shrm notes.docx

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Strategic Human Resource Management Lectures Noes

Delivered by reverent / respected Sir Dr.Sajid Bashir

at Riphah International University, Islamabad

and prepared by Ghulam Raza Qazi

Raza Qazi SHRM Notes

20-04-2014)

Change Agent. The role of change agent is possible through organizational development.

Organizational Development: (1997-Idelfer) it is the process to enhance both the effectiveness

of organization as well as the wellbeing of its members to planed interventions. The both are

important in Organizational Development; the effectiveness of organization and individuals.

We combine both the components to change the intervention. The focus of some will be the

members of the organization and of some organizations. So when both the components are

combined the Organizational Developmentwill come into being. That process/activity will be

called Organizational Development.

If we way back in 1949 we come to know that its theoretical development starts by Kurt

Lewine.. He designed two components; Group Dynamics and Action research. Because of these

two concepts literature declares Lewine the founding father of Organizational Development.

The

Group Dynamics. Ways in which groups and individuals react to changing circumstances. The

basic philosophy of Lewine was in any form of change at individual as well as at organizational

level. It can be more effective on organizational level rather than on individual level. In this way

the more effective changing process/intervention will come into existence. Change will be more

effective if it is made on group level rather than on individual level. For example; if we talk

about Individual/groups. So the division of Group was also given by Lewine before him

psychologists focused on individuals. But Lewine said in late 1940s that group plays much

important role. Previous literature talks about individual rather group. Lewine gave the concept

of social psychology. At that time it was a new thing. Earlier only individual psychology wasdiscussed. He made it a proper discipline and focused on it at organizational level.

Action Research:

It is a process of actively participating in change effort or change management. It is a type of

research. How you collect the data in Action Research the researchers have to be the part of

process. Examples; if we get primary data the main methods which are use are hypothetic


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methods. In hypothetic deductive method the researcher has to be limited. Here you have to use

the organization method. Example; research on children, Hofsted said that upto 10 a child can

learn his culture. Like in emotional psychology the research was held on children. For example:

In a research before almost 30 to 40 children of 03 to 06 years Marshmallow was taken and the

researcher went out of the room but kept on peeping them from the window. She (Micheal)

experimented that most of the children in spite of liking the Marshmallow do not take them while

other could not help taking them. Now she came to know that the children who did not take those

Marshmallows are more effective and good/successful in their future lives than the other who

took them. Their decision making was stronger. She gave this concept the name of preferred

gratification or ability to defer. Then a big discovery took place i.e. emotional intelligence. The

person whose EQ level is high is more successful than of IQ level. The basic reason of success of

Canady & Bush was because of their EQ level was very high.

It is not essential that the entire time we use questionnaire. Interview analysis method is ( ).

There are different methods of observation. First to observe the phenomena the 2ndis to become

the part of that culture/process and observe the things. So in Action Research Lewine gave the

same concept that you become the part of that process/culture and then take change.

Then mixing both the concepts Lewine presented a theory the change process theory which

was published after 11 years of his death in 1958. Then a school of thought was developed in

the university where he taught. The main follower of Lewine was Festinger. He is a very popular

researcher. His main work was presenting Cognitive Dissonance Theory. He was last of

Lewines mentalprotease.

Change Process theory (Lewine,1958): it seeks to explain the dynamics through which

organizational improvement and change take place. (Note: the death of Lewine was also due to

over work). He had madness for his work.

Then he identified three stages: starting from unfreezing----------moving-------- refreezing

To unfreeze the status quo/system/the existing system has to be changed for the change

management. He developed two concepts; process for change and process against change.

Here we have to see which force is stronger. So we have to unfreeze the concepts of For and


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Against. Then we can move and if we go ahead without weakening them the change will not

occur. So we have to harmonize the pendulum. Change implementation is very difficult process

at national and international level. Example; drama in chekoslavakia. So there should be a

proper planned system. Firstly, you weaken the forces against change. (Example; of Huzrat

Muhammad (PBUH) moved gradually not at once. HE changed the behavior of individuals

(Sahabas) and then HE was allowed through revelation to openly preach Islam). When you have

moved then you have to re-freeze and control the Pendulum. Then the system successfully

works. This is the starting point of change management.

