pay Increase
A general pay increase is given to all employees (or sometimes a class of

employees such as office or production workers) based on local competitive
market requirements. This type of increase is awarded regardless of employee
© 2012 SHRM 53
performance. The pay increase is not linked to the cost of living and will depend
on the employer’s ability to pay for compensation increases.
Seniority
Seniority, which is the time spent in an organization, is sometimes the basis for
pay adjustments. Organizations may agree to one of these two rules when
seniority is used:
 Employees may need to be employed for a certain period of time before
they are eligible for pay increases.
 Employees may receive pay increases automatically after a set time in
the job.
Lump-Sum Increases (LSI)
Some organizations use a lump-sum increase (LSI), or performance bonus,

method to reward employees. An LSI is a one-time payment of all or part of a
yearly pay increase. An employee’s base wage rate is typically not adjusted by
this increase.
The LSI approach is an advantage to the organization because other wages and
benefits linked to the base rate, such as overtime, shift premium, sick pay and
life insurance, are not impacted.
Market-Based Increases
Organizations may use market-based salary increases to be competitive in

attracting new talent or to keep key employees.
Market-based salary increases are usually added to base pay and may also be
called equity increases.
© 2012 SHRM 54
Variable or Differential Pay
Variable pay, or differential pay, depends on performance and is not added to the
employee’s base pay. This practice allows organizations to better control their
labor costs and to tie performance and pay together. There are two ways to
differentiate pay:
 Time-based (when the employee works)
 Geographic (where the employee works)
Time-Based Differential Pay
Some employees receive time-based differential pay, or a different rate of pay,

based on when they work. Keep in mind that any overtime premium must be
applied to the differential pay.
 Shift pay. Some employees receive extra pay when they work less
desirable hours, such as a second or third shift. Shift pay may be a flat
amount per hour or a percentage of their base pay.
 Emergency-shift pay. Certain types of industries pay emergency-shift pay
when employees work in response to an emergency.
 Premium pay. Some employers pay extra pay, or overtime at a higher rate,
for working any of the following:
o Holidays or vacation days
o For the sixth or seventh day of straight time
o After eight hours in a day
 Hazard pay. In some industries, employees earn extra pay for working in
an environment that is considered to be more risky from a safety or health
perspective.
 On-call or call-back pay. In some organizations employees earn pay for
the following reasons:
o When they are on call, even if they are not called in to work (on-call
allowance)
o When they are called back for an extra shift in the same workday (earn
extra pay)
© 2012 SHRM 55
 Reporting pay. Employees are paid for reporting to work as scheduled

even if upon arrival no work is available.
 Travel pay. Hourly employees receive pay for time spent traveling to work
assignments, even if the travel time is outside of working hours.
 Overtime pay. In various countries the minimum amount to be paid for
overtime is dictated by legislation.
Geographic Differential Pay
Geographic differential pay is based on where an employee works. Organizations

with facilities in different locations often need to tailor their compensation
programs to the differences in local labor markets. For example, geographic
differences may occur between different cities or regions within the United States
and between the United States and other countries where the organization is
located. Some reasons for differential pay by geographic region include:
 For labor costs. Employers change their base-pay structure to reflect
different wage rates or factors that impact the cost of living in different
geographic areas.
 To attract workers to certain locations. Employers pay more for
employees who accept work in remote locations or in places where the
climate or quality of living is a deterrent. An offshore oil platform is a good
example.
 For foreign pay. Employers offer a base-pay structure plus allowances to
reflect factors that affect the economics of employees who work in offices
located in foreign countries. These factors may include the following
examples:
o Differences in culture
o Education
o Technology
o Climate
o Taxes
© 2012 SHRM 56
For more information on compensating global employees, visit this link;

http://www.shrm.org/templatestools/toolkits/pages/designingglobalcompens
ation.aspx
Incentive Pay
Incentives are used to motivate employees by paying for performance that

exceeds base-pay expectations. Incentives can be structured to reward short-term
accomplishments or long-term results.
 Short-term is easy to measure but may not have a lasting impact on the
overall health of the organization. For example, a salesperson who receives
incentives for having the most monthly sales may be motivated to exceed
goals in the short term only.
 Long-term can help keep high performers and provide long-term positive
results for the organization.
It is important that employees have the ability to achieve the incentive goal and
to see the results of their efforts. For example, a customer help line has no
impact on increasing production on the line, so customer service employees
should not be compensated for an increase in production. However, they can
increase customer satisfaction, which can be an appropriate incentive goal.
Keep in mind that “some people may prefer consolidated increases to base pay
rather than rely on possibly unpredictable bonus payments that may be perceived
as arbitrary, and which are likely to be non-pensionable” (Armstrong and
Cummins, Reward Management Toolkit: A Step-by-Step Guide to Designing and
Delivering Pay and Benefits 2011).
The best system balances both short- and long-term goals. Incentives can be
developed at any of these levels:
 Individual
 Group
 Organization-wide
© 2012 SHRM 57
Figure 2-9 provides examples of each.
Incentive Type Examples
Individual  The piece-rate system is the most basic individual

incentive system. Workers who produce more earn more.
Wages are decided by multiplying the number of units
produced by the piece rate for one unit.
 A commission is another example of an individual
incentive. A commission is generally a percentage of sales.
Group Group incentives are used when measuring individual

performance is difficult or when performance requires
cooperation of the group.
 In gain sharing plans, an organization shares a portion of
the gains from a successful group effort. For example, past
production records may be used to set up base productivity
standards. Any gains above that standard are shared 50/50
by the organization and its employees.
 Team bonuses can also be used and are based on
achieving group goals and objectives.
Organization-wide  Profit sharing and stock ownership are the most

common organization-wide incentive plans.
 Another example is a bonus program that is tied to
organizational goals. A goal may be to gain repeat
business from 10% of hotel customers. Examples of the
method of payout include a flat monetary amount and a
percentage of base pay; the methods are typically
dependent on the position within the organization.
Figure 2-9. Types of Incentives
© 2012 SHRM 58
For an incentive program to be successful, the following conditions must apply:

 Employees must feel the program is related to aspects of the job that they
can influence.
 Incentive pay should never be used as a way to reduce salary costs.
 Employees must believe that the goals are achievable.
 Organizations need to have the following in place:
o Competitive base salaries
o Fairly stable management presence and strategic direction
o Good communication between management and employees
o Reliable method for measuring the results linked to incentives
o Commitment from the top down to communicate the plan and to
provide ongoing training and coaching
HR’s challenge is to design an incentive plan that is tailored to the organization.

Even within the organization, the plan may vary across business units, functions
and locations.
Pay Plans for Select Employees
Sometimes specific categories of employees are compensated differently.

Organizations may develop separate pay plans for direct sales personnel,
professionals and outside directors.
Direct Sales Personnel
Most organizations compensate their direct sales force in one of three ways:
 Straight salary
 Straight commission
 Salary plus commission and/or bonus
In addition, sales personnel often receive the following:

 Car and expense allowances
 Company cars
 Club memberships or allowances
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 Other noncash perquisites
Straight salary plans are the least used compensation package for direct
salespeople. However, they are appropriate under these circumstances:
 The sales staff spends a significant amount of time servicing customers
rather than securing sales (for example, training, trade shows or handling
customer inquiries).
 Measuring sales performance is difficult.
 The nature of the sales process makes it impossible to separate one
individual’s efforts from those of the support people who also help secure
the sale.
 There is a long sales cycle.
In the case of straight commission plans, the salesperson’s entire salary is based
on commission. Straight commission plans are appropriate in the following
situations:
 When the organization’s objectives are to motivate sales volume (even if
that means less service)
 When holding down the cost of sales is important
 When competitors also compensate through commission-only systems
Sometimes organizations that use a straight commission plan provide an entry-

level sales representative with a non-recoverable draw or a guaranteed
commission for a set period of time, usually six months to one year. After that
time, the salesperson does not need to repay the draw and goes on a regular
commission plan.
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Nonrecoverable Draw (Guarantee): A compensation payment made in

addition to base salary regardless of performance. Typically given to individuals
who are either new to the company, position or territory. This type of
compensation is typically temporary and usually lasts a few months and no more
than a one-year period. If the incentive earnings do not exceed the draw amount,
the monies are not owed to the company by the individual (Society for Human
Resource Management 2007).
Salary plus commission/bonus is the most widely used approach to

compensating sales personnel, for these reasons:
 Traditionally, salespeople are thought to be motivated by financial gain.
 Salary-plus-commission systems allow organizations to directly reward
those behaviors that best support their organizational strategy.
 Salary-plus-commission systems are adaptable and allow organizations to
readjust the plan to fit current conditions.
 Competitors usually use a salary-plus-commission/bonus sales strategy.
Professionals
Another special compensation challenge is appropriately compensating

professionals. Almost all professionals are primarily oriented to their chosen
fields and to their career progressions in that field. As a result, the pay system
must reward career progression, and a promotional structure must be developed.
 A dual-ladder career progression allows professionals to earn as much

in senior technical positions as they would on a management track
(see Section 5.3 in Module 5: Training and Development).
 Maturity curves link pay with time spent in the professional field. They
are most frequently used for teachers and research-focused scientists,
engineers and other technical personnel.
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Outside Directors
Members of boards of directors are compensated in various ways:

 Base pay or retainer
 Incentives, usually for attending meetings, chairing a committee or other
services
 Benefits such as liability and life insurance
 Perquisites similar to those offered executives
 Nonqualified stock options/grant plans
 Nonqualified deferred compensation programs
Payroll Function
Few employees understand how complex it is to get paychecks issued; however,

all employees expect their paychecks to be on time and accurate to the penny.
The responsibilities of the payroll function are far more than just issuing
paychecks. The payroll function is also responsible for the following:
 Compliance with legal regulations
 Periodic reporting
 Record retention
 Control and security
The main tasks involved in payroll function are described here.
Completing Paychecks
Issuing paychecks is a complex operation that may use all the resources in
payroll. The following is a brief description of some of the tasks the payroll
function performs, sometimes on a daily basis. Each of these tasks depends on the
knowledge of skilled payroll administrators who must remain current as to all
applicable laws affecting payroll:
 Calculating employees’ gross earnings. Gross earnings include regular
wages plus additional earnings such as tips, shift premiums, paid time off,
bonuses and overtime pay.
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 Determining taxable wages. Most countries define taxable wages as all

remuneration for services (including noncash benefits) that is taxable when
paid. However, determining what is taxable and what is not can be
complex and may change from one tax year to the next.
 Withholding taxes. Withholding taxes can be done in different ways based
on country or state requirements. In either case, issues such as pay
frequency (such as weekly, biweekly or monthly) and withholding
allowances affect the amount of tax to withhold. If supplemental wages
such as bonuses or commissions are paid, they may be taxed differently.
 Calculating Social Security tax and Medicare tax. Typically, the Social
Security tax is a percentage (which changes periodically) of the employee’s
salary up to a yearly maximum, with the employer matching that amount in
some countries. All employers are required to withhold and match to the
maximum each year regardless of an employee’s previous earnings with
another employer. In some countries, Medicare taxes (also based on a
percentage of wages) are withheld with no yearly maximum.
 Withholding voluntary and involuntary deductions. Employees may
authorize the payroll department to take amounts directly from their
paychecks. Such voluntary deductions include union dues, some charitable
contributions, and contributions to retirement programs. Involuntary
deductions, or wage attachments in certain countries, include items such as
tax levies, court-ordered child support payments, and garnishments.
Involuntary deductions are withheld from paychecks before voluntary ones.
Payroll Record Keeping and Retention
Administering the payroll function includes keeping the organization in

compliance with its own internal policies as well as with applicable laws and
regulations. Ensuring compliance, combined with issuing paychecks, could cause
payroll to be buried in paperwork. Therefore, efficient payroll record-keeping
practices are vital to having an effective payroll system.
An employer is required to keep a master file of employment records for the

government. In addition, employers need a master file with accurate records to
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understand their labor costs and to have an organized pay process. A master file
includes information such as the following:
 Personal data on each employee (for example, name, gender, birth date and
Social Security number or equivalent number)
 Employment data on each employee (for example, hire date, hours worked
per day or week and regular rate of pay)
 Tax and payroll data on each employee, allowances claimed, marital status
and timecards
 Form 1099, a form used in the United States to record payment to
independent contractors who provided $600 or more of services during the
previous year (US-specific)
Retention of payroll records differs from that for personnel files. Unlike personnel
files, payroll records do not need to be retained for the term of employment plus a
specified period of time after employment ends. Instead, payroll records should be
retained on a rolling basis beginning with the date on which they were created, or
as specified by the respective government.
After employment ends, payroll records should include a copy of the termination
notice; all wages, salaries, commissions or other compensation paid to the
employee (for example, vested vacation time, unused compensating time and sick
pay); and any deductions made for money the employee owed the company.
Records should reflect deductions made from final paychecks in accordance with
the law.
Payroll Systems
Most payroll departments use a computerized payroll system because of the

enormous task involved with payroll and record keeping. Such a system allows
the payroll function to do the following:
 Comply with tax rules, multistate taxing (if applicable) and withholding,
depositing and reporting requirements on a timely basis
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 Reduce human error and possibly reduce labor costs by calculating wages,
tax withholding and various tax complexities
 Provide management with timely, accurate reports
 Maintain control and security
A computerized system relies on its hardware configuration and software choices.
Payroll System Hardware
The basic configuration of a payroll system within an organization can use any of
the following:
 Manual system
 Payroll service provider to administer turnkey payroll operation
 In-house mainframe or minicomputer
 Networked or online system
The organization can also choose to combine the various alternatives for a
customized system and may want to coordinate its efforts with the HRIS.
Payroll System Software
No matter which hardware configuration the payroll system uses, it is dependent

on software. Organizations have three software choices:
 Buy off-the-shelf software.
 Buy a vendor-supplied software package.
 Develop customized software package.
Considerations
Besides hardware or software options, there are other issues that must be
considered:
 People. The people who work with the system are the ones who decide its
success or failure. Their customers are the employees who depend on
timely and accurate paychecks and the organization that depends on an
accurate and cost-effective system. In all of their dealings with the
organization and its employees, the people in the payroll department will
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provide the best customer service if they possess the following

characteristics:
o Reliable
o Responsive
o Empathetic
o Professional
 Security. The organization must have a system of checks and balances.
The organization cannot use the same employees to enter payroll data and
control the employee database. For example, if an employee fraudulently
issues a paycheck to an employee who does not exist, the organization is
legally responsible for that paycheck.
 Compatibility. The HRIS and payroll systems must be compatible. They
must be able to share data, and changes to employee records made in one
system must be reflected in the other.
Controlling Costs
Controlling costs is a concern for all organizations and is crucial to their success.
Organizations can control compensation system costs and keep the system from
growing out of control by setting maximum/minimum ranges that govern pay
decisions, using a formal budgeting process and auditing the system.
 Setting ranges. Setting pay ranges, the upper and lower bounds of possible
compensation for jobs that fall within each pay grade, is one of the most
common ways for an organization to contain and predict labor costs. Once
ranges are set up, calculating compa-ratios can help HR managers decide if
compensation policies are being carried out as intended.
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Assuming that pay ranges are based on the market average, compa-ratios are an
indicator as to how actual wages match, lead or lag behind the market.
Compa-ratios are computed by dividing the pay level of an employee by the

midpoint of the pay range. A compa-ratio of 100% means that the salary would
be at the midpoint (Armstrong and Cummins, Reward Management Toolkit: A
Step-by-Step Guide to Designing and Delivering Pay and Benefits 2011).
 Budgeting. A formal budget process helps control and coordinate future

spending. There are two basic approaches to budgeting:
o Top-down. Top management sets a budge, and line managers make the
necessary personnel decisions to make it work. This is the more
common approach.
o Bottom-up. The employees’ compensation package for next year is
forecast to decide on the organization’s total labor budget. A bottom-
up system is rarely used because it does not offer any way to control
costs.
 Auditing. Pay ranges and a budget cannot be effective without ongoing
monitoring of the spending. Areas that need special attention include the
following:
o Administrative process
o Policy compliance, both organizational and regulatory
o Adequate documentation and record keeping
o Overall results
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and Labor Relations
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and Labor Relations
4.3: Benefits

Knowledge:
Behaviors: 02. Communicate information about company benefits
03. Record information about employees in HR database (for benefits or

tax purposes)

or vacation)
06. Track eligibility for time off and temporary leaves (for example,
maternity, mourning, unpaid leave)
07. Explain policies and procedures for taking time off and requesting
leaves of absence
08. Coordinate activities to support employee programs (for example,

programs to improve health, tuition reimbursement or educational
assistance)
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and Labor Relations
Skills & Knowledge: 02. Benefit programs (for example, health care plans and flexible
benefits)
03. Retirement plans and/or programs
06. Company-wide compensation policies (for example, wage

agreements with unions or work councils, employee categories and
salary increases)
07. Contracts with service and product providers (for example, health
insurance and pension plans)
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Section 4.3: Benefits
Introduction ..................................................................................................................................72
Deciding Which Benefits to Offer..............................................................................................72
Types of Benefits ..........................................................................................................................74

Benefits Needs Assessment ........................................................................................................74
Government Mandated Benefits .................................................................................................78
Voluntary Benefits .....................................................................................................................82
Paid Time Off .............................................................................................................................88
Work/Life Balance .....................................................................................................................90
Perquisites ..................................................................................................................................96
Metrics ........................................................................................................................................97
Trends in Benefits ........................................................................................................................99

Module 4: Compensation and Benefits Section 4.3: Benefits
Introduction
In addition to direct compensation, organizations provide employees with indirect
compensation, commonly known as employee benefits.
Benefits could be a large part of an organization’s total employment cost. In

general, the cost of benefits could add an estimated 35% to an employee’s base
salary. In most countries, rising health care costs have produced record highs for
employer-sponsored health plans and employee contributions. Because of the
expense, an organization must spend its benefit money wisely so that both the
organization and the employee benefit.
Benefit programs can be thought of as a contract to protect the financial and

physical well-being of workers and their families. They are designed to reward
continued employment, promote loyalty and enable employees to live healthier
lives.
Indirect compensation also benefits employers in the following ways:

 Helps organizations recruit and keep good employees.
 Increases the employee’s commitment to the organization. This
commitment then transforms into improved productivity, work quality and
competitiveness.
 Provides tax-effective purchase of insurance and benefits.
This section examines the types of benefits and trends associated with benefits.
Deciding Which Benefits to Offer
Armstrong and Murlis state, “Benefit entitlements are an area which employees
watch closely and where perceived injustice can rapidly cause problems. They are
also a major component of employee costs, particularly at management level
where keeping up with ‘best practice’ can add 40 percent or more to basic salary
costs for a fairly average group of executives” (Armstrong and Murlis 2007).
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In order to spend its benefit money wisely, an organization must answer the
following questions:
 Which benefits are required by law?
Laws require that employers provide certain benefits to their employees.
These benefits must be included in your organization’s total compensation
package.
 Which benefits enable an employer to compete for employees?
Some benefits, such as paid time off, have become so common that
organizations that do not offer them will have a problem finding and
keeping workers. Offering these benefits allows an organization to compete
for the best employees. Also, if an organization offers an attractive benefit
that is not commonly offered by competitors, such as day care, the
organization will have an advantage over its competitors.
 Which benefits are cost-effective to purchase and to administer?
Because organizations usually have a limited budget for benefits, they must
always assess the cost of the benefits and the associated administrative
burden. Benefits such as paid holidays are easy to administer, but pension
and health care plans are more time consuming and costly to administer.
 Which benefits do employees prefer?
Organizations must consider what benefits will attract and keep new
employees. Maintaining a well-qualified, motivated workforce is important
to the organization’s success. Surveying employees regularly and
understanding the makeup of the workforce allows the organization to
identify benefits that employees value. Here are some examples:
o Health insurance ranks high with employees of all ages.
o Some benefits, like tuition reimbursement, may appeal more to
younger workers.
o Older workers may also be interested in life insurance and retirement
benefits.
 Which benefits provide creative choices?
Look for ways to be creative when designing benefit programs. Constantly
monitor the marketplace to decide if legislation or other changes have
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made desirable benefits more affordable. Here are two examples of how to
provide benefits that save employees time and money and cost the
organization very little:
o An organization that cannot afford to provide health insurance may
consider annual cash bonuses that employees can apply toward their
insurance costs.
o An organization that cannot offer a benefit due to cost may think about
offering popular lower-cost benefits, such as a flexible work schedule,
telecommuting and casual dress.
Types of Benefits
HR will need to consider that there are several benefits required by law. In
addition to those benefits, HR will select from a wide array of voluntary benefits.
To aid in the selection process, they will need to know the following:
 Benefits most important to employees
 Benefits offered by competitors
Selecting the right voluntary benefits will make a difference in recruiting and
retaining valuable employees.
Benefits Needs Assessment
Employee benefits are a significant factor in an organization’s total budget and in

the reward package offered to employees. The HR professional has the
responsibility to develop an employee benefits package that fulfills the objectives
of both the employer and the employee. This is done by gathering data through a
needs assessment.
The purpose of the needs assessment is to decide on a benefits package that will
provide the following results:
 Match the overall business strategies.
 Support the organization’s mission and vision.
 Meet employee needs.
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A benefits needs assessment includes the activities listed in Figure 3-1 and ends
with a gap analysis.
Review the organization’s The organization’s market strategy has a direct effect on
strategy. the benefits it offers employees:
 Organizations that want to lead the market will
offer their employees a more extensive benefits
package.
 Organizations that have a lagging or matching
market strategy will offer their employees a simple
benefits package.
Review the organization’s The organization’s total rewards philosophy will provide
total rewards philosophy. an understanding of how benefits fit into that philosophy.
HR professionals will need to find out how much can be
spent on benefits and their actual impact on the
organization’s cash flow. Benefits must be balanced with
the other elements in the total rewards program.
Analyze the demographics of An organization’s benefits plan must address the needs of
the organization’s workforce. various categories of employees. These categories include
the following:
 Full-time versus part-time status
 Active versus retired status
 Age
 Marital status
 Family status
Figure 3-1. Activities in a Benefits Needs Assessment (continued to next page)
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Analyze the design and Utilization data need to look at specific benefits plan usage
utilization data on all benefit (for example, relevance of defined benefit schemes for a
plans. workforce that has a lower than average age and a high
turnover). This analysis may result in design changes to a
plan. Based on employee lifestyle and employee mix, types
of benefits will vary and may include the following:
 Retirement
 Medical expenses
 Insurance
 Dependent care assistance
 Capital accumulation
Figure 3-1. Activities in a Benefits Needs Assessment (concluded)
Gap Analysis
The final step in a benefits needs assessment is to compare the following:

 Organizational needs (including budget)
 Employee needs
 Existing set of benefits
The HR professional performs a gap analysis to identify the set of benefits that
best matches the needs of the organization and its employees.
Based on employee demographics and employees’ need for different benefits,

current benefits must be looked at to decide if the benefits need is being met.
A review of the use of current benefits can also be done to decide which specific
parts of each benefits plan are being used and whether that use is in line with the
organization's strategies.
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Figure 3-2 summarizes some issues that may surface during a gap analysis and
suggests the appropriate action.
Figure 3-2. Gap Analysis Findings and Actions
Needs assessment data should help HR develop a benefits package that is

affordable for the organization, valued and used by employees. A benefits needs
assessment allows HR to build a business case for important recommendations
listed here:
 The type of benefits provided
 Who is covered under the plan (for example, employees, dependents,
retirees)
 What options employees have (for example, flexible spending accounts,
cafeteria plans)
 How the plan will be financed and whether employees share in the costs
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 Who should administer the plan (for example, the organization, an

insurance carrier, a third-party administrator)
 How the benefit plan will be communicated to all affected individuals
Government Mandated Benefits
In some countries, certain benefits are administered or provided by the employer

as per law. The organization cannot change or remove these benefits even if a
needs assessment suggests the benefits are not required by the organization or its
employees. Different countries may use different words or terms to describe these
benefits; however, they all tend to operate similarly to insurance programs
whereby a premium is paid (by either the employer, employee or both) and a
benefit is offered. These benefits may be deferred to the future or may operate in
parallel to the employee’s tenure.
In addition, some programs may be administered at different levels:

 National
 Subnational (for example, state or provincial)
 Both national and subnational
Some northern European countries use what is called a Ghent system. In this
system, trade unions take on the role of government, acting as the collector of
premiums and administrator of such benefits. These mandated workplace benefits,
together with nonemployment-related government benefits, create what has been
called social protection or a social safety net.
In general, government-mandated benefits that affect employers tend to fall into

four main categories related to the following:
 Retirement (or loss of ability to work)
 Health
 Unemployment (loss of job or work)
 Work-related accidents
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In some countries, some or all of these benefits may be administered as a single

group of social services within the broader tax system (for example, Provident
Funds or Welfare). In other countries each category of benefit may have its own
national, state, provincial or quasi-government body that collects fees and
administers the benefit. In all cases the employer’s contribution is effectively a
tax. It must also be emphasized that the same term or phrase associated with a
benefits program in one country may have very different meanings and
applications in another.
Mandated Retirement (or Loss-of-Ability-to-Work) Benefits
Many countries mandate a form of social security or social insurance programs

that may provide the following employee benefits:
 Retirement
 Disability
 Death
 Survivor’s benefits
Often the manner of calculating the employer’s contribution to fund this benefit is
based on a percentage of salary up to a yearly maximum. This amount must be
deducted from the employee’s regular pay until the maximum is reached. This
premium may be jointly paid by the employer and the employee.
The social principle of this benefit is to defer income for when an employee is
retired or no longer able to work. However, in many cases the funds collected by
the government (or government-appointed body) are not specifically allocated to a
dedicated fund but rather are paid out of general revenue once the employee
qualifies for the benefit. Terms or phrases often associated with this type of
benefit are:
 Social Security
 Social insurance
 Government pension
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Mandated Health Benefits
Many jurisdictions collect premiums from employers and employees to be applied

toward payments to employees if and when they require health care services
and/or are unable to financially provide for their own health care services.
Globally there are two extremes relating to this benefit:
 Universal (single-payer) health care systems at one extreme
 Purely private or self-insured systems at the other extreme
Employers must comply with the laws associated with health-related benefits of
the jurisdiction within which they have operations. In terms of legally mandated
health benefits, this compliance may involve the employer paying dedicated
health-related premiums or simply paying into general income tax to support the
public policy.
In countries such as the United States, the mandated health benefit relates to when
the employee retires (Medicare). In other countries, the government-mandated
health benefit coverage and premium are ongoing as part of the general medical
services provided to residents or citizens.
The formulas for collecting premiums vary; however, most follow a pattern that is
similar to the formulas for mandated retirement benefits. In this pattern, the law
establishes a certain yearly maximum contribution. The employer—and perhaps
the employee—makes regular contributions based on a percentage of the
employee’s salary until the yearly maximum is reached.
The actual methods and payout of mandated health-related benefits vary

significantly between countries and are too broad to generalize. However, many
principles of insurance such as deductibles, means testing, co-insurance and
qualification periods are often applied to this benefit depending on the
jurisdiction.
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Mandated Unemployment Insurance Benefits
Many jurisdictions collect premiums from employers—and perhaps employees—

to be applied toward paying a percentage of an employee’s salary in the case of
the employee losing his or her job through no fault of the employee. The principle
behind this benefit is to help workers who have been terminated to transition from
one job to another equally suitable job.
In most jurisdictions the amount paid to the unemployed worker first requires a
waiting period and is followed by time and financial limits (the benefit period is
limited, as is the financial payout). The goal of such public policy is to enable
people to meet their basic financial obligations while searching for a new job.
Though the unemployment benefits plans may operate differently, here are some
examples of terms or phrases used to describe this kind of benefit:
 Unemployment insurance
 Employment insurance
 Job seekers allowance/benefit
 Redundancy funds
Mandated Work-Related Accident Benefits
In many jurisdictions, insurance against work-related accidents is called workers’

compensation. This wording can be a bit misleading because the benefit is more
of an insurance policy against accidents than a form of compensation for work;
only a person who has a work-related accident would collect this benefit.
The goal of the benefit is to offer employees and employers a financial buffer if
an employee is unable to work for a period of time because of a work-related
accident.
 The employer is usually exempt from paying the employee’s salary or
wages during the accident-related leave period.
 The employee receives a portion of his or her salary during the same
period.
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An additional benefit to the employer is that these plans usually function as non-
fault insurance policies, meaning the employer is protected against being sued by
the injured employee even though the injury occurred at the workplace (provided
the employer was not negligent).
In jurisdictions with broader or more universal social health care systems,

sometimes the need for a separate work-related accident benefits program is not
necessary because it relates to the medical coverage for the injured worker.
Nevertheless, in these cases it is usually mandatory that the employer obtain some
form of insurance related to the income loss potential for the employee, which can
be significant, especially if the employee is permanently disabled. The following
are terms or phrases often associated with this type of benefit:
 Workers’ compensation
 Workers’ comp
 Compo
 Workers’ indemnity
 Employers’ liability insurance
Voluntary Benefits
Highly regarded employers are always looking for solutions to help employees
with the following:
 Manage their personal lives
 Increase performance
 Develop professionally
Knowing what type of benefits are offered by your competitors and which
benefits are meaningful for your organization’s employees makes it easier for
your organization to design a plan that will help recruit and keep valuable
employees.
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Health Care Benefits
In most countries, health care is paid through some type of social insurance,
funded by employers, employees, general taxation or combinations of these. It is
very unusual for employees not to be at least partially covered by some form of
government-supported health care.
The role of private health insurance varies, usually depending on the amount and
quality of health care provided by the local government or the employer. Many
employees purchase additional private health insurance and go to private health
care facilities because the quality of government-provided health care is
sometimes less than desirable. Private health insurance is too expensive for most
employees in less developed countries, so this option is usually available only to
upper management.
Cultural values play a role in which health care benefits are provided to
employees. Health care options considered by many Western countries as
nontraditional may be considered both traditional and acceptable in other
countries.
In the United States, health insurance has become very important to the average
employee; however, health insurance is an optional protection program that is not
mandated by law.
Additional Health Care Benefits
Many organizations are progressively looking to offer additional health care

benefits such as the following:
 Dental plans. Dental plans vary, but coverage is usually provided for
preventive and restorative services and orthodontia, in varying percentages.
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 Vision care plans. Because health care plans provide little or no vision
care except for medical or surgical treatment, employers sometimes offer a
vision care plan. Many employers calculate the cost of lowered
productivity because of eye care problems and decide that offering vision
care is a good business decision—especially as the workforce ages and the
use of computers becomes more widespread. Vision care plans include all
or some coverage for eye exams, frames and lenses.
 Prescription drug plans. The most common drug plans require a per-
prescription co-payment or a percentage of the ceiling amount. If the cost is
less than the co-payment, the amount is the cost of the drug. Mail-order
drug benefits are becoming more popular for maintenance drugs. Some
prescription drug plans may have the following requirements:
o Employees must fill prescriptions at specified pharmacies for a
prearranged reduced cost.
o Employees must use generic-brand drugs when available.
o Employees must refer to a list that states which prescription drugs are
covered.
Information on the cost of health care can be found in the article The Rising Cost of
Health Care: Strategic and Societal Considerations for Employers, by Leslie A.
Weatherly, HR Magazine, September 2004, at:
http://www.shrm.org/Research/Articles/Documents/q304health.pdf
Life Insurance Plans
A major concern of most employees is caring for their families if the employees
were to die. Many employers provide death benefits through group-term life
insurance.
Group-term life insurance provides a lump-sum payment to beneficiaries. These

plans may have any of the following characteristics:
 The insurance may be for a flat amount (such as $50,000) or a multiple of
salary (such as two times base annual salary). The amount does not usually
vary by the length of service or the position of the insured.
© 2012 SHRM 84
 The majority of employers provide life insurance, payable to a beneficiary

upon the death of the employee, as a voluntary company-provided benefit.
 Sometimes life insurance is required by law. These required insurances are
often very small lump-sum amounts, enough to cover burial but not enough
for the beneficiary to live on. Here are two examples:
o In some countries, some life insurance is provided by Social Security.
o In some countries, the government mandates that life insurance must
be provided by the employer.
 In many countries, the employee can purchase additional life insurance
through an organization-sponsored group plan. Examples of this include
the following:
o In many Latin American countries, employees may receive life
insurance that pays twenty-four months of salary, although the amount
may vary depending on the employee’s level in the organization.
o In the United Kingdom, employees may receive three to four times
their annual salary as a life insurance benefit.
o In the United States, the organization-provided amount tends to be one
or two times the annual salary, and the employee is able to buy
additional coverage at group rates.
o Keep in mind that life insurance practices may vary even within a
country. For example, in India it varies across industries and could
vary across local/multinational organizations. There is no uniformity.
Dependent Group Life Insurance
Some employers also insure the employee’s spouse or dependent children through
dependent group life insurance. Most organizations allow employees to pay for
this coverage through a payroll deduction at favorable group rates.
Disability Income Plans
In addition to replacing income when they retire and are no longer working,
employees may need an income-replacement plan in case they become disabled,
© 2012 SHRM 85
die prematurely (leaving their family without adequate resources) or are

temporarily out of work.
In many countries, work-related illnesses or injuries are covered under workers’

compensation. Non-work-related disabilities are covered by the employer’s
disability plan, which typically has three phases:
 Employer-provided sick leave
 Short-term disability (STD) coverage
 Long-term disability (LTD) coverage
 Sick leave. Most sick leave policies pay 100% of pay for a specified
number of earned sick leave days. Employees usually accrue sick leave up
to a maximum amount specified by the organization. When an employee
uses the maximum amount, the sick leave ends, and short-term disability
coverage or leave without pay begins.
“Sick leave pay causes difficulty for many employees. The
problem is that while many employees use their sick days only
when they are legitimately sick, others use sick leave as extensions
of vacations, whether they are sick or not. Employers have tried
several tactics to overcome the problem. They used to repurchase
unused sick leave at the end of the year by paying their employees
the equivalent sum of the amount of unused sick days.” (Bhatia
2010)
 Many organizations provide paid-time-off (PTO) banks rather than sick
leave. The PTO bank combines all paid-time-off programs into one large
bank of time that includes vacation, sick leave and personal days.
 Short-term disability (STD). This type of disability coverage replaces a
portion of lost income and may require a waiting period. STD normally
provides employees with 50% to 70% of their compensation for up to six
months. Sometimes employees with more years of service are given more
STD coverage.
 Long-term disability (LTD). Long-term disability (LTD) coverage
usually begins after the short-term coverage ends. Because of the risks
© 2012 SHRM 86
associated with long-term coverage, a commercial insurance company

almost always underwrites such coverage.
o During the first two years of LTD, employees must be unable to
perform their own occupation. After the first two years of LTD
coverage, benefits will be continued if the person is still unable to
engage in any work or occupation that he or she has the education,
training or experience to perform.
o Benefits end if the person returns to work or dies prior to retirement
age.
o There are no income-level restrictions on LTD.
o Compared to short-term disability, LTD is an expensive benefit to
offer employees because it could begin at an early age and may last
until normal retirement age (the age at which Social Security begins).
Retirement Plans
Retirement programs are sometimes mandated by the government, but they are
often paid for with employee and employer contributions. Supplemental
government support is sometimes provided.
Retirement and pension benefits may be provided through a wide variety of plans.
The main goal is to provide retirement income to employees with some type of
income payable periodically. The two most common types of plans, defined
benefit and defined contribution, are described in Figure 3-3.
© 2012 SHRM 87
Plan Description
Defined benefit  Promises specific benefit amount upon retirement.

 Vesting schedule is set up. (Vesting is the process by
which employees gain permanent claim to a portion or
all of their benefit. Employees are always 100% vested
in their own contributions; employer contributions
usually vest over time.)
 Provides benefits based on service and perhaps on
salary.
 Amount of benefit is decided by a formula.
 Provides a prespecified level of benefits.
 Employer bears the investment risk.
Defined contribution  The amount of money that is to be regularly

contributed to the fund is specified.
 No promises are made about the future value of the
benefit.
 Employees will be entitled to 100% of their
investment and the vested portion of the employer’s
contributions upon retirement.
 Requires individual accounts for each employee.
 The amount of the benefit at retirement will depend on
the investment return.
 Employee bears the investment risk.
Figure 3-3. Types of Retirement Plans
Paid Time Off
Paid leave provides well-deserved relief from the physical and mental demands of
work. It may also reward long-term employees for their seniority and service.
Paid leave also contributes to a worker’s ability to be productive and to keep up
© 2012 SHRM 88
with the stress of the job. Employers normally offer their full-time employees the
following types of paid leave:
 Holidays
 Vacations
 Leave of absence
 Bereavement
 Maternity/paternity/parental
Holiday Pay
Each country has paid public holidays, usually nationally, during which
organizations may be required to shut down. Certain holidays may be observed on
a local basis or only by certain industries.
HR personnel need to be aware of country requirements and employee

expectations for holidays.
Vacation Pay
Most vacation policies are based on the employee’s length of service and pay
100% of base earnings.
The number of paid employee vacation days varies from employer to employer.
The common trend is to relate the length of vacation to the length of tenure and
job classification in the organization. Examples include the following:
 Six months of service = one weeks’ vacation
 One year of service = two weeks’ vacation
 Five years of service = three weeks’ vacation
 Ten or more years of service = four weeks’ vacation (Bhatia 2010)
In some organizations, vacation time can be accrued and carried over to the next
year (or beyond). There are legal considerations for vacation carry-over; usually,
there is a limit on how many days can be carried over.
© 2012 SHRM 89
Employees are usually required to schedule their vacation time in advance and to
get approval from their supervisor. In some flexible benefit plans, employees may
buy or sell a limited number of vacation days.
Leave of Absence
Some industries or professions (for example, teaching) allow long-term

employees to take a leave of absence. A leave of absence is a period of time to
complete a course of study, to do research or to engage in other activities that will
help employees gain knowledge or expertise in their profession.
Bereavement Leave
Many organizations allow time off with pay to attend the funeral of a close
relative. Some organizations also extend this benefit to funerals of friends.
Maternity/Paternity/Parental Leave
In many countries, organizations pay some portion of maternity leave. To enhance

maternity leave, some organizations offer unpaid time off or allow the employee
to work part time. In addition to maternity leave, some countries offer paid or
unpaid paternity and parental leave. There is also a trend toward adoption leave.
Work/Life Balance
In today’s work environment, employees often live with a twenty-four-hour,

seven-days-a-week work ethic. There always seems to be a need to deliver
superior products, services and information. Technology makes possible
worldwide connectivity. Because of these factors, employees have less free time
because they are spending more time at work.
© 2012 SHRM 90
Work/life balance (WLB) is a term used to describe a variety of benefits-related

programs to help employees successfully manage their work, family and
personal life without too much stress or negative impact.
Many organizations report that a key factor in employee satisfaction surveys is

balancing work and family. Organizations are increasingly using work/life
balance as a recruitment and retention strategy.
Work/Life Programs
The purpose of work/life programs and services is to support the well-being of

employees and to help them achieve a balance between their jobs, families and
personal lives. Some organizations express work/life programs in terms of
diversity and corporate social responsibility (CSR) programs. Others present
work/life programs as a way to promote the organization.
An organization can choose from a wide range of work/life programs to offer

their employees. Examples are listed here:
 Convenience/concierge services
o Banking service
o Dinners-to-go program
o Dry cleaning and laundry service
o Grocery service
o Referral services for household needs
o Subsidized cafeteria service
 Employee assistance/employee development programs
o Career development and coaching
o Employee development courses
o Financial planning
o Legal assistance
o Mentoring
o Resources and referrals for counseling and education
o Retirement planning
© 2012 SHRM 91
o Tuition assistance program

 Family assistance programs
o Adoption assistance
o Backup (emergency) child care program
o Child care assistance
o Eldercare assistance
o Long-term care for extended family members
 Flexible work arrangements
o Flexible work hours (flextime). Employees choose starting and ending
hours but typically must be present in the office during core working
hours.
o Job sharing. Two employees share or divide the workload of a single
job.
o Part-time employment. Employees are offered a reduced work
schedule.
o Telecommuting. With the aid of technology, employees can work
remotely.
o Variable workweek (flexible week). Sometimes called a compressed
workweek, it allows employees to work longer hours over fewer days.
(For example, a person could work ten hours a day for four days
instead of eight hours a day for five days.)
 Leave of absence
o Maternity and paternity leave program
o Self-funded leave
 Wellness programs
o Disease management program
o Fitness benefits or workplace fitness program
o Smoking cessation program
o Weight management program
 Miscellaneous
o Commuting program
o Employer-sponsored discounts
© 2012 SHRM 92
o Ergonomics program
o New mothers’ rooms
o Public transportation assistance
Which Work/Life Programs Are Appropriate?
Organizations decide which work/life program benefits to offer its employees

based on several factors. Primary factors are listed in Figure 3-4.
Factor Description
Laws  Are work/life balance benefits required

by law?
Labor relations  Do labor contracts specify work/life

balance provisions for workers?
Organizational culture  Is the organization family friendly, or is

there the expectation of long hours of work
for career progression?
 What behaviors do managers model?
 What employee behaviors are rewarded?
Maturity of the organization  Is the firm in a start-up, entrepreneurial

phase or established with the capabilities to
support work/life balance initiatives?
Market practice  What work/life benefits are necessary to be

competitive (locally and globally)?
Figure 3-4. Factors Influencing Work/Life Program Decisions (continued to next page)
© 2012 SHRM 93
Factor Description
Expectations and needs of  What are the demographics and demands

employees employees have in terms of family
support, child care and other personal
matters?
Level of formalized human  Are there strategies within the

resources management organization, supported by training, to
make offerings possible?
Figure 3-4. Factors Influencing Work/Life Program Decisions (concluded)
In many countries, social programs for employees focus mainly on work/life

balance. Several countries have enacted employment legislation that directly
relates to work/life balance (for example, laws governing different types of
employee leave, working time and part-time protection).
Impact of Work/Life Programs
Why are so many organizations interested in work/life balance? They feel they
have a responsibility to care for their employees’ mental and physical health.
Actually, employers and employees both benefit from work/life programs, as
shown in Figure 3-5.
© 2012 SHRM 94
Benefits of Work/Life Balance Programs
To Employers To Employees
 Provides an appropriate work  Improves job satisfaction
environment  Reduces on-the-job stress
 Strengthens the employer brand  Increases commitment to the
 Decreases absenteeism employer
 Reduces turnover  Improves overall life satisfaction
 Reduces workplace stress  Assists with the management of
 Reduces health care costs work and family responsibilities
 Improves employee engagement,  Allows parents to be more
morale and productivity involved in their children’s lives
 Improves customer satisfaction and  Helps with eldercare issues
client retention  Improves self-esteem
 Helps attract qualified talent
 Improves employee commitment
and retention
Figure 3-5. Benefits of WLB Programs
There are many good reasons for work/life balance, but commitment and
communication can make or break success. Having work/life programs means
little if employees are not aware they exist or if the culture does not support the
programs.
© 2012 SHRM 95
For more information on work/life balance, you may access the article Work/Life
Balance: Challenges and Solutions, by Nancy R. Lockwood, 2003 SHRM
Research Quarterly, at:
http://www.shrm.org/Research/SurveyFindings/Articles/Documents/0302wl.pdf
Perquisites
There are many perquisites that organizations may offer employees. The
following are some of the more common:
 Club memberships. Entrance fees as well as annual subscriptions for
social or sports club memberships
 Free/discounted products or services. Eligibility for free products and
services or discounts
 Housing. Accommodations or related allowances
o May be company-owned or company-leased housing
o Allowances may be a fixed monetary amount or a percentage of basic
salary
o May include furnishings
 Mobile phones. Mobile phone equipment, typically for senior executives
and employees with a business need (such as direct sales)
 Professional organizations. Employee membership in professional
associations
 Training programs. Payment of training programs, available to many
levels of employees
 Company car and/or cash car allowances and meal subsidies/vouchers.
Often included in international compensation packages
The following are some additional (less common) perquisites:

 Education/tuition fee reimbursements
 Employee assistance programs
 Financial counseling
 Medical checkups
© 2012 SHRM 96
 Subsidized/low-interest rate loans for the purchase of a house or car

 Travel allowances
Metrics
As an HR professional, understanding how benefits costs are calculated will help

in the following ways:
 To analyze the requirement of a particular benefits program
 To understand the cost-benefit ratio of a particular program
 To prioritize the money spent
 To communicate with employees
Figure 3-6 provides descriptions/formulas for figuring the cost of benefits.
Metric Description Formula
Benefits costs as a Reflects total costs of benefits

percentage of total divided by total payroll costs for
payroll costs organization.
Figure 3-6. Metrics for Costs of Benefits (continued to next page)
© 2012 SHRM 97
Annual increase / 1. Represents expected 1. Health care expense per

decrease in benefits increase/decrease in organization’s covered employee
costs (from previous health care expense for a given
years and projected) fiscal year.
2.
2. Health care expense per covered
employee is calculated by taking
the total health care expenses paid
by the organization in a given
fiscal year and dividing it by the
number of employees who are
enrolled in a health care plan in
that organizational unit. Total
health care expenses include both
employee- and company-paid
premiums, stop-loss insurance and
administrative fees.
Percentage of Calculated by dividing the amount

premiums the organization pays for
organization pays for employee-only coverage
employee-only premiums by the total amount.
coverage
Figure 3-6. Metrics for Costs of Benefits (continued to next page)
© 2012 SHRM 98
Percentage of Calculated by dividing the amount

premiums the organization pays for
organization pays for employee and dependent coverage
employee and premiums by the total premium
dependent coverage amount.
Figure 3-6. Metrics for Costs of Benefits (concluded)
Trends in Benefits
Armstrong and Murlis state, “The main trends in benefits policy are:
 Continued simplification of benefit packages
 Increased emphasis on individual need and individual choice, particularly
evidenced by flexible and voluntary benefit schemes
 More attention paid to communicating the benefits available to employees”
(Armstrong and Murlis 2007)
The trends provided here are brief snapshots of the type of issues that HR
professionals must consider when making employee benefits decisions. Trends
related to employee benefits include the following:
 Health care cost control. Because health care costs continue to rise,
organizations are finding multiple ways to cut costs. Some examples are
listed here:
o Reduced number of choices for employees
o Choices that force employees to be more conscious of costs when
making health care decisions
o Higher co-payments for office visits and drugs
o Networks that offer a limited choice of doctors
© 2012 SHRM 99
o Limited number of participants in the organization’s plan

o Spousal surcharge to encourage a spouse who has coverage elsewhere
to enroll in that plan
For more information on trends in health care reform, you may access the article
Health Reform: Mixed Impact on Retiree Benefits, Study Finds, by Stephen
Miller at
http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/Reform_RetireeBenefits.
aspx?marquee=DD3_032310.
 Consumer-directed health care plans. Under the umbrella of consumer-

directed health care, employers are adding high-deductible health plans,
personal health care spending accounts and tiered benefit designs. These
plans are designed to encourage consumers to avoid unnecessary care and
to seek lower-cost, higher-quality providers.
For more information on trends in consumer-directed health plans, you may access the
following articles by Stephen Miller:
Studies Quantify Savings with Consumer-Driven Health Plans:

http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/CostSavingsCDHPlans.aspx
Reform Creates Opportunities, Uncertainties for Consumer-Directed Plans:

http://www.shrm.org/Publications/HRNews/Pages/UncertaintyConsumerDirected.aspx
 Demand for work/life balance. As mentioned earlier, one of the reasons

the demand for work/life balance is increasing is that employees have less
free time because they are spending more time at work. In addition,
increases in employees’ caring responsibilities (for example, aging parents)
may also lead to greater demands for work/life balance benefits.
 Preventive health and wellness programs. Many organizations are
adopting preventive health and wellness programs because of the increase
in preventable and chronic health conditions. This increase also results in
© 2012 SHRM 100

an increase in the organization’s health insurance costs. Examples of

wellness programs include the following:
o Stop smoking program
o Stress management
o Weight management
o Hypertension (high blood pressure) screening and education
For more information on trends in preventive health and wellness programs, you
may access the article 10 Steps for Wellness Program Success, by Stephen Miller
at
http://www.shrm.org/Pages/loginA.aspx?ReturnUrl=%2fhrdisciplines%2fbenefits%
2fArticles%2fPages%2f10StepsforWellness.aspx.
 Retaining younger workers. Organizations are beginning to provide

benefits for the purpose of encouraging younger workers to remain in the
organization. Younger workers are often interested in the following:
o Child care
o Tuition reimbursement for education that will allow them to advance
in their careers
 Flexible benefits. The choice is in the hands of the employees to allocate
the benefits most suitable to them based on their needs. Kanchan Bhatia
details the initial motivation for flexible benefits packages:
“[The flexible benefits package]…was basically designed to
enable senior executives, top professionals and managers to choose
individually many of these benefits and services. The demands of
services depend on their age, their educational and income levels,
their life style and other forms of preferences. Recent studies
suggest that flexible or cafeteria compensation programs are
becoming increasingly popular among employees. It provides an
opportunity to contain the costs of the benefit package and
provides benefits on a more tax-effective basis. It also increases
loyalty and motivation of employees, which in turn enhances
productivity.” (Bhatia 2010)
© 2012 SHRM 101

You have completed Module 4: Compensation and Benefits. Next, if you feel
terminology.
© 2012 SHRM 102

Module 4: Compensation and Benefits Bibliography
Society for Human Resource Management.