2nd

theory is Organizational Development implementation theory:

These interventions are specifically designed to reduce change. There are four types of

interventions:

Human process based intervention Techno structural intervention Socio-technical systems (STS) Organizational transformation(OT)

Human process Based intervention:

We focus on; individual, group, attitude, behavior, perception, values and problem solving

approaches. The focus is on both the groups; individual/group. This process is based on

behaviorism. The basic theories we can use; are need theory, expectancy theory. Which theory is

dominant? The concepts of these theories are also based on how to change the behavior of

human being/individuals. The element of group which is added in it is because of Lewine;

because he says that intervention should be designed around the group. Then in 1970s there is a

big name in Organizational Psychology I,e. Orgris(1970). He gave the concept of value of

information which means to pass information from one individual to another. If you

communicate properly then change is possible. What is the importance of information in change

implementation? The most hindrance we face is resistance to change. So you have to talk about

organizational development ie. unfreeze, move and refreeze. For example: you do MS so this

movement/development is an intervention so you change your career. So moving from status quo


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is intervention. Here you have to intervene to make the change. So until individual/human is

changed then structure change/socio technical change gives zero result. So there should be a

proper change/role map with change agent that upto what level we have to go like;.

Objective:

. Change Agent

Existing stage

Which kind of people you need to reach. What should be their thinking pattern, problem solving

ability, attitude or behavior? You should have knowledge about the behavior/ability/attitude of

existing people and what kind of change is needed to take them upto existing stage. So, this all is

done to reach upto the stage of valued objectives. You have to intervene in this human behavior

to take change.

II: Techno Structural Intervention: Improving work contents and work methods, work flows,

performance factors and relationship among workers. Firstly the concept was developed by

(Friedlanger and Brown(1974). Improving work factors, we take structural form of changes.

Basically we take structure changes. Example; job enhancement, job enrichment etc are all

techno structure concepts. Task interdependence is also the example of TSI which shows how an

employee depends on another employee. In working process which changes we take that are also

the example of TSI. The techno structural changes as the concept given by

iii. Socio-Technical System (STS)

In its back hand concept was given by Trust Bamforth (1951) - Socio Technical System

Theory. If you do not care about social aspects of human being while designing the job it

negatively impacts on the employees. So after the presentation of this theory this negative aspect

was also removed.

It is directed towards a fit between technological configuration and social structure of unit. If you

will not join job design and social structure then change and development will not be possible. It

requires what are the needs of the workers while designing the jobs. So you have to make such

intervention which could help the works to meet socialization needs. It has strong relation with


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organizational culture. In hierarchy it is also seen. So culture plays a vital role as the employees

who are working in the organization have come from different cultures.

III: Organizational Transformation(OT)

Bechhard,(1969): Organizations are complex human systems each possessing unique

characteristics, culture and value systems along-with information and work procedure that must

be continuously examined / analyzed and improved. Each organization has unique identity. We

practically examine these all aspects like; people, group; culture, value system etc. and you

continuously make changes where there it is needed. Change is part of routine of that system.

Changes intervention, assessment, evaluation and implementation is a part of culture of that

organization. It is the most difficult part of intervention. Change is continuously examined then

accordingly it is implemented.

Pora and Selve (1991) Model of planned intervention Model

Type of Intervention:

Organization Transformation Organization Development

Types of Intervention Target Variables in Organization

OT At the organizational level: Mission, purpose andphilosophy.

OD At the organizational level: Structure, Physical setting,Technology, Social Factors, Organizing arrangements.

The Outcome of Both/Combined impact of OT/OD

: Its combined impacts is on individual organizational members

Combined Impact of OD/OT

At Individual Level they identify cognitivechanges

Alpha Beeta Gama A Gama-B

Its impact will be on change in behavior


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The outcome of Organizational will be on:

Improved organizational performance

Individual development

Alpha You just need change in skills not in job design

Beeta Change in work standard

GamaA The focus in Change will be from quantity toQuality

Gama B Change from paradigm to another paradigm ie.Product focus to customer focus.

So we will come to know kinds of change from above will be needed. The behavior of individual

will be change and the organizational performance will be improved. So this is OD.

So whole OD philosophy /process has been discussed. Which kind of Intervention is required at individual/organizational level? Outcome with behavior And its impact on organization

Types of Interventions:

Practical Implementation Methods:

i)- Human Process Based Intervention: if u will do then it has following methods to be

used:-

Survey Feedback: What is your analysis for intervention of human being process.?You have take change in H behavior. What is existing situation with ref. to employee,

their level of motivation, level satisfaction. Required outcome. In which situation u r atpresent. Curent situation and desired intervention. U have to identify gap that we have to

get this change and what are the desired problem areas, generating situation. and then and

then motivating for change. This process is called survey feedback process. Change

varies from need to need. For example you have to change skill of employee then it is

low gap and if u have to get change at big level then whol org. culture is going to be

change like; u go to new philosophy, technical change, work design change, work


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system change. So u see what are desired objective and what is existing situation and

according to that u make interventions. (Example; Railway change: and worker rest time

and how to stop work).