Bibliography "Effectively Managing Base Pay:
Strategies and Programs for
Armstrong, Michael, and Ann Cummins.
Success." January 21, 2010.
Reward Management Toolkit: A
http://www.shrm.org/hrdisciplines/co
Step-by-Step Guide to Designing and
mpensation/Articles/Pages/CMS_00
Delivering Pay and Benefits.
5592.aspx (accessed August 31,
London, United Kingdom: Kogan
2012).
Page , 2011.
—. "Effectively Managing Base Pay:
Armstrong, Michael, and Helen Murlis.
Strategies and Programs for
Reward Management: A Handbook
Success." January 21, 2010.
of Remuneration Strategy and
http://www.shrm.org/hrdisciplines/co
Practice. 5th Edition. London,
mpensation/Articles/Pages/CMS_00
United Kingdom: Kogan Page, 2007.
5592.aspx (accessed May 2011).
Bhatia, Kanchan. Compensation
—. "Sales Compensation Planning for HR
Management. Mumbai, India: Global
Professionals." June 1, 2007.
Media, 2010.
http://www.shrm.org/Research/Articl
Briscoe, Dennis R., Randall S. Schuler, and es/Articles/Pages/CMS_022035.aspx
Lisbeth Claus. International Human (accessed August 31, 2012).
Resource Management: Policy and
—. "Sales Compensation Planning for HR
Practice for Multinational
Professionals." June 1, 2007.
Enterprises. New York, New York:
http://www.shrm.org/Research/Articl
Routledge, 2008.
es/Articles/Pages/CMS_022035.aspx
Dessler, Gary. Human Resource (accessed June 24, 2011).
Management. 11th Edition. Upper
Vance, Charles M., and Patik Yongsun.
Managing a Global Workforce:
Prentice Hall, 2008.
Challenges and Opportunities in
Jensen, Doug, Tom McMullen, and Mel International Human Resources
Stark. Manager's Guide to Rewards: Management. Armonk, New York:
What You Need to Know to Get the M.E. Sharpe, 2006.
Best For-- and From-- Your
Weatherly, Leslie A. "Society for Human
Employees. New York, New York:
Resource Management." July 1,
AMACOM, 2006.
2004.
Koss, Sharon K. Solving the Compensation http://www.shrm.org/research/article
Puzzle: Putting Together a Complete s/articles/pages/compensation_20seri
Pay and Performance System. es_20part_20ii__20job_20evaluation
Alexandria, VA: Society for Human .aspx (accessed August 31, 2012).
Resource Management, 2008.
Manas, Todd M., and Michael Dennis

Graham. Creating a Total Rewards
Strategy: A Toolkit for Designing
Business-Based Plans. New York,
New York: AMACOM, 2002.
© 2012 SHRM 103

Module 4: Compensation and Benefits Index
Index
setting ranges ......................................... 66
auditing ........................ See controlling costs
corporate culture ................................... 8, 19
base-pay systems ....................................... 46 entitlement-oriented ................................ 8
performance-based/merit pay system .... 48 performance-oriented .............................. 9
productivity-based system ..................... 49
single- or flat-rate system ...................... 47 demand for work/life balance ... See trends in
time-based step-rate system .................. 47 benefits
benefit needs assessment........................... 74 differential pay .............................. 15, 55–56

activies in......................................... 75–76
gap analysis ........................................... 76 disability income plans ........... See voluntary
purpose of .............................................. 74 benefits
benefits .... 62–63, 72–84, 87–88, 92–95, 97– emergency-shift pay .............. See time-based
101 differential pay
definition ................................................. 6
entitlement-oriented approach . See corporate
bereavement leave .............. See paid time off culture
budgeting...................... See controlling costs external equity........................................... 10
communicating to employees .......... See total external surveys ............... See salary surveys
rewards
flexible benefits ........... See trends in benefits
commuter assignments ........See international
assignments gap analysis ... See benefits needs assessment
compa-ratios ............. 5, See controlling costs geographic differential pay ....................... 56
compensation . 30–31, 35, 40, 42, 44, 46, 49, government mandated benefits ................. 78
54, 56, 60, 61, 64, 66 mandated health benefits ....................... 80
definition ................................................. 5 mandated retirement (or loss of ability to
work) benefits .................................. 79
compensation system .......... 9, 30–31, 35, 66 mandated unemployment insurance
design process ....................................... 30 benefits ............................................. 81
mandated work-related accident benefits
completing paychecks ... See payroll function .......................................................... 81
consideration ...................... See total rewards green-circle rates .............. See pay variations
consumer-directed health care plans ........ See hazard pay .... See time-based differential pay
trends in benefits
health care benefits ....See voluntary benefits
controlling costs ........................................ 66
auditing .................................................. 67 health care cost control See trends in benefits
budgeting ............................................... 67
compa-ratios .......................................... 67 holiday pay ......................... See paid time off
© 2012 SHRM 104

incentive pay ....................................... 57, 59 mandated health benefits......See government

long-term ............................................... 57 mandated benefits
short-term .............................................. 57
mandated retirement benefits ................... See
internal equity ..................................... 10, 18 government mandated benefits
internal surveys ................ See salary surveys mandated unemployment insurance benefits
........... See government mandated benefits
international assignments .......................... 19
mandated work-related accident benefits.See
job analysis.................................... 31, 32, 40 government mandated benefits
job classification .............. See job evaluation market-based evaluation .. See job evaluation
job descriptions ......... See job documentation match competition ............. See pay strategies
job documentation ............. 35, 39–40, 43, 46 maternity/paternity/parental leave ... See paid
job descriptions ..................................... 35 time off
job evaluation ........................................ 40
job specifications ............................. 35, 38 metrics ................................................. 97–99
job evaluation ...................................... 40–43 nonquantitative evaluation methods . See job

job classification .................................... 41 evaluation
job ranking............................................. 40
market-based evaluation ........................ 43 overtime pay. See time-based differential pay
nonquantitative evaluation methods ...... 40
point-factor system ................................ 41 paid time off .................................. 62, 73, 88
quantitative evaluation methods ............ 41 bereavement leave ................................. 90
holiday pay ............................................ 89
job ranking ....................... See job evaluation leave of absence .................................... 90
maternity/paternity/parental leave ......... 90
job specifications ...... See job documentation vacation pay........................................... 89
job-content-based (internal) job evaluation pay adjustments ................................... 52–54

...................................... See job evaluation cost-of-living adjustments (COLAs) ..... 53
general pay increase .............................. 53
Knowledge, skills, abilities (KSAs) .......... 32 lump-sum increases (LSI) ..................... 54
market-based increases .......................... 54
KSAs ...... See knowledge, skills and abilities seniority ................................................. 54
lag competition.................. See pay strategies pay compression............... See pay variations
lead competition ................ See pay strategies pay grade ............................ See pay structure
leave of absence ................. See paid time off pay plans for select employees ................. 59
direct sales personnel ............................ 59
life insurance plans ....See voluntary benefits outside directors .................................... 62
professionals .......................................... 61
long-term assignments ........See international
assignments pay ranges .......................... See pay structure
© 2012 SHRM 105

pay strategies ....................................... 11–12 quantitative evaluation methods ....... See job
lag competition ...................................... 12 evaluation
lead competition .................................... 12
match competition ................................. 12 red-circle rates .................. See pay variations
pay structure ...................... 43, 46–47, 51, 56 retirement plans ..........See voluntary benefits
grouping jobs into pay grades ............... 43
setting pay ranges .................................. 44 salary surveys ............................................ 15
steps to develop ..................................... 44 external surveys ..................................... 17
internal surveys ..................................... 15
pay variations ............................................ 50 internal versus external surveys ............ 15
green-circle rates ................................... 51
red-circle rates ....................................... 51 setting ranges ............... See controlling costs
payroll function ................................... 62–63 shift pay........ See time-based differential pay
completing paychecks ........................... 62
payroll record keeping and retention ..... 63 short-term assignments .......See international
assignments
payroll record keeping and retention .......See
payroll functions single- or flat-rate system.......... See base pay
systems
payroll system hardware See payroll systems
tetaining younger workers......... See trends in
payroll system software .See payroll systems benefits
payroll systems.................................... 64, 66 time-based differential pay ....................... 55

considerations ........................................ 65 emergency-shift pay .............................. 55
payroll system hardware ........................ 65 hazard pay ............................................. 55
payroll system software ......................... 65 on-call or call-back pay ......................... 55
overtime pay .......................................... 56
performance-based/merit pay system ......See premium pay .......................................... 55
base pay systems reporting pay ......................................... 56
shift pay ................................................. 55
performance-oriented approachSee corporate travel pay ............................................... 56
culture
time-based step-rate system ...... See base pay
perquisites ..................................... 60, 62, 96 systems
person-based system ... See base pay systems total rewards .. 4–8, 10, 13, 17–19, 20, 30, 75
communicating to employees ................ 17
point-factor system........... See job evaluation consideration ........................................... 5
corporate culture ...................................... 8
premium pay See time-based differential pay evaluating effectiveness ........................ 19
goals of .................................................... 6
preventive health and wellness programs See mission and strategy ................................ 6
trends in benefits subcomponents of .................................... 4
workforce ................................................ 9
productivity-based system ........ See base pay
system trade agreements and treaties .................... 25
© 2012 SHRM 106

travel pay...... See time-based differential pay vacation pay ....................... See paid time off
trends in benefits ....................................... 99 variable pay ........................................... 8, 55

Consumer-directed health care plans .. 100
Demand for work/life balance ............. 100 voluntary benefits................................ 74, 82
health care cost control .......................... 99 disability income plans .......................... 85
Preventive health and wellness programs health care benefits ................................ 83
........................................................ 100 life insurance plans ................................ 84
Retaining younger workers ................. 101 retirement plans ..................................... 87
trends in beneftis work/life balance ............................... 91, 100

flexible benefits ................................... 101 work/life programs .................... 91, 93, 94
types of benefits .................................. 74, 76 Work/Life Programs ................................. 91
workforce .....................See corporate culture
© 2012 SHRM 107

Module 5: Training and Development ....................................................................................... iii
Acknowledgements ......................................................................................................................v
Module 5 Body of Knowledge ................................................................................................... vi
Purpose Statement .................................................................................................................. vi
Body of Knowledge ................................................................................................................ vi
Section 5.1: Training....................................................................................................................11

Introduction ..................................................................................................................................4
Adult Learning .............................................................................................................................4
Key Principles of Adult Learning ............................................................................................ 5
Motivation ............................................................................................................................. 10
Developing Training ..................................................................................................................14
New Employee Orientation ................................................................................................... 14
Training Analysis, Design and Development Process........................................................... 15
Cultural Learning Perceptions ....................................................................................................39
Language and Interpretation .................................................................................................. 46
Technology Trends .....................................................................................................................46
Learning Portal ...................................................................................................................... 46
Learning Management System .............................................................................................. 47
Webinar ................................................................................................................................. 47
Training and Virtual-World Simulation ................................................................................ 48
Social Networking and Web 2.0 ............................................................................................ 48
Section 5.2: Performance Management .....................................................................................52

Introduction ................................................................................................................................53
Management of Performance in the Organization .....................................................................53
Organizational Values and Goals .......................................................................................... 53
Performance Standards .......................................................................................................... 54
Performance Management Process ........................................................................................ 55
Business Results and Employee Growth ............................................................................... 57
Organizational Support .......................................................................................................... 58
Individual Performance Appraisals ............................................................................................59
Performance Evaluation Process ........................................................................................... 60
Individual Development Plans............................................................................................... 73
Section 5.3: Career Development ...............................................................................................76

Introduction ................................................................................................................................77
Career Management ...................................................................................................................78
Managing Career Development ............................................................................................. 79
Career Development Model................................................................................................... 80
Career Development Programs .............................................................................................. 82
Individual Career Planning.........................................................................................................85
Employee Development Programs ........................................................................................ 85
Unique Employee Needs ....................................................................................................... 89
Challenges in Career Planning and Development ................................................................. 89
Developing Leaders ....................................................................................................................90
Leadership and Management ................................................................................................. 91
Leadership Theories .............................................................................................................. 93
Issues Affecting Leadership .................................................................................................. 98
Succession Planning .............................................................................................................. 98
Bibliography ...............................................................................................................................103
Index ............................................................................................................................................105
Acknowledgements

Vice President and Head HR – Region India, Ericsson India Pvt. Ltd.
New Delhi, India



Ankara, Turkey
Nancy Kaysarly, PHR
Consulting Company
Cairo, Egypt
Module 5: Training and Development Section 5.1: Training
For your convenience, the Body of Knowledge for Module 5: Training and
Development is provided on the following pages.
Purpose Statement
Purpose Statement for Training and Development:
HR professionals in training and development should possess a combination of

behaviors and skills/knowledge that include developing and delivering basic
training programs and collecting information about training programs, such as
training needs, employee participation, and evaluation of programs. They also
include monitoring completion of the performance review process and the
preparation of development plans.
Body of Knowledge
content related to Module 5: Training and Development.
Important behaviors for training and development:
01. Develop basic training programs (for example, safety regulations, emergency preparedness,
presentation skills and time management skills)
02. Train employees for basic programs (for example, safety regulations, emergency
preparedness, presentation skills and time management skills)
03. Collect and analyze evaluations of training programs (for example, review evaluation forms,
contact trainees or supervisors after the training and ask how effective the training was)
04. Coordinate and monitor training activities (for example, cross training, re-training,
scheduling, setting up the classroom and completion of required training)
© 2012 SHRM vi
05. Collect information, analyze needs and make recommendations for training and future
06. Monitor completion of performance reviews and development plans
07. Keep records to document employee development and performance
Important knowledge and skills for training and development:
01. Different training and learning methods (for example, e-learning, blended learning, seminars
and mentoring)
02. How to give feedback on job performance
03. Organizational culture (for example, the organization’s vision, mission, values, history,
processes and guidelines)
10. Performance management methods (for example, setting goals, benchmarking, 360-degree
feedback, performance incentives)
© 2012 SHRM vii

12. How to organize meetings (for example, writing agendas, inviting attendees, scheduling and
setting up rooms)
13. Career paths (for example, concepts such as opportunities for job promotion, how employees
can grow within an organization)
© 2012 SHRM viii

5.1: Training

Knowledge:
Behaviors: 01. Develop basic training programs (for example, safety

regulations, emergency preparedness, presentation skills and
time management skills)
02. Train employees for basic programs (for example, safety

regulations, emergency preparedness, presentation skills and
time management skills)
03. Collect and analyze evaluations of training programs (for

example, review evaluation forms, contact trainees or supervisors
after the training and ask how effective the training was)
04. Coordinate and monitor training activities (for example, cross

training, re-training, scheduling, setting up the classroom and
completion of required training)
05. Collect information, analyze needs and make recommendations

for training and future development programs
Skills & Knowledge: 01. Different training and learning methods (for example, e-learning,
blended learning, seminars and mentoring)
12. How to organize meetings (for example, writing agendas,

inviting attendees, scheduling and setting up rooms)
Section 5.1: Training
Introduction ....................................................................................................................................4
Adult Learning ...............................................................................................................................4

Key Principles of Adult Learning ................................................................................................5
Motivation ..................................................................................................................................10
Developing Training ....................................................................................................................14

New Employee Orientation ........................................................................................................14
Training Analysis, Design and Development Process ...............................................................15
Cultural Learning Perceptions ...................................................................................................39

Language and Interpretation .......................................................................................................46
Technology Trends.......................................................................................................................46
Learning Portal ...........................................................................................................................46
Learning Management System ...................................................................................................47
Webinar ......................................................................................................................................47
Training and Virtual-World Simulation .....................................................................................48
Social Networking and Web 2.0 ................................................................................................48
Introduction
Learning occurs all the time, with or without formal training; however, formal
training speeds up the learning that is important for the organization. Training in
an organization is necessary for the following reasons:
 To teach new employees the skills they need to perform their jobs
 To teach current employees how to use a new program, process or system
 To close the gaps between an employee’s current performance and the
desired performance
 To correct performance issues
An organization may have excellent employees, but knowing what the

organization expects them to do and how they are expected to do it is the key to
their success (Dessler 2008).
This section examines:

 Adult learning principles
 Processes for developing training
 Cultural learning perceptions
 Technology trends
Keep in mind that dealing with different cultures means dealing with various
learning styles, skills, methods, environments and time schedules.
Adult Learning
When designing or selecting training, it is important to consider adult learning
principles and learning styles. They both affect the quality of the learning
experience. Before beginning the design and development of a training program,
adult learning principles must first be addressed.
© 2012 SHRM 4
Key Principles of Adult Learning
Using the basic principles of adult learning is the best place to start when
designing training programs. These principles provide a basis for how adults
learn. HR and training professionals must design their programs with the needs of
adult learners in mind. A checklist summarizing adult learning principles is shown
in Figure 1-1.
Adult Learning Principles Training Applications

 Adults want a focus on real-world  Show how participants can
issues. immediately use the learning back
on the job.
 Adults want the emphasis to be on  Apply training to current and future
how the learning can be applied. needs.
 Adult learners will come with goals  Discover the participants’
and expectations. expectations at the beginning of the
program and address those that will
not be covered.
 Allow debate and challenge of  For some participants, this
ideas, but adults must be motivated interaction enhances the learning.
to keep disagreements unheated.  Create a safe learning environment.
 Adults expect instructors to listen  Promote a learning environment that
to and respect their opinions. is collaborative between the
instructor and the participants.
 Allow participants to receive
feedback from the instructor and
each other.
 Adults will wish to be resources to  Allow for planning between the
you and to each other. instructor and the group.
 Take the knowledge and experience
of participants into account.
Figure 1-1. Checklist of Adult Learning Principles
© 2012 SHRM 5
Trainability
The principles of adult learning show that how people learn is a direct result of
their trainability. Trainability can be defined as follows:
 Willingness to learn and motivation
 Level of ability
 Perceptions of the work environment
A participant must have both the willingness to learn and the ability to achieve the
learning objectives. If either is lacking, then learning will not occur. For example,
if a graphic artist is required to attend a training program on the basics of graphic
design and has actually been very good at graphic design for several years, the
graphic artist’s motivation to attend the program will be low.
In addition, if participants feel there will be no support for their new knowledge
when they return to work, their learning will suffer.
If employees are placed in programs that they are not motivated to attend or are
not prepared to do well in, a lot of time and resources will be wasted. Participants
with a lower level of ability take longer to learn, which can increase the length of
the program and the expense involved with conducting it.
Obstacles to Learning
Every HR and training professional will meet participants who are resistant to
learning. There are many causes for this resistance, so trainers should be aware of
the following obstacles:
 Low tolerance for change. Because today’s environment is constantly
changing, organizations need to constantly adapt to keep up with the
competition. Some people accept change more readily than others. HR
professionals need to let employees know that change makes their jobs
more interesting and challenging, as well as more secure, and prepares
them for a variety of responsibilities that will increase their value as
employees in the organization.
© 2012 SHRM 6
 Lack of trust. There are some employees who do not think training is
worthwhile, or they have had negative experiences in the past. These
employees will not give the training their full attention to make it
worthwhile. One way to overcome this problem is to involve these
individuals in the design of the training. In addition, when employees see
how training fits into the overall plan, they are more likely to support the
training.
 Peer group pressure. Many employees are influenced by their coworkers’
opinions. If employees do not think a training program is valuable, their
opinions may affect others in the department. If HR professionals can find
out why negative feelings exist, they can define the goals of the program
and explain how the training will help them in their jobs.
For more information on key principles of adult learning, visit the following
website: http://www.lsaglobal.com/pdf/w_laws_of_learning.pdf.
Experiential Learning Theory
Experiential learning is the process of making meaning from direct experience.

David A. Kolb helped to promote the idea of experiential learning, drawing
heavily on the work of John Dewey, Kurt Lewin and Jean Piaget. According to
Kolb, there are four stages of learning (shown in Figure 1-2).
© 2012 SHRM 7
Figure 1-2. Experiential Learning Cycle (Kolb and Kolb 2005)
The four stages include Concrete Experience, followed by Reflection on that

experience on a personal basis. Reflection may then be followed by the
application and learning from the experience (Abstract Hypotheses) and hence to
the construction of ways of modifying the next occurrence of the experience
(Active Testing). This stage will in turn lead to the next Concrete Experience.
Learning Styles
According to Kolb’s model, the ideal learning process engages all four of these
modes in response to situational demands. In order for learning to be effective, all
four of these approaches must be incorporated. As individuals attempt to use all
four approaches, however, they tend to develop strengths in one experience-
grasping approach and one experience-transforming approach. The resulting
learning styles are combinations of the individual’s preferred approaches. These
learning styles include the following:
© 2012 SHRM 8
 Convergers are characterized by abstract conceptualization and active

experimentation. They are good at making practical applications of ideas
and using deductive reasoning to solve problems.
 Divergers tend toward concrete experience and reflective observation.
They are imaginative and are good at coming up with ideas and seeing
things from different perspectives.
 Assimilators are characterized by abstract conceptualization and reflective
observation. They are capable of taking a wide range of information and
creating a concise logical summary.
 Accommodators use concrete experience and active experimentation.
They are good at actively engaging with the world and actually doing
things instead of merely reading about and studying them (Kolb and Kolb
2005).
In the mid-1970s Peter Honey and Alan Mumford adapted David Kolb’s model
for use with middle and senior managers in business. Two adaptations were made
to Kolb’s experiential model.
First, the stages in the cycle were renamed to coincide with managerial
experiences such as decision making and problem solving. The Honey and
Mumford stages are listed here:
1. Having an experience
2. Reviewing the experience
3. Concluding from the experience
4. Planning the next steps
Second, the styles were directly aligned to the stages in the cycle and were named
as follows:
1. Activist
2. Reflector
3. Theorist
4. Pragmatist
© 2012 SHRM 9
These preferences are assumed to be acquired and adaptable rather than being
fixed personality characteristics.
Meeting the needs of all learning styles requires the use of various learning
methods. This use will help increase the rate of success for your adult learners.
The Training Analysis, Design and Development Process topic of this section
examines various learning methods.
Motivation
Motivation has a great influence on an individual’s ability to learn. Motivation is

defined as reasons that lead to specific desired behavior such as commitment to a
job or continuing efforts to achieve a goal. It is essential to understand the reasons
behind behaviors when designing a learning environment.
The best way to understand motivation is to look at three principles of human

behavior:
 People have a reason for doing what they do.
 People do things to accomplish something.
 No two people are alike, which means that no two people have exactly the
same characteristics.
Motivational Theories
The principles of human behavior can help HR professionals motivate learners to

engage in the learning process. The major motivational theories described below
look at what events affect behavior and how they affect it. These theories will
help you understand learners’ needs, goals and motives.
Maslow’s Hierarchy of Needs
Maslow’s hierarchy suggests there are five basic human needs, arranged in a
hierarchy:
1. Basic physical needs: The need to meet basic physical needs or drives.
© 2012 SHRM 10
2. Safety and security: The need to feel secure and free from threats.
3. Belonging and love: The need to belong, to be accepted, to give and
receive love.
4. Esteem: The need for respect and esteem in the eyes of oneself and others.
5. Self-actualization: The need to fulfill one’s potential, to be the best one
can be.
“The hierarchic theory is often represented as a pyramid, with the larger, lower
levels representing the lower needs and the upper point representing the need for
self-actualization (Simons, Irwin and Drinnien 1987).” Figure 1-3 shows
Maslow’s needs hierarchy and suggests how to fulfill these needs both on and off
the job.
Figure 1-3. Maslow’s Hierarchy of Needs

Herzberg’s Motivation-Hygiene Theory
Herzberg’s theory of work motivation says that employees have two different
categories of needs that are independent of each other and affect behavior in
different ways:
 Hygiene factors (extrinsic). Hygiene factors are those that make up the
environment in which the employees work. These factors include job
security, pay, working conditions, supervision and relations with
coworkers.
© 2012 SHRM 11
 Motivation factors (intrinsic). Motivation factors are present in the job

itself. They include opportunity for recognition, achievement and personal
growth.
McClelland’s Theory of Needs
McClelland’s theory is based on studies showing that a person’s needs are

influenced by life experiences. Some people have an intense need to achieve,
while others do not. His work identifies people with the following characteristics:
 High need for achievement (nAch):
o Create difficult but potentially achievable goals
o Prefer to work on a problem rather than leave the outcome to chance
o Are more concerned with personal achievement than with the rewards
of success
o Look for situations in which they get feedback on how well they are
doing with regard to their work
 High need for affiliation (nAff):
o Need harmonious relationships with other people
o Need to feel accepted by other people
o Conform to the norms of their workgroup
o Prefer work that provides personal interaction
o Perform well in customer service and client interaction situations
 High need for power (nPow):
o Personal: Want to direct others (often considered undesirable)
o Institutional: Want to organize the efforts of others to further the goals
of the organization
For more information on McClelland’s Theory of Needs, visit the following

website: http://www.netmba.com/mgmt/ob/motivation/mcclelland/.
© 2012 SHRM 12
Theory X and Theory Y
McGregor’s theory is based on two approaches to motivating employees:

 Theory Y managers operate with a participative style. They believe that
employees do not like rigid controls and that they naturally want to
accomplish something.
 Theory X managers operate with an authoritative style. They believe that
employees do not like to work and must be strictly controlled and forced to
work.
The Theory Y manager provides leadership to employees using motivational

techniques that produce greater satisfaction, productivity and interest in learning
than what the Theory X manager will provide.
Organizations need to consider the type of work, the work environment, the work
group size and other factors when adopting either a Theory X or Theory Y
approach.
The following website provides more information on McGregor’s Theory X and

Theory Y: http://www.netmba.com/mgmt/ob/motivation/mcgregor/.
Skinner’s Behavioral Reinforcement Theory
B. F. Skinner’s theory of behavioral reinforcement explains how principles of

behavior can be used to train people or to shape their behavior. People’s behavior
is influenced by consequences; therefore, management may influence employees’
future behavior by the way it reacts to current behavior.
Behavior modification provides employees with immediate knowledge of the

results of their behavior. Desired behavior is recognized and rewarded; undesired
behavior is ignored or punished. Using behavior modification, a facilitator may
apply the following strategies in a learning situation:
 Positive reinforcement. Giving a reward to induce desired behavior or to
encourage the person to repeat the behavior.
© 2012 SHRM 13
 Negative reinforcement. Avoiding an undesirable end result by giving the

person a reward when a desired response is displayed.
 Punishment. Responding negatively to discourage undesirable behavior.
 Extinction. Giving no response. When behavior is not reinforced
(positively, negatively or via punishment), the behavior will eventually
become nonexistent. .
Barriers to Motivation
Most people have barriers against learning and change. As much as they may
want to learn and make changes, they are held back because of certain barriers,
such as the following:
 Lack of confidence in their ability to learn or succeed at the task
 Lack of interest because there is no perceived benefit
 Lack of time or money or presence of scheduling problems
 Lack of cognitive ability needed to pay attention and remember
To see a description of GE’s Training and Development philosophy and

programs, visit the following website:
www.ge.com/citizenship/our-priorities/our-people/training-development.html.
Developing Training
New Employee Orientation
New employee orientation programs ease the transition to a new environment and
maximize the contribution of employees once they start their new assignment. In
the short term, it helps support the day-to-day functioning for new employees. In
the long term, it helps employees interact with other employees in harmony with
the organizational values.
© 2012 SHRM 14
In their book, HR Answer Book: An Indispensable Guide for Managers and

Human Resources Professionals, Shawn A. Smith and Rebecca A. Mazin
identify the following common elements for effective orientation programs:
 An explanation of organizational goals, mission and vision
 Introductions of supervisors, managers, leaders and executives (these
introductions may take the form of a pre-recorded message from
executives)
 A review of the company history, structure, and organization chart to
identify each attendee’s organizational role in the department
 Distribution of the employee handbook, with a review of crucial policies
 An introduction to and overview of any benefits plans
 A tour of the facility, perhaps with product demonstrations, a view of
manufacturing processes, or other organizational highlights
 A review of emergency, safety and security procedures
 A discussion of any outstanding logistical details, such as pay cycles and
deadlines for benefits enrollment (Smith and Mazin 2004)
Over a period of time, the orientation program enables employees to become

committed members of the organizational team. When conducted successfully, it
results in faster and greater productivity as well as engagement.
Module 2: Recruitment and Selection provides more detail on new employee

orientation.
Training Analysis, Design and Development Process
The process for developing training programs is similar to the process for
developing software or a new product or service. The process begins with an
analysis stage and proceeds through design and development. There are many
models for the training development process, but the standard and most frequently
used process is referred to as the ADDIE model.
© 2012 SHRM 15
ADDIE stands for:

 A = Analysis
 D = Design
 D = Development
 I = Implementation
 E = Evaluation
As you can see in Figure 1-4, the ADDIE model is cyclical. The success of each
phase depends on the time, effort and resources spent on the previous phase. For
example, if the analysis is skipped because members of the organization feel they
know what the problem is, the program design might not address the cultural
differences of the audience or contain the content necessary to address the most
important needs. Each phase of the ADDIE model is described in detail below.
Figure 1-4. The ADDIE Model
Needs Analysis
The first phase of the ADDIE process is needs analysis or assessment. A needs
analysis is the process used to identify and document the organization’s
developmental needs. Gaps between actual and desired performance are
identified. When those gaps suggest a lack of employee knowledge or skill,
objectives are created to address training needs.
© 2012 SHRM 16
The analysis phase can be used to identify the following:

 The organization’s goals
 Gaps between current and future performance
 Types of programs needed
 Identification of mandatory training
 Target audience
 Expected challenges and areas of potential learner resistance
 Baseline information to check effectiveness
 Limitations for cost-effective program
 Resource and logistical limitations
Sometimes organizations develop and implement programs without conducting an

analysis. Figure 1-5 summarizes various reasons that organizations choose not to
conduct needs assessments.
Reasons Organizations Do Not Conduct a Needs Analysis

 Lack of support for the needs analysis process
 Time-consuming and expensive
 Not easy to summarize findings into objective data
 Managers may prefer action over research
 Demands from senior managers sometimes take priority
 Lack of knowledge about how to conduct an analysis
Figure 1-5. Reasons Organizations Do Not Conduct a Needs Analysis

Types of Needs Analysis
A complete needs analysis will explore three types of possible development

needs: organizational, task and individual. Figure 1-6 briefly describes what is
measured in each of these three types.
© 2012 SHRM 17
Type Definition Measures
Organizational Identifies the knowledge,  Where is training needed in
skills and abilities the organization?
employees will need in the  What are the conditions
future under which training will be

conducted?
Task Compares job  What needs to be taught?
requirements with  What training is mandatory?
employee knowledge and  What must be done to
skills to identify areas that perform the job effectively?
need improvement
Individual Focuses on individual  Who should be trained?
employees and how they  What kind of training do they
perform their jobs, usually need?
during performance
reviews
Figure 1-6. Three Types of Needs Assessment

Conducting a Needs Analysis
The time spent in conducting a needs analysis differs according to the type
(shown in Figure 1-6) of assessment that is conducted. There are five basic steps
to conduct the analysis, as shown in Figure 1-7.
© 2012 SHRM 18
Figure 1-7. ADDIE Model – Needs Analysis
Step 1: Gather data to identify needs. Selecting a needs analysis strategy that
will produce high-quality information requires effort. A number of different
methods are available for collecting data. Using more than one method helps
validate the data by collecting different types of information through different
methods. For example, questionnaires provide factual information, and follow-up
interviews can explain why people answered questions as they did.
Participants should represent a cross section of the target audience and include
varying experience levels. Otherwise, the sample may not be valid, and training
may be effective only for the small part of the total population questioned.
© 2012 SHRM 19
Step 2: Decide needs that can be met by training. Training is not a solution for
employee relations problems such as poor morale or lack of motivation. Examples
of needs that can be met using training are as follows:
 How to use a new program or system
 Learning about new product information
 Learning a new sales technique
 Implementing a new or modified process
 Skill enhancement needs
Step 3: Propose solutions. After a performance/competency gap is identified and

it is decided that a training program or intervention is a potential solution, all
possible solutions should be identified and examined for their ability to address
the problem.
Step 4: Calculate potential cost of training. In this step, the value and cost of a
training program must be justified in order for it to occur. HR professionals must
identify the cost per trainee against the potential value to the organization for each
of the proposed solutions from Step 3. In calculating the cost of training,
employers also need to consider whether and when they must pay employees for
the training time.
Organizations traditionally think of training as a cost or an investment. If the

training is seen as a program that will support the vision, mission and goals of the
organization, it will have a better chance of being approved. If training programs
can show their worth, they will be viewed as an investment rather than as an
expense.
The cost of individual training programs can be figured using traditional cost
accounting principles. The steps are listed here with a simplified formula shown
in Figure 1-8:
1. Calculate the total cost of the training.
2. Divide the cost of training by the number of trainees.
© 2012 SHRM 20
Figure 1-8. Simplified Formula for Cost of Training
3. Calculate the savings or benefit (often a more difficult activity).

4. Compare the cost per trainee to the expected improvement or savings.
Step 5: Choose and implement the training. Once all costs have been calculated
and compared, it is time to select the most appropriate training program and
continue through the ADDIE model process.
Design
During the design phase of the ADDIE process, training and human resource
personnel make decisions regarding course content and structure, course goals
and objectives, delivery methods, and implementation strategies.
“Before training can be undertaken, a number of critical stages need to be

satisfied. For training and development to be the right answer is rather
dependent on first asking the correct questions. …Although training is
often thought of as a single event, in reality planned training is a
continuous process which begins with identifying the learning that is
required.” (Leigh 2006)
The result of the design phase is a rough outline of what the final program will
look like. All major content components are described, including the order and
method in which they will be presented. Design includes the following tasks:
 Composing goals and objectives
 Defining the target audience
 Deciding how to develop the training program
© 2012 SHRM 21
Composing Goals and Objectives
Effective instructional design is based on a concise statement of the goal of the

program and of the objectives that describe what participants will do and learn.
The goal is a clear statement, usually in one sentence, of the purpose and the
intent of the program. The goal consists of three parts:
 Who is the training for?
 What is the training about?
 Why is the training being conducted?
Objectives describe what participants will be able to do at the end of instruction,

and they provide clear reasons for teaching. Objectives should describe the
intended result of instruction, not the process of instruction itself. Objectives are
based on the goal of the program, and they should do the following:
 Provide a focus for selecting and designing instructional content
 Alert participants as to what they should know by the end of the program
 Assist in ensuring knowledge and skill transfer
 Provide a means of measuring whether participants have gained the
appropriate skills and knowledge
The purpose of objectives is to help participants, facilitators and management

make training programs more effective. The objectives should also support
performance planning initiatives and development of individual competencies.
Well-written objectives use action verbs such as identify, list, describe, define,
operate and compare as opposed to terms such as understand or learn about.
© 2012 SHRM 22
This model outlines a way to compose SMART objectives. It provides an easy

way to remember to include these five elements in each objective:
 Specific objectives outline exactly what the learner hopes to accomplish.
 Measurable objectives can be evaluated to decide whether they have been
accomplished.
 Action-oriented objectives describe the actions the learner will be able to
take.
 Realistic objectives are attainable; they are not so difficult that the learner
cannot achieve them, and they are not so simple that the learner will not be
challenged.
 Timely objectives outline actions the learner can apply immediately.
Defining the Target Audience
When conducting an initial needs analysis, the target audience is identified. When
designing the training, the target audience’s abilities, talents, prior knowledge,
skills, attitudes, motivation, perceptions and resources must be taken into account.
The principles of adult learning and learning styles are also important aspects of
program design.
Deciding How to Develop the Training Program
A key decision that must be made at the beginning of the process is whether to
develop a training program in house or to purchase it off the shelf or customized.
Figure 1-9 lists the advantages and disadvantages of in-house versus off-the-shelf
or customized programs. This information may help HR professionals decide on
the most effective way to develop the training program.
© 2012 SHRM 23
In-House  Knowledge of organization’s  Development time may be

culture is useful. lengthy.
 Learning objectives can be  Training staff, if any, is often
tailored to specific needs. overloaded with administrative
 Management may buy in more duties.
quickly; trust has already been  Expertise is often not on staff.
developed.
Externally Off the Shelf Off the Shelf

Provided:  Training is immediately  Training does not always target
Off the available. specific needs.
Shelf and  Developer’s expertise is  There is usually a need for
Customized usually available to the orientation to assist in
organization to assist in understanding the corporate
tailoring the product to meet culture.
specific needs.  It may not be possible to
 It is often less expensive than customize the product.
developing in-house  It can sometimes be expensive.
programs.
Customized
Customized  It can sometimes be expensive.
 Training is designed to meet  It may require a lot of time to
specific needs of organization. develop.
 Practical applications for the
organization.
 Staff spends fewer hours away
from work.
Figure 1-9. Advantages/Disadvantages of Designing In-House or Externally Provided
© 2012 SHRM 24
When the training is purchased off the shelf, it is important to provide the
instructor with some information on the company culture. This information has
greater value if the course goals are for soft skill improvement. For teamwork and
communication skills type of training programs, the instructor should know where
the audience stands and what the current relationships are. If there is a major gap
between the current state and the requested state, the course content may be
thought of as not applicable, and resistance may occur.
Development
The third phase of the process is development. At this point, a needs analysis and
the design of goals and objectives have been successfully completed. During the
development phase, the training team makes a decision on the most appropriate
method of delivering the training. Then materials are created, purchased or
modified to meet the objectives that were created during the analysis phase.
Training Delivery Methods
Training delivery methods are the approaches for teaching the content. Delivery
methods serve two vital purposes:
 They provide a means for participants to learn the program content.
 They keep participants interested and involved, so the learning is enhanced.
When deciding which methods to use in a training program, you can ask the
following questions:
 What are the learning objectives of the program?
 What are my cost limitations?
 What is the time frame of the program?
 What equipment is available for delivering the program?
 Who is my audience?
Figure 1-10 lists several common training-delivery methods.
© 2012 SHRM 25
Delivery Method Description
Classroom training Classroom training is face-to-face training, usually led by an

instructor or facilitator. The face-to-face classroom structure allows
for the use of several learning methods, such as the following:
 Presentations and lectures
 Case studies
 Demonstrations
 Group discussions
 Simulations
Self-directed study Self-directed study, sometimes combined with other methods,

allows participants to learn at their own pace through a collection of
training materials. Here are examples of training materials:
 Workbooks
 Web-based materials
 Job aids
Figure 1-10. Training Delivery Methods (continued on next page)
© 2012 SHRM 26
E-learning E-learning is the delivery of formal and informal training and

educational materials, processes and programs using electronic
media. E-learning includes the following:
 Web-based learning
 Computer-based training (CBT)
 Virtual classrooms
E-learning can be synchronous or asynchronous.

 Synchronous: Participants interact together in real time—for
example, in a virtual classroom or for an online discussion at
a specific time.
 Asynchronous: Participants access information at different
times and in different places—for example, accessing and
completing a web-based training course.
On-the-job On-the-job training (OJT) is training provided to employees by

training managers and supervisors at the actual worksite. The instructor
uses demonstration and actual performance of job tasks to train
the employees.
Figure 1-10. Training Delivery Methods (continued on next page)
© 2012 SHRM 27
Blended learning Blended learning is an approach that includes a combination of

methods. Based on the needs of the target audience and the
learning objectives, blended learning may be more effective than
a single strategy.
“One of the most important factors in creating blended

learning solutions is to recognize where they fit in the
broader context of organizational learning and
development. …The potential of blended learning is
almost limitless and represents a naturally evolving
process from traditional forms of learning to a
personalized and focused development path” (Thorne and
Mackey 2007).
Combined methods may include any the following:

 Classroom
 E-learning
 Self-paced study
 Job aids
 Coaching
 On-the-job training
Figure 1-10. Training Delivery Methods (concluded)
Once the delivery method is decided, the primary activity is to create (or revise)
course materials that will be used in the training program. Sometimes an existing
course, with minor changes, may be acceptable to meet specific needs. Using
learning content that exists in the organization avoids reinventing the wheel, saves
overall cost and helps with consistency. If using content previously created is not
possible, a new course must be developed.
© 2012 SHRM 28
Presenting Small Scale Training
Many times HR is responsible for presenting training (for example, for new
hires). The following list provides suggestions on how to effectively prepare and
present small scale training:
 Provide content in small training blocks.
 Set a positive, productive tone for the training session.
 Practice active learning principles.
 Consider a variety of learning styles by using different methods of
presenting information.
 Visualize content with charts, pictures and graphs.
 Train people on skills and information that are immediately applicable on
the job.
 Engage trainees in tasks requiring action.
 Address real-life scenarios and barriers that participants believe they will
encounter when they apply the training on the job.
 Provide reference materials and job aids for review after the session.
 Assign or self-select a training partner.
 Collect feedback from the trainees after the training.
Use of Copyrighted Material
When HR and training personnel within an organization are using an existing

training program or developing a new course, keep copyrights in mind. Copyright,
enacted by most governments, gives exclusive rights to the author or creator of an
original work, including the right to copy, distribute and adapt the work.
Copyright does not protect ideas, only their expression. Rights are usually granted
for a specified and limited period of time. During the effective period, copyright
protection allows the creator of the work to control how it is used. It is essential to
remember to reference/cite any content written by another author when
developing training materials.
Copyright legislation differs from country to country. While no single law

universally extends copyright protection worldwide, a number of agreements,
© 2012 SHRM 29
treaties and conventions made between various countries provide for copyright
protection across borders.
Implementation
In the implementation phase, the program is delivered to the target audience. This
is the most visible phase in the ADDIE process. Success will be measured on the
learning that takes place during the delivery of the program. At this point, the
primary responsibility for that success is in the hands of the trainer.
The primary tasks of implementation are listed below:

 Pilot program
 Revising content
 Scheduling the program
 Announcing and executing the program
Pilot Program
A pilot program offers the program in a controlled environment with a small

sample of the target audience, including managers. The purpose of the pilot
program is to identify potential problems and assess initial effectiveness before
the program is offered to the entire target audience.
A pilot program gives HR and training personnel a chance to do the following:

 Evaluate the sequencing of the content and the level of detail
 Measure the effectiveness of the learning activities
 Assess the time allotted
 Examine the physical space in which the program will occur
 Establish support for the program from key stakeholders
The pilot program provides useful feedback and identifies potential content or
deployment problems before program launch. Feedback from the participants of
the pilot audience will be used in the next step, revising content.
© 2012 SHRM 30
Revising Content
Based on the results of the pilot program and on feedback from the pilot audience,
training personnel will revise the content and make last adjustments before final
delivery of the program. Revisions made in this phase may involve the
elimination of ineffective learning activities or changes required to give more or
less time to specific segments of the program.
Scheduling the Training Program
Organizations can be unpredictable environments, and attempting to coordinate

all the details of a training program can be challenging. The main goal is to ensure
that the participants attend training at a time when their attention will be focused
on the learning task.
Scheduling the program involves paying attention to the following aspects of the
training:
 Target audience
 Intended learning outcomes
 Deadlines for completion
 Participation at a distance
 Selecting a qualified trainer
 Logistics
Selecting a Trainer
Effective trainers have characteristics that make them suitable for leading a
training session. Trainers have different styles and different ways of leading their
sessions. The choice of trainer will be influenced by the training method and the
target audience.
Trainers can be selected on the basis of a variety of factors. Selection criteria

should be decided early in the process and be based on the cultural and learning
needs of the audience. Important factors to consider during the selection process
are listed here:
 Training expertise
© 2012 SHRM 31
 Subject matter expertise

 Consulting skills
 Credibility with the local audience
 Qualifications, education and certification
 Cultural familiarity
 Communication and language expertise
Finding all the required characteristics in one individual may be difficult. Pairing
trainers is an effective strategy that may allow for larger groups and at the same
time reduce the stress on the primary trainer.
Logistics
Before a training program is delivered, HR and training personnel must consider

the following logistics:
 Location. The location of the program can affect its effectiveness. The
choice of a training facility will depend on the target audience, the methods
and media to be used, special needs such as computer terminals or
simulation aids, the length of the program and whether the budget allows
for travel costs.
o On-site facility options may include classrooms, labs, learning centers
or conference rooms. On-site facilities are convenient and economical,
but the space must be conducive to effective training and free of job
site-related interruptions.
o Off-site training is often selected for multiday programs. A new
environment can help make participants more involved, and there will
be fewer job-related interruptions. Trainer and participant travel must
be arranged and budgeted. More administration is required to handle
the logistics.
© 2012 SHRM 32
 Equipment and environmental concerns. A number of environmental

factors must be considered to maximize learning and retention. Breaks
should also be planned to keep participants refreshed and alert. Here are
some considerations for comfortable classrooms:
o Good seating
o Acoustics
o Vision sight line
o Room temperature
o Ventilation
o Lighting
o Media equipment
 Space requirements and facility availability. Adequate space must be
available; participants must not feel crowded or uncomfortable. Different
types of training have different space requirements. For example,
interactive training such as role playing and team exercises requires more
space than presentations.
 Seating arrangements. Seating arrangements will depend on the type of
training and the size of the group. General types of seating include
classroom/theater, banquet, circle and rectangle. Figure 1-11 outlines the
advantages and disadvantages of various types of seating arrangements.
Announcing and Implementing the Program
Promoting and advertising a new training program is an effective way to increase

interest in the program. Giving participants the opportunity to preview the topics
and agenda will help increase interest, motivation, attendance and learning. This
activity may be even more important in situations where cultural or other types of
participant resistance may be expected.
© 2012 SHRM 33
Arrangement Advantages Disadvantages

 Suited for large groups  Low interaction
Classroom/theater
 Great for presentations  May be hard to hear or see
trainer
 Suited for large groups  Some participants seated with

Banquet
 Can easily be broken into back to the trainer
small groups for interaction
 Good for small interactive  Not suitable for large groups

U shape
groups

Circle
groups
 Suited for large groups  Easy for participants to feel

Chevron
 Great setup for PC-based disconnected if sitting at PC
training terminals

Rectangle
groups
Figure 1-11. Advantages and Disadvantages of Types of Seating Arrangements
© 2012 SHRM 34
Evaluation
Evaluation, the final phase of the ADDIE model, involves measuring the
effectiveness of the training. Evaluators will compare the program results to the
established objectives to decide whether the original needs were met. When
evaluating training results, evaluators will look at the following indicators:
 Participant reactions
 Retention of new information
 Application of new procedures
 Changes in behavior on the job
 Changes in organizational performance
Evaluation is such a meaningful part of the process, yet organizations often

overlook this step. Training program evaluations have the following goals:
 Determine whether a program achieved its objectives
 Identify best practices as well as the strengths and weaknesses of individual
programs
 Help the organization evaluate the cost-benefit ratio of training
 Identify which participants benefited the most and least from the training
effort
 Gather data to help design, create and market future programs.
 Decide whether the program content and learning methods were
appropriate
 Create a database of information to assist in future strategic decision
making
Transfer of Learning
When the effectiveness of the training program is measured during the evaluation
phase, HR professionals can validate their contribution to organizational goals
and objectives. Training program evaluation is also essential to the evaluation of
the transfer of learning.
© 2012 SHRM 35
Transfer of learning is the effective and continuing on-the-job application of

the knowledge and skills gained through the training experience. Learning is an
important result for human resource development programs, but the organization
needs the participant to apply the new skills and knowledge at the worksite.
Ideally, the participant will also share the new skills and knowledge with
coworkers.
Levels of Training Evaluation
There are several models for evaluating training programs. Let’s focus on the
well-known model developed by Donald L. Kirkpatrick (Kirkpatrick 1998), who
identified four levels of training evaluation. Kirkpatrick’s model focuses on
evaluating effectiveness after the program has been conducted. Figure 1-12
summarizes each of the four evaluation levels.
Level What Is Evaluated? Data-Gathering Methods
1. Reaction How participants felt about the  Checklists

program  Questionnaires (see Figure 1-13
for a sample Evaluation Form)
 Interviews
2. Learning How participants increased or  Post-measure tests

changed their knowledge, skills  Pre-/post-measure tests
and attitudes  Pre-/post-measure tests with
control group
Figure 1-12. Levels of Evaluation (continued to next page)
© 2012 SHRM 36
Level What Is Evaluated? Data-Gathering Methods
3. Behavior How participants changed their  Performance tests

behavior on the job  Critical incidents
 360-degree feedback
 Simulations
 Observations
4. Results How the program affected the  Progress toward organizational

organizational goals objectives
 Performance appraisals
 Cost-benefit analysis
 Return-on-investment analysis
Figure 1-12. Levels of Evaluation (Kirkpatrick 1998)
© 2012 SHRM 37
Figure 1-13. Training Evaluation Form
© 2012 SHRM 38
Cost-Benefit Analysis
During the fourth level of training evaluation, an organization may decide to use
the data collected at each level to complete a cost-benefit analysis, also known as
a return-on-investment (ROI) analysis, to evaluate results of the training.
Cost-benefit analysis is a financial review of various options to decide if the

benefits are greater than the costs. The organization calculates the return on
investment produced by the training. This level of analysis is usually conducted
only for 10% to 20% of all training programs because the collection and analysis
of data is usually time consuming and expensive.
Computing the return on investment of training involves the following tasks:

1. Isolating the effects of the training
2. Converting these effects (benefits) into monetary values
3. Calculating the costs of the training
4. Comparing the value of the effects to the costs of the training
Additional Training and Development Models
In addition to the ADDIE model, the following models may be used in many
organizations:
 Dick and Carey Design Model
 ARCS Model of Motivational Design (Keller)
 Bloom
 Gagne
Cultural Learning Perceptions

In global organizations, there are cultural considerations. To be effective within a
global organization, HR professionals must understand the effect of cultural
forces on the implementation of global strategies and on the development of local
HR practices. Being global requires that the organization be able to see the view
from inside another person’s culture and to use that awareness to create solutions.
© 2012 SHRM 39
There may be various types of cultures in a global organization. The differences

between these cultures can create conflict that will interfere with the
organization’s ability to apply its global strategic plan. HR professionals in a
global organization must therefore understand culture as being very complex with
many exceptions because there will always be individuals or groups that resist
expectations.
Geert Hofstede’s dimensions of culture originate initially from his research during
the 1970s into cultural differences at IBM subsidiaries in sixty-four countries.
They have since been researched in additional countries and in other occupations
and industries. Not all dimensions may be of the same importance in all cultures.
Hofstede’s five dimensions are listed in Figure 1-14. The table shows the effect of
Hofstede’s dimensions on the practice of global HR. The examples show the
effect of culture on the manager and on the person being managed.
© 2012 SHRM 40
Dimension Definition Impact on Manager Impact on Managed Examples
Power Extent to which less powerful Two headquarters’ managers A British training High:
distance members of organizations and demonstrate the effects of their specialist goes to  Malaysia
institutions accept unequal cultures. A Saudi manager: work for a Malaysian  Latin America
distribution of power  Remains aloof from domestic company.  Middle East
subordinates He cannot understand  China
 Tends to retain significant why his attempts to  Indonesia
projects rather than delegate offer suggestions are  India
them coldly received and
 Expects subordinates to step why he is receiving Low:
forward quickly to assume poor performance  Austria

blame when things go reviews.  Israel
wrong  Scandinavian
countries
A Danish colleague:  UK
 Enjoys sharing assignments
 US
and credit with subordinates
 Always assumes blame for
any problems
Figure 1-14. Hofstede’s Five Dimensions (continued on next page)
© 2012 SHRM 41
Individualism Degree to which individuals A US manager in a Latin The performance of a Individual:

/collectivism are integrated into groups American country plans to South Korean sales  US
 Individualism: ties are promote an individual based on force improves  Australia
loose; self-reliance valued her work on an important dramatically when  UK
 Collectivism: strong, project. incentives are  Netherlands
cohesive groups in which changed from  Italy
Other managers explain that
protection is exchanged for individual rewards to  Belgium
they use a broader range of
loyalty to group team bonuses.
factors in this decision, Collective:
including evidence of loyalty.  Latin America
 Pakistan
 Indonesia
 South Korea
 China
© 2012 SHRM 42
Uncertainty Level of tolerance of A compensation specialist Before beginning a High:

avoidance uncertainty and ambiguity; advises a Singapore company to project, a French  Greece
extent to which individuals adopt a different compensation employee of a global  Portugal
feel comfortable in plan for its sales force in Japan. nonprofit asks many  Latin America
unstructured, new or Unlike the home sales force, questions to ensure  Belgium
unexpected situations which has low base pay and perfect understanding  Japan
high commissions, the Japanese of the manager’s  France
sales representatives will expectations.
receive high base pay and lower Low:
commissions.  Singapore
 Denmark
 Sweden
 Hong Kong
 UK
© 2012 SHRM 43
Masculine/ Masculine traits: A Swedish company promotes An HR department in Masculine:

feminine  Ambitious, tendency to employee development Austria has been  Japan
polarize, preference for practices such as coaching and instructed by its  Hungary
speed and size, oriented mentoring that emphasize Danish headquarters  Austria
toward work and providing empathy and support. to start a new  Venezuela
achievement work/life balance  Italy
A manager in Japan has trouble
program. They try, but
Feminine traits: performing this part of his job. Feminine:
the program is not
 Nurturing, empathetic, well accepted or  Scandinavian
oriented toward quality of implemented locally. countries
life, striving for consensus,  Netherlands
favoring small size and  Chile
slow pace  Thailand
Note: In masculine societies,

gender roles are distinct, while
in feminine societies roles may
overlap.
© 2012 SHRM 44
Long-term/ Long-term orientation: A Chinese manager faced with A Nigerian Long-term:

short-term  Values thrift and promoting one of two Nigerian supervisor can’t  China
perseverance supervisors chooses the one understand why he  Japan
 Orders relationships by with the most tenure and best has been passed over  South Korea
status and values work attendance. for promotion in his  Brazil
observation of this Chinese-owned  India
company. He is well
Short-term orientation: placed in his Short-term:
 Values social traditions community and has  West Africa
and fulfilling social given his manager  Philippines
obligations; values being appropriate gifts.  Norway
respected  UK
 Expects reciprocation of  US
greetings, favors, gifts
Figure 1-14. Hofstede’s Five Dimensions (concluded) (Hofstede, Hofstede and Minkov 2010)
© 2012 SHRM 45
Language and Interpretation
Organizations must recognize the value of translation services for their website,
Intranet, employee communications and training programs. Specific country
legislation often specifies that all employee-related material be translated into the
local language.
Translating training programs into the local language will reduce participant
resistance and gain support. Although training and human resources professionals
may not be legally required to translate the program, the cost of taking this extra
step to ensure better participant understanding and retention is likely to be small
compared to the total investment the organization made in purchasing or
designing and developing the program.
Technology Trends
The use of technology in training has changed the methods that training
professionals use to design, deliver and administer training. Several trends related
to training program development and implementation are described here.
Learning Portal
A learning portal is an Internet or Intranet site that provides access to an

organization’s database of learning and training resources. Learning portals are
often used in conjunction with learning management systems (see below) as a
way for training professionals to manage data, provide access to internal training
programs and distribute training-related information and resources to employees.
© 2012 SHRM 46
Learning Management System
Many organizations have an electronic system called a learning management

system (LMS) or learning content management system (LCMS). The LMS and
LCMS are used for the following purposes:
 Hold course content information and web-based and computer-based
training courses
 Track and manage employee course registrations, course completion, and
scoring
 Manage career development and other employee development activities
 Repurpose content to allow multiple uses for the same content
Webinar
The Internet has made web conferencing a popular communication tool. Web
conferencing is used to conduct live meetings or to give presentations over the
Internet. In a web conference, participants sit at their own computer and are
connected to other participants via the Internet. This can be either a downloaded
application on each of the participants’ computers or a web-based application in
which the attendees enter a URL (website address) to access the conference.
A webinar is a specific type of web conference. The presenter may speak over a
standard telephone line, pointing out information being presented on the screen,
and the participants can respond over their own telephones. Webinars typically
occur in real time and are characterized by the presence of an actual, live
instructor.
The presence of an instructor and the opportunity for audience interaction has
made webinars a popular delivery choice for training and human resource
professionals. This solution provides many of the benefits of live classroom
training without many of the costs of bringing the instructor to the audience or
the audience to the instructor.
© 2012 SHRM 47
Training and Virtual-World Simulation
Computer and electronic simulations are also growing in popularity (for training,
networking, entertainment and other uses). Training-related simulations place the
learner in a virtual work environment (for example, managing an office or using a
new computer system) and present a series of real-life challenges. The learner has
the opportunity to practice new skills and make decisions in a low-risk
environment.
Here are some benefits that simulations provide:

 Appeal to young learners with sophisticated technological expectations
 Actively engage individuals in the learning process
 Provide opportunities for individuals to learn complex or dangerous skills
in a realistic but low-risk environment
Social Networking and Web 2.0
Another technological trend is the growing use of social networking sites and
social networking software to expand professional relationships. Social
networking sites are rapidly becoming valuable resources that trainers and global
HR professionals can use for multiple professional purposes, including the
following:
 Identifying and contacting potential suppliers
 Controlling learning
 Developing mentoring and professional support relationships
 Identifying and selecting potential new employees
© 2012 SHRM 48
“The advent of social platforms has challenged traditional work

constructs and can be harnessed to drive performance improvement and
enterprise excellence. With Web 2.0 technologies, it is important to
take advantage of individuals’ natural inclinations to share and learn
from one another. Instinctively, employees prefer to turn to peers and
colleagues (both virtually and face-to-face) for advice with work-
related queries and problem solving. Web 2.0 is not just about new
technology changing the way people communicate; it’s a fundamental
shift in the way people perceive learning.” (Haar, Michael 2010)
© 2012 SHRM 49
© 2012 SHRM 50
Training and Development Section 5.1: Training
5.2: Performance
Management

Knowledge:
Behaviors: 06. Monitor completion of performance reviews and development

plans
07. Keep records to document employee development and

performance
Skills & Knowledge: 02. How to give feedback on job performance
10. Performance management methods (for example, setting goals,

benchmarking, 360-degree feedback, performance incentives)
Section 5.2: Performance Management
Introduction ..................................................................................................................................53
Management of Performance in the Organization ...................................................................53

Organizational Values and Goals ...............................................................................................53
Performance Standards ...............................................................................................................54
Performance Management Process ............................................................................................55
Business Results and Employee Growth ....................................................................................57
Organizational Support ..............................................................................................................58
Individual Performance Appraisals ...........................................................................................59

Performance Evaluation Process ................................................................................................60
Individual Development Plans ...................................................................................................73
Module 5: Training and Development Section 5.2: Performance Management
Introduction
Performance management is the process of maintaining or improving employee
job performance. Organizations perform this process with the following methods:
 Using performance assessment tools
 Coaching and counseling
 Providing continuous feedback
This section focuses on two processes:

 Continuous management of performance within the organization
 Individual performance appraisals
Management of Performance in the Organization

The performance management process in an organization allows employees to
talk about their performance and development goals with their managers and
create a plan for achieving those goals. Development plans and employee actions
then contribute to organizational goals and the professional growth of the
employee.
Organizational Values and Goals
Values and goals reflect organizational structure and philosophy. Executives must
come to an agreement as to the values and goals of their organization. Once they
communicate those values and goals, employees have a sense of purpose and
know where to place priorities.
Values
Management throughout the organization must display behavior that reflects the
organizational values. Values are usually expressed in the organization’s mission
statement.
© 2012 SHRM 53
Values are principles, standards, or qualities considered worthwhile or desirable.

It is important that employees always conduct business with the organization’s
values in mind. The following values are highly regarded:
 Putting the customer first
 Treating employees as well as you treat your customers
 Conducting business fairly and honestly
 Showing creativity and innovation
 Using teamwork to achieve goals
Goals
Management must also be specific about the organization’s goals. Goals are the
standards that reflect the success of the organization. By comparing
organizational goals with levels of achievement, management can get a good idea
of whether the organization is progressing at the rate desired.
Performance Standards
Performance standards are the behaviors and results that management expects of
the employees.
© 2012 SHRM 54
The HR professional needs to consider the following when creating and

communicating performance standards:
 Behaviors. What does the organization want employees to do? These
behaviors have to be translated into performance standards.
 Results. What does the organization want employees to produce?
When performance standards are communicated throughout the organization, they

must be clearly defined, so all employees understand the expected behavior.
Employees must be told what management expects for performance. This
instruction can be delivered in a number of ways:
 Orientation
 Employee handbooks
 Company or department meetings
 Newsletters
Performance Management Process
In most organizations, the performance management process includes three

phases. Each phase has a unique set of activities, considerations, and outcomes.
These phases are shown in Figure 2-1.
Figure 2-1. Phases of the Performance Management Process
© 2012 SHRM 55
Design
During the design phase of the performance management process, the following
important decisions are made:
 Who will evaluate?
 When will evaluations be completed?
 What criteria will be used?
Questions that must be answered during this phase include the following:
 Purpose
o Why do we have a performance management process?
o What do we expect from it?
 Performance criteria
o What standards will we use to evaluate employees?
 Instrumentation
o How will the evaluations be done?
o What tools will be used?
 Evaluators
o Who will complete the evaluations?
 Integration/local differentiation
o How will the process and performance standards differ in different
countries and locations?
Implementation
The implementation phase involves the following activities:

 Communicating expectations regarding job performance and how
performance will be evaluated
 Providing training in the performance management process
 Communicating the performance management process to both employees
and managers
 Providing performance incentives to motivate employees
© 2012 SHRM 56
Keeping in close contact with managers and employees during implementation is

critical. Respond quickly to questions and feedback from managers and
employees by providing solutions to recurring problems and questions if possible.
Evaluation
The evaluation phase involves identifying and evaluating the results of the
performance management process. The following outcomes are evaluated:
 Overall fit with the organization’s culture and objectives
 Fairness to employees
 Effectiveness and extent to which the process supports the organization’s
recognition and reward system
Business Results and Employee Growth
Business results. Organizations will assess the effectiveness of the performance

management system by asking certain questions:
 Are the employees’ behaviors and results what management expected?
 Is the organization progressing as planned?
The business results impact the goals and strategy of the organization. As
business goals and strategies change, the performance management system will
need to be adjusted. Business results provide value to stakeholders and may affect
the following:
 Financial earnings
 Business processes
 Quality outcomes
 Customer products or services
Employee growth. The employee brings certain knowledge and skills to the job
but will also grow professionally through experience, performance improvement
plans and organizational support. The performance management system must
include fair and meaningful recognition and rewards. Job satisfaction surveys
© 2012 SHRM 57
have shown that employees do value financial rewards, but the following
performance incentives keep employees in an organization:
 Appreciation/recognition
 Career growth opportunities
 Good manager relationships
Organizational Support
There are several ways an organization can support and enhance its performance
management system:
 Show support of performance management at the executive level.
 Encourage and promote employee engagement activities.
 Train managers in performance management.
 Hold managers accountable for their contributions to the performance
management system.
 Encourage continual feedback from managers, peers and other team
members.
 Make it clear to everyone in the organization that performance
management is more than a yearly appraisal.
 Provide necessary resources and tools.
 Communicate consistent management practices.
© 2012 SHRM 58
Individual Performance Appraisals
The typical method of measuring employees’ adherence to performance

standards and of providing feedback is the performance appraisal. Performance
appraisal is the process that measures the degree to which an employee
accomplishes work requirements.
According to Gary Dessler in his book Human Resource Management, there are
four reasons to appraise employees’ performance:
 From a practical point of view, most employers still base pay and
promotional decisions on the employee’s appraisal.
 Appraisals play an integral role in the employer’s performance
management process. It does little good to translate the employer’s
strategic goals into specific employees’ goals, if you don’t periodically
review performance.
 The appraisal lets the boss and employee establish a plan for correcting any
deficiencies and to reinforce the things the employee does right.
 Appraisals should serve a useful career planning purpose. They provide an
opportunity to review the employee’s career plans in light of his or her
exhibited strengths and weaknesses. (Dessler 2008)
© 2012 SHRM 59
What is the difference between performance management and

performance appraisal?
Performance management is the process of maintaining or improving

employee job performance. By communicating and defining performance
standards throughout the organization, development plans and employee actions
can contribute to organizational goals and the professional growth of the
employee.
Performance appraisal is the process that measures whether an employee

accomplishes work requirements.
Performance Evaluation Process
Remember, the organization’s goals are the standards that reflect the success of
the organization. Managers need to help convert the organization’s business goals,
objectives, and performance standards to individual employee goals. This
conversion is accomplished when the employee and the performance manager talk
about performance goals and create a plan for achieving those goals. This process
is called performance evaluation. Figure 2-2 shows the phases of the performance
evaluation process.
© 2012 SHRM 60
Figure 2-2. Performance Evaluation Process
The performance evaluation process is an ongoing communication process

between a manager and an employee. Together they do the following:
 Set goals.
 Meet regularly to talk about progress on projects, plans and goals.
 Update goals and plans throughout the year as needed.
 Document the results and meet to review them annually.
Setting Goals
The manager and employee decide on performance goals by considering the

following:
 Strategic planning process
 Organization’s goals and objectives
 Employee’s job description
 Past performance
 Employee’s desired accomplishments and development objectives/goals
Performance goals communicate the expected level of performance as well as

how performance will be measured in each area of the job description. Some
goals relate to the duties of the job and are easy to observe and measure. Other
goals relate to the employee’s behavior.
Observation
The coaching or mentoring that takes place between the employee and a
colleague/mentor must be consistent to ensure continual feedback to support the
employee’s performance success.
Self-Assessment and Manager Assessment
This phase includes assessment by both the employee and the manager.
Manager assessment. During the period of time between performance reviews,

the manager does the following:
© 2012 SHRM 61
 Reviews information related to employee performance

 Completes the performance evaluation form
 Obtains feedback from an HR manager and peers or subordinates
The assessment must be objective and focus on actual performance. It must also
refer back to any documentation of performance issues.
Errors and bias are described in detail in the Errors in Performance Appraisals
subsection of this module.
Two tools managers commonly use in this effort are performance logs and critical
incidents.
 Performance logs are informal notes listing examples of employee
accomplishments and/or deficiencies.
 A critical incidents tool is a record of positive and negative employee
actions.
The manager’s ability to talk objectively about issues is critical to the success of
the performance evaluation. The more a manager prepares for the evaluation
meeting, the more successful the results.
Employee’s self-assessment. Some organizations ask employees to complete a

self-assessment prior to the evaluation meeting. Employees use a performance
evaluation form to complete their self-assessment. This process advances the
dialogue between the manager and the employee.
Self-assessment and manager assessment combined. If the employee uses a

self-assessment, the evaluation is usually structured around these action areas:
 The employee provides the self-assessment.
 The manager adds comments about the employee’s assessment. Positive
comments are provided first, followed by suggestions for improvement.
 The manager and the employee talk about problems and agree on steps.
Keep in mind that performance feedback should occur frequently.
© 2012 SHRM 62
Evaluation
After the review, the manager and the employee will agree on new goals in a
separate session. The focus is now on setting goals that will affect the employee’s
future performance. It is important that the employee sees a direct connection
between his or her personal objectives and those of the organization.
Involving employees in setting their own goals is key. Being a part of the process
leads to greater acceptance. The manager can use the following approach for a
successful evaluation process:
 For long-term objectives, provide short-term milestones that help measure
progress along the way.
 Give employees the support they will need to reach their objectives (for
example, tools, training, coaching or special projects).
 Ensure that objectives do not conflict with each other.
 Follow up to see how the employee is proceeding and provide timely
feedback.
 Encourage review of successes and obstacles.
Evaluation Methods
An organization’s decisions about evaluating performance are usually influenced

by the industry in which it competes as well as by its culture. A common
approach to performance appraisal involves the employee and the direct
supervisor. Methods available for conducting an appraisal are described briefly
below.
360-Degree Feedback
In some company cultures and environments, peers may be asked to provide input
on an individual’s performance. This input may be supplied using a 360-degree
feedback approach to performance appraisal.
The 360-degree feedback approach evaluates performance using self, peers, direct
reports, management and sometimes even customers and suppliers. It benefits the
© 2012 SHRM 63
employee by providing feedback from a variety of sources and basically serves as

a development tool for altering behavior.
Benchmarking
Jon A. Christopherson, David R. Carino and Wayne E. Ferson define

benchmarking as, “…the process of finding a quantifiable standard against which
to measure one’s performance. Benchmarking seeks to determine whether the
performance of our investment is than what we could have obtained using a
simpler or less costly investment plan.” (Christopherson, Carino and Ferson 2009)
Category Rating Methods
The category rating methods are the easiest to administer and understand. The
manager marks an employee’s level of performance on a designated form that is
divided into performance categories. The following are three category rating
method examples:
 Graphic scale: This method uses a five-point scale, with ratings ranging
from Exceptional to Needs Improvement.
 Checklist: Check marks are placed next to characteristics describing
employee performance.
 Force choice: Check marks are placed by two of four statements from a
combination of positive and negative statements describing what the
employee is most like and least like.
When dealing with appraisals, always consider cultural differences—grading and

scale systems are very different. People understand the rating scales from their
own experiences. Here are examples of differing rating scales:
 Eastern Europe—Russia: 1 (very bad) – 5 (very good)
 Western Europe—Germany: 1 (very good) – 5 (very bad)
 US: A (very good) – F (failed)
 Canada: Level 4 (very good) – Level 1 (passed)
© 2012 SHRM 64
At OBI, a 5-scale program has been implemented for appraisals. For more
information, visit the following website: http://www.shrmindia.org/team-effort-
helps-make-worldwide-performance-evaluations-consistent.
Comparative Methods
Comparative methods of evaluation require the manager to compare employees’

performance. The following are three comparative method examples:
 Ranking of all employees: Employees are ranked from highest to lowest
in performance.
 Paired comparison: Each employee is compared with every other
employee, one at a time.
 Forced distribution: Employee ratings are distributed on a bell curve.
Narrative Methods
Sometimes managers are required to develop narrative evaluations:

 Essay: The manager writes an essay describing the employee’s
performance.
 Critical incidents: The manager keeps a written record of positive and
negative employee actions.
Special Methods
Special appraisal methods overcome some of the difficulties associated with

appraisals:
 Management by objectives (MBO). Management by objectives (MBO) is
frequently used by managers to appraise employees. Employees help
identify objectives for themselves, defining what they intend to achieve
within a specified time period. The objectives are based on overall goals
and objectives for the organization. After the employee identifies goals and
objectives, a dialogue between the employee and the manager must take
place to ensure they both agree with the goals and objectives. The goals
and objectives must still reflect the goals of the organization.
© 2012 SHRM 65
 Behaviorally anchored rating scale (BARS). The behaviorally anchored

rating scale (BARS) method enhances the category rating. The manager
describes the employee’s behavior associated with each level of
performance. BARS works best in situations where many employees are
performing the same tasks. This method requires a lot of time and energy
to develop and maintain. In addition, different BARS must be developed to
measure employee performance for different jobs.
 Competency models. A competency model identifies the competencies
needed to perform a specific role in a job, organization or profession.
Simply put, a competency model helps define what people need to know
and to do to be successful. For several decades, business and industry have
used competency models to select and develop their employees and for
workforce planning purposes (American Society for Training and
Development 2010).
© 2012 SHRM 66
Here is an example of a typical competency model that includes behavioral

anchors as a three-rating scale:
Competency: Deadline Management
Description of three rating options:
 Exceeds expectations: Frequently provides the required performance earlier
than the schedule deadlines require. Constantly monitors critical stages in
order to ensure that projects are executed in compliance with the time
schedule.
 Meets expectations: Always completes tasks in compliance with schedules
or deadlines.
 Occasionally meets expectations: Does not achieve any on-time service
provision. Must often be reminded of compliance with deadline
specifications.
Behavioral examples for “meets expectations”:

 Fulfills tasks by the planned deadlines
 Keeps promises
 Assumes responsibility
 Initiates measures in order to ensure that schedules are adhered to.
Balanced Scorecard
The balanced scorecard is a tool used to evaluate organizational strategies. This

tool must accommodate the goals of various strategies. The balanced scorecard
approach provides a concise picture of an organization’s performance. Four key
areas are assessed in a balanced scorecard:
 Finance
 Customers
 Internal business processes
 Learning and growth
© 2012 SHRM 67
Programs should be piloted before they are formally carried out. Ideally,
scorecard use should start at the top of the organization, so people have direction
and understanding about the total organizational mission and goals.
The balanced scorecard is described in detail in Module 1: HR Administration,

Section 1.2 Gathering, Measuring and Reporting HR Data.
Additional information about the organizational use of the balanced scorecard

can be found at the website of the Balanced Scorecard Institute,
http://www.balancedscorecard.org.
Errors in Performance Appraisals
No appraisal rating method is entirely foolproof. Figure 2-3 lists some common
errors a manager may see when conducting an appraisal of employees and
assigning a rating. Performance logs may help reduce these biases.
© 2012 SHRM 68
Error Description
Halo/horn effect A halo effect may occur when an employee is extremely

competent in one area and is rated high in all categories. On the
other hand, the horn effect may occur when one weakness results
in an overall low rating.
Recency A recency error occurs when a manager gives more weight to

recent performance and ignores the employee’s earlier
performance during the appraisal period. This situation may
happen for the following reasons:
 The manager is unable to remember the employee’s
performance from eight or twelve months ago.
 Many employees may improve their performance just before
their performance review occurs.
Primacy effect A primacy effect is the tendency to pay more attention at first and
then lose attention. A manager may give more weight to the
employee’s earlier performance and ignore recent performance.
Bias When a manager’s values, beliefs or prejudices have an influence

on ratings, the error is due to bias. National origin, age, religion,
gender, appearance or other non-job-related factors may influence
the manager to alter appraisal information. HR should offer
training materials or training for managers regarding biases.
Strictness The employees of a strict manager may be performing better than

employees in other departments, but their ratings may be lower.
This error occurs when these managers believe the standards are
too low and higher the standards make these managers more
meaningful in their eyes.
Figure 2-3. Common Errors in Performance Appraisals (continued to next page)
© 2012 SHRM 69
Error Description
Leniency A leniency error is the result of managers who don’t want to give
low scores, so they give all employees high scores. If an employee
is discharged after receiving such an evaluation, the appraisal may
contradict the reason for the discharge; therefore, this type of
evaluation can cause discontent, and it may be the cause of
litigation. In addition, employees who have not received clear,
honest feedback have limited opportunity for improvement and
future success. That’s why this error does not really help the
organization or the employee who is rated.
Central tendency Central tendency errors occur when a manager rates all
employees within the same range, regardless of their differences in
actual performance.
Contrast A contrast error occurs when an employee’s rating is based on

how his or her performance compares to another employee’s
performance instead of on objective performance standards.
Although it is legitimate for an employer to rank employees and
compare them, their performance must be judged at first against
objective standards that are appropriate for them.
Figure 2-3. Common Errors in Performance Appraisals (concluded)
Appraisal Meeting
During the performance appraisal, input from both the employee and manager is
necessary for an effective appraisal. Employees need to have a clear
understanding of how they are doing in the eyes of their manager and the
organization. The appraisal meeting gives the manager an opportunity to talk
about the employee’s performance, the rationale behind strengths and weaknesses
and suggestions for future development.
© 2012 SHRM 70
Guidelines for Giving Feedback
The feedback guidelines in Figure 2-4 are helpful for the manager when giving
performance feedback.
Feedback Guidelines
Do’s Don’ts
 Do choose a time and place that allows for  Don’t focus on a specific event.
privacy and lack of interruptions. (Instead, review the entire
 Do give employees a chance to comment evaluation period.)
on their own performance (both strengths  Don’t focus only on the negative.
and weaknesses).  Don’t focus on personality issues
 Do focus first on strengths and then talk or traits that are not related to job
about areas for improvement. performance.
 Do be specific, not general. (Support  Don’t do all the talking.
feedback with factual information.)
 Do focus on job behaviors, not the person.
Figure 2-4. Feedback Guidelines

Action Planning Steps
After the review of the employee’s performance, the manager and the employee
work together to create a performance improvement plan that will help the
employee meet organizational, departmental and individual goals.
At this point in the appraisal meeting, the manager and the employee must do the
following:
 Come to an agreement on the appraisal ratings.
 Set objectives that the employee is to achieve before the next appraisal
period.
 Create a plan for how the employee will meet the objectives.
 Talk about how the manager will follow up with the employee to see that
the objectives are being met.
© 2012 SHRM 71
In addition to looking at past performance against agreed-upon objectives, the

performance appraisal is the time for the manager and the employee to talk about
the following employee needs, so they can plan for long-term development:
 Training
 Other developmental needs
 Employee strengths
 Interests/ambitions
Documentation
In some countries, good documentation can make the difference between winning
or losing a lawsuit. More importantly, good documentation plays an important
role in the overall fairness of the evaluation system. Up-to-date performance
information helps the manager explain the comments in the performance
appraisal.
Documentation of employee performance can show the reasoning that led to

positive or negative actions. Two common documentation practices include the
following:
 A performance diary is a record of incidents or tasks performed by the
employee. The manager usually keeps the diary.
 Performance records are notes that contain unit measures, quantity and
quality measures and accounting and cost measures, as they relate to the
employee.
All performance documentation must be specific, objective and accurate.

Documentation is not only valuable in protecting an organization from a lawsuit
but also can be used for the following purposes:
 Improve employee performance
 Communicate with employees
 Form the basis of training and career development activities
 Reward and recognize good performance
© 2012 SHRM 72
The following guidelines will assist managers in documentation efforts:

 Document as an event happens.
 Keep performance notes on all employees.
 Keep observations job related and be objective.
 Support your observations with facts.
 Focus on the deficiencies, not the perceived underlying cause.
 Avoid emotion; write with respect, regardless of the employee’s
performance.
 Avoid conclusions; provide facts for others to use in reaching logical
conclusions.
 Keep in mind that others may read your comments.
Individual Development Plans
An individual development plan (IDP) is a natural product of the performance

evaluation process. IDPs are a valuable performance enhancement and career
development tool. Managers who promote the use of IDPs send a clear message to
their employees that each person’s professional development is a priority.
An IDP focuses on the following:

 The employee’s skills and talents for future jobs
 New skills that will help the employee perform better on the job
It requires employees to answer the following questions:

 What direction is my organization going in the future?
 What will the organization need from its employees?
 What positions am I interested in?
 What are my goals for the next three years?
 What strengths can I build on?
 What major weakness could prevent me from reaching my goals?
© 2012 SHRM 73
Employees who are involved in a career development process are more likely to
stay with the organization. Working together, a manager and an employee can
plan ahead to meet the goals of both the employee and the organization. It is very
important that these goals are regularly monitored and that the organization
supports the employee to enable him or her to achieve these development plans.
You will read more information about individual development and career
planning in Section 5.3: Career Development.
© 2012 SHRM 74
5.3: Career Development

Knowledge:
Behaviors: 05. Collect information, analyze needs and make recommendations

for training and future development programs
07. Keep records to document employee development and

performance
Skills & Knowledge: 03. Organizational culture (for example, the organization’s vision,
mission, values, history, processes and guidelines)
13. Career paths (for example, concepts such as opportunities for job
promotion, how employees can grow within an organization)
Section 5.3: Career Development
Introduction ..................................................................................................................................77
Career Management ....................................................................................................................78

Managing Career Development .................................................................................................79
Career Development Model .......................................................................................................80
Career Development Programs ..................................................................................................82
Individual Career Planning ........................................................................................................85

Employee Development Programs .............................................................................................85
Unique Employee Needs ............................................................................................................89
Challenges in Career Planning and Development ......................................................................89
Developing Leaders ......................................................................................................................90

Leadership and Management .....................................................................................................91
Leadership Theories ...................................................................................................................93
Issues Affecting Leadership .......................................................................................................98
Succession Planning ...................................................................................................................98
Module 5: Training and Development Section 5.3: Career Development
Introduction
Career development looks at how employees and organizations work together to
manage the employee’s career objectives. Career development consists of two
processes—career management and career planning.
 Career management focuses on the goals of the organization. It involves
preparing, carrying out and monitoring employees’ career paths.
Employees are involved in career management activities, but the
organization provides development programs and opportunities that
support its interests, such as staffing and succession planning.
 Career planning focuses on the needs of the individual employee. It
involves the activities that employees perform to figure out the best course
of action for their career. Management and HR professionals often help
employees as they assess their skills and abilities to create a career plan.
Figure 3-1 compares the focus of career management to the focus of career
planning.

 Career management practices
 Individual career planning
 Methods for developing leaders
© 2012 SHRM 77
Career Management: Career Planning:

Organizational Focus Individual Focus
 Identify future staffing needs.  Identify personal interests and
 Decide training and development abilities.
gaps around organizational needs.  Set personal career goals.
 Create professional development  Assess career path options.
programs and strategies.  Design a career plan.
 Match organizational needs with  Select professional development
individual abilities. opportunities.
 Provide access to ongoing learning  Reassess progress of career on a
opportunities to support future career regular basis; adjust career goals as
growth. needed. (Employees are responsible
for their own careers.)
Figure 3-1. Career Management versus Career Planning
Career Management
A good career management program should incorporate and align both the goals
of the business and those of the employees. If an organization ignores the personal
goals of its employees, the organization may face issues such as the ones listed
here:
 Morale problems
 Inability to match new organizational requirements with the best-qualified
candidates
 Loss of outstanding employees
The organization must balance the employees’ needs with the organizational
direction and objectives.
In addition, employees need to understand the goals of the organization to ensure

that they remain a necessary part of the organization. Training and professional
development are critical to the success of the organization and its employees.
© 2012 SHRM 78
Allowing employees to grow with the organization will benefit the organization
and the employees.
Managing Career Development
Within an organization four key players, listed below, are involved in the career
development process.
Individual Employees
Employees have the primary responsibility for their own career. In the past,
employees felt that the organization would lead them through their career;
however, the changes in the social contract between employers and employees
have made it necessary for everyone to accept responsibility. Individual
employees need to be proactive in planning their own careers but recognize that
their organization can still support them.
Managers
Managers should serve as the support link between the individual employee and
the organization. There are four roles managers can perform to assist their
employees in developing their careers:
 The coach listens, clarifies and defines employee career concerns.
 The appraiser gives feedback and explains performance standards and job
responsibilities.
 The adviser helps set goals, makes recommendations and gives advice.
 The referral agent talks to employees about action plans and links them to
available organizational resources.
HR Professionals
To help employees achieve their career goals, HR professionals design career

paths, enlargement programs and enrichment programs. Designing a career path
involves several key steps:
 Complete a job analysis to determine the performance requirements of a
position and how they link to the organizational goals.
© 2012 SHRM 79
 Develop a natural progression of jobs that employees can follow that

require more knowledge, skills and abilities.
 Communicate potential career paths to employees through brochures,
booklets, career development workshops, meetings and other methods.
 Obtain information from employees and their managers to be entered into a
skill inventory database.
 Decide training and development needs of employees.
Organizational Leaders
The organization’s leaders need to understand the importance of supporting

organizational career development and career management. This support
promotes a focus on development and creates a more flexible workforce that can
adapt to the changing times. There are several ways that top leaders can be
involved:
 Link career development to the organization’s mission and vision.
 Clearly communicate business goals.
 Reward managers who help employees with career planning.
 Take part in career development kickoff meetings.
 Require annual review of management planning versus actual actions
taken.
Career Development Model
A career development model usually includes the following stages:

 Occupational preparation
 Organizational entry
 Early career establishment and achievement
 Mid-career
 Late career
By understanding the focus of each stage, employees can better manage their
careers as they evolve. Organizations will also be able to develop programs to
© 2012 SHRM 80
manage career transitions and to create career management systems that will meet
the needs of both the employee and the organization.
The typical stages of career development and the major tasks associated with each
stage are summarized in Figure 3-2.
Stages Major Tasks
1: Occupational preparation  Develop occupational self-image.

 Investigate alternative occupations.
 Develop initial occupational choice.
 Pursue necessary education.
2: Organizational entry  Obtain job offers from desired organizations.

 Select appropriate offer.
3: Early career establishment  Learn job.

and achievement  Learn organizational rules.
 Fit into chosen occupation and organization.
 Increase abilities.
 Pursue career dream.
4: Mid-career  Evaluate early career plans.

 Reaffirm or modify career dream.
 Make choices appropriate to middle adult years.
 Remain productive in work.
Figure 3-2. A Career Development Model (continued to next page)
© 2012 SHRM 81
Stages Major Tasks
5: Late career  Remain productive in work.

 Maintain self-esteem.
 Prepare for retirement.
 Contribute to career development of others at
earlier stages.
Figure 3-2. A Career Development Model (concluded)
Career Development Programs
Organizations can choose from a wide range of possible career development tools
and activities. Organizations with good programs have a variety of these
activities. Employee self-assessment tools and other professional development
tools are described below.
Employee Self-Assessment
Self-assessment activities usually focus on a process for employees to identify

their career goals and preferences. A self-assessment is a good first step in the
career development process, but it should not be used on its own. Self-
assessments should answer the following questions about a person’s career:
 Where am I today?
 Where do I want to be?
 What gaps do I need to fill to get there?
Types of self-assessment tools include:

 Self-study workbooks with exercises that help individuals discover their
career values, abilities and preferences
 Web-based career planning tools, including assessments, interactive
exercises and Internet resource searching capabilities
 Career planning workshops that offer support and feedback from others
© 2012 SHRM 82
Professional Development Tools
The following professional development tools will help organizations and

employees develop the skills they require to be successful:
 The International Coach Federation (ICF) defines coaching as partnering
with clients in a thought-provoking and creative process that inspires them
to maximize their personal and professional potential (International Coach
Federation 2010). Coaching involves discussions between the employee
and an experienced individual. This individual can be an HR professional,
a supervisor or a hired consultant. Types of individual coaching activities
o Internal coaching
o External coaching
o Executive coaching
 Mentoring is a relationship between two individuals, usually a senior
colleague and a junior colleague, but usually not a supervisor. The junior
colleague receives career support and learns about the organization. The
mentor gets the chance to serve as a role model and share his or her
knowledge. The following features are included in an effective mentoring
program:
o Matching of mentor and employee based on skills/development needs
o Formal goals outlined and tracked
o Minimum time commitments
o Both parties being accountable
o Links to business strategy and goals
 Job rotation, also known as cross-training, provides employees with the
opportunity to learn diverse skills. Employees learn new job skills by
moving from job to job, usually in a lateral direction.
 Job enlargement expands the job. It adds more tasks and duties to the job,
usually at the same level of complexity.
 Job enrichment adds depth to the job. The employee has more control and
responsibility and uses good judgment as to how the job is performed.
© 2012 SHRM 83
 Employees take on increased job responsibilities, some of which are

usually at a higher level, such as supervisory.
 Employees are often given developmental assignments that allow them to
develop new skills, knowledge and abilities necessary to compete for
higher-level positions. These assignments may be in the following areas:
o Specialty areas
o Related positions
o Different organizational levels
o Different geographical sites
 Replacement planning looks for available qualified backup for crucial
management positions. These candidates are ready to assume a position
without any additional training.
 Succession planning is an ongoing process of identifying and developing
leadership that will help achieve future strategic goals. This activity
decides which employees may benefit from different organizational
experiences and identifies the training that will help them advance in the
organization. Succession planning, as compared to replacement planning, is
more concerned with long-range needs and the development of qualified
employees to satisfy those needs.
 Assessment centers consist of a standardized evaluation of behavior based
on many different activities. Job simulations are used to evaluate
candidates on behaviors related to the most critical competencies of the
job. Assessment centers may play a role in recruiting. Also referred to as
Development Centers, they are used to identify employees with potential
and to decide on their training needs.
More information on assessment centers can be found in Assessment and

Development Centres, by Iain Ballantyne and Nigel Povah.
You can find more information on career management in Career Paths: Charting
Courses to Success for Organizations and Their Employees, by Gary W. Carter,
Kevin W. Cook and David W. Dorsey.
© 2012 SHRM 84
Individual Career Planning

Individual career planning for the employee not only involves employee
development programs but also takes into consideration unique employee needs
and the challenges organizations face in career planning and development.
Employee Development Programs
Employee development programs prepare employees for future positions by

providing them with opportunities to learn new ideas and skills. Types of
employee development programs include the following.
Tuition Reimbursement Programs
Sometimes organizations offer tuition reimbursement programs to support

employees’ education and development. Most companies require that the program
attended by the employee be directly related to his or her job responsibilities.
Committee/Team Participation
If employees are involved on committees and diverse work teams, they are
exposed to group decision making, collaborative processes and other areas of the
organization. These assignments may result in the following advantages:
 Provide challenging activities
 Enrich employee knowledge
 Develop leadership capabilities
 Offer recognition and rewards
Apprenticeship
Apprenticeship usually relates to technical skills training. Employers design,

organize and manage apprenticeship programs under a set of apprenticeship
standards that include the following:
 On-the-job training outline
 Classroom instruction curriculum
 Apprenticeship operating procedures
© 2012 SHRM 85
Internal Mobility
Internal mobility in career development involves a number of activities. These

mobility options are strengthened when partnered with job enrichment and job
enlargement programs.
The Career Development Programs topic in this section describes job

enrichment and job enlargement programs.
Here are some examples of internal mobility activities:

 Promotions. A promotion is a change or increase in level. Management
and HR are responsible for developing a natural progression of jobs
whenever possible. This development will result in the following:
o Provides employees with a career path for future growth
o Enhances employee morale and motivation
o Provides the organization with candidates whose strengths and
weaknesses are known and who should already have an understanding
of the business operation
 Demotions. Sometimes employees may have advanced beyond their skills
and capabilities. If this situation occurs, they may have the opportunity to
move back or laterally to positions that are more suited to their talents and
capabilities. Demotions as a practice could vary across countries, based on
cultures. In some cultures, demotions would be very difficult. Demotions
are usually the result of the following cases:
o Staff reductions, consolidations and reorganizations
o An attempt to move an underqualified employee to a more suitable
position
o An employee’s request
 Relocations. Moving employees to another geographic location,
domestically or internationally, can be expensive and disruptive for the
company as well as for the employee; however, relocation helps the
organization as it increases the pool of employees with a global mindset.
There has been a decrease in employee willingness to accept relocations
© 2012 SHRM 86
because of issues related to work, dual-career families and the value of

family life. Here are some factors to be considered when managing such
moves:
o How will the organization benefit?
o What will be the effect on employee morale and productivity?
o What are the costs, including moving costs and possible adjustments in
compensation?
o Are there employment opportunities for the spouse?
o Is there an orientation program to adjust employees and their families
to the new location?
 Transfers. Another way to match employees’ abilities and the
organization’s staffing needs is to shift employees to other positions.
Transfers are usually considered a lateral move with no salary adjustment.
Employees sometimes seek transfers for the following reasons:
o Personal enrichment
o More interesting job
o Better hours
o Job location
o Greater possibility for advancement (Dessler 2008)
Dual-Ladder Programs
A dual-ladder career program offers two separate career paths within an

organization, one for managers and one for technical workers. The two paths offer
equal pay scales at each level.
Technical workers such as engineers, programmers and scientists often feel the
need to move into management to progress their career and take home a larger
paycheck. As a result, many skilled technical workers end up in management
positions that are administrative in nature, and their technical knowledge and
expertise are no longer used. The idea behind the dual-ladder program is to
provide an alternative method of career progression for these employees.
Figure 3-3 is a good example of a dual-ladder career path.
© 2012 SHRM 87
Figure 3-3. Dual-Ladder Career Path
Fast-Track/High-Potential (HiPo) Programs
The fast-track program searches for high-potential employees who have shown
the personal motivation and drive to excel now and in the future. The fast-track
program is expected to increase retention. It is also a good tool for succession
planning to ensure that qualified employees are available across the organization
for new business and for replacements after promotions and retirements.
After an organization identifies potential future leaders, it can use fast-track

programs to promote their development. The results of development centers and
other methods can be used to tailor development plans for each employee. The
organization must be careful that any fast-track program does not discriminate.
Everyone must have an opportunity to be considered for the program.
More information on HiPo programs can be found in the article Best and Brightest
by Dave Zielinski at the following website:
http://www.personneldecisions.com/uploadedFiles/Articles/ARTICLE_BestandBrig
htest.pdf.
© 2012 SHRM 88
Unique Employee Needs
Employee development programs must consider the unique needs of the

employees. HR professionals have the responsibility to the organization to ensure
that any special needs of employees can be met in order to help them accomplish
their goals. These needs may include any of the following:
 Employee flexible work arrangements. These may include flextime, job
sharing, telecommuting and other options.
 Alternative staffing. Nontraditional workers may include temporary,
contract, on-call and other types.
 Workplace diversity. This may include race, age, ethnicity, gender,
religion and more. Be aware of laws, regulations and practices on diversity,
which vary from country to country as well as locality to locality.
Challenges in Career Planning and Development
Even though an organization has created programs and processes for development
and retention of employees, there are always exceptions and challenges.
Plateaued Careers
One of the more challenging issues for HR professionals is dealing with

employees whose careers are not progressing in a positive direction. A challenge
for HR professionals is to maintain the commitment and productivity of long-term
employees who can no longer be promoted. HR professionals must look for ways
to achieve the following for these employees:
 Maintain and expand skills
 Recapture enthusiasm
 Maintain motivation
 Use the talents of an aging, experienced workforce
Early Retirement
Early retirement programs are often provided as an alternative to layoffs.

Organizations may offer incentives for employees to retire voluntarily if they
© 2012 SHRM 89
meet length-of-service or age requirements. Incentives generally include

additional retirement pay and other benefits.
Employers need to be careful that they do not state or even suggest that an older
employee is required to retire. The early retirement must be voluntary.
Transition Planning
Many employees who wish to retire are still interested in an opportunity to

continue to contribute to their former employer or community. Many
organizations are creating formal mentoring programs and modified work
arrangements (including part-time work and sabbaticals). This arrangement will
support their employees’ wishes to continue to contribute and benefit the
organization by keeping that knowledge in the organization.
Developing Leaders
Figure 3-4. Barry Posner Comment on Developing Leaders (Posner 2010)
HR professionals spend a good amount of time on leadership development

because organizations must recognize effective leadership characteristics,
behaviors and competencies. To drive their business success, organizations need
to do the following:
 Develop those leadership behaviors through coaching and developmental
activities
 Reward and advance employees who show those behaviors
© 2012 SHRM 90
In the leadership role, HR professionals have two responsibilities:

 Serve as leaders themselves, so they can help bring about the change
necessary to keep the organization competitive and successful
 Identify and develop leaders in the organization
Leadership and Management
Leadership is the ability of an individual to influence a group or another

individual toward the achievement of goals and results.
Management has the responsibility of coping with day-to-day operations. Good

management brings order and consistency to an organization by establishing
structures and systems to get results.
Leadership and management differ in terms of their primary functions.

 Leadership:
o Produces useful change.
o By itself never keeps an operation on time and on budget.
 Management
o By itself never creates significant, useful change.
o Creates logical results that keep something working efficiently.
Where Do Leaders Come From?
Despite the lack of much evidence, most researchers agree that leaders are both
born and made. For example, genetics and early family experiences play a
significant role in developing the following:
 Personality and character that motivate an individual to lead
 Intellectual and interpersonal skills necessary to lead
The majority of researchers today believe that the following sources may also
play a role in the development of leaders:
 Work experiences
 Hardship
 Opportunity
© 2012 SHRM 91
 Education
 Role models
 Mentors
Preparing Potential Leaders
To expand upon sources that may play a role in developing leaders, the following
are important development opportunities in the workplace that will help prepare
potential leaders:
 Challenging assignments early in a career
 Visible leadership role models
 Assignments that broaden knowledge and experience
 Mentoring or coaching from senior executives
 Attendance at meetings outside a person’s core responsibility
 Special projects
 Formal training programs
Certain types of work experiences enhance the development of leaders. A

potential leader may learn the following from challenging work assignments:
 Self-confidence and a sense of independence
 Toughness and persistence
 Knowledge of the business
 Skill in managing relationships
 Leadership and collaboration
Leadership development is a lifelong process. The leaders of today must nurture

the development of tomorrow’s leaders.
More information on leadership development can be found in Leadership

Development: Optimizing Human Capital for Business Success, by Nancy R.
Lockwood, 2006 SHRM Research Quarterly, Society for Human Research
Management, available at http://www.shrm.org/Research/Articles/.
© 2012 SHRM 92
Leadership Theories
According to Stephen R. Covey, leadership theories can be grouped into five

broad categories:
 Trait
 Behavioral
 Participative/power-influence
 Situational/contingency
 Integrative
Over the past 100 years the general trend in leadership theories has followed the
ongoing debate between what has more of an influence—nature or nurture. Early
leadership theories tended to emphasize nature (that is, the innate attributes a
person was born possessing). Over time the influence of circumstance and
experience that is nurture has proven to be increasingly influential in the
development of a leader purporting that leaders are made. The more contemporary
integrative approach to leadership theories suggest that once certain minimum
personal attributes and behaviors are established, the influences of circumstance
and experience end up having a much greater impact on the realization of the
leader’s potential. Because any engagement of specific leadership behaviors will
vary significantly depending on the actual application (such as political,
organizational, military, intellectual and family), the most successful leadership
theories today tend to be more context specific and less subject to broad
generalizations (Covey 2004).
Trait Theories
Early approaches to leadership studies concentrated on the qualities of leaders. At

that time the studies assumed that leaders were born and not made. The emphasis
was on personal characteristics such as physical and mental abilities and
personality characteristics.
© 2012 SHRM 93
Research has never identified one set of traits to identify leaders; however, five
personal characteristics seem to be related to effective leadership:
 Intelligence
 Dominance
 Self-confidence
 High levels of energy and activity
 Task-relevant knowledge
Behavioral Theories
Trait theories were popular until the 1940s. From the late 1940s through the
mid-1960s, the emphasis changed to the idea that how a person behaves shows
that person’s leadership effectiveness.
This research looked at the impact that leadership behavior of different leaders
had on the performance and satisfaction of followers. From these behavioral
studies, two leadership styles were revealed. One focuses on the employee, and
the other focuses on the job:
 Consideration, also known as employee-centered behavior, refers to
leadership behavior aimed at meeting the social and emotional needs of
individuals and group members (for example, helping individuals and
group members, explaining decisions and looking out for their best
interests).
 Initiating structure, also known as job-oriented behavior, refers to
leadership behavior aimed at careful supervision of employee work
methods and performance levels (for example, getting workers to follow
rules, clarifying roles and setting goals).
Research on these behaviors tried to predict the style that would produce the most
effective leaders. A combination of both styles seemed to be the most favorable,
but there were enough exceptions to suggest that other factors needed to be
considered.
© 2012 SHRM 94
Power-Influence/Participative Theories
This group of leadership theories tends to focus on the relationship between

formal and informal authority and the degree to which a leader chooses to engage
others by utilizing one or the other form of authority. The strength of these
theories relates to the emphasis put on engaging the group; however, the
weakness surrounds the assertion that it is the leader alone who holds the key to
engagement and that people require a certain type of leader in order to become
engaged.
Situational/Contingency Theories
No one leadership style is optimal in each and every situation. Situational and
contingency theories suggest that a successful application of leadership depends
on thoughtful consideration of the leader’s own style coupled with a specific
analysis of the circumstance and composition of the affected group.
Situational Leadership Theory
Situational leadership theories stress that leadership styles vary according to the
situation or the employees involved. A well-known situational leadership theory
is Hersey-Blanchard’s theory. This theory suggests that leadership style should be
matched to the maturity level of the employees regarding each task.
Situational leadership theory has two key aspects: task behavior and relationship
behavior.
 Task behavior is the extent to which leaders are likely to organize and
define the roles and activities of members of the group.
 Relationship behavior is the extent to which leaders are likely to maintain
personal relationships with members of the group.
Maturity is defined in relation to a specific task and has two parts:

 Psychological maturity combines self-confidence, ability and readiness to
accept responsibility.
 Job maturity combines related skills and technical knowledge.
© 2012 SHRM 95
As the employee’s maturity increases, leadership should become more

relationship motivated than task motivated. Leadership consists of four leadership
styles based on the employee’s maturity:
 Telling employees what to do
 Selling ideas to employees
 Participating with employees
 Delegating to employees
Figure 3-5 illustrates the situational leadership model.
Figure 3-5. Situational Leadership Model

Contingency Theories
Several contingency theories were developed in the 1960s and 1970s. The most
popular and well known is the contingency model of leadership effectiveness
developed by Fred Fiedler (Fiedler 1967). This theory states that group
performance depends on the interaction between leadership style and the
situation.
© 2012 SHRM 96
Fiedler proposed there are three factors that determine the favorableness of the
leadership environment:
 How much confidence, trust and respect do followers have in their leaders?
 Are the followers’ tasks defined (that is, structured or unstructured, clear or
unclear)?
 How much power and influence does a leader have over subordinates?
Fiedler argues that certain leadership styles are more effective for certain
situations. However, rather than suggesting that leaders be trained to change their
preferred styles, he suggests that it is better to alter the situation by making
changes to one or more of the three factors listed above.
Integrative Theories
Integrative theories tend to combine or contrast the transactional elements

associated with management against the inspirational aspects associated with
leadership. This group of theories gathers together the more contemporary and
often populous work of management and leadership gurus. Integrative theories
tend to polarize between those that support systematic, deliberate and consistent
management techniques as being the required foundation for successful
leadership, in contrast with those that support a visionary if not spiritual
leadership style that inspires people to achieve results beyond their own
predetermined expectations. A common theme among these theories is the
understanding that management and leadership are two very different behaviors;
nevertheless, each behavior depends on the other in order to be optimally
effective.
© 2012 SHRM 97
Issues Affecting Leadership
Regardless of which leadership theory an organization accepts as its model, HR is

responsible for creating a culture in which leaders can succeed. Leadership style
may also be affected by the following:
 Gender differences. Individuals learn through family, places of worship,
the education system and the media to act according to their gender.
Because these behaviors are often instilled over a lifetime, they may also
affect leadership style. Although HR professionals must be aware of gender
differences, it is important not to generalize based on gender.
 Generational characteristics. Leaders must recognize that generational
differences exist and use general guidelines for planning and
communication in the organization. HR professionals must be aware of
generational differences, but they should not reach wide-ranging
conclusions based on them.
 Cross-cultural differences. Culture can also affect a person’s leadership
style. Different cultures will vary quite a bit in how they operate. Again,
HR must be aware of cultural differences without generalizing based on
culture.
 Emotional intelligence (EI). Emotional intelligence describes an
individual’s ability to be understanding of the emotions of others and to
manage his or her own emotions. The level of emotional intelligence varies
among leaders and can affect their ability to direct others and build
cooperative teams.
Succession Planning
An organization’s strategic goals can be more easily achieved if there is an

effective program for leadership succession. As introduced earlier in the Career
Development Programs topic of this section, succession planning is a talent
management strategy to help identify and promote the development of high-
potential employees.
© 2012 SHRM 98
A succession planning program decides which employees may benefit from

different organizational experiences and identifies the training they will need to
advance in the organization. Succession planning must apply to employees at all
levels of the organization, not only to senior management.
Succession planning targets long-range needs and focuses on the development of

certain qualified employees to satisfy those needs. Effective succession planning
plays an active role in encouraging employee engagement, reducing turnover and
aiding retention.
Replacement planning, also introduced in the Career Development Programs

topic of this section, concentrates on immediate needs and searches for available
qualified backups for employees in key positions.
Figure 3-6 compares succession planning and replacement planning.
© 2012 SHRM 99
Variable Succession Planning Replacement Planning
Time frame 12–36 months 0–12 months
Readiness Candidate with the best Best candidate available

development potential
Commitment Only possibilities until vacancies Selected preferred replacement

level occur candidate
Planning focus A pool of talented candidates Vertical lines of succession within

with capabilities for several units or functions
assignments
Planning Specific plans and goals set for Usually an informal status report on
development the individual strengths and weaknesses
Flexibility Flexible plans intended to Limited by plan structure; however,

promote development and has a great deal of flexibility
thinking about alternatives
Plan basis The result of input and discussion Each manager’s best judgment based
among multiple managers on observation and experience
Evaluation Multiple evaluations by different Observation of performance on the

managers on different job over time; demonstrated
assignments; testing and competence; progress through the
developing early in career unit
Figure 3-6. Succession versus Replacement Planning
© 2012 SHRM 100

You have completed Module 5: Training and Development. Next, if you feel
terminology.
© 2012 SHRM 101

© 2012 SHRM 102

Module 5: Training and Development Bibliography
Haar, Michael. "How Can Web 2.0 Help

Bibliography Train Your Employees?" Mind
Resources Institute of Learning and
American Society for Training and
Development. "ASTD Competency Innovation 2, no. 2 (2010): 17.
Models." 2010.
http://www.astd.org/content/research Hofstede, Geert, Gert Jan Hofstede, and
/competency/competencyStudy Michael Minkov. Cultures and
(accessed August 31, 2012). Organizations: Software of the Mind.
New York, New York: McGraw
Ballantyne, Iain, and Nigel Povah. Hill, 2010.
Assessment and Development
Centres. Aldershot, United International Coach Federation. "Advancing
Kingdom: Gower Publishing, 2004. the Art, Science and Practice of
Professional Coaching." 2010.
Carter, Gary W., Kevin W. Cook, and David http://www.coachfederation.org/
W. Dorsey. Career Paths: Charting (accessed August 31, 2012).
Courses to Success for
Organizations and Their Employees. Kirkpatrick, Donald. Evaluating Training
Est Sussex, United Kingdom: Wiley- Programs: The Four Levels. San
Blackwell, 2009. Francisco, California: Berrett-
Koehler Publishers, 1998.
Christopherson, Jon A., David R. Carino,
and Wayne E. Ferson. Portfolio Kolb, Alice Y., and David A. Kolb.
Performance Measurement and "Learning Styles and Learning
Benchmarking. New York, New Spaces: Enhancing Experiential
York: McGraw-Hill, 2009. Learning in Higher Education."
Academy of Management Learning
Covey, Stephen R. The 8th Habit: From & Education 4, no. 2 (2005): 193-
Effectiveness to Greatness, Har/DVD 212.
ed. New York, New York: Free
Press, 2004. Kotter, John P. A Force for Change: How
Leadership Differs from
Dessler, Gary. Human Resource Management. New York, New York:
Management. 11th Edition. Upper The Free Press, A Division of Simon
Saddle River, New Jersey: Pearson & Schuster, 1990.
Prentice Hall, 2008.
Leigh, David. Group Trainer's Handbook:
Fiedler, F.E. "Leader Attitudes and Group Designing and Delivering Training
Effectiveness." Urbana, Illinios: for Groups. London, United
University of Illinois Press, 1967. Kingdom: Kogan Page, 2006.
Gorman, Tom. Motivation: Spark Initiative. Posner, Barry. "Leadership Is in the

Inspire Action. Achieve Your Goal. Moment." March 2010.
Avon, Massachusetts: F+W http://www.leadershipchallenge.com/
Publications, 2007. WileyCDA/Section/id-420509.html
© 2012 SHRM 103

Module 5: Training and Development Bibliography
Simons, Janet, Donald Irwin, and Beverly Thorne, Kaye, and David. Mackey.
Drinnien. Psychology—The Search Everything You Ever Needed to
for Understanding. New York, New Know About Training, 4th ed.
York: West Publishing Company, London, United Kingdom: Kogan
1987. Page, 2007.
Smith, Shawn A., and Rebecca A. Mazin.

HR Answer Book: An Indispensable
Guide for Managers and Human
Resources Professionals. New York,
New York: AMACOM, 2004.
© 2012 SHRM 104

Module 5: Training and Development Index
Index
360-degree feedback .............. See evaluation challenges in career planning and
methods, See evaluation methods development .................................... 89–90
early retirement ..................................... 90
ADDIE model ............. 15, 16, 19, 21, 35, 39 plateaued careers ................................... 89
transition planning ................................. 90
ADDIE process ............... See ADDIE model
coaching .......... 28, 44, 53, 61, 63, 83, 90, 92
additional training and development models
............................................................... 39 competency models ............................. 66, 67
adult learning ........................................ 4–14 cost-benefit analysis ..... See evaluation phase
basic principles ........................................ 5
obstacles to learning ............................ 6–7 Covey, Stephen ......... See leadership theories
alternative staffing ...... See unique employee cross-cultural differencesSee issues affecting
needs leadership
appraisal meeting ................................ 70–72 cultural learning perceptions ............... 39–45

action planning steps ....................... 71–72 Hofstede's dimensions of culture .... 40–45
feedback guidelines ............................... 71
design phase ........................................ 21–25
apprenticeship ....See employee development composing goals and objectives ...... 21, 22
programs deciding how to develop the training
program .................................. 21, 23–25
assessment centers .................................... 84 defining the target audience ............ 21, 23
in-house versus externally provided ...... 24
balanced scorecard .................................... 68 SMART objectives ................................ 23
BARS ............................................................ Dessler, Gary............... See Human Resource
...... See behaviorally anchored rating scale Management
basic principles of adult learning .... See adult development phase .............................. 25–30
learning presenting small scale training .............. 29
training delivery methods ................ 25–28
behaviorally anchored rating scale (BARS) use of copyrighted material ................... 30
............................................................... 66
documentation ............................... 62, 72–73
benchmarking ............................................ 64 performance diary ................................. 72
performance records .............................. 72
business results.......................................... 57
dual-ladder programs .............. See employee
career development ................. 47, 72, 73, 74
career development model .................. 80–82
early retirement ....... See challenges in career
career management ....................... 77, 78–84 planning and development
e-learning ...................................... 27, 28, 49
© 2012 SHRM 105

employee development programs ....... 85–88 Hofstede, Geert .............See cultural learning
apprenticeship........................................ 85 perceptions
committee/team participation ................ 85
dual-ladder programs....................... 87–88 IDP ............ See individual development plan
fast-track/high potential (HiPo) programs
........................................................... 88 implementation phase ......................... 30–33
internal mobility .............................. 86–87 announcing and implementing the
tuition reimbursement ........................... 85 program ........................................ 30, 33
logistics............................................ 30–33
employee flexible work arrangements ..... See pilot program ......................................... 30
unique employee needs revising content ............................... 30, 31
scheduling training program............ 30, 31
employee growth ................................. 57–58 selecting a trainer ............................ 31–32
employee self-assessment ......................... 82 internal mobility .See employee development

programs
errors in performance appraisals ......... 68–70
bias ........................................................ 69 issues affecting leadership ........................ 98
central tendency..................................... 70 cross-cultural differences ...................... 98
contrast error ......................................... 70 emotional intelligence (EI) .................... 98
halo effect .............................................. 69 gender differences ................................. 98
horn effect ............................................. 69 generational characteristics ................... 98
leniency error......................................... 70 succession versus replacement planning
primacy effect ........................................ 69 ................................................... 99–100
recency error .......................................... 69
job enlargement ................................... 83, 86
evaluation methods ............................. 63–68
360-degree feedback ............................. 64 job enrichment .................................... 83, 86
category rating methods .................. 64–65
comparative methods............................. 65 job rotation ................................................ 83
narrative methods .................................. 65
special methods ............................... 65–67 Kolb, David A. .................................... 7, 8, 9
evaluation phase .................................. 35, 57 language and interpretation ....................... 49

cost-benefit analysis .............................. 37
LCMS .......See learning content management
levels of training evaluation ............ 36–38
system
training evaluation form ........................ 38
transfer of learning ................................ 36 leadership and management ................ 91–92
differences ............................................. 91
experiential learning theory .................... 7–8
preparing potential leaders .................... 92
four stages of learning ............................. 7
where do leaders come from?................ 92
face-to-face training .................................. 26
leadership theories
fast-track/high potential (HiPo) programsSee behavioral theories ................................ 94
employee development programs contingency theories .................. 95, 96–97
Covey’s five categories ......................... 93
Fiedler, Fred .............. See leadership theories Fiedler.............................................. 96, 97
integrative theories ................................ 97
Herzberg, Fredrick See motivational theories power-influence/participative theories .. 95
© 2012 SHRM 106

situational leadership theory............ 95–96 Herzberg’s Motivation-Hygiene theory

trait theories ........................................... 94 ..................................................... 11–12
Maslow's Hierarchy of Needs ......... 10–11
learning content management system McClelland's Theory of Needs .............. 12
(LCMS) ................................................. 47 Skinner's Behavioral Reinforcement
Theory.......................................... 13–14
learning management system (LMS) ........ 47 Theory X ............................................... 13
Theory Y ............................................... 13
learning portals.......................................... 46
needs analysis...................................... 23, 25
learning styles ........................................... 10 definition ............................................... 16
accommodators........................................ 9 types of needs assessment ............... 17–18
activist ..................................................... 9
assimilators .............................................. 9 new employee orientation ................... 14–15
convergers ............................................... 9
divergers .................................................. 9 OJT............................ See on-the-job training
pragmatist ................................................ 9
reflector ................................................... 9 on-the-job training (OJT) .......................... 27
theorist ..................................................... 9
organizational values and goals .......... 53–54
levels of training evaluation ... See evaluation goals ...................................................... 54
phase mission statement .................................. 53
values..................................................... 54
LMS ......... See learning management system
performance appraisals ....................... 37, 53
management by objectives (MBO) ........... 65 agement and performance appraisal ...... 60
definition ............................................... 59
managing career development ............ 79–80 Dessler ................................................... 59
key players....................................... 79–80 reasons to appraise employees’
performance ....................................... 59
Maslow, Abraham See motivational theories,
See motivational theories performance evaluation process
critical incidents ........................ 37, 62, 65
MBO .....See management by objectives, See evaluation .................................. 62, 65, 70
management by objectives manager assessment .................. 61–62, 62
observation ............................................ 61
McClelland, David See motivational theories
performance logs ............................. 62, 68
McGregor, Douglas.............See motivational self-assessment ................................ 62, 82
theories setting goals ........................................... 61
mentoring .................... 44, 48, 61, 83, 90, 92 performance management ......................... 74
organizational support ........................... 58
mission statement .. See organizational values
and goals performance management process 53, 55–58
phases of .......................................... 55–57
motivation ......... 6, 10–14, 20, 33, 86, 88, 89
barriers to motivation ............................ 14 performance standards 54–55, 56, 59, 60, 70,
79
motivational theories........................... 10–14
pilot program ........See implementation phase
© 2012 SHRM 107

plateaued careers ..... See challenges in career training delivery methods .. See development
planning and development phase
professional development tools..... 82, 83–84 training evaluation form ......... See evaluation
phase
replacement planning .................. 84, 99, 100
transfer of learning ....... See evaluation phase
return on investment (ROI) ....................... 39
transition planning .. See challenges in career
ROI......................... See return on investment planning and development
scheduling training program .................... See tuition reimbursement ............. See employee
implementation phase development programs
selecting a trainer .See implementation phase unique employee needs ........... 89–90, 89–90
alternative staffing ................................. 89
Skinner, B. F. ........ See motivational theories employee flexible work arrangements .. 89
workplace diversity ............................... 89
small scale training .. See development phase
use of copyrighted material See development
SMART objectives............. See design phase phase
social networking ...................................... 49 Web 2.0 ..................................................... 49
succession planning ...................... 77, 84, 88 webinar ...................................................... 47
training and virtual-world simulation ....... 48 workplace diversity ..... See unique employee
needs
© 2012 SHRM 108

Module 6: Health, Safety and Security ....................................................................................... ii
Module 6 Purpose Statement ................................................................................................. vii
Module 6 Body of Knowledge .............................................................................................. vii
Section 6.1: Organizational Risks.................................................................................................2

Introduction ..................................................................................................................................3
What Is Organizational Risk? ......................................................................................................5
Origins of Risk......................................................................................................................... 5
Risk Management Strategy ..........................................................................................................9
Effect of Health and Safety Laws and Regulations ....................................................................11
Contingency Plans for Health and Safety Issues ........................................................................12
Creating a Contingency Plan ................................................................................................. 14
Managing Risk for International Assignees .......................................................................... 16
HR’s Role in Managing Risk .....................................................................................................22
Mitigating Risk within the Supply Chain .............................................................................. 23
Section 6.2: Employee Health .....................................................................................................26

Introduction ................................................................................................................................27
Workplace Health Risks .............................................................................................................28
Infectious Diseases ................................................................................................................ 28
Global Warming .................................................................................................................... 35
Environmental Health Hazards .............................................................................................. 35
Promoting Health and Wellness Programs .................................................................................40
Performance Benefits ............................................................................................................ 40
Cost Benefits.......................................................................................................................... 41
Employee Wellness Programs ............................................................................................... 42
Work/Life Balance Programs ................................................................................................ 46
Employee Counseling and Awareness Programs .................................................................. 48
Section 6.3: Employee Safety ......................................................................................................53

Introduction ................................................................................................................................54
Safety Risks and Prevention .......................................................................................................55
Workplace Accidents ............................................................................................................. 55
Road Accidents ...................................................................................................................... 58
Workplace Violence .............................................................................................................. 60
Terrorism ............................................................................................................................... 63
Kidnapping ............................................................................................................................ 63
Accident Investigations ..............................................................................................................64
Promoting a Safe Culture ...........................................................................................................68
Management Support ............................................................................................................. 69
Safety Committees ................................................................................................................. 71
Safety Inspections .................................................................................................................. 71
Emergency Preparedness Plans ............................................................................................. 72
Insurance and Processing Claims ...............................................................................................74
Workers’ Compensation Insurance ....................................................................................... 74
Disability Insurance ............................................................................................................... 74
Social Security Insurance ...................................................................................................... 75
Processing Claims.................................................................................................................. 75
Section 6.4: Workplace Security .................................................................................................78

Introduction ................................................................................................................................79
Security Risks and Preventions ..................................................................................................80
Security Risk Analysis........................................................................................................... 80
Workplace Security Risks ..................................................................................................... 81
Physical Security Risks and Preventions ............................................................................... 82
Nonphysical Security Risks and Preventions ........................................................................ 83
Creating Security Programs .......................................................................................................91
Formalized Policies and Procedures ...................................................................................... 92
Assigned Responsibility and Accountability ......................................................................... 92
Security Controls and Measurements .................................................................................... 93
Disaster Recovery Plans for Security Matters ....................................................................... 95
Internal Investigation Policies and Procedures ..........................................................................96
Monitoring, Surveillance and Searches ................................................................................. 96
Internal Security Investigations ............................................................................................. 96
Bibliography .................................................................................................................................99
Index ............................................................................................................................................102
Acknowledgements

Rachel Park
Program Manager, Global Talent Acquisition, Mastercard Worldwide
Singapore, Singapore
Mohamed Boraei, MBA Sameer Khanna, GPHR

HRIS & Project Manager, Qatar Foundation Head of Human Resources, Jones Lang
Doha, Qatar LaSalle, India
New Delhi, India
Brad Boyson, MSHRM, SPHR, GPHR,
HRMP Timo Michel, HRMP
Executive Director, SHRM MEA HR Business Partner, HR International
Dubai, United Arab Emirates Deutschland, Germany
Diane M. Dowlin, CEBS, CCP, SPHR, Patchara Popaitoon

GPHR Researcher/Teacher/Lecturer, School of
International Human Resources, Senior Management University of Bath
Manager, FIS Claverton Down, Bath, United Kingdom
Ankara, Turkey
Nancy Kaysarly, PHR
Consulting Company
Cairo, Egypt
For your convenience, the Body of Knowledge for Module 6: Health, Safety
and Security is provided on the following pages.
Module 6 Purpose Statement
Purpose Statement for Health, Safety and Security: HR professionals in the

area of health, safety, and security should possess a combination of behaviors
and skills/knowledge that focus on promoting a safe work environment,
encouraging employee participation in health and wellness programs and
documenting events that relate to employee well-being. These events may
include injuries or crimes or the return to work after a long absence.
content related to Module 6: Health, Safety and Security.
Important behaviors for health, safety and security:
01. Encourage employees to participate in health and wellness programs (for example, exercise
programs, health tests, vaccinations, vision tests)
02. Track reports about injuries and crimes (for example, accidents, theft, vandalism)
03. Process claims from employees (for example, workers’ compensation, short-term or long-
term disability benefits and social security or social insurance)
04. Complete tasks for employees who are returning to work after a long absence (for example,
after giving birth, after an injury, returning with medical issues)
© 2012 SHRM vii

Important knowledge and skills for health, safety and security:
01. Effects of laws and regulations about health and safety
02. Policies and programs for paying workers who take a leave of absence (for example, medical
leave, maternity leave, injury leave, or leave due to a death in the family)
03. Safety risks in the workplace (for example, violence, use of drugs and alcohol, small spaces,
dangerous materials, fires, emergencies)
04. Security risks in the workplace (for example, data or materials theft, equipment theft, damage
or destruction)
05. Health and safety practices (for example, emergency evacuation procedures, ergonomic
evaluations, safety-related behaviors)
06. Policies and procedures for investigating issues of health, safety or security
© 2012 SHRM viii

6.1: Organizational Risk

Knowledge:
Behaviors: 05. Promote a safe work environment
Skills & Knowledge: 01. Effects of laws and regulations about health and safety
03. Safety risks in the workplace (for example, violence, use of

drugs and alcohol, small spaces, dangerous materials, fires,
emergencies)
04. Security risks in the workplace (for example, data or materials

theft, equipment theft, damage or destruction)
05. Health and safety practices (for example, emergency evacuation

procedures, ergonomic evaluations, safety-related behaviors)
06. Policies and procedures for investigating issues of health, safety

or security
Section 6.1: Organizational Risks
Introduction ....................................................................................................................................3
What Is Organizational Risk? ......................................................................................................5

Origins of Risk .............................................................................................................................5
Risk Management Strategy ...........................................................................................................9
Effect of Health and Safety Laws and Regulations...................................................................11
Contingency Plans for Health and Safety Issues .......................................................................12

Creating a Contingency Plan ......................................................................................................14
Managing Risk for International Assignees ...............................................................................16
HR’s Role in Managing Risk ......................................................................................................22

Mitigating Risk within the Supply Chain ...................................................................................23
Module 6: Health, Safety and Security Section 6.1: Organizational Risk
Introduction
Risk or negative outcome is common to all organizations. Consequently, all
organizations should assess sources and levels of risk, decide their own level of
risk tolerance and develop strategies to manage risk. A global organization must
conduct risk assessments in each geographic area and in each function.

 The concept of risk management
 Risk management strategies
 The effect of health and safety laws and regulations
 Contingency plans for health and safety issues
 HR’s role in managing risk
To consider the potential scope of organizational risk, let’s consider the

hypothetical example in Figure 1-1.
Hypothetical Example of Organizational Risk
Gabe is a senior HR professional at a commercial sheet metal company. The

company designs and fabricates light gauge metalworking, tanks, pressure
vessels, holding chambers and other custom products. The company is
headquartered in Dublin, Ireland, but has factories in six other countries. The
company’s customers are worldwide.
Figure 1-1. Hypothetical Organizational Risk Example (continued to next page)
© 2012 SHRM 3
Gabe’s company, like most organizations today, is extremely aware of the risks it
faces in all the aspects of its business and supply chain. As part of its strategic
planning process, the company just completed a risk-mapping project in all its
locations. Gabe heads a project team that will now try to create controls to
manage these risks and prepare audit plans.
What Gabe sees, as he studies all the reports, is complex and involves different
types of risk areas. A summary of the reports is outlined in the bulleted list.
 Corporate headquarters: At  Factories: Throughout the

corporate headquarters, risks factories, risks include
include violations of corporate machinery injuries, improper
governance by senior handling of hazardous
management and the board of chemicals and improper use of
directors; ergonomic injuries safety equipment such as
from repetitive work; goggles and boots.
inadequate lighting; poorly
handled installation of new
software and a security break-in
through the vendor portal.
Figure 1-1. Hypothetical Organizational Risk Example (continued to next page)
© 2012 SHRM 4

 Supply chain: Looking at the  Worldwide presence:
entire supply chain, Gabe Recently, there was flooding in
considers the transportation one of the factories in China
companies with whom his causing extensive damage to
company partners in London several laser cutting and
and Singapore and notes there welding machines, forcing
are unclear policies regarding projects to shut down and
insurance and liability issues. In employees to be out of work
addition, while strict procedures until the machinery was fixed.
are in place for data access and
information sharing for
suppliers and contractors, the
procedures are not enforced.
Figure 1-1. Hypothetical Organizational Risk Example (concluded)
Gabe’s situation represents the scope of risk for many organizations today: health,
safety, technological, physical, legal and financial. The job of the HR professional
is to create risk awareness throughout the organization and to promote the
development of risk management plans that create plausible controls and audit
measures that ensure employees and organizations are healthy.
What Is Organizational Risk?

Origins of Risk
There are two origins of risks:

 External risks: Risks that result from external political, economic,
technological and sociological changes, which can have a negative
impact on the organization.
 Internal risks: Risks that originate from internal processes and
management.
© 2012 SHRM 5
Let’s use Gabe’s example to categorize the origin of risks for his company. The
risks are categorized in Figure 1-2.
External Risks Internal Risks
 Third-party liability issues  Violations of corporate

 Flooding governance
 Breach of data integrity  Ergonomic injuries
 Chemical exposure
 Machinery-use injuries
 Interruption in business
Figure 1-2. Origins of Risk
The risks identified for Gabe’s organization present a small fraction of the
potential risks organizations face today. Figure 1-3 lists additional risk types and
examples for each type.
Risk Categories Related Examples

 Natural disasters  Flooding
 Hurricane
 Landslide
 Tsunami
 Wildfire
 Blizzard
 Financial risks  Inflation risk
 Interest rate risk
 Liquidity risk
 Credit risk
Figure 1-3. Categories and Examples of Risk (continued to next page)
© 2012 SHRM 6

 Medical risks  Chemical exposure
 Ergonomic injuries
 Poor air quality
 Operating dangerous machinery
 Biological hazards/exposure
 Property risks  Fire
 Structural damage
 Being underinsured
 Theft
 Legal risks  Contractual risk
 Uncovered claims
 Legal defense costs
 Tax risk
 Political and social risks  War
 Coups
 Terrorism
 Shift in political power
 Government relations
 Intellectual property (IP)  Copyrights, trademarks, patents,
Risks trade secrets
 Someone has infringed on your
IP rights
 You have infringed on someone
else’s IP rights
Figure 1-3. Categories and Examples of Risk (continued to next page)
© 2012 SHRM 7

 Technological risks  Critical data
 Confidential data
 Security posture
 Architectural weaknesses
 Internal hackers
 External hackers
Figure 1-3. Categories and Examples of Risk (concluded)
Regional Risks
Risk levels vary regionally. Extreme locations pose unusually high levels of risk
to local employees and international assignees. These extreme locations may be
characterized by difficult living and working conditions, including high levels of
poverty, kidnapping, theft, assault or war. Other examples are health risks
resulting from lack of health care facilities, inadequate supplies of drinking water
or high levels of pollution. Extreme locations necessitate risk management plans
that can provide the following:
 Detailed ways to avoid unnecessary risks and to mitigate risks that can be
managed
 Contingency planning to manage specific events
Industry-Specific Risk
Industries tend to have distinguishing tolerances for risk. Contrast risk-tolerant

companies that specialize in exploration for natural resources with risk-averse
health care industries. In the first sector, the benefits of accepting the risk
outweigh the potential harm. However, for a health care business, a risk like
contaminated raw ingredients or improperly certified care providers could lead to
deaths, lawsuits, substantial negative publicity, decline in share value and so on.
Despite these possible dangers, a pharmaceutical company may choose to accept

or mitigate risk in some of its activities, particularly product development, if those
© 2012 SHRM 8
activities offer significant potential benefits. They may mitigate the risk by having
a variety of products with different risk levels in their development pipeline or by
entering into development partnerships with other companies and sharing the risk.
Other forms of risk mitigation include replicating or keeping versions of

information. For example, an insurance company keeps replicated information, so
client data will be preserved if the main system fails.
Risk Management Strategy

The only real way to avoid risk is to shut the doors and put a closed sign in the
window, which of course is not practical. Risks are unavoidable and organizations
have an obligation to protect the health and safety of their employees, clients and
anyone who may be part of the business cycle.
Figure 1-4. Risk Quote (Neville 2005)
A risk management strategy describes how an organization plans to address the

vulnerabilities it has identified throughout the organization: by accepting,
avoiding or mitigating the risk. The strategy is influenced by such factors as
specific risk levels, vulnerabilities and the organization’s own tolerance for risk.
© 2012 SHRM 9
There are several ways to calculate risk levels. One example of how to calculate
risk is illustrated in Figure 1-5.
Figure 1-5. Calculating Risk
For Gabe’s company, there is a probability of a flood twice every ten years at a
cost of $500,000 for equipment loss and project delays. The risk level is
calculated in Figure 1-6.
Figure 1-6. Example of Calculating Risk
Some risks are so unlikely, or their effects so minimal, that the organization will
choose to tolerate them. For example, a significant change in the legal
environment of the European Union could have a large impact on an
organization’s activities there, but this occurrence is extremely unlikely.
However, if an organization’s success depends on its relationship with the current
regime in a politically unstable country, it may decide to avoid the risk and do
business elsewhere.
A risk management strategy is implemented through a system of controls

designed to avoid or mitigate the risk. The strategy is continuous for as long as the
© 2012 SHRM 10
organization exists. In his book, The Risk Management Process: Business

Strategy and Tactics, Christopher L. Culp discusses the five steps within a risk
management process. These steps are as follows:
1. Identify risks and determine tolerances
2. Measure risks
3. Monitor and report risks
4. Control risks
5. Oversee, audit, tune and re-align risk management (Culp 2001)
A risk management strategy is not a one-time event but requires ongoing

monitoring. Monitoring should involve tracking of milestones, tracking of
critical risks and regular risk reassessment.
Effect of Health and Safety Laws and Regulations

Health and safety laws are concerned with protecting the health, safety and
welfare of people in the workplace. The goals of laws and regulations are to foster
a safe work environment. Consequentially, laws and guidelines may also protect
coworkers, family members, employers, customers, suppliers, communities and
other members of the public who may come in contact with the organization.
According to the International Labour Organization (ILO):
“…deaths due to work-related accidents and illnesses represent 3.9 percent

of all deaths and 15 percent of the world’s population suffers a minor or
major occupational accident or work-related disease in any one year. A
large number of the unemployed—up to 30 percent—report that they
suffer from an injury or disease dating from the time at which they were
employed. The unemployed often cite impairment of their health as a
hindrance to finding new employment.” (International Labour
Organization 2005)
© 2012 SHRM 11
Laws and regulations effectively enforced can drastically reduce the number of
work-related accidents and deaths. Different countries and regions take different
approaches to legislation, regulation and enforcement. For example, in the
European Union (EU), member states have enforcing authorities to ensure that
employees are protected. In many countries, there is strong cooperation between
the organization and workers unions to ensure safety and protection.
In the People’s Republic of China, the Ministry of Health is responsible for

occupational disease prevention and the State Administration of Work Safety for
safety issues within the work environment. On the provincial and municipal level,
there are Health Supervisions for occupational health and local bureaus of Work
Safety for safety.
Know the laws by which you must abide, and ensure your organization’s policies
and procedures are compliant. In addition, if your organization is conducting
international business practices, be sure you are aware of the risks and laws of
related countries so that employees are protected across borders.
The International Labour Organization (ILO) offers a wealth of resources to

assist organizations with occupational safety and health practices. There are
many ILO Codes of Practice, or recommended guidelines, to address general and
specific HR related topics.
Titles include Guidelines on Occupational Safety and Health Management

Systems, Prevention of Major Industrial Accidents and Safety in the Use of
Chemicals at Work. Many of these publications can be freely downloaded from
the ILO website, http://www.ilo.org.
Contingency Plans for Health and Safety Issues

Disasters occur all the time and can have severe implications for your
organization, especially if you are not prepared. Things like computer failures,
broken water pipes, electrical outages and labor issues may seem manageable, but
these types of issues can lead to the demise of an organization.
© 2012 SHRM 12
Take, for example, the outbreak of the Severe Acute Respiratory Syndrome
(SARS) in 2003. Overnight, this outbreak had a tremendous impact on the tourism
and the transportation industry. Sherry Cooper from the Harvard Business
Review reported on the impact of SARS:
Figure 1-7. Report on SARS (Cooper 2009)
In fact, 50% of organizations that suffer a disaster without a contingency plan

never reopen their doors.
Without a doubt, your organization will be faced with challenges. While you can’t
be certain which event may challenge your business, you can prepare for these
potential threats through contingency planning. In their book, The Disaster
Recovery Handbook, Michael Wallace and Lawrence Webber outline relevant
questions to measure whether your organization is prepared for disasters.
1. Does your organization know how long your Uninterruptible Power Supply
will power your equipment if the electrical grid fails? Which equipment can
be shut down first?
2. Does your organization know where you can get critical supplies if your
primary supplier is shut down?
3. Does your organization know the location of all your software licenses?
© 2012 SHRM 13
4. Does your organization have a plan to contact customers to make sure they
don’t go to a competitor if they hear you have a disaster?
5. Has your organization tested backups to ensure data can be restored? What
about custom applications? Is backup software up to date?
6. Do employees know who to call if they see on the news a building caught
fire?
7. Does your organization know what to do if a backhoe cut a
telecommunication cable?
8. Is the virus protection software up-to-date?
9. Does your organization know the location of warranty information,
registration codes and CD keys for all hardware and software?
10. Does your organization have a plan for using alternative equipment until the
existing equipment is restored or replaced? (Wallace and Webber 2004)
Contingency planning is a forward planning process, in a state of uncertainty,

in which scenarios and objectives are agreed on and systematic responses are
outlined to protect employee security, company assets and all stakeholders; to
comply with local laws and regulations; to document and report the event as
required and to follow up. The plans should be specific in designating roles and
time frames, and they must be supported with training and opportunities for
practice.
Creating a Contingency Plan
How you build your contingency plans is determined by your organization’s

culture, available resources and the support for the planning. You may find the
planning becomes a myriad of complex options you may want to document by
functional area. The following provides several guides for creating contingency
plans.
© 2012 SHRM 14
Gain support and assign a lead: Contingency plans require a significant

investment in resources—not for the purpose of gain but simply for preventing
loss. Therefore, it is advantageous to secure support at the highest level within the
organization. Then assign the planning task to an individual who commands
respect and support and who can assemble and lead an effective team.
Scope and plan: The scope of the contingency planning should be clearly
defined, with resources identified and timelines agreed on. Both technical and
political considerations are important in assembling a team that can create and
implement the plan.
Create and test the contingency plan: A plan is designed and must be reviewed
and tested. The plan can be reviewed in stages:
1. A preliminary review by senior staff will help ensure that all contributors
complete their planning assignments within the specified time frame and
according to an expected standard of quality.
2. Interdepartmental reviews can identify potential bottlenecks and areas in
which coordination is important.
3. Simulations can be run in test areas.
4. If feasible, areas with a high potential for failure or whose failure poses a high
level of risk to the enterprise can be shut down to test the plan.
Contingency planning software is available to guide organizations through the

process. In some cases, the entire contingency planning process may be
outsourced to vendors specializing in this area.
There are many resources to assist an organization in its contingency planning

efforts. The embassies, consular offices and commerce departments of many
countries publish information of this nature. Local and international
organizations such as those outlined below provide valuable information about
preparing for and recovering from a wide range of human disasters.
 Disaster Preparedness European Humanitarian Aid Office or DIPECHO
 United States Federal Emergency Management Agency or FEMA
© 2012 SHRM 15
 International Red Cross and Red Crescent

 World Health Organization
Managing Risk for International Assignees
International assignments are an integral part of today’s global organizations.

While international business offers endless opportunities, some organizations are
finding they are not getting the return on the time and money they are investing in
international pursuits. There are incomplete assignments, inefficiencies, stress on
employees, health and safety risks and high rates of turnover, all making
international endeavors risky for organizations.
While international assignments have existed for decades, organizations often

lack an understanding of how to properly assign employees, train them and
provide the support required. Due diligence in four relevant areas will help
organizations manage associated risks and thus capitalize on the international
experience:
 Duty of Care
 Proper international assignments
 Personal security for international assignees
 Training for international assignees
These relevant areas are further discussed in the sections to follow.
Duty of Care
Organizations have a Duty of Care to proactively protect employees’ and their

dependents’ health, safety and security as they travel internationally. The
treatment of Duty of Care is diverse in terms of application, and it is incumbent
upon leaders within the organization to take the Duty of Care responsibilities into
account and to make the appropriate business decisions. To ignore this issue is to
add layers of risk to an organization that can extend into legal, fiduciary, ethical
and social responsibilities. Figure 1-8 provides an example of what can happen
when an organization does not provide Duty of Care.
© 2012 SHRM 16
Figure 1-8. Duty of Care: Obligation to Employees (Claus 2010)
A standardized Duty of Care involves the following:

 Developing policies and procedures according to the various work
environments
 Carefully planning and tracking employees’ trips and schedules to
minimize risk; establishing an emergency preparedness plan
 Educating traveling employees on all political, social, security and health
risks
 Setting up a twenty-four-hour support system for traveling employees
(Claus 2010).
Proper International Assignments
Determining the reason for an international assignment will help guide the
selection process. Traditionally, companies have relied on technical, job-related
skills as the main criteria for selecting employees for overseas assignments, but it
is becoming apparent that assessing global mindset is equally, if not more,
important.
To a great extent, the success of every expatriate relies on that person’s ability to
influence individuals, groups and leaders that may have a different cultural
perspective.
© 2012 SHRM 17
Figure 1-9. Characteristics for International Assignees (Society for Human Resource
Management, Best Expatriate Assignments Require Much Thought, Even More Planning 2008)
Expatriate Screening Processes
Many organizations are informal about their expatriate screening processes, which
can lead to failed assignments. For example, in some organizations, the right
technical skills combined with an interest in traveling abroad may be enough for
an assignment. This approach is risky. HR should have a thorough screening
process to screen for skills, experience and behaviors necessary for successful
foreign assignments.
Research points to three major attributes of successful expatriates as illustrated in

Figure 1-10. These attributes and related questions can help guide the screening
process.
© 2012 SHRM 18
Figure 1-10. Attributes of Successful Expatriates

(Society for Human Resource Management, Best Expatriate Assignments Require Much
Thought, Even More Planning 2008)
Personal Security for International Assignees
Personal security is always a greater concern when employees are transferred

outside the employee’s country of origin. These employees may be entering
unfamiliar territory, with risks they cannot recognize or appreciate and with
limited support if problems occur.
In 2010 alone, there were several high-profile international emergencies, from

natural disasters like the earthquake in Haiti and the eruption of Iceland`s
Eyjafjallajokull volcano to political disturbances like those in Bangkok, Thailand.
Expatriates who were involved in these overseas emergencies became urgent
issues for those managing their assignments.
It has become more important than ever to proactively manage personal security
risks and have well-thought-out and comprehensive contingency plans should the
worst happen, though being prepared for every emergency is impossible.
© 2012 SHRM 19
Lisbeth Claus and Michael McCallum reported on the most important actions an
organization can take to protect employees assigned to hazardous regions. These
actions are listed in Figure 1-11.
What Organizations Can Provide to Protect Their International Assignees
Assessment and risk management Protection

planning  Provide protective services for assignees in
 Engage in ongoing assessment of hazardous areas.
risks.  Ensure evacuation services for employees
 Develop contingency plans with and their families.
crisis management experts.  Provide additional hazard insurance.
 Design safety and evacuation
Support during a crisis
plans.
 Provide full crisis-management support
 Develop clear policies,
services for employees and their families.
procedures and action plans.
(These services range from twenty-four-
Training hour communication to full evacuation to
 Provide training on how to handle ensuring employee and family safety at any
emergency/hazardous situations, cost.)
how to improve safety and how to
Empowerment
protect employees and their
 Empower employees to make informed
families.
decisions regarding their own safety and
Information and communication the safety of their families.
 Provide honest, accurate and  Listen to local input, and grant locals the
timely information to employees authority to provide support.
and their families on the risks and  Provide access to discretionary funds.
hazards involved.
Figure 1-11. What Organizations Can Provide to Protect International Assignees

(Claus and McCallum 2004)
© 2012 SHRM 20
Training for International Assignees
Training to prepare international assignees should address, at minimum, the

following topics.
Health risks: The host country may pose certain health risks or lack sophisticated
hospital facilities. Expatriates and their family members can minimize and
prepare for medical emergencies by doing the following:
 Familiarizing themselves with illnesses prevalent in the host country,
keeping apprised of disease outbreaks and epidemics and developing
behavioral strategies to avoid problems; this information can be found on
the World Health Organization website, http://www.who.int
 Obtaining copies of their medical records and a separate summary of their
medical histories, including any current or chronic problems, from their
home-country physicians; these medical records should be translated into
the language of the host country
 Receiving appropriate preventive vaccinations and medication (such as
antibiotics)
 Bringing at least a six-month supply of any prescription medication, kept in
its original container
 Traveling with a basic medical kit that includes over-the-counter
medication and supplies (such as analgesics, antacids, cough syrup and
sterile bandages), as well as a phrase book to help them describe any
symptoms in the local language
 Developing an understanding of the local health care system (for example,
which facilities are appropriate in given circumstances) and establishing
relationships with local doctors as soon after their arrival as possible
 Creating, with the employer’s assistance, a contingency plan if evacuation
to a country with better medical care becomes necessary
Risks from legal prosecution: International assignees should be aware that the
criminal prosecution process varies from one country to the next. They and their
© 2012 SHRM 21
family members should know how to request immediate assistance from the
nearest consular office or embassy in the event of an arrest.
A consular or embassy representative will explain the local judicial system;

provide a list of local attorneys; contact family and friends (if authorized by the
prisoner); facilitate the transfer of money, food and clothing; ensure that the
prison conditions are humane and healthy; arrange medical examinations, if
appropriate and protect against discriminatory treatment.
Kidnapping and ransom: Employers must determine, in advance, how they will
handle kidnapping and ransom (K&R) demands.
 Will the local authorities be contacted?
 Will ransom demands be paid? If so, will this be done through a K&R
insurance policy or some other source of funds?
 Does the insurance policy include access to a negotiation consultant? If
not, should the firm retain one independently?
 Will corporate K&R procedures apply only to employees or to their family
members as well? Whatever the case, a company’s K&R guidelines and
insurance details should be shared with as few individuals as possible.
Evacuation plans: Due to political and social unrest in many areas of the world,
employers must be prepared to bring international assignees and their families
home if their safety is threatened.
Many global firms establish a corporate crisis team to create evacuation plans and
make crucial decisions during emergency situations. At a minimum, the HR,
security and legal departments are typically involved in the proactive and
continuous process of keeping international assignees out of harm’s way.
HR’s Role in Managing Risk

HR should be considered an added value business partner with regard to risk
management. HR can help balance opportunity management and risk
minimization. For example, data security is not typically monitored and managed
© 2012 SHRM 22
by HR. However, hiring appropriately trained technology professionals can

minimize an organization’s risk of fraudulent activities.
According to John Stevens, author of Managing Risk: The Human Resources

Contribution, five core concepts help to define HR’s role in managing
organizational risk:
 Organizations should involve HR in risk management strategies, and
organizational policies and procedures should be included in risk
management systems.
 A prime responsibility for HR is to provide effective management of
organizational activities that have a human dimension. This is often
referred to as people risks.
 HR professionals should use risk management techniques to identify risk
exposures and evaluate control options. HR should demonstrate that the
cost of improving people risks can outweigh inaction.
 HR must adopt a proactive risk-based, business-focused approach rather
than a risk averse, compliance approach.
 HR must form partnerships with relevant influencers in the organization
and those who are involved in business planning and strategy. (Stevens
2005)
Mitigating Risk within the Supply Chain
Business relationships with suppliers and third-party vendors can pose risk if their
ethics and compliance are not monitored and enforced. While companies
historically have taken little interest in their external suppliers beyond product
features, quality, price and availability, the issue of supply chain behavior is now
closely integrated with a global organization’s corporate social responsibility
(CSR) policies.
HR professionals can mitigate those risks by doing a thorough risk assessment

and communicating company standards and expectations proactively. In some
organizations, training and workshops provide suppliers with an understanding of
© 2012 SHRM 23
expectations and of how the organization operates. In other cases, values are
communicated in bid documents and in terms and conditions of master
agreements and contracts.
In one example, the British home improvement, appliance and electronics retailer
Kingfisher includes attention to supply chain behavior in its own corporate social
responsibility program. Believing that this focus strengthens both the supply chain
and the Kingfisher brand, the multinational has set policies to do the following:
 Know the provenance of every product they sell—who sells Kingfisher the
product and where they make it.
 Set and assess workplace standards for suppliers’ factories.
 Work with suppliers, governments and nongovernment organizations to
address challenges within the supply chain.
 Support factories to help them achieve Kingfisher’s standards.
Site Visits
Site visits are an excellent way to identify potential safety and risk issues
concerning employees and to further help prevent business risks. Site visits can
expose unsafe work conditions, environmental and labor issues such as hazardous
waste disposal or underage workers. HR may have a role in these visits by
answering questions regarding the organization’s health, safety, and security
policies and also by ensuring that any issues are documented and resolved as
needed.
Take for example the factories run by Foxconn Technology Group, the contract
maker of Apple Inc.’s iPhone. In 2010, at least ten of their workers committed
suicide, which resulted in investigations into whether Foxconn’s working
conditions were legal and ethical. Apple commissioned a review by a team of
suicide-prevention experts after the worker deaths occurred and then presented its
findings to senior executives from both companies (Culpan 2011).
In cases like this, the organization’s knowledge of supplier operation can help
navigate underlying cause of business risk.
© 2012 SHRM 24
Health, Safety and Security Section 6.2: Employee Health
6.2: Employee Health

Knowledge:
Behaviors: 01. Encourage employees to participate in health and wellness

programs (for example, exercise programs, health tests,
vaccinations, vision tests)
Skills & Knowledge: 05. Health and safety practices (for example, emergency evacuation

Section 6.2: Employee Health
Introduction ..................................................................................................................................27
Workplace Health Risks ..............................................................................................................28

Infectious Diseases .....................................................................................................................28
Global Warming .........................................................................................................................35
Environmental Health Hazards ..................................................................................................35
Promoting Health and Wellness Programs ...............................................................................40

Performance Benefits .................................................................................................................40
Cost Benefits ..............................................................................................................................41
Employee Wellness Programs ....................................................................................................42
Work/Life Balance Programs .....................................................................................................46
Employee Counseling and Awareness Programs .......................................................................48
Module 6: Health, Safety and Security Section 6.2: Employee Health
Introduction
Human resource (HR) professionals deal with issues such as health workforce
information, research, planning and management. In recent years, there has been a
raised awareness of the critical role HR has in strengthening health system
performance and improving health outcomes. Human resources functions are
identified as one of the core building blocks of a health system. The World Health
Organization defines human resources in health as “all people engaged in actions
whose primary intent is to enhance health” (World Health Organization 2006).
In global health, we are witnessing enormous advances in medicines and

technologies, yet there are also unprecedented reversals, incurable diseases,
widespread conditions and natural disasters. The shortages of skilled health care
workers and lack of access to care compound today’s problems.
In many organizations, HR is responsible for navigating health issues for

employees. While offerings and services may differ from country to country, this
section offers practices for health concerns and ways in which you can manage
this responsibility.

 Workplace health risks
 Promoting health and wellness programs
© 2012 SHRM 27
Workplace Health Risks

Most workplace health risks are not obvious and can go undetected until a worker
needs to be hospitalized. Direct and indirect costs to the organization can be
considerable, including the following:
 Wages due employees for paid time lost
 Compensation (remuneration) for employees covering injured or disabled
employees
 Disability payments
 Increased health insurance costs
 Litigation costs and possible fines
 Costs associated with investigations
 Costs associated with recruiting and training replacements
You can reduce your organization’s health risks by understanding potential risks
and working with the leaders in your organization to identify preventive policies
and programs.
Infectious Diseases
Infectious diseases, also known as communicable diseases, are caused by

pathogenic microorganisms, such as bacteria, viruses, parasites or fungi; the
diseases can be spread directly or indirectly from one person to another.
An epidemic can take an economic toll through lost workforce productivity and
can strain health services. With many employees traveling internationally,
monitoring and controlling infectious diseases has become a crucial health issue.
Let’s look closely at four infectious diseases and discuss ways in which
organizations can reduce risks (see Figure 2-1):
 Influenza
 Hepatitis B
 Malaria
 Acquired Immune Deficiency Syndrome (AIDS)
© 2012 SHRM 28
Disease Description
Influenza Influenza is a viral infection that affects mainly the nose,

throat, bronchi and, occasionally, lungs. Infection usually lasts
for about a week and is characterized by sudden onset of high
fever, aching muscles, headache and severe malaise,
nonproductive cough, sore throat and rhinitis.
Vaccination is the most effective way to prevent infection and

protect employees. Some organizations promote vaccinations
(World Health Organization 2009).
Hepatitis B Hepatitis B is a viral infection that attacks the liver and can
cause both acute and chronic disease. The virus is transmitted
through contact with the blood or other body fluids of an
infected person—not through casual contact.
About 2 billion people worldwide have been infected with the

virus, and about 350 million live with chronic infection. An
estimated 600,000 persons die each year due to the acute or
chronic consequences of hepatitis B.
Hepatitis B virus is an important health hazard for health

workers. Vaccination is the most effective way to prevent
infection (World Health Organization 2008).
Figure 2-1. Infectious Diseases (continued to next page)
© 2012 SHRM 29
Disease Description
Malaria Malaria is a life-threatening disease caused by parasites that

are transmitted to people through the bites of infected
mosquitoes.
Most malaria cases and deaths occur in sub-Saharan Africa.

However, Asia, Latin America and, to a lesser extent, the
Middle East and parts of Europe are also affected. In 2008,
malaria was present in 108 countries and territories.
Nonimmune travelers from malaria-free areas are very

vulnerable to the disease when they get infected.
For individuals, personal protection against mosquito bites

represents the first line of defense for malaria prevention
(World Health Organization, Media Centre: Fact Sheet, no. 94
2010).
Figure 2-1. Infectious Diseases (continued to next page)
© 2012 SHRM 30
Disease Description
AIDS AIDS (acquired immune deficiency syndrome or acquired

immunodeficiency syndrome) is a disease of the human
immune system caused by the human immunodeficiency virus
(HIV). AIDS is considered a pandemic.
AIDS is a concern to all countries and presents exceptional

challenges to countries such as Central and Southern Africa
and South and Southeast Asia.
Here are a few facts about this disease:

 As of 2009, it is estimated that there are 33.3 million
people worldwide living with HIV/AIDS.
 There are 2.6 million new HIV infections per year.
 1.8 million deaths annually are due to AIDS.
(AVERT 2010)
The amount of people living with HIV/AIDS is staggering and

includes employees, family members on health care plans,
future hiring pools, customers, leaders and policy makers.
Illness or death in any of these groups can reduce performance
and increase costs for an organization (AVERT 2010).
Figure 2-1. Infectious Diseases (concluded)
© 2012 SHRM 31
At the United Nations International Labour Conference (ILC) meeting

June 1-18, 2010, in Geneva, an international standard on HIV/AIDS in
the workplace was drafted.
It was decided that it was necessary to adopt an international labor

standard in order to increase the attention devoted to the subject, to
promote united action among the main actors on HIV/AIDS and to
increase the impact of the International Labour Organization (ILO) code
of practice on HIV/AIDS and the world of work (International Labour
Organization 2010).
Preventive Measures for Infectious Diseases
It is the responsibility of employers to educate their workforce regarding the risk

of and response to infectious diseases while maintaining the confidentiality of
affected employees.
Organizations can incorporate policies to prevent the exposure or spread of

diseases through several proactive measures:
 Closely monitor resources such as the World Health Organization for travel
alerts.
 Offer vaccination awareness programs as needed. Be sure international
assignees are appropriately vaccinated.
 Provide daily screenings for employees who may be exposed to infectious
diseases.
 Deny access to facilities for ten days for employees or visitors returning
from affected areas.
 Instruct employees to stay home if they are exhibiting symptoms such as
fevers or respiratory issues.
 Institute policies on cleaning work surfaces and areas regularly.
 Stagger breaks. Offer several lunch and break periods to reduce
overcrowding.
© 2012 SHRM 32
 Communicate the importance of frequent hand washing and make

sanitizers with alcohol available throughout the workplace. (Dressler 2008)
World Health Organization Interactive Map
The World Health Organization (WHO) has several resources you can access to
help monitor disease outbreaks and other health issues across the globe. Figures
2-2, 2-3 and 2-4 describe some of the resources available on the WHO’s website
at http://www.who.int.
Figure 2-2. WHO Health Action in Crisis
© 2012 SHRM 33
Figure 2-3. WHO Emergency Program Information
Figure 2-4. WHO Interactive Map
© 2012 SHRM 34
Global Warming
You may be wondering, “What does global warming have to do with HR?” Well,
when organizations offer concern for the health of the environment, they are
contributing to the well-being of their employees. This situation is especially true
for those workers who have to cope with increasing fuel prices and dense traffic
while commuting.
HR can help employees develop their competencies by advocating for their

continuing education on global warming and personal development. In addition,
HR professionals can work with all levels of the organization to take advantage of
their insights and find ways to reduce carbon dioxide emissions.
Environmental Health Hazards
Environmental hazards are situations that pose a threat to the surrounding

natural environment and adversely affect people's health. This term incorporates
topics like pollution, chemicals and radiation. Environmental hazards can be
categorized by the following:
 Chemical agents
 Physical agents
 Biological agents
 Natural disasters
Chemical Agents
The production and use of chemicals continue to grow worldwide. Many

chemicals can when properly used significantly contribute to the improvement of
our quality of life, health and well-being. But other chemicals are highly
hazardous and can negatively affect our health and environment when improperly
managed. The chemicals listed in Figure 2-5 are considered common workplace
chemical hazards.
© 2012 SHRM 35
Figure 2-5. Chemicals of Public Health Concern (World Health Organization, Preventing
Disease through Healthy Environments: Action Is Needed on Chemicals of Major Public Health
Concern 2010)
Dust, fumes, gases, toxic materials, carcinogens and smoke are all ways in which
chemicals can directly affect humans. If your workforce is at risk, your
organization needs to take action. Let’s look more closely at the use of pesticides
and tactical ways in which an organization can reduce harmful risks.
Overview of Pesticides
Not all pesticides are safe. Impurities formed during the manufacture of a
pesticide or by interaction in unstable formulations can increase product toxicity
to humans and the environment.
Effects from pesticides can range from simple irritation of the skin and eyes to
more severe effects such as affecting the nervous system or causing reproductive
problems or cancer.
© 2012 SHRM 36
If you are questioning the safety of pesticide exposure or use, be sure to research
associated risks.
In 2009, the Pesticide Data Sheets were prepared by the World Health
Organization (WHO) along with the Food and Agriculture Organization of the
United Nations (FAO) and give basic toxicological information on individual
pesticides.
The Pesticide Data Sheets can be accessed from the World Health
Organization’s website at http://www.who.int/ipcs/publications/pds/en/.
Physical Agents
In his book, The Manager’s Guide to Health & Safety at Work, Jeremy
Stranks identifies important physical agents and associated risks. Figure 2-6
provides several examples.
Physical Agent Associated Risks

 Heat stroke
Temperature  Heat cataracts
 Miner’s nystagmus
Lighting
 Radiation sickness
 Arc eye
Radiation
 Burns
 Noise-induced hearing loss
Noise
 Vibration-induced white finger
Vibration
 Decompression sickness
Pressure
Figure 2-6. Physical Agents (continued to next page)
© 2012 SHRM 37
Physical Agent Associated Risks

 Pneumoconiosis, including silicosis, coal
worker’s pneumoconiosis, occupational
Dust
asthma, occupational cancers
 Writer’s cramp
Repetitive movements
 Beat elbow, beat knee, beat hand
Manual work
Figure 2-6. Physical Agents (concluded) (Stranks 2006)
Biological Agents
Biological agents have the ability to threaten human health in a variety of ways,
ranging from relatively allergic reactions to serious medical conditions, even
death. These organisms are present in nature and can be found in water, soil,
plants and animals. Biological agents are a potential danger because many
reproduce rapidly and require minimal resources for preservation. Figure 2-7
provides examples of biological agents and associated risks.
Biological Agent Associated Risks
Contact with infected Anthrax, Brucellosis, Glanders

animals
Contact with blood or Viral Hepatitis

blood products
Vegetable-borne infections Farmer’s Lung (aspergillosis)
Contact with rodents Leptospirosis
Figure 2-7. Biological Agents (Stranks 2006)
© 2012 SHRM 38
Natural Disasters
The powerful earthquake that hit off the northeastern coast of Japan in March
2011 offered an unfortunate reminder that disaster awareness and emergency
preparedness is critical for organizations around the world.
The threats of natural disasters are often determined by geographic location and
populations at risk. Many resources are available that categorize and identify risk
profiles for specific regions. Figure 2-8 is taken from the Annual Disaster
Statistical Review 2009 and summarizes the number of natural disasters that
occurred by region from 2000 through 2009.
Figure 2-8. Number of Natural Disasters per Region (Vos, et al. 2010)
The Annual Disaster Statistical Review 2009 report may be accessed from the
following web link:
http://reliefweb.int/sites/reliefweb.int/files/resources/7C4BB2DD1D0F292AC125
774D004254C5-CRED_Jun2010.pdf
© 2012 SHRM 39
Risk Assessment for Environmental Hazards
For HR, risk assessment is essential for planning purposes. Human health risk can
be mitigated by the level of preparedness or capacity of the community and
organization at risk. Figure 2-9 provides a calculation for evaluating proportional
risk levels.
Figure 2-9. Proportion of Risk (World Health Organization n.d.)
In the Employee Security section, we will discuss HR’s role with emergency
preparedness and response.
Promoting Health and Wellness Programs

Performance Benefits
Research and evidence prove that wellness and health programs based on the
clinical practice of preventive medicine are able to achieve the following tangible
results:
 Greater employee engagement
 Organizational productivity
 Talent retention
 Creativity and innovation
 Health care cost savings
According to Deborah Schroeder-Saulnier, Senior Vice President for Global

Solutions at Right Management, there are five top drivers for promoting health
© 2012 SHRM 40
and well-being at work. Figure 2-10 summarizes these key drivers from an
employee’s perspective.
Figure 2-10 (Schroeder-Saulnier 2010)
Cost Benefits
The trend toward increasing health and wellness programs coincides with growing
evidence that these programs are providing a return on investment (ROI) and
driving down costs. Organizations are recognizing that preventing illnesses is less
expensive than treating them and that they can help reduce costs by increasing
their program offerings.
© 2012 SHRM 41
Employee Wellness Programs
A wellness program consists of services offered by the employer to promote or

maintain good health rather than the correction of poor health. Most often
wellness programs target physical, mental and social well-being, which together
are commonly referred to as the Health Triangle. Components of the Health
Triangle are illustrated in Figure 2-11 (World Health Organization 2006).
Figure 2-11. Health Triangle
There are a number of ways you can incorporate wellness programs within your
organization.
Nutrition and Fitness Programs
There are many ways you can incorporate nutrition and fitness programs in the
workplace. Here are several ideas for workplace nutrition and fitness programs:
 If your building has stairs, you may suggest using the stairs instead of
taking the elevator.
 Try a Walk to Work Day for employees who live nearby.
 Suggest a lunchtime group walk.
 Bring in a fitness professional to help devise a program for the group
and/or individuals. Perhaps the fitness professional can measure progress
over a period of time.
 Subsidize memberships at a fitness club near the office.
 Offer yoga classes as a healthy, therapeutic and team-building form of
exercise.
© 2012 SHRM 42
 Provide storage for bicycles.

 Sponsor a company team or arrange regular activity nights.
 Allow flexible working hours to let personnel fit in exercise time before or
after work.
 Provide handbooks for employees to find out more about the various
options open to them.
 Install showers in the office.
 Implement a fitness challenge to promote sustainable improvement.
(Natural Healthcare Canada n.d.)
Health Screenings
Workplace screenings offer employees a chance to test for overall health risks
while at work. Some of the more popular screenings include the following:
 Cholesterol screenings
 Glucose screenings
 Blood pressure screenings
 Body composition analysis
 Pulmonary function screenings
 Prostate cancer screenings
 Hepatitis vaccinations
 Vaccinations
 Tuberculosis skin tests
 Hearing
 Vision screenings
Vision Screenings
Let’s explore vision screenings in more detail and examine how a quick fifteen-
minute test can prevent blindness and other eye diseases.
An eye exam conducted by a licensed eye care professional can detect the early
signs of eye disease and uncover evidence of other diseases, including diabetes or
hypertension.
© 2012 SHRM 43
Typically, the screener will ask for information about the employee’s medical
history, age and other questions to assess risk for eye problems. Next the screener
conducts the exam and checks problems seeing far and close and the ability to
focus. If a certified vision screener detects a possible problem, the screener will
advise you to make an appointment with an eye doctor for a full eye exam.
Considering that good eyesight and visual health leads to increased productivity at
work, the return on investment for this screening can be significant.
Considerations for Workplace Screenings
There are three major considerations for workplace screenings: safety, privacy
and budget.
Safety considerations: Screenings should be completed by qualified and licensed

personnel. This is critical because your employees need to know that the results
they are getting are accurate and reliable.
Privacy considerations: Screenings should follow the organization’s policies

regarding confidentiality of employee information. HR should have a full
understanding of what it will take to ensure privacy of employee information and
be able to address any concerns about privacy up front.
Budget considerations: Screenings can be very costly for an organization as well

as for the wellness budget. You may need to find alternative ways to supplement
paying for these tests. Employees may be willing to pay for all or a portion of the
testing, and they will recognize the convenience of onsite screenings.
© 2012 SHRM 44
Health Education Programs
In his book, The Manager’s Guide Health & Safety at Work, Jeremy Stranks
concludes that:
“Health education programs are primarily concerned with the education of

employees toward a healthier lifestyle. It can also include the training of
management and employees in various health and safety at work, in health
working techniques and in the avoidance of health hazards, such as those
arising from manual handling and the use of hazardous substances.”
(Stranks 2006)
By offering workplace education programs, organizations have an opportunity to

improve individuals’ health and influence their attitudes. The following provide
ideas for health education programs in the workplace:
 Nutrition education and resources
 Smoking cessation programs
 Eldercare education and resources
 Office ergonomics
Promotion and Participation for Health and Wellness Programs
The biggest challenge for making wellness programs work is getting employees to
participate. Often employees think involvement can get in the way of job
opportunities and even promotions. Employees may think, “If I sign up for the
Heart Health seminar, my boss won’t think I have the stamina for a management
position.” Employees may also be discouraged to participate if they are fearful
that personal information will be made public.
To encourage participation, make it a policy to protect your worker's privacy.

Make sure signing up for health information is strictly confidential.
You may also think about offering incentives for participation, from decreasing
employees' co-pays to giving gifts and bonuses. Communicate that your
organization values good health and that good health can also reduce health care
© 2012 SHRM 45
costs. Posters, social media platforms, e-mail, and meetings are several ways in
which you can promote nutrition and health initiatives.
Work/Life Balance Programs
The economy, environment, technology and societal demands have changed the
role of today’s employees and what they expect from their employers. While
work is still a necessity, there are expectations for personal satisfaction. One of
the ways to help employees achieve personal and professional goals is to offer
work/life balance programs.
Work/life balance is the ability to effectively manage time at work with

the time spent on leisure or with family members.
If you poll employees across organizations, you’ll likely find there is never a
complete balance between work and life because of conflicting responsibilities
and commitments. However, organizations that provide flexible and supportive
programs to assist employees find they can better maintain employee morale,
which directly ties to better productivity.
In some countries, legislation may impose guidelines for some work/life balance
programs. An example is child care programs. Some governments are setting the
policy framework for child care that meets diverse needs, including those of
workers and employers. Benefits of such programs can include the following:
 An increase in resources for child care
 Encouragement of partnerships and innovation
 Improved responsiveness to parents’ needs
 Support for woman’s labor force participation (International Labour
Organization 2011)
© 2012 SHRM 46
Telecommuting
Flexible workplace options, such as telecommuting or teleworking, can greatly

expand HR’s opportunities for hiring the most talented candidates for a job,
regardless of their location.
Many organizations are concerned about productivity when employees work from
home, yet some studies show that employees can be more productive when
working remotely. With telecommuting, employees can avoid office distractions
and add to productivity hours without the commute.
Telecommuting doesn’t work for everyone, and certain employees perform better
in the well-structured office environment. For this reason, when hiring employees
who will work remotely, it is important to find candidates capable of creating
their own structure.
When supervisors cannot see employees, they may need to change their
management style. Agreeing on clear and structured goals can help manage the
relationship (Society for Human Resource Management 2011).
Flexible Schedules
There are many alternatives to a traditional workweek. Many of them have been
in practice for some time but are now being recognized as flexible or alternative.
Examples of flexible work hours are as follows.
Regular part-time work: An arrangement that provides both employee and

employer flexibility to achieve job-related tasks. Often, part-time employees do
not receive the same level of benefits as full-time workers, although this is
increasingly changing.
Temporary work: Traditionally, organizations used temporary workers on a

short-term basis to fill in when employees went on leave or for special staffing
needs. However, many organizations now use temporary arrangements to test
employee’s productivity and fit within the organization before hiring or to meet
long-term staffing needs.
© 2012 SHRM 47
Compressed workweek. This type of workweek allows full-time employees to

work the required number of hours in fewer days than in a traditional workweek.
For example, instead of working eight hours a day for five days, you may work
ten hours a day for four days.
Compressed workweeks are more common in the health care, production and
manufacturing industries. Some employers offer compressed workweeks to
employees during the summer (Dressler 2008).
We will further explore flexible schedules in Section 6.3: Employee Relations

and Communication.
Employee Counseling and Awareness Programs
Counseling is a preventive strategy to help employees better manage stress,

personal issues or work-related problems. Counseling programs can increase
employees’ awareness regarding their thinking patterns and behaviors to make
them more effective as individuals and in turn more effective in their job.
Employee counseling programs are typically structured in one of two ways:

 Internal counseling: Staff employed exclusively by the organization or by
a union provides counseling services.
 External counseling: Counseling services are provided on a contract and
confidential basis by an external provider.
Additionally, programs can also be structured through the following:

 Consortium: Several companies pool their resources to develop a
collaborative counseling program.
 Affiliate: A vendor already under contract to the employer subcontracts to
a local professional rather than using the employer’s own salaried staff.
© 2012 SHRM 48
Stress Management
Pressure is unavoidable and is often due to the demands of the modern work
environment mixed with life’s responsibilities. When peoples’ abilities to cope
are challenged, the result is stress. At work, stress can be aggravated if employees
feel they have little support from supervisors and colleagues, as well as little
control over work processes.
Organizations can minimize stress in a number of ways:

 Evaluate work requirements and policies from the standpoint of stress.
 Use job design interventions to give employees greater control over their
work.
 Use a stress questionnaire to help identify sources of tension and provide
individual counseling and follow-up programs as indicated.
 Build effective and supportive relationships with employees.
 Negotiate realistic deadlines on important projects.
 Encourage open communication between management and employees.
 Encourage employees to get away (for example, take a vacation or work
elsewhere).
 Support employee participation in fitness and relaxation programs.
 Train supervisors to understand the issues surrounding stress.
 Allow employees to personalize their workspace.
Additionally, recognition and respect at work is one of the most important factors
to increase motivation and satisfaction as well as general well-being. Research
shows that appreciation and respect can be useful for the prevention of stress in
the workplace.
The following report provides more information on workplace stress: Raising

Awareness of Stress at Work in Developing Countries, available at
http://www.who.int/occupational_health/publications/raisingawarenessofstress.pdf.
© 2012 SHRM 49
Substance Abuse Awareness
Substance abuse refers to the harmful or hazardous use of psychoactive

substances, including alcohol and illicit drugs. Psychoactive substance use can
lead to dependency and physiological risks that develop after repeated substance
use.
Training and education on substance abuse are crucial to workplace wellness.

Managers, supervisors and coworkers are typically the first ones to be aware of a
problem, and they are in a position to provide the necessary support and
motivation to confront the problem.
Training usually focuses on educating managers and workers to spot behaviors

that signal abuse. Education also helps managers react effectively to substance
abusers and provides them with information on appropriate support resources and
referral strategies.
Managers who are not trained are far less likely to respond appropriately when
faced with signs and symptoms of drug and alcohol abuse. Apart from the
productivity lost to the company, the prospects for helping an employee and a
career are much higher when intervention is made early.
© 2012 SHRM 50
6.3: Employee Safety

Knowledge:
Behaviors: 03. Process claims from employees (for example, workers’

compensation, short-term or long-term disability benefits and
social security or social insurance)
04. Complete tasks for employees who are returning to work after a
long absence (for example, after giving birth, after an injury,
returning with medical issues)
Skills & Knowledge: 02. Policies and programs for paying workers who take a leave of
absence (for example, medical leave, maternity leave, injury
leave, or leave due to a death in the family)
03. Safety risks in the workplace (for example, violence, use of

drugs and alcohol, small spaces, dangerous materials, fires,
emergencies)
05. Health and safety practices (for example, emergency evacuation

or security
Section 6.3: Employee Safety
Introduction ..................................................................................................................................54
Safety Risks and Prevention .......................................................................................................55

Workplace Accidents .................................................................................................................55
Road Accidents ..........................................................................................................................58
Workplace Violence ...................................................................................................................60
Terrorism ....................................................................................................................................63
Kidnapping .................................................................................................................................63
Accident Investigations ................................................................................................................64
Promoting a Safe Culture ............................................................................................................68

Management Support .................................................................................................................69
Safety Committees .....................................................................................................................71
Safety Inspections ......................................................................................................................71
Emergency Preparedness Plans ..................................................................................................72
Insurance and Processing Claims ...............................................................................................74

Workers’ Compensation Insurance ............................................................................................74
Disability Insurance ....................................................................................................................74
Social Security Insurance ...........................................................................................................75
Processing Claims ......................................................................................................................75
Module 6: Health, Safety and Security Section 6.3: Employee Safety
Introduction
Workplace safety is no longer an advantage of working for a compassionate
employer. In today’s organization, safety policies are mandated and recognized by
employers as a way to sustain profitability, provide competitive advantages and
stay out of the courtroom. In fact, safety initiatives and events such as the World
Day for Safety and Health at Work sponsored by the International Labour
Organization (ILO) are becoming more widespread and demonstrate that our
cultures, communities and employers value the safety of our workers.
Since 2003, the ILO has observed on April 28 the World Day for Safety
and Health at Work, which promotes the prevention of accidents and
diseases at work, capitalizing on its traditional strengths of tripartism and
social dialogue.
Safety refers to freedom from hazard, risk or injury for employees on the job. As
discussed in Section 6-1, laws and regulations help create safety and health
standards, yet how an organization interprets and enforces those is often part of
HR’s responsibilities. In this section, we will explore safety risks, suggestions for
preventive measures and best practices for maintaining and managing a safe
workplace environment.

 Safety risks and prevention
 Accident investigation
 How to promote a safe culture
 Insurance and processing claims
© 2012 SHRM 54
Safety Risks and Prevention

Safety risks for employees are never ending and can arise when an employee
stumbles on brick walking into an office or can occur thousands of miles away in
a foreign country. In the sections to follow, we will describe the following safety
risks and discuss ways in which HR can institute and support preventive
measures:
 Workplace accidents
 Road accidents
 Workplace violence
 Terrorism
 Kidnapping
Workplace Accidents
In 2010, thirty-three Chilean workers were trapped in a mine for sixty-nine days.
Fortunately, this catastrophe ended well, and all the miners were saved. As a
result of the incident, Chilean President Sebastian Pinera ordered an overhaul of
Chile’s mine safety regulations and a renewed call to shut down decrepit mines.
This miraculous incident has become a symbol of survival and also a reminder to
consider the safety of employees within our own workplace environments.
Catastrophes such as the one in Chile and accidents on a smaller scale can lead to
the demise of an organization and loss of life. Figure 3-1 categorizes influencing
risk factors for workplace accidents.
© 2012 SHRM 55
Influencing
Description
Risk Factors
Internal Internal influences refer to the nature of the task, the work
influences group, management goals, organizational style, leader’s style
and experience, employee orientation and new or antiquated
machinery.
For example, an inexperienced supervisor may give

employees orders that could put them in unsafe situations.
External External influences include economic conditions,

influences composition of the labor force and the geographic location of
the organization.
External influences such as labor unions and governmental

regulations and requirements can have a positive influence
on the workplace.
For example, some laws may dictate required safety

clothing, equipment and training for certain tasks, such as
using power tools and slicing machines.
Human factors Human factors include employee attitudes, abilities,

motivation, skills, preferences and distractions.
For example, an employee who forgets to remove dangling

jewelry could become entangled in equipment.
Figure 3-1. Workplace Accidents’ Influences
Classifying Accidents
Applicable laws, regulations and your organization’s policies will determine how
to classify accidents. For example, in some organizations, an accident can result
© 2012 SHRM 56
from unsafe acts or unsafe conditions or a combination of both. Figure 3-2

further compares unsafe acts verses unsafe conditions.
Figure 3-2. Unsafe Acts and Unsafe Conditions
By identifying the potential causes of incidents, the HR professional becomes

aware of factors that may need immediate attention if further incidents are to be
prevented. The more precise the professional is during the identification stage, the
better he or she can use the information to suggest necessary changes.
Musculoskeletal Disorders
Musculoskeletal disorders can result from unsafe acts or conditions at work.

Disorders can affect muscles, nerves, tendons, ligaments, joints, cartilage, blood
vessels and spinal disks. These diseases are the result of repetitive motion and are
one type of disease attributed to ergonomic problems. Some examples of
musculoskeletal disorders are listed below:
 Carpal tunnel syndrome
 Tendonitis
 Bursitis
 Ganglion cysts
Musculoskeletal disorders can be mitigated by improved workplace design,

ergonomically designed equipment, frequent breaks, exercise programs,
job rotation and increases in job variety.
© 2012 SHRM 57
Ergonomics
Ergonomics is the proper design of the work environment to address the physical
demands experienced by employees. An ergonomist assesses three factors to
identify ways to reduce or eliminate accidents:
 Physiological factors such as lighting and ventilation
 Psychological factors such as fatigue and stress
 Engineering design such as layout and tools
The goal of an effective ergonomics program is to engineer risk factors out of

jobs.
Lower Back Strains
Lifting is an activity frequently done incorrectly, placing strain on the lower back
area and leading to potential workers’ compensation (remuneration) claims. Back
injuries are often painful and expensive cases, and to compound the problem, at
least half of the population will suffer from back pain during their working
careers.
An effective program to reduce and control back injuries can lead to a reduced
number of workers’ compensation claims as well as improve employee relations
and help reduce stress in the workplace.
Road Accidents
According to the European Transport Safety Council (ETSC), it is estimated that

in Europe six out of ten work-related fatalities result from road crashes, including
crashes while driving for work and while commuting to work.
In response, ETSC’s PRAISE project, Preventing Road Accidents and Injuries

for the Safety of Employees, has been established to mobilize knowledge and
create work-related road safety programs.
© 2012 SHRM 58
The project aims to achieve the following:

 Advance the awareness of the need for work-related road safety
management
 Offer organizations ways in which they can incorporate safety standards
and programs
The PRAISE project is making a difference in how the workplace addresses road
safety. The PRAISE project suggests organizations identify risk factors before
instituting a safety program. The following considerations can help determine an
organization’s level of risk and also identify action needed to keep employees safe
on the road:
 Commuting mode: Employees may spend hours every day commuting to
and from work. Evaluate how employees commute to work and if there are
associated risk factors with cars, bicycles, ferries, walking, road conditions
and other considerations.
 Working hours: Working and commuting during darkness and early
morning can double the risks of accidents. Besides fatigue, drivers can
misinterpret road conditions due to the darkness.
 Traveling routes: Commuters and workers typically seek the quickest
traveling route that is not always the safest. This risk can be addressed by
providing information on safer alternatives.
 Operating skills and behaviors: Consider what skills and behaviors are
needed to safely operate vehicles. Safety education programs on topics
such as traffic rules, speed, mobile phone use, braking distances, impact of
weather conditions and preparing for long journeys can reduce the risks of
accidents. (European Transport Safety Council 2010)
For more information on the PRAISE project, please go to ETSC’s website:

http://www.etsc.eu/home.php.
© 2012 SHRM 59
Workplace Violence
Stressors often lead to workplace violence. In today’s organization, stressors may

include reductions in workforce, hiring moratoriums, salary reductions, increased
workloads and longer hours.
Violent acts can occur in all industries and are perpetrated by workers who bully
other workers, customers who write menacing notes or refuse to leave the office
or discharged workers who return to the office. Having a zero-tolerance policy for
threats, harassment, intimidation and weapons possession provides employers
with legal support for future terminations and helps employees understand the
unacceptable behavior and its consequences.
“Workplace violence includes but is not limited to intimidation, threats,

physical attacks, domestic violence or property damage and includes acts of
violence committed by employees, clients, customers, relatives, acquaintances
or strangers against employees in the workplace” (Muller 2009).
Workplace Violence in the Health Care Sector
According to the International Labour Organization (ILO), workplace violence is

an increasingly dangerous problem within the health care sector. This is a
disturbing finding considering these environments are intended to provide care for
those in need. Not only does violence compromise the safety of workers, but it
also imposes very significant costs on health services in terms of human and
financial resources.
An article published by the ILO states:
“Recommendations from country reports on how to address workplace

violence in the health sector reflect an approach that integrates
interventions at an organizational, societal and individual level, with a
clear focus on preventive action. Interventions should focus on (a) general
conditions in society and the legal framework; (b) normative interventions,
© 2012 SHRM 60
such as guidelines and management competencies; and (c) interventions at

the environmental and individual levels.”
The article encourages the start of social dialogues and strategies that can promote
awareness and build understanding among health personnel and others. When
people are conscious about the magnitude of this problem, they are more likely to
participate in programs that can make health care environments a safer place to
work (International Labour Organization 2003).
Domestic Violence
In the case of domestic violence or stalking, the potential liability for the
employer is often greater because the organization is usually unaware of the
conflict between the employee and the person intent on revenge. Once on notice,
the employer should take reasonable precautions to protect the employee and
coworkers.
HR’s Role in Preventing Workplace Violence
In addition to creating a healthy environment, HR can institute preventive

strategies against workplace violence and document these practices within the
organization’s policies. Some preventive strategies include the following listed in
Figure 3-3.
© 2012 SHRM 61
Strategy Actions to Take
 Institute cash-handling policies such as

Environmental
safes and carrying small amounts of money.
 Make high-risk areas visible to people and
install external lighting.
 Install security devices and systems for
relevant risk areas.
 Publish and distribute a workplace violence

Administrative
policy.
 Establish a workplace violence reporting
system.
 Institute staffing patterns and practices
during the opening and closing of buildings
and use security professionals as
appropriate.
 Train employees, including management,

Behavioral
on identifying risk factors for violent
behaviors, nonviolent responses and
conflict resolution.
 Enforce workplace violence policies.
Figure 3-3. Strategies for Preventing Workplace Violence (Muller 2009)
HR’s Role in Responding to Workplace Violence
In the event of workplace violence, HR should respond quickly and in the best
interest of the safety of the employees. The first concern is to ensure the safety of
the employees and company property. Once the situation is under control, the
organization will need to review the situation to prevent a recurrence of violence
and to address the effect the violent act has had on company and employee
morale.
© 2012 SHRM 62
Terrorism
Terrorism is the use of force or violence against persons or property in violation

of the criminal laws for purposes of intimidation, coercion, or ransom. There are
two types of terrorism:
 In-country terrorism involves groups or individuals whose terrorist
activities are without foreign direction.
 International terrorism involves groups or individuals whose terrorist
activities are foreign based or whose activities transcend national
boundaries.
Responses to terrorism should be part of the organization’s crisis management

and emergency response plans. With the increased visibility of terrorism,
governments have passed legislation and formed agencies targeting the unique
situations posed by terrorism. As an HR professional, you must continuously
monitor legislative proceedings with the goal of understanding how laws and
regulations impact the organization’s strategic goals. Identify governmental
organizations and agencies that provide support and expertise.
Kidnapping
Many business travelers are more careless about personal security than they are
about corporate security. As a result, terrorism and kidnapping have become a
major corporate concern, especially for executives. To prevent kidnapping,
executives should constantly be aware of their surroundings. If a risk exists for
family members, they should be appropriately advised.
Employers may take protective measures and retain crisis management teams. In
the event that a suspected kidnapping has occurred, the organization should
immediately establish contact with the appropriate government and law
enforcement agencies.
© 2012 SHRM 63
Crisis Management Teams
Organizations may retain crisis management teams to respond to critical incidents

such as kidnapping, extortion, terrorism or threats to harm property. The crisis
management team’s purpose is to assist with decision making, communications
flow and operational response capability. Crisis management teams provide the
following:
 A framework for a quick and effective response
 A description of roles, responsibilities and limitations
 Methods to assess the situation
 Cues regarding relevant issues they must handle in the first twenty-four to
forty-eight hours
 Communication process descriptions
Accident Investigations
If an actual accident occurs, the employer must act. An accident is an undesired
event that results in physical harm to a person or in damage to property. It is an
unwanted interruption of a desired course of action.
Whenever an accident occurs, an investigation should follow as soon as possible

to identify its cause and the steps that should be taken to prevent recurrence.
When investigating an accident, prioritize your action steps to prevent further
harm and to preserve any necessary evidence. Figure 3-4 identifies some of the
priorities that should be considered when investigating an accident.
© 2012 SHRM 64
Priority Actions to Take
Priorities at the  Arrive safely and  Care for the

incident scene take charge. injured.
 Observe the overall  Protect others
scene for safety upon from injury.
arrival and evaluate  Remove
the situation. onlookers from
the immediate
area.
Secondary priorities  Protect the mishap  Contact

at the incident scene scene. appropriate state
 Keep management and federal
informed. officials.
Preserving evidence  Control crowds and  Isolate witnesses.

traffic.  Erect barriers (if
 Take charge. necessary or
 Take photos or make appropriate).
sketches.
Gathering evidence  Gather samples of  Identify photos

evidence (such as oil, and sketches.
glass, metal).  Identify witnesses
 Label samples. by name, address
 Take measurements. or other means.
Figure 3-4. Prioritizing Accident Action Steps (continued to next page)
© 2012 SHRM 65
Priority Actions to Take
Interviewing  Interview witnesses  Let witnesses tell

in a quiet, neutral and the story in their
nonthreatening own terms; do not
location. interrupt.
 Tell witnesses the  Take notes.
purpose of the  Avoid leading
interview. questions; be
 Take down essential neutral and use
information. tact and
diplomacy.
Figure 3-4. Prioritizing Accident Action Steps (concluded)
The process for an investigation should go beyond the unsafe act or condition and
look at system and management errors. It is important to follow a disciplined
process such as the approach outlined in the following four steps:
1. Learn why the accident happened.
2. Make changes that will prevent a repeat accident.
3. Document findings according to policy and applicable laws.
4. Communicate with the employee.
The following sections provide more detail for each step.
1. Learn why the accident happened.
Learning why the accident occurred is essential and includes the investigation
itself, interviews and documenting your findings.
It is crucial to determine the physical and environmental conditions that

contributed to the accident. Poor lighting, poor ventilation and wet floors are
possible considerations at the scene.
© 2012 SHRM 66
One way to obtain an accurate view of the accident scene is with photographs or
videotapes. However, recognize these may be used against your organization in a
related civil or criminal litigation.
Another way to obtain information about the accident is to interview the injured
employee, his or her supervisor and witnesses to the accident. The interviewer
attempts to determine what happened and how the accident was caused. These
interviews may generate some suggestions on how to prevent similar accidents in
the future. Depending on the severity of the injury, such interviews may need to
be conducted by or at the direction of legal counsel to ensure that attorney-client
privilege and/or the work product doctrine protect them.
2. Complete the accident investigation report.
The accident investigation report forms should address the items required by
upper management and necessary authorities. Reports that contain subjective
impressions of management or counsel should be held confidential, and
distribution should be tightly controlled to preserve all possible legal privileges. A
separate report, limited to factual information, may be prepared where necessary
for use with employees, third parties or government agencies.
3. Make changes that will prevent a repeat accident.
Identifying why an accident occurred is useful, but identifying steps to prevent it

from occurring again is more important. As part of an investigation,
recommendations should be made on how the accident could have been prevented
and what changes could prevent further accidents.
4. Communicate with employees.
If an accident prevents an employee from immediately returning to work, the HR

professional should provide information to the employee regarding how medical
bills will be handled, what financial benefits the employee can expect to receive
and any other benefits offered to the employee under the company’s programs.
© 2012 SHRM 67
Follow-Up and Corrective Action
Once problems have been identified, specific individuals should be designated to

take responsibility for carrying out and monitoring any follow-up that is
necessary.
All corrective actions must be documented as to how the correction was made,
when it was made and by whom. If possible, proof of the correction should also
be documented; for example, a picture of a corrected guard rail could be included
in the documentation.
Extended Absence
If an accident prevents an employee from immediately returning to work, the HR

professional should provide information to the employee regarding how medical
bills will be handled, what financial benefits the employee can expect to receive
and any other benefits offered to the employee under the company’s programs.
In the case of a planned extended absence, options may vary according to

applicable laws and the organization’s policies. Part of HR’s role is to ensure that
the individual’s work responsibilities continue during this absence and that a
manager or an HR professional keeps in touch with the employee.
Promoting a Safe Culture

Once you know the risks that threaten the safety of your organization, you’re
better prepared to promote safety through suitable programs and with realistic
actions.
© 2012 SHRM 68
Management Support
HR professionals must gain senior management support for safety programs and
include management in the development, administration and evaluation of those
programs. Management policies can create a culture that either emphasizes safety
as an uncompromised goal for the workplace or, on the other extreme, tolerates
unsafe conditions or work practices.
Senior management’s commitment and involvement can be demonstrated in a

variety of ways as illustrated in Figure 3-5.
Figure 3-5. Management Support for a Safe Culture
© 2012 SHRM 69
HR and Line Management Support
Once a commitment is made to safety, planning efforts must be coordinated, with

duties assigned to line managers, including safety specialists and human resource
professionals. Naturally, these duties vary according to the size of the
organization and the industry. While it is impossible to suggest a single proper
mixture of responsibilities, the primary safety responsibilities in an organization
usually fall on managers and HR, as suggested in Figure 3-6.
HR Line Management
 Gain management support  Show support of safety with

for safety programs. actions as well as with words.
 Assist in coordinating  Monitor employees’ safety
safety programs. habits.
 Develop a safety reporting  Recognize hazards.
system.  Report accidents.
 Provide accident  Conduct follow-up actions to
investigation expertise. prevent further accidents.
 Provide technical expertise  Follow up with employees after
on accident research and incident is reported.
prevention.  Accept ultimate responsibility
 Provide training for line for the safety of employees.
managers.
Figure 3-6. HR and Line Management Support for Safety
© 2012 SHRM 70
Safety Committees
Workers from different levels and departments are frequently involved in safety
planning through safety committees. An effective safety committee encourages
safety awareness, serves to help motivate employees to follow sound safety
practices and provides feedback to identify and correct new safety hazards at the
earliest stages. As described in Figure 3-7, safety committees can have a
significant role in reducing accidents.
Figure 3-7. Jeremy Stranks Quote (Stranks 2006)
Safety Inspections
Organizations should inspect their worksites before accidents happen. Accidents

or injuries can be very expensive and counterproductive to organizations’ efforts.
As a result, organizations should conduct their own regular inspections.
Safety and health inspections provide formal methods to assess the state of an
organization’s safety and health activities and can be highly effective early
warnings of accident potential or job health problems. Explore whether your
organization can obtain assistance in performing safety inspections from its
© 2012 SHRM 71
workers’ compensation carrier, local safety associations or third-party consultants

who are qualified safety and health professionals.
Conducting on-site safety inspections can help achieve the following:

 Identify unsafe conditions and equipment.
 Focus on eliminating unsafe work practices and behaviors.
 Reveal the need for new safeguards.
 Involve many more employees in the safety program.
 Help to promote the safety program within the organization
 Reevaluate the safety standards of the organization.
 Compare safety results against safety plans.
 Gauge the relative success of training efforts.
Emergency Preparedness Plans
An important component of an integrated safety and security system for any

organization is an emergency preparedness plan. Such a plan should describe the
actions to be taken by all personnel to respond to situations at the facility that
pose a threat to human health and the environment. Emergency situations could
include planning for natural disasters and human disasters. Potential disasters are
listed in Figure 3-8.
© 2012 SHRM 72
Natural Disasters Human Disasters
 Floods  Civil disasters

 Fires  Labor disturbances
 Hurricanes  Chemical/gas leaks
 Earthquakes  Explosions
 Tornadoes  Blackouts
 Volcanic eruptions  Brownouts
 Workplace violence
Figure 3-8. Potential Emergencies
Guidelines for Creating Emergency Preparedness Plans
The goal for an emergency preparedness plan is to get an organization back up

and running in the event of an interruption. In order for an emergency
preparedness plan to be useful, it must be created before an interruption occurs.
There are some common elements among plans, but every plan will be different
because every organization’s structure and circumstances are unique. The
Nonprofit Coordinating Committee of New York, Inc. offers guidelines for
developing an emergency preparedness plan:
1. Assign a team to write the emergency preparedness plan, including someone
in charge of making decisions.
2. Identify potential disasters.
3. Analyze your organization, including critical services and functions and the
employees who perform those functions.
4. Identify where information is stored, including employee data, client data and
other data crucial to the organization’s operations.
5. Analyze the physical buildings and the organization’s security infrastructure.
6. Identify emergency contacts, such as local police precinct, fire department,
gas, power and other utility companies, poison control, electrician, plumber,
architect and building managers.
© 2012 SHRM 73
7. Conduct a business analysis to determine how many days or weeks without

income you can sustain before going out of business. Also part of the business
analysis is to establish a recovery time objective that identifies when the
organization can expect to be in operation following a disaster.
8. Write the emergency preparedness plan and identify necessary resources.
9. Test the emergency preparedness plan.
10. Communicate the emergency preparedness plan.
11. Test the emergency preparedness plan.
12. Keep the emergency preparedness plan current. (Nonprofit Coordinating
Committee of New York 2007)
Insurance and Processing Claims

Workers’ Compensation Insurance
Workers’ compensation laws and standards differ between jurisdictions. For those
countries with workers’ compensation laws, the aim is to protect an employee and
their dependents if a work-related accident or death occurs.
Depending on the plan, provisions can be made for weekly payments in place of
wages, financial compensation, reimbursement of medical expenses and benefits
to the dependents of workers killed during employment.
Workers’ compensation typically functions like an insurance plan and is

purchased by the employer. Governments do not typically fund workers’
compensation insurance.
Disability Insurance
Many organizations offer some type of disability insurance to protect employees

against loss of wages after an accident or illness.
When this benefit is offered, the payments usually start after sick leave payments
end. Disability payments usually compensate employees 50% to 75% of normal pay.
© 2012 SHRM 74
Social Security Insurance
For those jurisdictions that offer Social Security, there are typically three benefits
that are part of this program. Provisions will vary according to jurisdictions.
 Retirement benefits: These benefits provide income to retirees.
 Survivor or death benefits: These benefits provide payments to a
surviving dependent, regardless of age.
 Disability payments: These payments provide monthly payments to
disabled employees and their dependents.
Often, to get disability benefits, you must meet different criteria such as working
a minimum amount of time under the Social Security program.
For more information on Social Security programs around the world, please go
to the Social Security Online/International Programs website at:
http://www.ssa.gov/international/links.html.
Processing Claims
Proper handling of claims is a critical HR responsibility. Insurances provide a

great benefit to employers and employees and must be managed in a disciplined,
swift manner to minimize risks.
The following provides a list of primary duties HR is often responsible for when
handling claims:
 Review and evaluate all work-related claim forms and accident reports for
completeness and clarity of information.
 Review, track and document accidents and claims and assure compliance.
 Create initial folder for new claims; maintain confidential files; collect and
file required documentation.
 Research discrepancies.
 Facilitate effective communications between employee (or dependent)
filing claim and claims administrators.
© 2012 SHRM 75
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© 2012 SHRM 76
6.4: Workplace Security

Knowledge:
Behaviors: 02. Track reports about injuries and crimes (for example, accidents,
theft, vandalism)
Skills & Knowledge: 04. Security risks in the workplace (for example, data or materials
theft, equipment theft, damage or destruction)

or security
Section 6.4: Workplace Security
Introduction ..................................................................................................................................79
Security Risks and Preventions ..................................................................................................80

Security Risk Analysis ...............................................................................................................80
Workplace Security Risks ..........................................................................................................81
Physical Security Risks and Preventions ...................................................................................82
Nonphysical Security Risks and Preventions .............................................................................83
Creating Security Programs .......................................................................................................91

Formalized Policies and Procedures ..........................................................................................92
Assigned Responsibility and Accountability .............................................................................92
Security Controls and Measurements .........................................................................................93
Disaster Recovery Plans for Security Matters ............................................................................95
Internal Investigation Policies and Procedures .........................................................................96

Monitoring, Surveillance and Searches ......................................................................................96
Internal Security Investigations ..................................................................................................96
Module 6: Health, Safety and Security Section 6.4: Workplace Security
Introduction
The purpose for workplace security is to protect employees and the organization
from internal and external security risks. Workplace security risks vary depending
on an organization’s location, industry and its hours of operation. For some
organizations, securing technology and data present the biggest security risks,
while in other organizations theft and building access may be potential threats.
Human resource professionals are becoming increasingly responsible for many

workplace security matters, and their role can expand into the following
responsibilities:
 Working with leaders to establish a formal security function
 Hiring security professionals
 Establishing theft and fraud prevention policies
 Communicating and educating employees on security policies and
practices
 Including noncompete agreements and other types of clauses in
employment contracts for the protection of proprietary information and
intellectual property
 Developing crisis management and contingency plans
 Developing workplace violence prevention procedures
 Installing security systems
 Developing organization access procedures
Some organizations may have an in-house security function or may use a third-
party provider to assist in security measures. In either case, HR should determine
how its role can support workplace security and what actions it needs to take to
keep employees safe at work.
This section examines the following areas:

 Security risks and prevention measures
 Creating security programs
© 2012 SHRM 79
 Internal investigation policies and procedures
Security Risks and Preventions

Security Risk Analysis
Organizations vary by size and type and the vulnerability of their property. The
degree of security needed is directly related to the loss control and risk-
containment requirements of the organization. Risk assessments should be used to
identify possible security issues and help organizations establish the appropriate
measures.
During a risk analysis, the organization looks at its security risk factors, also
known as vulnerabilities. These risks can be specific to the organization.
Examples may include computer viruses, union strikes or vandalism. Next, the
organization examines the probability of occurrence.
Once the probability of occurrence is determined, the organization can assess the
impact or cost if a loss were to occur, including the following:
 Cost to permanently replace lost or damaged assets
 Cost to temporarily replace lost or damaged assets
 Cost of related losses caused by the inability to carry on normal activities
 Cost of loss of investment income from short-term expenses incurred to
meet these costs
The risk level of a loss can be evaluated in terms of four levels of criticality:
 Level 1: Fatal to the organization
 Level 2: Very serious
 Level 3: Moderately serious
 Level 4: Not serious or negligible
© 2012 SHRM 80
Assessing risk levels can help determine if the organization should invest in
security protection measures. Organizations usually look for the cost of protection
to be substantially less than the costs incurred without the protection. Figure 4-1
demonstrates a simple calculation used to determine whether investing in a
security guard and video surveillance is a financially good decision.
Figure 4-1. Comparison of Magnitude of Costs to Protection Costs
Workplace Security Risks
Security risks can be categorized as physical or nonphysical.
Physical security risks are possible dangers against tangible items such as
property, facilities, computer equipment, materials and even personnel. These
risks occur from unauthorized entry, trespass, damage, sabotage or other illegal
acts.
Nonphysical security risks are potential dangers against nontangible items such
as corporate data, consumer data, personnel data and intellectual property. There
are many ways in which these assets are threatened, and they are especially
vulnerable since many people have access.
© 2012 SHRM 81
Physical Security Risks and Preventions

Theft
Taking a pen here or there seems innocent enough; however, if your organization
has strict policies on using workplace materials for personal purposes, this small
infraction can be considered theft. Theft can be costly to organizations, especially
when theft expands into larger problems such as stealing computer equipment or
inflating expense reports.
The source of theft can be internal employees or external offenders. In either case,
HR plays a role in prevention.
HR’s Role in Preventing Fraud, Vandalism and Theft
From an HR perspective, there are a number of actions you can take to minimize
and prevent workplace theft, fraud and vandalism. Here are specific ways HR can
help minimize workplace offenses:
 Implement and support security measures. Security measures include
clearly identified and distributed policies and practices such as those listed
below:
o Track inventory through a system of checks and balances.
o Implement authorization controls to determine how financial
transactions are initiated, authorized, recorded and reviewed.
o Separate duties among employees for recording and processing
financial transactions (Buckhoff and Morris 2002).
 Establish hiring practices that include background checks. Complete a
thorough investigation and background check when hiring employees
(Evans 2010).
 Establish policies on theft and fraud. An effective policy should address
the most common forms of employee theft (Buckhoff and Morris 2002).
 Educate employees about fraud. Inform your employees about policies
and procedures related to theft and fraud (Evans 2010).
© 2012 SHRM 82
Financial Auditing
Each organization should consider hiring financial auditors to develop an ongoing

auditing program to test accounting and financial systems for theft and fraud.
Companies may consider using forensic accounting, which is a system that is

intended to detect and investigate fraud. Unlike traditional accounting, forensic
accounting avoids checklists and preconceived notions and procedures. Rather, it
takes aim at the indicators, or red flags, of fraud and other financial misdeeds. The
goal of forensic accounting is to isolate documents and events that do not fit
within the normal course of business.
Nonphysical Security Risks and Preventions

Data Security
As companies around the world trend toward wireless networking and the use of
smart phones, like Blackberries or iPhones, appropriate security methods must be
considered. Information technology managers and systems specialists already face
enormous challenges in providing security for Windows and Mac computer
environments. Now factor in the various mobile devices, and the potential for risk
escalates.
The issue of data security for HR professionals involves two relevant areas:
 Protecting organization-wide information such as client lists and databases
 Protecting personnel files and data
Both of these issues are at risk if appropriate safeguards and practices are not in
place. Figure 4-2 lists the technology-related components, potential risks and
influences these risks can have on an organization.
© 2012 SHRM 83
Component Potential Risk Influences

 Viruses  Can disrupt entire company.
Workstation
 Shared folders  Improper security can lead to
(PC)
 Hard drive compromised data.
 Passwords  Can be stolen and data retrieved.
 Flash drives  Common passwords (such as user
name) can be guessed and
bypassed.
 Firewall  May not protect system or may be
Network
 E-mail overly restrictive.
 Access  Anyone can read or alter.
 Lack of user access audits can
lead to security breach.
 Viruses  Synchronizing email can lead to
Cellular
 Access viruses and increased exposure to
phones
 private information.
 Tapes  Data can be extracted from

Database
 Patches physical access to tapes.
 Extracts  Failure to install current software
can leave security holes.
 Data extracts from interface
programs can be used to gather
sensitive data.
 Controls  Employee-installed software on
Software
 Roles servers can cause problems.
 Lack of maintenance and testing
can give access to sensitive data
to wrong users.
Figure 4-2. Data and Technology Risks
© 2012 SHRM 84
Cyber Criminals
Cyber criminals have created a number of tactics to break into systems to get the
information they want. In some cases, the criminal is not looking for information
but simply the ability to hack into as many systems as possible.
Cyber criminals are hard to catch because many organizations report that their
systems were hacked long before the issues was realized. If your systems are not
properly guarded, it is easy for cyber criminals to access your systems. A risk
assessment can help determine your systems’ vulnerabilities.
Identity Fraud
Some of the most sensitive and private information about an individual, from
health records to financial data, is one reason why identity fraud is becoming
more prevalent in the workplace. Personnel files, benefits information and payroll
and tax records all typically reside in the HR department and can be an ideal
target for identity thieves. Coupled with computerized storage of records, the
frequency and severity of incidents of identity fraud in the workplace have
increased.
HR professionals can help safeguard against identify fraud through the following
measures:
 Monitor news and professional sources for fraudulent schemes.
 Implement basic practices to minimize identity fraud.
 Stay current on legislative and regulatory developments.
Another way to safeguard against fraud is to enforce policies regarding online

shopping at work. ISACA, previously known as the Information Systems Audit
and Control Association, is an association for information technology governance
with members in more than 160 countries. It found that “using the company e-
mail address as the contact for a purchase—a practice by nearly one-fourth of
those ISACA polled—can lead to security problems. It can open a computer
network to a variety of threats and productivity wasters such as spam, phishing
attacks and viruses.”
© 2012 SHRM 85
For those organizations that allow online shopping from workplace systems,
ISACA advises, “…those shopping online not to allow sites to save their
username or password, to use separate browser sessions for online shopping vs.
work-related browsing and to delete cookies from the computer after shopping.”
(Society for Human Resource Management, Online Shopping Poses Threats to
Employers 2008)
Social Media Risks
Social media networks present another channel for risk. Social media are defined
as any web-based applications that allow people to share information to an entire
network. The network can be user controlled, like Facebook, or open, like
YouTube. Social media differ from e-mail and websites. Examples include
LinkedIn, Facebook, Twitter, Hyves, YouTube and various web logs, or blogs.
Users may forget that posting personal or company-related information through

social media can breach confidentiality policies. Be sure social media policies
clearly detail what is considered acceptable versus what is unacceptable.
Figure 4-3 summarizes the possible advantages and disadvantages with social
media from the Society for Human Resource Management.
© 2012 SHRM 86
Possible Advantages Possible Disadvantages

 Facilitates open communication,  Opens up the possibility for
leading to enhanced information hackers to commit fraud and
discovery and delivery. launch spam and virus attacks.
 Allows employees to discuss  Increases the risk of people falling
ideas, post news, ask questions prey to online scams that seem
and share links. genuine, resulting in data or
 Provides an opportunity to widen identity theft.
business contacts.  May result in negative comments
 Targets a wide audience, making it from employees about the
a useful and effective recruitment company or potential legal
tool. consequences if employees use
 Improves business reputation and these sites to view objectionable,
client base with minimal use of illicit or offensive material.
advertising.  Potentially results in lost
 Expands market research, productivity, especially if
implements marketing campaigns, employees are busy updating
delivers communications and profiles, etc.
directs interested people to
specific web sites.
Figure 4-3. Social Media Possible Advantages and Disadvantages

(Society for Human Resource Management 2010)
© 2012 SHRM 87
Data Security Standardization
Across the world, laws, regulations and guidelines are being enforced to protect
consumers and also employees. One example is the ISO/IEC 27000 series. This
information security standard was published by the International Organization for
Standardization (ISO) and by the International Electrotechnical Commission
(IEC) and entitled Information Technology - Security Techniques - Code of
Practice for Information Security Management.
This publication includes best practices such as establishing a risk assessment

process and determining controls that are appropriate for given circumstances.
The standards are broad enough to apply to organizations of all sizes, and
equivalent national standards have been adopted by many countries.
You can access detailed information on the ISO/IEC 27000 standards from
http://www.iso.org/iso/home.html.
In some countries, governments have instituted specific new laws on data

protection. In Germany, for example, states have ratified separate data privacy
laws protecting individuals from fraud and malicious use of their data.
As an HR professional, know the guiding laws and regulations as they apply to

your organization’s systems and data infrastructure.
HR’s Role in Protecting Data
Whether you’re protecting personnel files or client lists, HR must be involved in

ways to prevent data from falling into the wrong hands. Here are ten simple
guidelines HR can follow and enforce to safeguard critical data:
 Collect only the information that is needed.
 Create rules on how information is stored, accessed and transported.
 Grant access to sensitive data on an as-needed basis, and keep current
records of who has access to the data.
 Avoid accessing information in public places such as airports, buses,
Internet cafes or unsecured wireless networks.
© 2012 SHRM 88
 Discard the data responsibly once the need for it has expired.
 Create a culture in which employees, including HR employees, understand
the importance of data security and abide by company policy.
 Educate employees on policies regarding secure data. For example, if
encrypting data will offer a more secure data environment, provide training
on this process.
 Ensure that laptop computers have current anti-virus subscriptions.
 Have an active personal firewall to protect laptops from clients’ networks.
 Use company laptop computers for business purposes only.
(Society for Human Resource Management, By Protecting Client Data,
Consultants Protect Themselves 2008)
Additionally, be sure to establish a relationship with the systems and technology

professionals in your organization. Rely on these professionals to identify
potential risks, to assist during training programs and to help you develop disaster
and contingency planning.
Protecting Portable Data and Equipment
When employees are traveling or working remotely, risks for stolen data and
equipment greatly increase. HR should work with systems and technology
professionals to establish procedures for storing sensitive data on laptops and for
using public wireless networks. Additionally, HR should set up best practices for
transporting equipment from location to location, especially at airports. It is often
best practice to carry a laptop onto an airplane rather than to check it with
luggage.
Intellectual Property
By talking to competitors, employees can jeopardize a valuable organizational

asset, intellectual property. They can also compromise the organization’s
competitive edge and future profits. In addition, current and former employees
may attempt to use trade secrets and other information for their own gain.
© 2012 SHRM 89
The following suggestions are offered to help organizations prevent information

leaks:
 Identify what needs protecting.
 Create confidentiality and nondisclosure agreements to keep proprietary
information from being exploited by former owners or employees in
competing ventures or through sales to competitors.
 Have all employees promise to safeguard company secrets.
 Remind workers not to discuss company activities or display sensitive
company documents in public places.
A nondisclosure agreement (NDA), also known as a confidentiality

agreement, confidential disclosure agreement (CDA), proprietary
information agreement (PIA) or secrecy agreement, is a binding contract
between at least two groups that outlines confidential knowledge or
information that the groups agree to share and restrict with third parties.
The most important part of a nondisclosure agreement is defining the

confidential information. It is better to be inclusive and descriptive
without actually revealing the confidential information itself.
Organizations should also have processes in place for protecting intellectual

property through trademark, copyright and patent procedures. Give careful
thought to the types of information made available through the organization’s
Intranet and Internet sites.
Beyond these steps, management at all levels must exert a positive influence on
the protection of a company’s proprietary information. This positive influence
must come from the top, with a strong statement from the CEO or president
supporting a proprietary information policy. This policy should identify the types
of corporate proprietary information that are protected and the steps to be
followed in preserving confidentiality.
© 2012 SHRM 90
Creating Security Programs

A world-class security program is effective only when policies and procedures
achieve their stated objectives, and that is to protect people, property and the
workplace environment. Best practices vary depending on the scope of security
measures.
Building a security program takes time, dedication and commitment from all
levels within the organization. An effective security program will likely include
the elements listed in Figure 4-4.
Figure 4-4. Elements of a Security Program
Each element is further discussed in the sections to follow.
© 2012 SHRM 91
Formalized Policies and Procedures
Organizations should have a documented security program that addresses specific

security threats and employee responsibilities. Management must be visibly
supportive and involved in communicating practices.
A formal process for reporting security issues should be established and included
in the documentation. Policies and procedures should be reviewed on a regular basis
and should allow for employee feedback toward policy formation and implementation.
Communication and Training
Security policies can save lives but only when employees are knowledgeable
about risks and can clearly articulate the course of action to take when security
threats arise. Training programs offer an opportunity to review policies and
procedures and also to role play best practices. Specific training topics may
 Who and what are subject to the rules, including which any new rules that
apply to employees
 Permitted and restricted uses and disclosures of privacy requirements
 Administrative, physical and technical security measures
 Documentation requirements
 Applicable penalties
Assigned Responsibility and Accountability
A security program requires someone to oversee all responsibilities and to

account for controls and measurements. For some organizations, outsourcing can
be a cost-effective alternative when resources are not able to adequately address
workplace safety and security. Once a need is identified, the organization can
determine whether the budget and culture will allow for outsourcing. A successful
outsourcing relationship will require commitment from the outsourcing firm to the
organization’s goals.
© 2012 SHRM 92
Security Professionals
Security professionals are common in industry sectors such as health care, retail
and pharmaceuticals. If you are hiring a security professional, be aware positions
range from basic security officers to executive-level roles at large, multinational
corporations.
Workplace security careers typically require education and experience in overall

security, criminal science, computer technology, law and information
management. A basic understanding of business relations and human resources is
also important.
Security Controls and Measurements
Security controls that are put in place should tie directly to security risks. For
example, if your building presents security or safety risks, you may want to enact
the following controls:
 Reduce the number of access points to your organization.
 Use key cards or badge access.
 Secure restrooms.
 Institute panic button procedures for contacting emergency personnel.
 Establish practices for mail delivery and handling.
 Create computer protection measures if an unauthorized individual gains
access.
These are just a few examples, and other control measures may include highly
sophisticated systems such as video surveillance. The key factor here is to analyze
the risk and put appropriate controls in place (Dressler 2008).
Security Metrics
It is essential to establish meaningful security metrics that can determine how

security programs and practices are contributing to the organization. Relevant
metrics may include those listed in Figure 4-5.
© 2012 SHRM 93
Examples of Security Metrics
 Safety and security team  At-risk behavior reduction

initiatives completion rate
 Compliance trainings  Observation of safety behavior
 Near-miss responses  Safety and security committee
activities
 Six Sigma  Trend analysis
Figure 4-5. Security Metrics (Garber 2008)
Supply Chain Management for Security Matters
Supply chain management (SCM) can greatly reduce security risks for
organizations. By carefully monitoring the interconnected businesses involved in
the provision of products and services, organizations can identify risk areas and
also communicate expectations to suppliers.
For some organizations, this process can be costly and require extensive
resources. Let’s look at a large-scale example. Imagine your country is hosting the
upcoming Winter Olympic events. Next, consider all the security measures
required to host such an event and to protect the host country, neighboring
countries, spectators, event workers and the athletes. Next, think about all the
potential risks for those attending and participating in the events. Now ask
yourself, what would it take to secure this event? Part of your answer should be to
consider risks associated with every vendor, athlete, worker and spectator and to
institute measures to monitor their presence at the games. Knowing who is part of
the supply chain and the risks they present is part of an effective security
assessment.
For the 2010 Winter Olympics hosted in Canada, the security costs were initially
estimated at $175 million Canadian, and the final tally was close to
$1 billion Canadian. Costs escalated once additional risks were identified and
© 2012 SHRM 94
Canadian security officials realized extra police, private security and military
personnel were required (Dowd February 19, 2009).
Disaster Recovery Plans for Security Matters
The goal of a disaster recovery plan is to get an organization back up and running
in the event of a disaster. The problem may be the loss of crucial data or an entire
network crashing. In any event, your organization should have a contingency plan
to protect against unsafe exposure so that the delivery of services and goods is not
interrupted.
The HR professional must recognize that operations, administration, finance,

security and marketing managers share in the planning responsibility for security
disasters. Their involvement will allow for appropriate planning consistent with
the organization’s values and beliefs.
A disaster recovery plan should describe the actions to be taken by all personnel
to respond to situations. For some disasters, establishing a command center makes
sense. A command center serves as the central source for communication and
making decisions on behalf of the organization. A command center allows a
company to act quickly, determine actions to take and provide information to
outside authorities, employees, their families and the media.
Should the organization be able to maintain its operations, plans should be

developed for identifying alternative worksites and staffing options, as well as the
technology structures required to support business operations.
© 2012 SHRM 95
Internal Investigation Policies and Procedures

Monitoring, Surveillance and Searches
Monitoring, surveillance and searches are often a source of tension between

employers and employees. While these controls may seem like the most effective
line of defense for protecting an organization’s interests, they can violate
employees’ personal rights. Be sure to follow applicable laws regarding
individual privacy issues if you are incorporating the following:
 Random searches of an employee’s personal property
 Electronic data monitoring
 Video surveillance
Video surveillance is one of many techniques you can use to monitor employees’
workplace activities. Many employers use video surveillance in order to monitor
theft and attendance issues and to identify unsafe working conditions.
Video monitoring also provides clear evidence of crimes when they occur in the
workplace. This type of surveillance may not be legal in your organization,
depending on many factors. Explore legal considerations: whether the
surveillance area is a public or private area, whether sound is also monitored and
whether the camera is in open view or hidden (Society for Human Resource
Management, Monitoring Video: Can We Use Video Surveillance to Monitor
Employees? 2008).
Internal Security Investigations
Organizations should investigate complaints where there is a reasonable concern

that an employee’s behavior may cause harm. To support such, the employer
should, in advance of any complaint, develop protocol for conducting internal
investigations concerning the reported behavior, threats or acts. Figure 4-6
outlines suggested steps for internal investigative protocol.
© 2012 SHRM 96
Suggested Steps for Investigative Protocol
Step 1: Identify a person This person should be a qualified in conducting

responsible for conducting interviews and be able to interview and gather
the investigation facts and statements on behalf of the employer.
Step 2: Establish protocol A process should outline how the reporting will
for the investigation be handled in terms of fact gathering,
documentation and confidentiality.
Step 3: Gather information The investigator should interview all persons

concerning the reporting.
A statement should be obtained from the person

making the report as well as from any persons
identified by the reporting party and witnesses. In
cases where the reporting is anonymous, the
investigator should make a good faith effort to
substantiate, within reason, the information
provided in the reporting.
Step 4: Analyze the data The investigator should make an effort to

collected determine whether the report is based on facts
and if there was a violation in the employer’s
policy.
The investigator should also prepare an

investigative reporting, including a summary of
the facts, evidence collected and, if appropriate,
recommendations such as intervention,
professional counseling or termination.
Figure 4-6. Suggested Steps for Investigative Protocol (continued to next page)
© 2012 SHRM 97
Suggested Steps for Investigative Protocol
Step 5: Review the A person(s) not involved in the investigation

investigators’ findings and should review the investigators’ findings and
recommendations recommendations. Based on these findings, a
course of action should be considered, and any
actions taken should be documented.
Figure 4-6. Suggested Steps for Investigative Protocol (concluded)
As a result of the investigation, if a course of action may have consequences to

any of the parties involved, the employer should communicate the potential risk to
these persons and undertake reasonable measures to mitigate the risk to any
employee and/or company assets.
Let’s use the example of a terminated employee who threatens harm against
another employee who reported wrong doing or an infraction to management. The
investigator should discuss an appropriate protective action plan with the
employee who made the report and the applicable manager. Actions could include
notification to law enforcement.
You have completed Module 6: Health, Safety and Security. Next, if you feel
terminology.
© 2012 SHRM 98
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sheets/fs204/en/index.html (accessed
August 31, 2012).
© 2012 SHRM 101

Module 6: Health, Safety and Security Index
Index
accident investigations .............................. 65 Duty of Care ............ 16–17, See international
corrective action .................................... 69 assignees
evidence ................................................. 96
extended absence ................................... 69 emergency preparedness plan ....... 17, 73–75
AIDS (acquired immune deficiency employee counseling and awareness

syndrome) ........................................ 29, 32 programs ................................................ 49
business risks ............................................ 24 employee wellness programs .................... 43
calculating risk .......................................... 10 environmental hazards ........................ 36, 41

risk assessment for environmental hazards
chemical agents ......................................... 36 ........................................................... 41
claims .............................................. 7, 59, 76 expatriate screening process ..................... 18

retirement benefits ................................. 76
survivor or death benefits ...................... 76 extended absence ...................................... 69
contingency plan ........ See security programs external counseling ................................... 49
contingency plans.................... 14, 19, 20, 79 external risks ............................................... 5

disasters .. 6, 12, 15, 19, 28, 36, 40, 73–74,
95 financial auditing ...................................... 83
corrective Action ....................................... 69 financial risks .............................................. 6
crisis management ............................... 20, 79 flexible schedules ...................................... 48
crisis management teams .......................... 64 global warming ......................................... 36
cyber criminals .......................................... 85 health and safety laws and regulations.. 1, 11

work related accidents ........................... 12
data security .................................. 22, 83, 89
health and wellness ....................... 41, 42, 46
disability insurance ................................... 75 cost benefits ........................................... 42
counseling and awareness programs ..... 49
disability payments ............................. 29, 75 employee wellness programs ................ 43
external counseling ................................ 49
disaster recovery plans .............................. 95 flexible schedules .................................. 48
health education programs .................... 46
disasters 6, 12, 13, 15, 19, 28, 36, 40, 73–74, health screenings ................................... 44
95 internal counseling ................................ 49
nutrition and fitness programs ............... 43
domestic violence................................ 61, 62 performance benefits ............................. 41
© 2012 SHRM 102

stress management ................................. 50 musculoskeletal disorders ......................... 58

substance abuse awareness .................... 51
telecommuting ....................................... 48 natural disasters ....... 6, 19, 28, 36, 40, 73, 74
health education programs ........................ 46 nutrition and fitness programs .................. 43
Hepatitis B .......................................... 29, 30 organizational risks ..................................... 5

external risks ........................................... 5
identity fraud ............................................. 85 financial risks .......................................... 6
internal risks ............................................ 5
infectious diseases ......................... 29, 31–33 legal risks................................................. 7
influenza ................................................ 29 medical risks ............................................ 7
political & social risks ............................. 7
influenza.................................................... 30 property risks ........................................... 7
technological risks ................................... 8
insurance ......................... 5, 9, 22, 29, 75–76
disability insurance ................................ 75 personal security for international assignees
disability payments .................... 29, 75, 76 ......................................................... 16, 19
social security insurance ........................ 76
survivor or death benefits ...................... 76 physical agents .......................................... 38
insurance assignees property risks .............................................. 7

evacuation plans .................................... 22
regional risks ............................................... 8
intellectual property (IP) risks .................... 7
retirement benefits .................................... 76
international assignees .. 8, 15, 18, 19, 20, 21
Duty of Care .......................................... 16 risk assessment .............. 3, 23, 41, 80, 85, 88
evacuation plans .................................... 20
proper international assignments ..... 16, 17 risk management strategy
protecting ............................................... 83 calculating risk ...................................... 10
risk assessment ........................................ 3
international assignments .......................... 17
road accidents
International Labour Organization11, 12, 33, PRAISE project ..................................... 59
55, 61
safe culture .......................................... 69–75
investigations ...................................... 96–98 emergency preparedness plan.......... 73–75
interviewing ........................................... 67 management support ............................. 69
investigative protocol. ..................... 96–98 safety committees .................................. 72
reports .............................................. 68, 76 safety inspections .................................. 72
kidnapping....................................... 8, 22, 64 safety committees...................................... 72
legal risks .................................................... 7 safety inspections ................................ 72–73
malaria................................................. 29, 31 safety risks and prevention........................ 55

classifying accidents .............................. 57
medical risks ............................................... 7 commuting mode ................................... 60
influencing risk factors .......................... 56
© 2012 SHRM 103

musculoskeletal disorders ..................... 58 substance abuse awareness ....................... 51

operating skills and behaviors ............... 60
road accidents ........................................ 59 surveillance ......................................... 81, 96
traveling routes ...................................... 60
unsafe acts ............................................. 58 survivor or death benefits.......................... 76
unsafe conditions ................................... 58
working hours ........................................ 60 technological risks ...................................... 8
safety risks and preventions telecommuting........................................... 48

workplace accidents .............................. 56
terrorism .......................................... 7, 56, 64
security investigations ............................... 96
theft ..................................................... 79, 82
security metrics ................................... 93–94
training for international assignees ..... 16, 21
security professionals .................... 63, 79, 93
vision screenings ....................................... 44
security programs ...................................... 91
vulnerabilities .................................. 9, 80, 85
communication & training .................... 92
disaster recovery plans .......................... 95 work related accidents............................... 12
security controls and measurements ...... 93
security metrics ..................................... 93 work/life balance programs....................... 47
supply chain management ..................... 94
working hours ........................................... 44
security risk
cyber criminals ...................................... 85 workplace accidents ............................ 56–57
damaged assets ...................................... 80 classifying accidents .............................. 57
data protection ....................................... 88
data security........................................... 89 workplace health risks......................... 29–41
data security standardization ................. 88 biological agents .................................... 39
financial auditing ................................... 83 chemical agents ..................................... 36
identity fraud ......................................... 85 direct and indirect costs ......................... 29
intellectual property............................... 89 environmental hazards ........................... 36
nonphysical security risks ..................... 83 global warming ...................................... 36
physical security risks ..................... 81–82 infectious diseases ................................. 29
probability of occurrence ...................... 80 natural disasters ..................................... 40
security risk analysis ............................. 80
social media risks .................................. 86 workplace screenings ........ 44, 45, See vision
theft.................................................. 79, 82 screenings
vulnerabilities .............................. 9, 80, 85
workplace security risks .................. 79, 81 workplace violence ........... 56, 62–63, 74, 79
actions to take ........................................ 63
site visits.................................................... 24 crisis management teams ....................... 65
social media .............................................. 86 workplace violence in the health care sector

............................................................... 61
social security insurance ........................... 76
World Health Organization ..... 15, 33, 34, 38
stress management .................................... 50
© 2012 SHRM 104

Glossary
Glossary
0-9 ..................................................................2 L .....................................................................55
A.....................................................................2 M ....................................................................58
B .....................................................................7 N.....................................................................62
C.....................................................................10 O ....................................................................63
D.....................................................................21 P .....................................................................66
E .....................................................................27 Q ....................................................................72
F .....................................................................34 R.....................................................................73
G ....................................................................39 S .....................................................................77
H ....................................................................43 T .....................................................................84
I ......................................................................47 U.....................................................................88
J......................................................................52 V.....................................................................88
K ....................................................................54 W....................................................................90
© 2012 SHRM 1
Glossary
Word Definition
0-9
360-degree feedback a method of appraising job performance in which information for an
employee's performance review is collected from many sources (for
example, from peers, subordinates, supervisors, and sometimes from
internal and external customers)
360-degree a method of appraising job performance using information collected

performance reviews from many sources (for example, from peers, subordinates,
supervisors, and sometimes from internal and external customers)
A
absenteeism not coming to work because of illness or personal problems. Many
companies calculate the absenteeism rate (the average number of days
employees do not come to work) of their employees.
accident an undesired event that results in physical harm to a person or damage

to property
accountability an obligation to accept responsibility for one's actions
accounts payable money an organization owes its vendors and suppliers
accounts receivable money an organization's customers owe the organization
accrual an accounting method that recognizes a company's financial

performance by recording income and expenses at the time a
transaction occurs, rather than when a payment is received or an
invoice is paid
© 2012 SHRM 2
Glossary
Word Definition
achieved cultures cultures where individuals are judged on accomplishments; one of

Trompenaars’ and Hampden-Turner’s cultural dilemmas, opposite of
ascribed culture
acquiring organization the business or organization that is buying another business or

organization
acquisition an acquired organization, or a process in which one organization buys

another organization
action plan detailed steps a unit, department or team take to achieve short-term
objectives
active listening a communication method that a listener uses to interpret and evaluate
information from a speaker
ad hoc a solution to a specific problem that is not planned or cannot be used

in other situations
ADA Americans with Disabilities Act. A United Sates law that prevents an
organization or person from discriminating against an employee
because of physical or mental disabilities.
ADDIE model a process for designing training programs that has five steps: analysis,
design, development, implementation and evaluation
ADR Alternative Dispute Resolution. A method for resolving a

disagreement without going through formal legal procedures.
advocacy supporting an idea or cause; influencing outcomes
© 2012 SHRM 3
Glossary
Word Definition
affective culture a culture where individuals are very open with their emotions; one of
Trompenaars’ and Hampden-Turner’s cultural dilemmas, opposite
neutral culture
affirmative action an activity designed to correct previous inequality that may have
existed for certain groups or classes of people. This may also refer to
a policy to give the same treatment to employees of all sexes, races,
religions and physical and mental abilities.
align to line up or make parallel; to place in a line or arrange in a similar

way
alliance a partnership between organizations that helps both sides
allowance money for a specific purpose
alternative dispute a method for resolving a disagreement without going through formal
resolution (ADR) legal procedures
alternative staffing the use of alternative recruiting sources and workers who are not
regular employees. This is also known as flexible staffing.
Americans with a United States law that prevents an organization or person from
Disabilities Act (ADA) discriminating against an employee because of physical or mental
disabilities
andragogy the study of how adults learn
Angoff method a way to set the standard score for passing a test
appeal to challenge an official decision (for example, in court); a request to a

higher authority
© 2012 SHRM 4
Glossary
Word Definition
applicant tracking computer software that helps an organization recruit employees

system (ATS)
application service a business that provides computer-based services to customers over a

provider (ASP) network such as the Internet. Software offered using an ASP model is
also sometimes called on-demand software or software as a service
(SaaS).
appraisals assessments or evaluations of the value or performance of something

(example: job appraisals)
apprenticeship when one person works for another to learn a skill, typically a
technical skill. This often occurs as a partnership between employers
and worker's groups.
aptitude the ability to learn information or acquire a skill
aptitude tests tests that measure the general ability or capacity to learn or acquire a
new skill
arbitration a process in which a disagreement between two or more people or

organizations is resolved by impartial individuals, called arbitrators,
without using a judge or court
ascribed culture a culture where individuals are judged based on social factors, wealth,
family or gender; one of Trompenaars’ and Hampden-Turner’s
cultural dilemmas, opposite of achieved culture
ASP application service provider. A business that provides computer-based

services to customers over a network such as the Internet. Software
offered using an ASP model is also sometimes called on-demand
software or software as a service (SaaS).
© 2012 SHRM 5
Glossary
Word Definition
assessment center a system of tests and interviews that evaluate employee performance
and help organizations select the right people for job positions
assets financial, physical and intangible properties owned by an

organization. Assets are the investments made by the organization to
operate its business.
assignee a person who is on (or will go on) an international work assignment
assignment a job, usually in a new location
assimilation the process of becoming a member of a team, organization or culture
asynchronous learning a teaching method where students and teachers are online at different
times
ATS applicant tracking system. Computer software that helps an

organization recruit employees.
attrition the number of employees that leave the organization for any of the
following reasons: resignation, termination, end of agreement,
retirement, sickness or death
auditory learners people who learn best by relying on their sense of hearing
authority someone with extensive knowledge of a specific subject; a person in a

superior position
availability analysis analysis in which an organization considers internal and external

availability to determine the theoretical availability of minorities and
women for established job groups
© 2012 SHRM 6
Glossary
Word Definition
B
balance sheet a standard financial report that summarizes the organization's
financial position on a specific day
balanced scorecard a method or tool that organizations use to measure the success of their
strategies by looking at both financial and non-financial areas
balance-sheet approach a way to set the salary and living allowances for employees on
international assignments
base pay basic compensation an employee receives for work; basic pay for
work performed
baseline the point or basis that is a starting point of reference; often, the
baseline is the first set of data collected to measure something over
time
behavioral interview an interview process to predict future performance based on how the
candidate acted in past work situations
bench strength The ability of the organization to fill vacancies from within the
organization
benchmarks a standard or a set of standards used as a point of reference for

evaluating performance or level of quality
benchmark jobs jobs used as reference points when designing a job classification
system and when designing or modifying a pay structure
benchmarking the act of using a standard or a set of standards as a point of reference

for evaluating performance or level of quality
© 2012 SHRM 7
Glossary
Word Definition
beneficiary a person who is eligible to gain benefits under a will, insurance

policy, retirement plan or other contract
benefits things that the employee receives in addition to a salary, such as

health insurance
best practices the methods, processes or activities that have proven to produce
outstanding results for organizations
bias occurs when an appraiser's values, beliefs or prejudices distort

performance ratings
biodata a shortened term for biographical data; information about a person's

education, background and work history
blackout period a brief period in which employees cannot access or change things
about their retirement or investment plans
blended learning a learning method that combines face-to-face teaching with online
learning
body language nonverbal communication including gestures, facial expressions,

dress, silence, touch and amount of personal space
bottom line the line on an income statement that shows net income or loss
brain drain when smart and talented people leave their own country or
organization for better opportunities
brainstorming a method in which individuals or groups spontaneously find solutions

to a problem
© 2012 SHRM 8
Glossary
Word Definition
break-even analysis analysis used to identify the point in time when a company begins
making a profit on a project by identifying the break-even point
BRI building-related illness. A situation in which building occupants

experience acute health effects and discomfort that can be attributed
directly to airborne building contaminants.
briefings discussions which provide detailed information
broadbanding combining several salary grades or job classifications with narrow pay
ranges into one band with a wider salary spread
Brownfield operations reuse of land previously used for industry or manufacturing
building-related illness a situation in which building occupants experience acute health

(BRI) effects and discomfort that can be attributed directly to airborne
building contaminants
bumping when more senior workers whose jobs have been eliminated are given
the right to transfer into the jobs of less senior workers
business continuity a management process that identifies potential threats and impacts to
planning an organization and provides a framework for safeguarding essential
business functions against disruption by unforeseen events
business ethics the accepted principles of right or wrong governing the conduct of
business people
business unit a specific area of an organization such as marketing, accounting or

production
© 2012 SHRM 9
Glossary
Word Definition
business-to-business any activity or program conducted between businesses through the

(B2B) e-commerce use of a computer network connection versus an intermediary
C
call-back pay additional pay that employees receive when they are called back for
an extra shift in the same workday
capacity to an operations department, the ability to yield output
career development an employee's progress through each stage in his or her career
career ladder job advancement through a series of defined positions, from lower
promotion level to higher level
career management preparing, implementing and monitoring the career path of employees
with a focus on the goals and needs of the organization
career planning taking steps to improve professional skills and create new
opportunities
cascading goals goals that an organization sets at a high level that flow down as goals
for departments and then become goals for specific people; goals that
flow from the top to the bottom of an organization
cash-balance plan a pension plan that defines the promised benefit in terms of a
hypothetical account balance and features benefit portability
cash flow a concept that describes the flow of cash in and out of the
organization
© 2012 SHRM 10
Glossary
Word Definition
cash flow projection predicts cash inflows from customer payments and cash outflows for
expenses
cause-and-effect a visual tool to organize factors that contribute to certain outcomes;

diagram also called a fishbone diagram
Caux Principles a set of ethical principles developed for global organizations by the
Caux Round Table, a group of global business leaders from around
the world
center of excellence a team or division that uses best practices in a specific area to achieve
business goals
central tendency a measure of the middle of a statistical distribution of data
centralization degree to which decision-making authority is restricted to higher

levels of management in an organization
centralized when decision-making authority is restricted to higher levels of

management in an organization
certification confirmation of specific achievements or characteristics given by an

authority, usually by issuing a certificate or diploma after a test
chain of command the sequence of power in an organization from the top to the next
levels of authority
change to make different
change agent a person or department that deliberately causes change in an

organization
check sheets simple visual tools used to collect and analyze data
© 2012 SHRM 11
Glossary
Word Definition
circular thinking how Eastern cultures view history as a cycle that repeats itself
civil law regulations set by countries or legislative groups about the rights of
people (different from common laws which are set by judges)
clause a part of a document, agreement, proposal or contract that gives more

detail
cliff vesting requires participants to complete a specific number of years of service

with an employer before they get any vested benefits, after which they
are 100 percent vested
closed questions questions that can usually be answered with yes or no
cloud computing storing, developing or processing data on software running on the

Internet instead of on a personal computer or the organization’s server
coaching a method of developing specific skills in which a coach gives

information and objective feedback to a person or group
code of conduct a written description of the principles, behaviors and responsibilities

that an organization expects of its employees
code of ethical conduct a written code of conduct or ethics that helps communicate an
organization's general value system and ethical principles, as well as
specific ethical rules
code of ethics a written description of the principles of conduct in an organization

that guide decision making and behavior; also see code of conduct
codetermination an organizational structure in which employees share responsibility

for the operations of a company
© 2012 SHRM 12
Glossary
Word Definition
co-employment a situation in which an organization shares joint responsibility and

liability for their alternative workers with an alternative staffing
supplier
cognitive ability thinking skills and mental abilities
cognitive ability test tests that assess skills the candidate has already learned
collectivism cultures where members form collective groups with close

relationships that are responsible for and reliant on each other; one of
Hofstede’s Dimensions of Culture, opposite of individualism
commercial diplomacy negotiations between countries about policies on international trade or

investment
commission payment made to salespeople, usually calculated as a percentage of

sales
committee a group of people and resources who are tasked to accomplish a

specific organizational objective
common law laws established by court decisions and legal precedence (different
from civil laws which are regulations set by nations or legislative
groups)
communication how communication moves through an organization

channels
communitarian culture a culture where the members work as a group toward a collective
goal; also called collectivist culture; one of Trompenaars’ and
Hampden-Turner’s cultural dilemmas, opposite of individual culture
© 2012 SHRM 13
Glossary
Word Definition
community of interests mutuality of interests among employees in bargaining for wages,

hours and working conditions
commuter assignment an international job that requires an employee to live in one country,
to work in another country, and to travel regularly between them (for
example, an expatriate who lives in Bahrain and works in Saudi
Arabia)
comparable worth women's and men's salaries should be equal when their jobs require
comparable skills, effort, responsibility and working conditions.
Comparable worth is a concept that compares salaries of women and
men.
compa-ratio a number comparing a person's salary to other salaries for the same
job. The comparison ratio is calculated by taking a person's salary and
comparing it to the mid-point of other salaries (if a person earns
$45,000 per year in a job where the salary mid-point is $50,000 per
year, the compa-ratio is $45,000/$50,000 = 90%).
compensable factors factors that reflect the dimensions along which a job is perceived to
add value to the organization. These factors are used to determine
which jobs are worth more than others.
compensation everything that an employee receives for working including pay and
non-monetary benefits
competencies the skills, behaviors and knowledge that are needed to succeed in a
specific job
competency model a list of the behaviors, skills and knowledge needed to do well in a
specific job
© 2012 SHRM 14
Glossary
Word Definition
competency-based pay pay based on the skills and knowledge that make an employee
valuable to an organization
compliance following established laws, guidelines or rules
comply to obey requests, laws or guidelines
comprehension level of learning characterized by ability to translate or interpret

information
compressed workweek work schedule that compresses a full week's work into fewer than five
days
conciliation method of nonbinding dispute resolution where a third party helps

disputing parties reach an agreement. This is also known as
mediation.
concurrent validity type of criterion-related validity determined by relating the test scores
of a group of test takers who take a test (Test A) to some other
criterion measure (Test B) that is administered at the same time
conflict resolution method of negotiating agreements or solving problems
consolidation combining separate companies, functional areas or product lines; in

finance, combining the assets, equity, liabilities and operating
accounts of a company with those of its subsidiaries
constituent a person who makes up one part of a larger group
constructive an intervention strategy that focuses on constructively confronting the

confrontation employee about job performance
© 2012 SHRM 15
Glossary
Word Definition
constructive discharge a type of discharge that occurs when an employer makes working
conditions so intolerable that an employee has no choice but to resign
consumer picketing product boycotts involving such activities as: distributing handbills,
carrying placards, and urging customers to refuse to purchase
products from a particular retail or wholesale business
content validity degree to which an interview, test or other selection device measures
the knowledge, skills, abilities or other qualifications that are part of
the job
contingency theories theories developed in the 1960s and 1970s that advocate that group
performance is dependent on the interaction between leadership style
and situational favorableness; the most popular and well known is the
contingency model of leadership effectiveness developed by Fred
Fiedler
contingent worker a person who is hired part-time to work under a contract or for a fixed
period of time
continuous an ongoing effort to improve products, services or processes. These

improvement efforts can seek incremental improvement over time or improvement
all at once.
contract manufacturing a production method in which one company hires another company to
manufacture parts or goods under its label and according to its
specifications
contrast error error that occurs when an employee's rating is based on how his or her
performance compares to that of another employee rather than to
objective standards
© 2012 SHRM 16
Glossary
Word Definition
control to an operations department, an after-the-fact evaluation of a

company's ability to meet its own specifications and its customers'
needs; operations-related term for ability to meet specifications
control chart a chart where variations from the norm are plotted over time
control-oriented when used as a descriptor for performance evaluation, this phrase

indicates the evaluation focuses on accomplishing tasks
copyright a form of protection provided by the United States government to

authors of original works to prevent others from printing or otherwise
duplicating, distributing or vending copies of his or her literary,
artistic and other creative expressions
core competency the skills or knowledge that an organization or employee needs to do

its work
corporate alumni developing a network of potential employees by maintaining

network relationships with employees who have left the organization for the
purposes of re-recruiting, gaining referrals of potential candidates and
supporting business development
corporate citizenship a practice in which organizations take steps to improve their

employees’ lives and the communities in which they operate
corporate culture the values, language, rules, procedures, expectations and processes
that affect how employees of an organization think, act and view the
world; the beliefs and behaviors of an organization
corporate governance the systems and processes by which organizations are controlled and
directed
© 2012 SHRM 17
Glossary
Word Definition
corporate social a business philosophy in which an organization helps to improve

responsibility (CSR) social and environmental problems
correlation a measure of the relationship between two variables
co-sourcing a business practice in which the employees of a company work with

an outside organization to perform a service
cost of goods sold the expenses incurred to produce the goods or services sold
cost per hire the amount of money needed to recruit a new employee, which
includes advertising, recruiting fees, referral fees, travel expenses and
relocation costs
cost-benefit analysis a financial review of various options to determine if the benefits are
greater than the costs
cost-sharing a method of saving money by dividing the costs of a program, project

or business operation among those involved
counseling a form of intervention in which the emphasis is on the cause of a

problem rather than on job performance
credentials proof of a person's earned authority, status or rights, usually in writing

(for example, a university diploma or proof of passing a professional
exam)
crisis management a plan that details the actions to be taken when a crisis strikes an
plan organization
criterion a test, standard or rule on which something is judged or measured
© 2012 SHRM 18
Glossary
Word Definition
criterion-related refers to the link between a selection device and job performance
validity
critical incidents tool a record of positive and negative employee actions
critical path the longest irreducible sequence of work activities which determines
the minimum duration of a project
cross-border taking place across the geographic boundaries of two or more

countries (for example, cross-border trade)
cross-cultural involving two or more cultures (such as national, regional or

professional cultures)
cross-cultural training programs that provide information to help a person live and work
successfully in a different culture (for example, teaching about
cultural values, beliefs and practices, communication styles, business
protocols and daily living resources)
CSR corporate social responsibility. A business philosophy in which an

organization helps to improve social and environmental problems.
cultural coaching giving support and suggestions to help employees achieve greater
success with different cultures
cultural determinism the belief that one's culture determines one's behavior
cultural dilemmas a model identified by Fons Trompenaars and Charles Hampden-

Turner that identifies seven alternatives that illustrate tensions that
occur between cultures
© 2012 SHRM 19
Glossary
Word Definition
cultural distance the disconnect between an organization’s leaders and subsidiary

leaders that increases the need for feedback (advice, comments,
responses and opinions) about organizational policies and their
implementation
cultural intelligence a person's ability to function in multi-cultural situations and to interact

appropriately with people from different backgrounds
cultural noise impediments to successful communication between people of

different cultures; failure to recognize responses of a candidate that
are socially acceptable rather than factual
cultural novelty the difference between a person's native culture and a new culture,
and the degree of difficulty in adjusting to the new culture
cultural presumption an unintentional attitude or conduct that originates from a person's

cultural perspective
cultural relativism the belief that everything is relative because cultures vary so greatly
cultural shortcut words, phrases or non-verbal cues that native English speakers use to
quickly convey a message that they presume their listeners or readers
will understand without any explicit explanation. Examples include
idioms, phrasal verbs, jargon, industry cliché, acronyms and
colloquial expressions.
cultural stereotypes generalizations made about individuals based on ethnicity, gender,

age, nationality or other characteristics believed to be typical of a
specific group
© 2012 SHRM 20
Glossary
Word Definition
culture the values and beliefs that shape a specific group of people (for
example, organizational culture, national culture, generational culture
and professional culture)
customer satisfaction a measure of how products and services supplied by an organization

meet or surpass customer expectation
customer value a business or marketing statement that describes why a customer

proposition (CVP) should buy a product or use a service. It is specifically targeted to
potential customers rather than other constituent groups such as
employees, partners or suppliers.
CVP customer value proposition. A business or marketing statement that

describes why a customer should buy a product or use a service. It is
specifically targeted to potential customers rather than other
constituent groups such as employees, partners or suppliers.
D
danger premium extra pay that employees receive for working in dangerous jobs or
places (for example, environments that are hazardous or politically
unstable)
dashboard similar to a dashboard on a car, this tool arranges information in a

visual fashion that allows the user to view and compare data
days to fill the average number of days it takes to hire someone for an open job
position
decentralized when decision-making authority is given to lower levels in an

organization's hierarchy
© 2012 SHRM 21
Glossary
Word Definition
decentralization the degree to which decision-making authority is given to lower levels

in an organization's hierarchy
decision science a consistent and logical framework that enhances reliable decisions
about a key resource—wherever those decisions are made
decreasing returns a type of learning curve in which the amount of learning or skill level
increases rapidly at first and then the rate of improvement slows
dedicated HR a human resource position that works only on HR responsibilities in

an organization
deductive reasoning reasoning from the general to the specific. A method of reasoning that
forms a conclusion from general information. The opposite of
inductive reasoning, where a conclusion is formed from particular
facts.
defamation injuring someone's reputation by making a false and malicious

statement. These statements may be either spoken (that is, slander) or
written (that is, libel).
deferred compensation a pension program which allows an employee to contribute a portion

plan of income over time to be paid as a lump sum at retirement when the
employee's income tax rate will be lower
defined benefit plan a retirement plan that tells participants exactly how much money they
will receive on a specific later date (usually the day they retire)
defined contribution a retirement plan where the amount of money that is to be regularly
plan contributed to the fund is specified, but no promises are made
regarding the future value of the benefit. The amount of the benefit at
retirement will depend on the investment return.
© 2012 SHRM 22
Glossary
Word Definition
defined retirement plan a retirement plan that tells participants exactly how much money they
will receive on a specific later date (usually the day they retire)
deliverables a tangible product created during the course of a project for delivery
to the customer
delphi technique a method of forecasting where a group of experts provide individual

opinions which are later shared in order to reach a more objective
decision
descriptive statistics statistics which condense and summarize large amounts of data for
quick understanding
demand analysis a type of workforce planning data. Demand analysis considers the
model organization of the future and its human capital needs. Demand
is often measured in terms of estimated growth, need for new skills,
and the location and number of new positions.
demographics statistics about groups of people that give information such as age,
gender, income and ethnic background
designated something intended for a specific person or purpose
develop professionally activities that prepare employees for future responsibilities while
increasing their capacity to perform their current jobs
development something that has happened or the act of making or improving

something
development-oriented a descriptor for performance evaluation, this phrase indicates that the
evaluation focuses on identifying developmental activities for
improving performance
© 2012 SHRM 23
Glossary
Word Definition
developmental activities that prepare employees for future responsibilities while

activities increasing their capacity to perform their current jobs
didactic intending to teach or demonstrate
differential a change in value of one item compared to another (for example, a

cost-of-living differential is the difference between the price of goods
bought in the home country compared to the price of similar goods in
the host country)
differential pay pay that is based on when the employee works or where the employee
works; also called variable pay
diffuse culture a culture in which people are very private; one of Trompenaars’ and
Hampden-Turner’s cultural dilemmas, opposite of specific culture
digital divide the gap between individuals with and without access to technology
dilemma reconciliation a method of resolving cross-cultural differences that focuses on the

use of “recognize, respect and reconcile”
direct compensation a type of pay received by employees that includes base pay,
differential pay and incentive pay
directive interview a type of interview in which the interviewer poses specific questions
to a candidate and keeps control
directors' and officers' liability insurance that protects directors, officers and corporations
(D&O) liability from claims
insurance
© 2012 SHRM 24
Glossary
Word Definition
disability a physical or mental condition that limits, but does not prevent, the
performance of certain tasks (for example, a person who is blind or
deaf)
disaster recovery plan guidelines and procedures used by an organization to recover essential
business operations in the event of a disaster. Many disaster recovery
plans place an emphasis on technology and information system
recovery
dispute resolution resolving conflict between people or groups (for example, lawsuits,
arbitration and mediation)
distance learning a method of education that uses TV, audio or video tapes, computers,
the Internet, and mobile devices instead of traditional classroom
teaching, where students are physically present with their teacher
distributed training a method of training that allows instructors, students and content to be
located in different places. This type of training can be used with a
traditional classroom or to create virtual classrooms.
distributive bargaining a negotiation process aimed at reaching the best and most equitable
outcome for all parties involved
diversity a combination of various people working together, often with

differences in culture, race, generation, gender or religion
diversity training training designed to inform and educate senior managers and
employees about diversity and to develop concrete skills to facilitate
enhanced productivity and communication among all employees
divestiture property which an organization sells or gives to another organization

(for example, a company sells a business unit)
© 2012 SHRM 25
Glossary
Word Definition
divisional structure an organizational structure in which segments are separated by

product, customer, market or region
DMADV a Six Sigma process. An acronym formed by “define, measure,

analyze, design, verify”. Is an improvement system used to develop
new processes or products at Six Sigma-quality levels.
DMAIC a Six Sigma process. An acronym formed by “define, measure,

analyze, improve, control”. An improvement system for existing
processes falling below specifications and looking for incremental
improvement.
domestic organization a local organization. An organization that does business and is based
in the country where it is established, unlike a multinational
organization, which does business in more than one country.
dot chart a graph with a vertical and horizontal axis with dots at each data
point. Also called a scatter plot or scatter diagram.
downsizing a decrease in a company's workforce to create efficiency and

profitability
draw an amount advanced to a salesperson in anticipation of future

commissions (this a unique usage of the word “draw” associated with
pay methods for salespeople)
drive to push or move forward a plan or project
dual-ladder programs career development programs that identify meaningful career paths
for employees not interested in traditional management roles
© 2012 SHRM 26
Glossary
Word Definition
due diligence the gathering and analysis of important information related to a

business acquisition or merger, such as assets and liabilities, contracts
and benefit plans
due process the way a government enforces its laws to protect its citizens (for
example, guaranteeing a person a fair trial)
duty of good faith and imposes on each party in a contract an obligation for honesty in the
fair dealing conduct of the transaction
duty of loyalty common-law precept that imposes on employees a duty to be loyal to

the employer
E
EAP employee assistance program. Services and counseling that employees
receive to help them solve problems that could affect their work
productivity. Examples include counseling for drug or alcohol
problems or family issues.
economic valuation giving monetary value to environmental factors (for example, the
quality of air and water, which are not normally part of a financial
valuation)
economies of scale the cost benefits that an organization experiences as it gains efficiency
through expansion
Eiffel Tower an organizational culture in which authority and decision-making

organizational culture responsibility increase with promotion; one of Trompenaars’ four
organizational cultures
© 2012 SHRM 27
Glossary
Word Definition
e-HR electronic human resources. Delivery HR services using technology

and web-based applications.
e-learning electronic learning. A method of education where students attend

classes on a computer or on the Internet.
e-procurement electronic procurement. Online ordering processes.
eligible to be qualified to participate in a program or to apply for a job
emergency response a plan that describes the actions to be taken by all personnel during
plan situations that pose a threat to human health and the environment
emergency-shift pay extra pay that employees receive when they are called into work
during an emergency
emotional intelligence the ability of an individual to be aware of the emotions and moods of
(EI) others and manage his or her own emotions and impulses
employee assistance services and counseling that employees receive to help them solve
program problems that could affect their work productivity. Examples include
counseling for drug or alcohol problems or family issues.
employee benefits payments or allowances that organizations give to their employees

(for example, medical insurance, social security taxes, pension
contributions, education reimbursement, and car or clothing
allowances)
employee engagement a measurement of employees' involvement, satisfaction, happiness

and loyalty with their employment (how hard they work and how long
they stay with their organization)
© 2012 SHRM 28
Glossary
Word Definition
employee handbook a manual that contains information about an organization's policies,

procedures and benefits
employee involvement planned and orderly attempt to link the shared interests of the
(EI) employee and the organization for their mutual benefit
employee relations interaction between employees and an organization (for example,

communications, conflict resolution, compliance with legal
regulations, career development and performance measurement)
employee retention an organization's techniques to keep its employees
employee self-service a trend in human resource management that allows employees to

handle many job-related tasks (such as updates to their personnel
data) using technology
employee stock a tax-qualified benefit plan with defined contributions that allows
ownership plan employees to own shares in a company
(ESOP)
employee surveys a measurement tool used to assess employee perceptions about the
work environment
employee turnover the percentage of a company's employees that must be replaced at any
time
employer branding the image an organization presents to its employees, stakeholders and
customers
employer of choice an organization that people want to work for because it attracts,
motivates and keeps good employees
© 2012 SHRM 29
Glossary
Word Definition
employer-paid benefits the benefits that an organization gives its employees in addition to
salary (for example, medical insurance, payments to retirement funds,
or allowances for cars or clothing)
employment at will an employment agreement in which an employee can quit or can be

fired at any time and for any reason
employment branding a process of turning an organization into an employer of choice
employment contract an agreement between an employer and an employee that explains the
employment relationship
employment offer a letter sent immediately after the final decision to hire a candidate is
made that makes the hiring decision official
employment practices insurance that protects an employer against claims by workers that
liability insurance their legal rights as employees of the company have been violated
(EPLI)
empowerment the ability for employees to manage their work, share information and
make decisions without close supervision
enterprise resource computer software that combines information from all areas of an
planning (ERP) organization (such as finance, human resources, operations and
materials) and also manages contact with people outside the
organization (such as customers, suppliers and stakeholders)
enterprise risk computer software that helps identify and manage operational risk
management (ERM) across an organization
environmental the management of products and processes that show concern for
responsibility health, safety and the environment
© 2012 SHRM 30
Glossary
Word Definition
environmental acquiring and using information about the internal and external
scanning business environments that influence an organization's strategy. For
example, determining how to respond to a talent shortage.
equal employment a United States law that guarantees equal treatment and respect for all
opportunity (EEO) employees
equity the amount of the owners’ or shareholders’ portion of the business
equity compensation a non-cash payment that represents an ownership interest in a

company (for example, stock options and restricted stock)
equity partnership an agreement for a person or organization to own part of a company

by providing start-up funds to the new business
ergonomic designed to be comfortable and avoid injuries (for example, an

ergonomic chair or keyboard)
ERP enterprise resource planning. Computer software that combines

information from all areas of an organization (such as finance, human
resources, operations and materials) and also manages contact with
people outside the organization (such as customers, suppliers and
stakeholders).
errors and omission form of professional liability coverage that protects against
(E&O) insurance employment claims
ESOP employee stock ownership plan. A tax-qualified benefit plan with

defined contributions that allows employees to own shares in a
company.
espouse adopt as one's own; support
© 2012 SHRM 31
Glossary
Word Definition
essential functions an employee's main responsibilities or tasks to succeed in a job
essential tensions basic conflicts that are inherent between different cultures
ethical strategy a strategy, or course of action, that does not violate the accepted
system of principles and values that guide individual or group
behavior
ethics a system of principles and values that guide individual or group

behavior
ethics hotline a dedicated phone, online chat or e-mail address used to confidentially
report ethical issues
ethnocentric a cultural bias based on the belief that one's own culture is the center
of everything and other cultures are less effective or less important
ethnocentric staffing filling important positions in an international organization by

orientation choosing new hires from the country where the organization has its
headquarters
ethnocentrism the belief that one's own culture is the center of everything and other
cultures are less effective or less important; opposite of parochialism
ethnorelative a cultural bias based on the ability to recognize different values and
behaviors as cultural and not universal
ethnorelativism the ability to recognize different values and behaviors as cultural and
not universal
evaluation a level of learning characterized by ability to make judgments
© 2012 SHRM 32
Glossary
Word Definition
executive search firms an organization specializing in recruiting candidates for executive,

managerial or professional positions. Executive search firms are
typically external to the hiring organization.
exempt a term used in the United States to designate employees who are
excluded from the overtime pay requirements of the law
exempt-level a term used in the United States which describes employees who work
experience as many hours as are necessary to perform the tasks of their position.
They do not receive overtime pay, unlike hourly workers.
exit interview an interview that HR has with an employee to get feedback about the
job the employee held, the work environment and the organization
expatriate an employee who has been transferred from their country of

citizenship (home country) to live and work in another country (host
country)
expatriate assignment a position in one country that is filled by a person from another
country who moves there to live and work
expenses the costs of conducting business
experimental research research in which certain factors (variables) are manipulated and the
results are examined
explicit culture surface characteristics of a culture (such as dress) which are easy to
identify but sometimes difficult to comprehend
express oral contract verbal employment promises made between employer and employee
© 2012 SHRM 33
Glossary
Word Definition
external coaching coaching typically available to professional, exempt and/or high-

potential employees that is done in a private and confidential
relationship with a trained or certified consultant/coach
external cultures cultures that believe humans are part of a larger scheme that directs
the course of events; one of Trompenaars’ and Hampden-Turner’s
cultural dilemmas, opposite of internal cultures
external equity classification of pay rates. When an organization's pay rates are at
least equal to market rates.
external forces events an organization cannot control. Things that occur outside of an
organization that might affect its financial health, employees,
products, services or customers (for example, political, economic or
environmental challenges).
extraterritorial laws laws from one country that apply to that country's citizens when they
travel or live in countries where they might be exempt from some
local laws. Similar exceptions can apply to companies operating
abroad.
extraterritoriality being exempt from the laws of the foreign country in which one is
living (for example, foreign diplomats)
extrinsic rewards work or actions where the motivating factors are material and are
measured through monetary benefits, grades, prizes and praise
F
face-to-face interacting while in the presence of another person as opposed to
interaction on the telephone, a webinar or e-mail
© 2012 SHRM 34
Glossary
Word Definition
facilitator a person who leads or coordinates a process
factor comparison a job comparison method that ranks each job by each selected
method compensable factor and then identifies dollar values to develop a pay
rate
family organizational an organizational culture that focuses on personal relationships and

culture compatibility; one of Trompenaars’ four organizational cultures
fast-track programs career development programs that identify potential leaders and
rapidly increase their leadership skill development
feasibility study an investigation or analysis of what is possible. Research and analysis

to determine if a project will succeed.
federal regulations national laws. United States laws that apply in every state (as opposed
to laws unique to every state).
feedback advice, comments, responses or opinions provided to an individual in

the form of coaching or counseling regarding his or her performance
or behavior
femininity the quality of being feminine. When gender roles overlap within a
culture; one of Hofstede’s dimensions of culture, the opposite of
masculinity
fetal protection policies formed with the primary goal of protecting the fetus from
policies workplace hazards
financial statement explains revenues, expenses and profits over a specified period of
analysis time, usually a year or a quarter
© 2012 SHRM 35
Glossary
Word Definition
financial viability the ability of an organization to achieve financial goals, growth and
stability while also paying expenses and debt
first-impression error a type of error made by interviewer. When an interviewer lets their
first impression of the candidate affect the outcome of the interview.
fixed costs business expenses that are not dependent on the level or goods or
services produced by the organization. That is, the amount does not
change based on the volume of goods or services produced.
flat-rate pay a type of pay calculation that provides each incumbent of a job with
the same rate of pay regardless of performance or seniority. This is
also known as single-rate pay.
flexible staffing the use of alternative recruiting sources and workers who are not
regular employees. This is also known as alternative staffing.
flextime a work schedule that allows changes in the beginning and end of the
work day without reducing the number of hours worked per week.
This is also known as variable work schedule.
focus group a small group invited to actively participate in a structured discussion

with a facilitator
forecasting a tool used to plan for the future needs of a business or other
operation. In HR, it is usually focused on predicting future
employment needs. Also defined as identifying expected future
conditions based on information about the past and the present;
predicting.
© 2012 SHRM 36
Glossary
Word Definition
foreign compulsion exemption from a home country's law. When a law of an

exception organization's home country does not apply because it is in conflict
with laws of the country where the organization is doing business.
foreign direct ownership of a business or property by a foreign entity. An overseas

investment investment in structures, equipment or property controlled by a
foreign corporation.
foreign service a financial reward for moving to a foreign country. Extra pay that an
premiums employee receives for accepting an international work assignment.
foreign subsidiary a legal term defining ownership of a foreign company. A company

that is more than 50 percent owned or controlled by a parent
organization in another country.
formal communication communication that is officially authorized by the organization
formalization structured work roles and rules. The degree to which processes and
procedures define job functions and organizational structure.
formula budgeting a form of budgeting in which an average cost is applied to comparable

expenses and general funding is changed by a specific amount
forum shopping the practice of trying to get a trial held in a location that is most likely
to produce a favorable result
franchising a business model that involves licensing. Selling a license for the use
of a trademark, product or service in order to do business a certain
way and receiving ongoing payment for the license.
fraudulent intentional deception relied on and resulting in injury to another

misrepresentation person
© 2012 SHRM 37
Glossary
Word Definition
frequency distribution data gathered that is grouped from lowest to highest
frequency table shows the number of people or organizations associated with data
organized in a frequency distribution
front-back structure an organization that has two parts: one part that focuses on the
customers and the market (the "front") and one part that develops
products and services (the "back")
FTE full-time equivalent. A percentage comparing the number of hours

that an organization's part-time employees work to the number of
hours that full-time employees work.
full-time equivalent a percentage comparing the number of hours that an organization's

(FTE) part-time employees work to the number of hours that full-time
employees work
functional area a group of people performing similar tasks. A department in which

people have similar specialties or skills (for example, the accounting
or IT department in an organization).
functional HR dedicated tasks of the human resource position in an organization.

The human resource role in an organization that focuses on strategy,
recruitment, management and the direction of the people in the
organization.
functional structure a group of people performing similar tasks. A department or division

where people have similar specialties or skills (for example, the
accounting or IT department in an organization).
© 2012 SHRM 38
Glossary
Word Definition
G
gainsharing plans group incentives where a portion of the gains an organization realizes
from group efforts is shared with the group
Gantt chart a project planning tool that graphically displays activities of a project
in sequential order and plots them against time
gap analysis a technique used to compare the current state with the future desired
state. An analysis process which helps an organization compare its
actual performance with its potential performance.
general pay increase a type of pay increase given to all employees based on local
competitive market requirements. This increase is awarded regardless
of employee performance.
generalization an objective conclusion. A perception based on observations (for

example, Americans are usually friendly). Different from a stereotype
(for example, all Americans are friendly).
Generation X a group of people born roughly between the years of 1965 and 1980
Generation Y a group of people born after 1980
geocentric staffing management of global talent. The practice of choosing the best
orientation employees for a job regardless of their nationality or where the job is
located.
geographic structure an organizational model in which divisions, functions or departments

are organized by location in a specific country or region
© 2012 SHRM 39
Glossary
Word Definition
global integration the management of global talent. The practice of choosing the best
employees for a job regardless of their nationality or where the job is
located.
glass ceiling an artificial barrier to advancement which excludes groups of

individuals from access to senior leadership positions
global ethics a system of principles and values that guide behavior around the
world
global ethics policy company behavioral guidelines. An outline of how a company expects
employees to behave around the world, often intended to prevent
bribery and corruption.
global integration bringing together diverse elements across multiple geographies.

Working to promote an effective combination of different people,
products, services and systems throughout the world.
global mindset a worldview that embraces cultural diversity. A perspective that helps
people understand and function successfully in a range of cultures,
markets and organizations. It is an attitude of authentic interest in
culturally diverse perspectives, receptiveness to new possibilities and
ideas, and a recognition that ignoring them can lead to unpredictable
consequences in workplace interactions.
global mobility international relocation. The transfer of employees from one part of
the world to another.
global organization an organization that views the whole world as one market and does
not divide it into separate markets by country
© 2012 SHRM 40
Glossary
Word Definition
global sourcing recruiting processes conducted on a global basis. This phrase is used
as part of the people development and talent management domain
behavior 03, “Analyze conditions affecting the organization’s source
of employees (for example, the average age of the available
workforce, global sourcing of talent, job changes, global mobility)."
This reference pertains to the usage for this sentence only.
global staffing worldwide employees. The process of identifying the number and
type of employees an organization needs worldwide and searching for
the best candidates.
Global Sullivan rules for ethics and human rights. A voluntary set of rules to help an
Principles organization advance human rights and equality.
global talent a strategy to put qualified employees in key positions around the
acquisition world. Actions an organization takes to make sure it has employees
with the right skills to accomplish its worldwide goals.
global team a group of employees who are working on the same project but who
are located in different countries or come from different cultures
globalization expansion of products, services, people and customs throughout the

world. Changes in society and the world as a result of economic trade
and cultural exchange.
glocalization a strong local and global presence. Characteristic of a company that

thinks globally, but acts locally. When a company has a strong
presence both in its own country and around the world.
© 2012 SHRM 41
Glossary
Word Definition
glocalized an organization where headquarters develops goals and standards

centrally and allows local HR to develop country-specific
mechanisms
goals objectives that an individual or organization wishes to achieve;

ambitions
going-rate approach a method for determining the salary of an employee on an

international assignment; the salary is based on pay rates in the
employee's home country
good-faith bargaining a bargaining technique. When parties enter into negotiation with a
sincere desire to arrive at an agreement.
governance a system of rules and processes an organization creates to comply

with local and international laws, accounting rules, ethical norms and
environmental and social codes of conduct
graded vesting a calculation method for pension plan vesting. A system by which
qualified retirement plan participants become incrementally vested
over a period of years of service.
graphic rating scale a method of evaluating employees. A method of giving employees a

numerical rating for having certain traits (for example, being reliable
or honest).
green environmentally conscious
green-circle rates a classification for employee pay. A situation where an employee's

pay is below the minimum of the range.
© 2012 SHRM 42
Glossary
Word Definition
Greenfield operation the startup of a new business plant or operation, usually in a new
location
grievance a cause of distress that can lead to an official complaint (for example,
difficult work conditions); serious complaint
gross domestic product a financial metric used to measure a country's commercial output.
(GDP) Estimate of the total value of goods and services produced in a
country in a given year.
gross profit margin a financial metric to measure gross profit. Measures the difference
between what it costs to produce a product and the selling price.
grossed-up income a practice in which a company increases an expatriate's base pay in

order to cover the additional taxes the expatriate owes because of
extra benefits and overseas allowances
group consensus a decision process in which a group of people agree to a decision or

come to the same conclusion; agreement between people
group interview a type of interview where multiple job candidates are interviewed by
one or more interviewers at the same time and/or multiple people in
an organization interview a single job candidate at the same time
guided missile an organizational culture that is highly focused on the achievement of

organizational culture specific objectives; one of Trompenaars’ four organizational cultures
H
halo effect the transfer of the positive qualities of a person or thing to related
people or things
© 2012 SHRM 43
Glossary
Word Definition
hardship premium extra payment or benefits that an expatriate receives on assignment in

a country where the living and working conditions are challenging
hardships situations in a country that cause political or economic uncertainty

that make it challenging for expatriates to live and work. Often,
expatriates receive extra hardship pay.
head count the number of employees an organization has on its payroll
head hunter an informal name for an employment recruiter, sometimes referred to

as an executive search firm
head hunting the practice of recruiting employees from one company to work at
another company
high-context culture a culture that communicates indirectly, through the context of a

situation more than through words and that builds relationships slowly
(for example, Japan, China, Arab countries, Spain and Greece);
defined by Edward T. Hall
high-potential an employee who has been identified as a talented and important

employee contributor
hiring engaging the service or labor of an individual by payment of wages;

employing
histogram a bar graph that shows the upper and lower limits in a set of data; a
bar graph showing frequency distribution
holistic a culture that views each individual as a whole; opposite of specific
© 2012 SHRM 44
Glossary
Word Definition
home-country an approach to handling an expatriate's international payroll.

compensation Expatriate salary that stays the same while the employee is on
assignment (for example, if an employee is relocated from Tokyo to
London, he or she continues to receive the Tokyo salary along with
expatriate benefits).
homogeneous a description of a group whose members are all the same or similar
(for example, people from the same background and heritage);
opposite of heterogeneous
horn effect when the interviewer allows one strong point that works against
candidate to overshadow all other information
host-country nationals employees or other people who are citizens of the country where a
person is working on an expatriate assignment; local citizens of a
country
hostile environment a situation in which an employee's co-workers create an

harassment uncomfortable work environment, often through inappropriate sexual
behavior or discrimination; harassment from co-workers rather than
supervisors
hourly wage a form of base pay that is dependent on the number of hours worked
HR human resources. A function in an organization that focuses on

implementing organizational strategy, as well as recruitment,
management and providing direction for the people who work in the
organization.
© 2012 SHRM 45
Glossary
Word Definition
HR audit an assessment of an organization's human resources. An evaluation of

the strengths, weaknesses and development needs of human resources
required for organizational performance.
HR business partner a strategic role in which human resources works closely with an
organization to develop strategies and achieve business results
HR partner a manager or department that has a relationship with HR in order to

provide services to the organization; an ally in providing HR services
HR value proposition the HR policies, procedures, functions and personnel that deliver
value to an organization's stakeholders (both internal and external)
HRD human resource development. The part of human resource

management that deals with training employees and giving them the
skills they need to do their jobs both now and in the future.
HRIS human resource information systems. Technology that supports

human resource functions.
human capital employees' knowledge, talents and skills that add to the value of the
organization
human capital a process to reduce the gap between the goals of the organization and
optimization the skills of the workforce; also see human capital risk analysis
human capital risk the analysis of human capital risk as the measurement of the gap
analysis between the goals of the organization and the skills of the workforce
human capital strategy methods and tools for recruiting, managing and keeping important
employees
© 2012 SHRM 46
Glossary
Word Definition
human resource a systematic and planned delivery of activities that provide the
development (HRD) members of an organization with the skills necessary to meet current
process and future job demands
human resource technology that supports human resource functions

information system
(HRIS)
human resource design of formal systems in an organization that ensure the effective
management (HRM) and efficient use of human talent to accomplish organizational goals
human resources (HR) a function in an organization that focuses on implementing

organizational strategy, as well as recruitment, management and
providing direction for the people who work in the organization
hybrid structure a vertical and horizontal organizational model. An organizational

model that combines different operational, functional, product and
geographic structures.
hypothesis a specific, testable prediction that is derived from a theory and

describes a relationship between two variables
I
ILO International Labour Organization. A department of the United
Nations that deals with human and labor rights.
ILO conventions standards of the International Labour Organization. International

standards for employers and employees that become international law
when a certain number of governments have adopted them.
© 2012 SHRM 47
Glossary
Word Definition
in-basket exercise a test used to hire or promote employees to management positions.

The test measures the candidate's ability to prioritize and respond to
daily tasks.
incentive a monetary or non-monetary reward to motivate an employee (for

example, a bonus or extra time off); motivation, inducement
income statement a report of financial performance that details revenues, expenses and
profits over a specified accounting period—usually a year or a
quarter. Also called the profit and loss statement.
incubator an organizational culture in which any individual in the organization

organizational culture can exert authority and gain recognition; one of Trompenaars’ four
organizational cultures
independent workers who contract to do specific work for other people or

contractors organizations and are not considered employees; people who provide
goods or services under an agreement
indirect compensation compensation that is not paid directly to an employee and is

calculated in addition to base salary and incentive pay (for example,
health/dental/vision insurance, vacation, retirement benefits,
educational benefits, relocation expenses, etc.)
individual a document completed by the individual for the plan of self-

development plan development over the next period. This plan is then reviewed and
(IDP) discussed by supervisors to match the individual goals with
organization goals.
© 2012 SHRM 48
Glossary
Word Definition
individualism a cultural belief that the individual is the most important part of
society; one of Hofstede's cultural dimensions, opposite of
collectivism
individualist culture a culture in which the individual is the most important part of society;
one of Hofstede's cultural dimensions, opposite of collective culture
inducement a benefit that management offers to employees as motivation for

producing specific results; incentive
inductive reasoning reasoning from the specific to the general. A method of reasoning that
forms a conclusion from particular facts. The opposite of deductive
reasoning, where a conclusion is formed from general facts.
indulgence a culture with an indulgence orientation has the freedom to pursue

desires, express feelings and experience gratification; one of
Hofstede's cultural dimensions, opposite of restraint
industrial relations the relationship between the management of an industrial enterprise

and its employees, as guided by specific laws and regulations
ineligible not suitable to participate in a program or apply for a job; not

qualified, unsuitable
inferential statistics let’s you form a conclusion about a characteristic of a population by

studying a sample taken from that population
informal unofficial communication that occurs among employees every day

communication
informants people who provide business, social or cultural data to others;

suppliers of useful information
© 2012 SHRM 49
Glossary
Word Definition
initiatives actions related to new ideas or to starting new plans; ideas, programs,
projects
inpatriate a foreign employee who is on a work assignment in the country where

an organization's headquarters are located
inpatriation the process of transferring a foreign employee to a work assignment

in the country where an organization's headquarters are located
insourcing assigning a job to an internal department instead of to an outside

organization; opposite of outsourcing
instant awards rewards for employees that are provided immediately after the desired
behavior is produced; immediate employee recognition
integrate to combine or bring together different parts
intellectual property creations or inventions protected by law. An original invention or

something created by the mind, usually protected by patents,
trademarks or copyrights.
intercultural between or among people of different cultures; involving or

representing different cultures (for example, intercultural
communication, intercultural competency or intercultural marriage)
intercultural communication involving people from any culture interacting with

communication anyone else from another culture and/or multiple cultures at the same
time
internal cultures cultures where individuals determine and follow their own paths; one
of Hofstede's cultural dimensions, opposite of external cultures
© 2012 SHRM 50
Glossary
Word Definition
internal equity unique jobs are fairly compensated by the organization as

performance or job differences result in corresponding differences in
pay rates
internal forces drivers of change inside an organization. Key people and influences
inside an organization that shape its future (the opposite of external
forces, such as the economy and competitors).
internal rate of return a way of measuring profits. A calculation of the average return each
year during the life of an investment.
international assignee a person who moves to a new country to work on an international

assignment; expatriate employee
International English a mode of communication increasingly used in international business

where non-native English speakers speak English with native English
speakers. Requires the avoidance of culturally laden language such as
cultural shortcuts, metaphors, jargon, slang and idiomatic phrases.
International Labour a department of the United Nations that deals with human and labor
Organization (ILO) rights
international a company that has operations and services in different parts of the
organization world; a business that operates in more than one country
International the world's largest developer and publisher of International Standards.

Organization for ISO is a network of the national standards institutes of 159 countries,
Standardization (ISO) one member per country, with a Central Secretariat in Geneva,
Switzerland, that coordinates the system.
© 2012 SHRM 51
Glossary
Word Definition
Internet a global system of interconnected computer networks that use the

standard Internet protocol suite (TCP/IP) to serve billions of users
worldwide
interpersonal skills effective social qualities for communicating and building good
relationships with different people; traits for effective social
interaction
interpretation an explanation of the meaning of something; translating spoken

language
interpreter someone who translates spoken language by speaking or signing
intrinsic reward non-material motivation which comes from personal satisfaction (for
example, job status, job satisfaction or human interest)
investments money and capital which is spent to make more money (for examples,
stocks, bonds, real-estate). A commitment of money for expected
return.
J
job analysis a study of the major tasks and responsibilities of jobs to determine
their importance and relation to other jobs in a company
job competencies the skills and behaviors that will help an employee succeed in a
specific job
job description a written document describing an employee's work activities (work

tasks and responsibilities)
© 2012 SHRM 52
Glossary
Word Definition
job enlargement increasing the scope of a job by extending duties and responsibilities,
generally without changing pay or status
job enrichment a way to motivate employees by giving them greater responsibilities

and more variety in their work; a motivational tool for increasing job
satisfaction
job evaluation the process of measuring how much a job is worth (for example, in
order to set the salary and other benefits)
job hierarchy a system for ranking jobs to each other based on their internal and
external value. The ranking is from most to least important.
job matching the process of connecting people with appropriate levels of

employment
job ranking a way to compare all jobs based on their value. A job evaluation
method that compares jobs to each other based on their importance to
the organization.
job requisition a request to hire a person for an open position. A procedure used
when a company wants to hire a new employee to fill a position.
job rotation a way to develop employees by giving them different jobs to perform;
changing work assignments
job shadowing learning a new job by watching another employee work; observing
another person's work practices
job specification a description of employee qualifications required to perform a specific

job; requirements for an employment position
© 2012 SHRM 53
Glossary
Word Definition
job-content-based job a method to decide an employee's salary. A way of estimating how

evaluation much a person should be paid based on what they do.
joint venture a partnership between two or more organizations. When two or more
organizations work together and share risks and rewards. Also called
JV.
jurisdiction the right and power to interpret and apply the law, often within a
certain geographical region; legal authority
jurisdiction shopping the practice of trying to get a trial held in a location that is most likely
to produce a favorable result
K
key performance a measure an organization uses to see its progress and show what it
indicator (KPI) needs to improve
key talent employees who perform extremely good work and are highly valued
by the organization; important and valued workers
kidnap and ransom policies that reimburse employees' losses due to kidnapping or
insurance extortion in high-risk areas of the world; protection for employees in
high-risk areas
knowledge the process of gathering, documenting and sharing important

management information to improve the performance of employees and the
organization
knowledge, skills, the qualifications for a job. A list of special qualifications and
abilities (KSAs) personal attributes you need to have for a particular job.
© 2012 SHRM 54
Glossary
Word Definition
KPI key performance indicator. A measure an organization uses to see its

progress and show what it needs to improve.
L
labor union a trade organization or works council. A group of employees with the
same job who join together to ask their employers for things such as
better wages, benefits or working conditions.
lagging indicators signs that confirm the economy has already changed (for example, the
unemployment rate)
laissez-faire an economic theory that is strongly against any government

interference in business affairs; lack of regulation and control
layoff a temporary suspension or termination of an employee or groups of

employees because of business reasons
leadership the ability to influence other people or groups to achieve a goal; a

management ability
leadership activities that enhance leadership performance. Investment in

development programs to help current leaders become more effective and to build
future leaders.
leadership pipeline a source of future leaders. The people in a company who will be
developed to move into higher levels of leadership over time.
leading indicators signs that show the economy will change before it does (for example,
a rise or fall in interest rates)
© 2012 SHRM 55
Glossary
Word Definition
lean six sigma a strategy that eliminates waste and improves process flows, and
focuses on resource optimization through logistical coordination and
inventory minimization
learning management computer software that administers, tracks and reports on employee
system (LMS) development opportunities, such as classroom and online events, e-
learning programs and training content
learning organization an organization that facilitates the learning of its members and
continuously transforms itself
learning pace the time it takes for a person to understand and retain information;
how fast a person learns
learning portal an Internet site where employees can use educational resources;
website for learning
learning style the way people process new information and learn most effectively
(for example, some people learn best visually, through lectures or by
reading, while others learn best by action or doing). The way a person
learns.
lease an agreement for a person or organization (leasee) to rent a property

from its owner (leasor) for a specific period of time and amount of
money
leniency error rating employees higher than their actual performance deserves;
favoritism in performance evaluations
leverage the act of applying a small investment to bring a high level of return;
the ability to multiply the return on an investment
© 2012 SHRM 56
Glossary
Word Definition
liability an organization’s debts and other financial obligations. Liabilities

reflect how the assets are financed. Liabilities are classified as current
(due within 12 months) and non-current (due after 12 months).
liaison a communication link between people or groups; contact, connection,

link
licensing a written contract in which the owner of a trademark or intellectual

property gives rights to a licensee to use, produce or sell a product or
service
line functions important functions in an organization that are directly related to and
support the organization's objectives
line management people who create revenue. Work groups that conduct the major
business of an organization, such as manufacturing or sales.
linear thinking how Western cultures view history as a linear; step-by-step thinking
loan money or goods that a person or organization lends temporarily,

usually charging interest; lending of money or goods
local nationals employees or other people who are citizens of the country where a
person is working on an expatriate assignment; local citizens of a
country
localized organizations where headquarters issues policies and allows local HR

personnel to develop local systems for implementation
localization a salary for an international assignee that is the same as the salary that
compensation strategy a local employee receives for a similar job. Expatriate salary based on
the salary structure of the host country.
© 2012 SHRM 57
Glossary
Word Definition
long term occurring over an extended time (for example, a long-term goal or a
long-term assignment)
long-term orientation when a culture is organized based on status, values, work ethic, thrift
and perseverance. A culture that is able to defer or delay gratification;
one of Hofstede's cultural dimensions, opposite of short-term
orientation.
long-term assignment a job in a different culture that lasts longer than six months, usually
three to five years
low-context culture a culture that communicates directly, using words more than
situations, and that builds relationships quickly (for example, the
United States, Canada, Germany, Sweden, Denmark and United
Kingdom); defined by Edward T. Hall
lump-sum a method for paying expatriates. An expatriate receives an extra

compensation amount of money (in addition to the base salary) to cover the cost of
housing, taxes and transportation, rather than receiving separate funds
for each item.
M
management contract an arrangement in which a person or company operates a project or
business in return for a fee
manager self-service a self-service online application. A technology system that allows

managers to access data and complete administrative HR tasks on-line
without the help of HR personnel.
© 2012 SHRM 58
Glossary
Word Definition
mandatory benefits laws which outline benefits to provide economic security for
employees and their dependents
manpower an organization's workforce. The total number of individuals who

make up the workforce of an organization.
market salary survey research summary of fair wages. A review of median pay for specific
positions in the same labor market.
market-based job a comparison of current salaries for a specific job. An evaluation that
evaluation compares the salaries for particular jobs offered on the external job
market.
masculinity the quality of being masculine. A term used in cultural studies to

represent work-oriented societies. One of Hofstede's cultural
dimensions, the opposite of femininity.
Maslow's hierarchy a theory in psychology based on five levels of human needs. A

method of ranking human needs in a pyramid, with basic physical
needs (such as obtaining food and shelter) at the bottom and
psychological needs (such as creative expression) at the top.
mastery great ability and knowledge of some subject or activity; ability,

expertise
matrix structure a system of managing staff where employees have more than one
reporting relationship (both vertical and horizontal relationships). For
example, they could report to a direct supervisor as well as a team
leader.
© 2012 SHRM 59
Glossary
Word Definition
mean a way to calculate the average of a series of numbers. An average

determined by adding up a group of numbers, and then dividing that
total by the number of numbers. For example, to calculate the mean of
"10, 20, 30, 40, 50": first, add the numbers (10+20+30+40+50 = 150),
then count the numbers (5), then divide the total by the number of
numbers (150/5 = 30).
measures of a relationship between variables; shows how two or more factors

association (variables) are related
measures of variation provide an indicator of variation around central tendency values
median the middle number in a series. For example, in the series "13, 13, 13,
13, 14, 14, 16, 18, 21", the median is 14, with four numbers to the left
and four numbers to the right
mediation an attempt to help other people or groups come to an agreement
mentoring when an experienced person shares knowledge with someone who has
less experience; helping a person learn
merger two or more organizations that come together through a purchase,

acquisition or sharing of resources to form a new legal entity. Usually
the new organization saves money by eliminating duplicate jobs.
mergers and when two or more different organizations are joined together as
acquisitions (M&A) equals or when one organization purchases another and the purchased
employees are assimilated into the purchasing organization under one
common owner and management structure; sometimes under the
name of the purchasing organization and sometimes as a new entity
© 2012 SHRM 60
Glossary
Word Definition
merit increase an increase in wages for meeting or exceeding the performance goals
of a job
milestones important events or achievements that mark progress toward a goal
minimum wage the lowest hourly, daily or monthly salary that employers must legally
pay to employees or workers
mission statement a short description of the main purpose of an organization, which does
not change (unlike strategy and business practices, which can change
frequently)
mobility the ability to move from one place to another. In HR, term refers to
employees and their families who move from one location to another.
mobility premium a financial benefit for expatriates. Extra salary paid to expatriates to
encourage them to move to a new country.
mode the value that occurs most often in a series of numbers. In the
following series of numbers, 8 is the mode: 6, 5, 8, 3, 7, 8, 9, 8, 4.
module one section of a training program which is presented alone or as part

of a series of other units
moonlighting to have a second job in addition to full-time employment; working for

more than one company at the same time
moral absolutes the idea that there is a clear definition of what is right and wrong;
beliefs that are right or wrong
© 2012 SHRM 61
Glossary
Word Definition
motivation reasons or influences that lead to specific desired behavior such as

commitment to a job or continuing efforts to achieve a goal;
inspiration for action
multicultural a group of people from several cultures or ethnic groups. Employees

of diverse cultures and backgrounds who are part of an organization's
workforce.
multinational a company that has its headquarters in one country and has offices and
corporation (MNC) operations in other countries; also known as a multinational
organization
multinational a company that has its headquarters in one country and has offices and
organization operations in other countries; also known as a multinational
corporation (MNC)
multinational pooling a method of managing the risk of benefit plans across countries.
Combining different employee benefit programs in a multinational
organization to save money and control risks.
N
needs analysis assessing the present situation to determine the steps necessary to
reach a desired future goal
negotiation the process of bargaining with one or more parties to arrive at a

solution that is acceptable to all
nepotism a practice where people of influence appoint their relatives or friends

to positions in a business even though they may be less qualified than
other candidates
© 2012 SHRM 62
Glossary
Word Definition
net present value a financial metric to analyze profitability of a project. The difference
(NPV) between the present value of cash inflows and the present value of
cash outflows. Compares the value of a monetary amount today to the
value of the same monetary amount in the future.
network a group of people who connect with one another. A computer system
that allows people to access shared resources and data.
neutral culture a culture that feels emotions but controls them; one of Trompenaars’
and Hampden-Turner’s cultural dilemmas, the opposite of affective
culture
NGO non-governmental organization. Any non-profit, voluntary and

independent organization that is not connected with any government
and that usually works to improve social or environmental conditions.
nonexempt a term used in the United States to designate employees who are not
excluded from the overtime pay requirements of the law and are
entitled to overtime pay
norms a standard model or pattern which is considered typical; standards,

averages
O
offshoring the relocation of a business process to another country. Transferring
internal service or manufacturing operations to a foreign (non-
headquarters) country where there is a supply of skilled and less
costly labor.
© 2012 SHRM 63
Glossary
Word Definition
onboarding the training and orientation of new employees. The process used to
help new employees learn the organization's policies, procedures and
culture in addition to their job responsibilities.
online survey an employee survey administered via the Internet
on-the-job experience the skills and knowledge a person learns from day-to-day work
experience
on-the-job training acquiring knowledge, practical skills and competencies while engaged
in daily work
one-on-one person-to-person communication such as a conversation between two

employees
open sourcing made available for others to use or modify; freely sharing
org chart organization chart. A graphic representation of how authority and

responsibility is distributed within a company. Includes all work
processes of the company.
organization chart a graphic representation of how authority and responsibility is

distributed within a company; includes all work processes of the
company
organizational culture shared attitudes and perceptions in an organization
organizational a planned process that uses the principles of behavioral science to

development improve the way an organization functions
© 2012 SHRM 64
Glossary
Word Definition
organizational the systematic presentation of data to groups to cause discussion of

feedback problem areas, to cause ideas for potential solution, to cause
motivation for change and to result in the development and
implementation of action plans
organizational goals objectives that an organization wishes to achieve; objectives that

guide an organization
organizational the way employees and processes are grouped into departments or
structure functions in an organization, along with a description of reporting
relationships
organizational values the values and goals that reflect an organization's philosophy and
guide its organizational effectiveness
outplacement the process of helping an employee find a new job. The services that
help an employee find a new job (for example, writing resumes,
networking skills and counseling).
outsourcing transferring certain business functions outside an organization so the

organization can focus on core activities (examples of outsourced
functions include data processing, telemarketing and manufacturing)
outstanding loan an unpaid debt; money that a person or organization has borrowed but
not yet paid back
overseas premium a financial benefit for expatriates. The extra salary paid to expatriates
to encourage them to move to a new country.
overtime extra time worked beyond the normal hours of employment or the
payment for extra time worked
© 2012 SHRM 65
Glossary
Word Definition
ownership interest owning part of a company or business; equity in a company
P
parent-country people who live and work abroad but are citizens of the country where
nationals an organization's headquarters is located
pareto chart a chart that shows most frequently occurring items. A vertical bar
graph in which values are plotted in decreasing order of frequency,
from left to right. Often used in quality control.
parochialism a narrow interest or view. A view of the world that does not consider
other ways of living and working. Opposite of ethnocentrism.
particularist culture a culture in which fairness is achieved by considering many factors

and relationships; one of Trompenaars’ and Hampden-Turner’s
cultural dilemmas, the opposite of universalist culture
partnership two or more organizations with shared interests working together

toward a common goal; alliance
passing score the number of correct answers required to pass a test; the minimum
points required to pass a test
passive candidate a recruiting strategy. Identifying and recruiting candidates who are not
recruiting actively seeking work. Internet recruiting technologies, intelligent
search agents and professional networking sites have made it easier to
employ this technique.
pay for performance a salary based on merit or on meeting goals. A payment strategy
where management links an employee's pay to desired results,
behaviors or goals.
© 2012 SHRM 66
Glossary
Word Definition
pay grade used to group jobs that have approximately the same relative internal
worth and are paid at the same rate or within the same pay range
pay range defines a job's upper and lower bounds of possible compensation for
individuals whose jobs fall in a pay grade; pay ranges are created for
each grade
peers people who are similar to one another in age, background, profession
or status; people equal to each other
percentile a specific point in a distribution that has a given percentage of items

below it
per diem the amount of money a person receives for working for one day, or
the amount an organization allows an employee to spend on expenses
each day (for example, meals and hotels on a business trip)
performance appraisals a method of measuring how effective employees are; employee

evaluation
performance logs informal notes listing examples of employee accomplishments and/or

performance problems
performance the process of setting goals, measuring progress, and rewarding or

management correcting performance for employees; supervising employees
performance the process of creating a productive work environment. The process

management system used to help people perform to the best of their abilities, which begins
by defining a job and ends when an employee leaves the organization.
© 2012 SHRM 67
Glossary
Word Definition
performance review a documented discussion about an employee's development and

performance that involves managers, HR and the employee. Formal
evaluation of an employee's work activities.
performance standards the behaviors and results that management expects employees to
achieve on the job
performance-based pay pay linked to how well the employee meets expectations; better
performance results in more pay
permanent assignment an employee's regular or usual job or position in a company
perquisites benefits and special treatment. Special non-monetary privileges (such

as a car or club membership) that come with senior job positions; also
called executive perks or fringe benefits.
PERT chart stands for “program evaluation and review technique”. A graphical
illustration used to manage very large complex projects with a high
degree of task dependency. Project planning tool.
phantom stock an employee incentive plan. A technique in which a company gives its
arrangement employees the benefits that come with owning stock, including
dividends, but does not actually give them stock in the company.
pilot program a small group of users who test the training and implementation of a
system before the system is released to the entire organization
placement finding suitable jobs for applicants
planned absence scheduled time away from work. Missing work after asking
permission in advance, such as for vacation or a medical appointment.
© 2012 SHRM 68
Glossary
Word Definition
plateaued careers the inability of employees to advance further in the company due to
mediocre performance or lack of opportunities
philanthropy when an organization donates money or resources to a charitable

organization or group; charity
pockets of technology dispersed areas where technology has been developed but is not being
used—or used effectively
point factor a method used for analytical job evaluation. A point rating plan is
developed by selecting and defining factors, by defining a number of
degrees for each factor, and by assigning point values to each degree.
Jobs are analyzed in terms of the factors in the classification plan and
assigned a point value by reference to the factor and degree
definitions. The total number of points determines the relative value
of the job. This method is used for the evaluation of work in the
professional and higher categories because of its capacity to evaluate
consistently and accurately, the heterogeneous jobs found in the
United Nations common system organizations. While it is more costly
to develop and operate than other systems, it is more difficult to
manipulate and biases become more readily apparent, thus, it is
ultimately more cost effective.
policy a method to help guide and make decisions
political unrest unrest, agitation or turmoil about a government's actions or beliefs
polycentric staffing recruiting host-country nationals to manage subsidiaries in their own

orientation country and recruiting parent-country nationals to fill management
positions at headquarters
© 2012 SHRM 69
Glossary
Word Definition
population a group or a collection (of people, objects or measurements) that you

want to form conclusions about
power distance a term Geert Hofstede uses in his cultural theory to describe
hierarchical relationships between people in a culture. For example,
high power distance means there are strong hierarchical relationships.
Low power distance means greater equality and accessibility among
the population.
predictive validity a relationship between a test score and a work task. The extent to
which a score on a scale or test predicts future behavior.
premiums incentives or payments employees receive for meeting goals by a

certain time; also, payments for insurance
prevailing wage the hourly wage, usual benefits and overtime that most workers
receive in a certain location
primacy errors incorrect conclusions where the first impression of someone or

something continues despite contradictory evidence. Occurs when a
manager gives more weight to the employee’s earlier performance
and ignores recent performance.
primary research a type of research that involves data that the HR professional gathers
directly for the evaluation
process mapping a method of assessing critical business functions. A diagram used to

assess business processes.
process-flow analysis a method of assessing critical business functions. A diagram used to

assess business processes. Sometimes called process mapping.
© 2012 SHRM 70
Glossary
Word Definition
proctor a person who monitors another person or activity (for example,

someone who supervises an exam)
product structure a method of organizing a company in which the departments are

grouped by product
profit the difference between the costs of doing business and the sales price.
On the income statement, there are various profit calculations.
professional actions taken by professionals to attain skills and knowledge for both
development personal development and career advancement.
progress review an evaluation of an employee's performance. Formal or informal

evaluation of an employee's progress toward goals and
recommendations for improvements and development.
progressive discipline a method of improving employee performance. A series of corrective

actions aimed at an employee to resolve a problem or improve
performance.
project an endeavor to accomplish a specific objective through a unique set of

interrelated tasks and the effective utilization of resources; enterprise
project management planning and guiding processes. A methodical approach to planning

and guiding project processes from start to finish.
promotion advancement of an employee's rank, usually with greater

responsibility and more money; job advancement
proprietary the rights of property ownership relating to key information, materials

or methods developed by an organization; relating to an owner or
ownership
© 2012 SHRM 71
Glossary
Word Definition
psychological contract an unwritten agreement of the mutual beliefs, perceptions and

informal obligations between an employer and an employee which
influences how they interact
purchase to buy or to acquire something through payment or barter
Q
qualitative measuring the quality of something rather than quantity
qualitative analysis a data analysis method that is based on research that uses interviewing
to explore and understand the opinions and behavior of individuals or
a group
quality assurance the planned and systematic activities implemented in a quality system
so that quality requirements for a product or service will be fulfilled
quantification giving a number to a measurement of something; counting and

measuring
quantitative measuring the quantity of something rather than the quality;

measurable
quantitative analysis a data analysis method that uses a limited number of measurements to
collect numerical data
quartile four parts each containing one quarter of the item being measured
© 2012 SHRM 72
Glossary
Word Definition
R
RACI chart stands for “responsible, accountable, consulted and informed”. A
chart that supports the effective allocation of roles and responsibilities
among the different members of the project team. A project
management tool.
raise an increase in salary that an employee receives, often for good

performance
range the amount covered, or the amount of difference (for example, a

salary range is the difference between the lowest and highest amount
paid for a particular job)
range penetration an employee's pay compared to the total pay range for the same job
function
ranked performance a method of evaluating employees. Rating employees from best to

worst against each other according to a standard measurement system.
ransom a demand for money or other goods in exchange for releasing a person
or property
reasonable changing the process of applying for a job or the work environment
accommodation for a qualified person with a disability
recency errors incorrect conclusions due to recent actions that are weighed more
heavily than overall performance
recruiting attracting, screening and hiring qualified people for a job
recruiting sources places or people who provide qualified applicants for job openings
© 2012 SHRM 73
Glossary
Word Definition
recruitment the process of attracting, screening and hiring qualified people for a
job
redeployment a change in an employee's location or task, often to reduce layoffs or

to make the best use of employees
reduce turnover to retain employees and lower the number of vacancies in a company
reduction in force loss of employment positions due to lack of funding or change in

(RIF) work requirements; temporary or permanent layoffs
redundancies elimination or reduction of jobs because of downsizing or outsourcing
re-entry shock the transition challenges that a person experiences when returning to
his or her home country after living in another culture; culture shock
upon repatriation
referral program a recruitment method that rewards employees for recommending

candidates
reimbursements payments made for money already spent (for example, a company
pays an employee for the cost of travel or supplies after the employee
has spent his or her own money)
regiocentric staffing a staffing policy for a particular geographic area. Focus on

orientation recruitment and hiring of employees in a particular region with
opportunities for inter-regional transfers.
regression analysis a statistical method that predicts a variable from one or more other
variables
© 2012 SHRM 74
Glossary
Word Definition
reliability having the same results after many tests; being dependable or
consistent
relocation transferring employees to another location for work; changing

residence, moving employees
remuneration the money paid for work including wages, commissions, bonuses,
overtime pay and pay for holidays, vacations and sickness
remuneration surveys surveys that gather information on what other companies pay
employees and what kind of benefits they provide
repatriate to return home from an international work assignment
repatriation the return of an employee to the home country after living in another
country (for example, an expatriate going home from an international
assignment)
replacement planning using past performance to identify employees who can fill future
vacancies (unlike succession planning, which focuses on future
potential)
reprimand a warning given to an employee who violates an organization's rules

and may result in dismissal; formal warning or scolding
request for proposal a written request asking contractors or vendors to propose solutions
(RFP) and prices that fit the customer’s requirements
requisition a request to hire a person for an open position. A procedure used

when a company wants to hire a new employee to fill a position.
responsibility a task that is part of an employee's job description; duty
© 2012 SHRM 75
Glossary
Word Definition
restraint a culture with stringent social norms that dictate the need for
individuals to control their emotions and the need for gratification;
one of Hofstede's cultural dimensions, opposite of indulgence
restricted stock stock with rules about when it can be sold (restricted stock is usually
issued as part of a salary package and has a time limit on when it can
be fully transferred)
retention the methods of motivating employees to stay with the organization

and making sure employees are satisfied and rewarded; keeping
employees
retention management an organization's techniques to keep its employees
return on investment a performance measure used to evaluate the financial outcome of an

(ROI) investment
revenue the income an organization receives from its operations. Income is

typically generated from the sale of goods and services to customers.
risk management the process of analyzing potential threats and deciding how to prevent
them
role behavior how a person acts as appropriate to a particular job function or

position
role play to perform an action or attitude in a simulation in order to understand

a different viewpoint; to act a part
root cause the underlying cause(s) of specific areas of deficiency in business
© 2012 SHRM 76
Glossary
Word Definition
rule of law a political system in which the law is supreme. All citizens are subject
to the laws of their country, no individual is above the law and
everyone must obey it.
S
S.M.A.R.T. goal applying specific, measurable, achievable, relevant and time-based
setting goals to help a company achieve business success. A process used to
help achieve business success.
salary a uniform amount that an employee is paid no matter how many hours
are worked
salary mid-point the amount of money between the highest and lowest amount paid for
a particular job. The middle range paid for a certain job.
salary range the lowest and highest wages paid to employees who work in the
same or similar jobs; wage band, pay scale, compensation rate
sample a smaller part of a whole group
Sarbanes-Oxley Act a broad range of legal regulations that strengthen corporate

accounting controls in the United States; sets specific standards for
public companies
scaled score an adjusted score. A conversion of a raw score to a common scale that
can be used for comparison.
scatter diagram a graph with a vertical and horizontal axis with dots at each data point
(shows relationships between variables). Also called a scatter plot or
dot chart.
© 2012 SHRM 77
Glossary
Word Definition
scatter plot a graph with a vertical and horizontal axis with dots at each data point
(shows relationships between variables). Also called a scatter diagram
or dot chart.
scientific method an experimental research method where a problem is defined, a

hypothesis is formulated, and data is collected and analyzed. Note that
non-experimental research observes, measures and analyzes behaviors
instead of variables.
scored questions the answers on exams that count toward the total score. The total
number of right and wrong questions on an exam (for example, pre-
test questions do not count).
secondary research a type of research that uses data that is gathered by others and
reported in various sources; data from secondary research must be
examined for relevance
selection a method for choosing the most suitable candidate for a job
self-assessment evaluation of one's own performance, abilities and developmental

needs
sequential cultures cultures in which time is viewed as a linear progression; one of

synchronic cultures
service mark a word, phrase, symbol or design that identifies and differentiates the
provider of services; trademark
severance money paid to an employee when employment ends in addition to

salary that is owed; separation payment
© 2012 SHRM 78
Glossary
Word Definition
sexual harassment unwelcome verbal, visual or physical conduct of a sexual nature that
is offensive or inappropriate; inappropriate sexual advances
shared services a business strategy to centralize administrative functions. An

operational approach where each country or unit uses administrative
services from a central source rather than repeating these services in
different locations (examples of services include finance, purchasing,
inventory, payroll, hiring and information technology).
Sharia Islamic religious law. The code of law from the Koran that regulates
civil and criminal justice, and individual behaviors and morals.
shift differential extra pay employees receive for working a less-than-desirable shift;
variable pay
short term occurring over a brief time (for example, a short-term loan or a short-
term assignment)
short-term assignment a work assignment outside the home country that is usually less than
six months long
short-term orientation when a culture is concerned about displaying respect and fulfilling
social obligations within their cultural contexts; one of Hofstede's
cultural dimensions, opposite of long-term orientation
six sigma a strategy to improve current business processes by continuously

reviewing and revising them; business management strategy
skill banks computerized talent or skill inventories that can furnish a list of
qualified people; skill tracking systems
© 2012 SHRM 79
Glossary
Word Definition
skill tracking systems computerized talent or skill inventories that can furnish a list of
qualified people; skill tracking systems
social audit systematic assessment of a company’s activities in terms of its social

impact (influence)
social media technology that lets people communicate over the Internet to share
information and resources (for example, Twitter, Facebook, LinkedIn
and podcasts)
social network a group of people who interact because they have a common interest.
The group communicates either in-person or using technology (for
example, Facebook or Twitter).
social networking when a group of people interact because they have a common interest.
The group communicates either in-person or using technology (for
example, Facebook or Twitter).
social responsibility an ethical theory that guides organizations to consider the welfare of
society. An organization's voluntary obligation toward the good of the
environment in which it operates.
sourcing identifying candidates who are qualified to do a job by using pro-

active recruiting techniques
span of control the number of employees who report to one manager in an

organization. The more people that a manager supervises, the wider
the span of control.
specific a culture that views individuals by their parts, not as a whole; opposite
of holistic
© 2012 SHRM 80
Glossary
Word Definition
specific culture a culture in which people have approachable public lives with a strong
boundary to separate their private lives for public lives; one of
diffuse culture
split payroll a method of paying expatriates that gives part of their salary in the
currency of the home country and part of their salary in the currency
of the host country
staff units work groups that support the major business of an organization with
activities such as accounting, customer service, maintenance and
personnel; people who support line management
staffing the act of selecting, hiring and training people for specific jobs, as
well as reducing the workforce when needed
staffing needs analysis a systematic approach to talent supply and demand. Provides a
systematic approach to anticipate the demand for talent and the supply
available. The outcome of the process is data that HR professionals
can use to help ensure that the appropriate workforce mix will be
available when needed to accomplish organizational goals and
objectives, typically within a one- to three-year timeframe.
stakeholder a person, group or organization that has a direct or indirect interest in

the organization (for example, owners, investors, employees,
suppliers, unions or the community)
standardized an organization in which policies are developed at headquarters for

implementation in the field
© 2012 SHRM 81
Glossary
Word Definition
status an individual’s position in an organization in relation to other

individuals in the organization; professional standing
start-up a new business venture. A company or business that recently began

operating and is in an early phase of development.
stereotype an oversimplified opinion, image or attitude that people from a

particular group are all the same; fixed opinion or belief
stock option a benefit which gives employees the right to buy or sell stock in their
company at a certain price for a specific period of time
strategic alliance an arrangement between two organizations to pursue common goals

and share resources. Unlike a joint venture, the organizations do not
form a new legal entity.
strategic goals a goal developed during strategic planning to define an important

result for an organization to achieve
strategic planning the process of defining a company's direction for the future in four
stages: analysis, development, implementation and evaluation
strategy a plan of action that starts with examining the current state of an
organization and then deciding how to achieve the best state for the
organization's future
subsidiary a company whose voting stock is more than 50 percent owned by

another company. The company with the majority interest is called
the parent company.
substance abuse use of habit forming drugs or substances which impair behavior;
excessive use of drugs, alcohol or other addictions
© 2012 SHRM 82
Glossary
Word Definition
succession planning identifying and developing high-potential employees for the

organization's future success; determining and preparing for future
talent needs
supervisor someone who oversees employees in a department or business unit to

assign tasks and make sure work is completed
supply analysis supply data is one type of workforce planning data. Supply analysis
considers the varieties of skills in the organization as it exists now and
projects the future needs based on anticipated business growth or
retention. Historical attrition is considered when forecasting future
supply.
supply chain the process of planning, implementing and controlling operations,

management (SCM) which begins with acquiring raw materials and continues to customer
delivery and support. The steps taken from initial planning through
customer support.
sustainability the ability of an organization to sustain itself while preserving the

environment
sweet spot in sports: the place on a sporting instrument (such as a racket or bat)
from which the most accurate shots are made; in business: the place
where business and society interests overlap
SWOT analysis a strategic planning technique used to assess the internal and external
environment in which a company operates; its strengths and
weaknesses (internal), and opportunities and threats (external)
© 2012 SHRM 83
Glossary
Word Definition
synchronic cultures cultures in which individuals often participate in multiple activities at

the same time; one of Trompenaars’ and Hampden-Turner’s cultural
dilemmas, opposite of sequential cultures
synchronous learning type of e-learning in which participants interact without a time delay,
which requires them to attend at specific times; online teaching
method
systems theory a theory of how interacting parts work together to achieve a goal. A
system is meant to take in inputs, process them and produce outputs.
T
tactical objective the objectives focused on closing high-priority gaps in the near term
(as opposed to the long-term strategic HR objectives). Specify in
concrete and measurable terms which gaps must be closed and when;
specific, concrete and measurable objective.
talent acquisition the actions an organization takes to meet current and future skill needs
for operations throughout the organization.
talent management the process of recruiting, integrating and developing new workers,
developing and keeping current workers, and attracting skilled
workers
talent pool a group of available skilled workers, or database of resumes, that a

company can use to recruit in a particular location
talentship a decision science created by John Boudreau and Peter Ramstad in

2004 that helps managers make better talent management decisions;
an employment marketing approach
© 2012 SHRM 84
Glossary
Word Definition
tax bill a document which lists the tax money owed to a government or legal
body
tax equalization a policy that makes sure that expatriates' combined home and host
taxes are no more than they would have paid if they remained in their
home country. The expatriate's company pays for any additional
taxes. Tax equalization is also known as tax protection.
tax protection a policy that makes sure that expatriates' combined home and host
taxes are no more than they would have paid if they remained in their
home country. The expatriate's company pays for any additional
taxes. Tax protection is also known as tax equalization.
telecommuting a flexible work arrangement which allows part- or full-time

employees to work at home via a computer
territorial rule a rule that employees must follow the tax laws of the country where
they are working
testing vendor an organization that provides locations for people to take exams on
certain dates
theory of constraints a systems management philosophy intended to help organizations

(TOC) continually achieve their goals. Based on the premise that the rate of
goal achievement is limited by at least one constraining process. Only
by increasing flow through the constraint can overall throughput be
increased
third-country national an expatriate who works for a foreign company that is located in the
(TCN) host country (for example, a French person working in China for a
German company)
© 2012 SHRM 85
Glossary
Word Definition
Time-based step-rate a compensation rate based on how long an employee has been
system performing the job and pay increases occur on a set schedule
time to fill the average number of days a certain job position remains open;
average time to hire people for job vacancies
tolerance for ambiguity the ability of an individual to deal with unknown factors
total compensation an employee's complete pay package including cash, benefits and
services
total quality a method for improving the organization by continuously changing

management (TQM) practices, structures and systems; continuous improvement
total rewards financial and non-financial benefits that the employee sees as
valuable. All the tools available for attracting, motivating and keeping
employees.
totalization agreement an agreement between countries that says an expatriate only needs to
pay social taxes to the country in which he or she is working.
Arrangement to avoid double social taxes of expatriates.
trade secret information that has economic value to an organization’s competitors

if known to them. Organizations make reasonable efforts to keep this
information secret. Proprietary information.
trade union a trade organization or works council. A group of employees with the
same job who join together to ask their employers for things such as
better wages, benefits or working conditions.
trademark a word, phrase, symbol or design that identifies and differentiates the
maker of goods; service mark
© 2012 SHRM 86
Glossary
Word Definition
training method a way of communicating skills and knowledge (for example,

classroom training, distance learning, online training and on-the-job-
training). A way of helping people learn.
transfer of learning the continuous exchange of information, knowledge and skills from
one context to another
translation changing a message from one language to another while keeping the
meaning. Interpreting text from one language to another.
transnational an organization whose operations, production or service processes

corporation (TNC) take place in more than one country and are interconnected. An
organization that operates globally; multinational enterprise.
triple bottom line a concept coined by Andy Savitz that describes three criteria for
organizational success: people, planet and profit
tuition reimbursement a benefit whereby the employer provides full or partial payment for
educational courses completed by employees
turnkey operation a business that includes everything needed to start operating in a

certain location
turnover a metric expressed using an annualized formula that tracks the number
of employees leaving the organization for any reason (for example,
resignation, retirement, disability or health reasons, another job, etc.)
and the total number of workforce employees per month
© 2012 SHRM 87
Glossary
Word Definition
U
uncertainty avoidance one of Geert Hofstede's cultural dimensions which describes the
degree to which cultures accept ambiguity and risk. For example, in
cultures with high uncertainty avoidance, people prefer clear, formal
rules. In cultures with low uncertainty avoidance, people are
comfortable with flexible rules.
universalist culture a rules-based culture in which rules are applied consistently and
impartially; one of Trompenaars’ and Hampden-Turner’s cultural
dilemmas, opposite of particularist culture
unweighted average gives equal weight to every item being averaged; raw average
up-front paid in advance, or invested as beginning capital
upward leadership when a subordinate leads superiors
user interface software that allows a human and a computer to share information
V
validate to formalize an agreement. In testing, to confirm the accuracy.
validity the extent to which something is accurate (for example, the extent to
which an exam actually measures what it claims to measure).
Reliability; true evaluation.
value-added employee an employee who delivers unique benefits, return on investment

(ROI) and value to his or her organization (Cripe and Mansfield 2002)
© 2012 SHRM 88
Glossary
Word Definition
value chain a model of how businesses receive raw materials, add value to the raw
materials and sell finished products to customers
value creation the primary financial performance indicator for measuring and
indicator evaluating financial performance
value proposition the unique benefits, costs and value that a business delivers to its
customers
values the lasting beliefs of members of a culture about what is good or

desirable and what is not
variable a factor or condition that is subject to change, especially one that is

allowed to change; in a scientific experiment, to test a hypothesis
variable costs the expenses that change in proportion to the activity of the
organization. Variable costs are also called unit-level costs because
the costs vary with the number of units produced.
variable pay pay that is based on when the employee works or where the employee
works. This is also called differential pay.
variable pay plan profit-sharing, incentives, bonuses or commissions that align

compensation with performance. Compensation that is less
predictable than standard base pay.
vicarious liability a legal doctrine that makes a person liable for the negligence or
crimes of another person
virtual communication the use of technology to communicate across distances (for example,
telephone, video chat, instant messenger) or in a virtual reality (e.g.,
second life)
© 2012 SHRM 89
Glossary
Word Definition
virtual team a group of people who work in different times, locations or

organizations, who communicate using technology
vision statement a written statement which clarifies what the organization wants to be
in the future
voice-over-Internet technology that allows voice communication over the Internet

protocol (VoIP)
voluntary benefits extra benefits or discounted services offered to employees with little
extra cost to the employer. Examples include additional life insurance,
gym memberships and concierge services.
W
wage band the lowest and highest wages paid to employees who work in the
same or similar jobs; salary range, pay scale, compensation rate
war for talent principles based on a 1997 study by McKinsey & Company that
projected that talent would be the most important business resource
over the following two decades; employment marketing approach
webinar an interactive seminar on the Internet (usually a live presentation).

Meetings, training or presentations on the Internet.
weighted average considers the number of each type of item being averaged; weighted
mean
weighting pattern term used in statistics to show the frequency of different choices
well being a positive lifestyle which includes good health, enjoyable recreation
and leisure time, and social belonging
© 2012 SHRM 90
Glossary
Word Definition
wellness program services to improve and maintain the health of employees
whistle-blower a non-supervisory employee who reports an ethical and illegal

violation; informant
whistle-blowing a method for a non-supervisory employee to report ethical and illegal

violations; informing
work rules a set of rules specific to an organization that reflect management

decisions regarding specific actions to be taken—or avoided—in a
given situation
work sample test an evaluation of a candidate's ability to perform tasks that are similar
to the actual tasks performed on the job
work unit a business function that produces one product or focuses on a single
area. Smallest work group in a company.
work/life balance ability to effectively manage time at work with time spent on leisure
or with family members
work/life issues issues surrounding the balance between an employee’s work and
personal life
work/life programs services to support the well-being of employees and to help them
balance their jobs, families and personal lives
workforce the people working for a single company, industry or a geographic

region; workers, employees
© 2012 SHRM 91
Glossary
Word Definition
workforce analytics the metrics used to determine the effectiveness of HR functions, such
as turnover rates, organizational culture and succession planning;
metrics used in HR strategic planning
workforce planning identifying and analyzing what an organization needs to achieve its
goals, in terms of the size, type and quality of its employees
workforce rotation the regular movement of employees from one function, time or place
to another, as needed
workplace a place, such as an office or factory, where people work
works councils organizations that function like trade unions and represent the rights
of workers. Works councils are most common in Europe and the
United Kingdom.
© 2012 SHRM 92

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Body of Knowledge

The Body of Knowledge on which the Universal HR Practices Learning System is

For your convenience, the Body of Knowledge is provided on the following

Purpose Statement for HR Administration:

HR professionals in the area of HR Administration should possess a combination

Important Behaviors for HR Administration:

02. Format and maintain organization charts

06. Stay updated on new business trends

Important Knowledge and Skills for HR Administration:

01. Skills for planning and organizing (time management techniques)

03. Documentation requirements for employees and their employment

05. Communication skills, both verbal and written

08. Organizational policies and procedures

09. HR ethics and professional standards

Module 2: Recruitment and Selection

Purpose Statement for Recruitment and Selection:

HR professionals in recruitment and selection should possess a combination of

Important Behaviors for Recruiting and Selecting Employees:

04. Announce job openings within the organization

07. Scheduling interviews with managers and applicants

08. Answer questions from job applicants

09. Interview job candidates

Important Knowledge and Skills for Recruiting and Selecting Employees:

01. How government requirements affect recruitment and selection

02. Job functions and responsibilities in the organization and industry

05. Procedures to check references

06. Assessments or evaluations of applicants

07. Procedures to conduct assessments or evaluations

08. Tools for selecting candidates

09. Options for recruitment

10. Interviewing techniques

12. Processes for transferring or promoting employees within the organization

Module 3: Employee Relations and Communication

Purpose Statement for Employee Relations and Communication:

HR professionals in employee relations and communication should possess a

Important Behaviors for Employee Relations and Communication:

Important Knowledge and Skills for Employee Relations and

01. How to encourage and keep employees (employee engagement techniques)

07. Methods for investigating complaints or grievances

09. Event planning

Module 4: Compensation and Benefits

Purpose Statement for Compensation and Benefits:

HR professionals in compensation and benefits should possess a combination of

Important Behaviors for Compensation and Benefits:

01. Communicate information about an employee’s compensation package, when required

02. Communicate information about company benefits

05. Administer salary adjustments

09. Coordinate the completion of salary surveys from external organizations

11. Provide data for merit increases or bonus payments

Important Knowledge and Skills for Compensation and Benefits:

01. Total compensation packages

03. Retirement plans and programs

04. Salary surveys

05. Effects of laws and regulations on compensation and benefits

08. Bonus and incentive programs

09. Payroll processes

10. Leave and time-off allowances

Module 5: Training and Development

Purpose Statement for Training and Development:

HR professionals in training and development should possess a combination of

Important Behaviors for Training and Development:

06. Monitor completion of performance reviews and development plans

07. Keep records to document employee development and performance