Team Building: You have design intervention around teams (roles should beclearly defined., norms are also very important like; how I have to behave, sit so there

should be harmony in every action of employees. Team building is very difficult to

handle because to motivate people in a team is very difficult task. In team building there

are some stages (forming, norming, storming). The main hindrance is Conflict. Conflict

in a group decreases performance. The second is Group think. You developed team for

energy that outcome should be more than individual effort. But some time in a team there

is no conflict and there is harmony but there is no performance that is because of group

think. It is disease for groups. Actually some kinds of norms are developed for consensus

in a group. Norms for consensus are developed it overweight the realistic appraisal of the

creation. If difference of opinion will be vanished then it is called group think. Function

conflict and dysfunctional conflict. If there is not functional conflict then it is because of

group think

(Group/Team: every person works by living in his domain in a group and their no goal

clarity while in a team every person helps each other, they support each other and there is

goal clarity).

Social Loafing: An individual thinks that other person is working then I need not to

work. Tendency to do less effort and to gain more grades. Individual does not exert

effort. So the size of group should be less if group will be based on more people then

there are chances of social loafing.

There are different ways to avoid to Group thin.

Second Type is Socio Techno Structural Type of Intervention:

Job Enlargement It is horizontal expansion of job. Here the jobs have beendesigned for the employee.

Job enrichment It is vertical expansion of job. Individual should be giventhe autonomy of the job to design it, plane it andimplement it.


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Alternative work schedules Compressed work need:(working hrs have been increased and then workerhave been given leave

Flextime schedule: here u give flexibility in time:like; to mothers. So time is in the hand of peoplewho make the time schedule according to theiravailability. Telecommunicating change:

If an individual wants to work at home he may bedo. The main thing is outcome. You have changework design.


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Lector No.2

Human Process:

human

Structural Designs

Job Design

Ethical and social impacts after 1980

It is very important phenomena. TQM, Quality management, quality circle, these all are used as

org. interventions. Here human process and structural designs are joined.

Quality Circle:

Quality related to concepts. This concept was most defined by Japanese. Quality circle was the

main focus of Japan organizations. The concept was given by USA but practically it was used

by Japanese organizations. These people make a team which watch quality of each department

and discuss these issues, resolve it and then implement. So other orgs of the world studied it and

they done the same jobs as Japanese did. So a popular intervention was developed to watch out

all the important units of the org. and identify and resolve the problem. These problems can only

be solved by the people who actually face that problem. The approach of top to bottom is

planned by the persons who are sitting the top management.

The one approach is tradition approach. It means that the person who is sitting at the top

management they make strategies and set the targets and then they move towards downwards

and at all the level communication if made. Its alternate planning concept was MBO which was

very successful than traditional goal settings. The main concept of MBO was a participate setting

of goal. It is almost an extension of Quality Circle, here all people also set some goals,

objectives, targets are selected at the department level which become successfully and discussion

is made and at participative goals are selected. The concept of MBO is successful that traditional

H.R. You give feedback of the goals.

Empower of Goals

You empower the people. Then the people who are in empowerment they identify the problems

and make solutions and its social aspect is that when you the studies which have made on it is


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production & sate etc. Its ultimate outcome will be that your defect rate will decline and its ideal

stage is Zero defect and then intense focus on customers. This philosophy when Deming

presented this in USA in late sixties at that time the main influence relate to production was of

Tailorism. Their focus was how to increase; Output, production, number of units and quality.

At that time to increase the profitability the main purpose was; the more youproduce the more

you cannot __________.

Note: Taylor also changed the idea of scientific interventions in his Steel Company. He made

structural intervention in his work force. He made intervention with the same work force and

gave outcome of 12 tons steel of a day into 48 tons in a day. So, in the whole world a structural

change was made after Taylors intervention and so many companies flourished and capability of

the employees increased a lot. So, Taylor gave the concept that we can earn a lot by producing

less just because of quality work. So, when Demming gave this concept the American did not

like this concept. So, he changed his mind set and went to Japan and when he started his work

there Japanese appreciated his concept a lot. So, the products of Japans became a symbol for the

whole world. Hence to make quality your employee should be involved intrinsically. The quality

is concerned to them as they are concerned with the likes and dislikes of the customer and in that

way they make quality of the product:

Six Sigma Quality standards:

This concept is that if you make one millions products i.e. Zeero defect as there is not defect in

the product and its impact will in the form of customers satisfaction. It means that there is no

defect in the product. Its output will in the form of customers satisfaction. From the

management point of view TQM is philosophy of management.

Third Term - Self-Managed Team

It is a team in which its members are interdependent and have authority to regulate the activities.

All the group members design the plan and make intervention. Hence, interdependence is self-

motivated concept. So it is a team which is

Task interdependence; i.e. to achieve the tasks. Team work collectively and it is


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Interdependence on eachThere is no formal guidance so to obtain objectives. In our organizational we just complete time

and we do not use the philosophy of change and intervention. Until you change the mindset of

people you cannot flourish your orgs. The main problem is lying at our top level management.

Organizational Transformational Intervention (OTI):

It is implementation with transformation. We transform it with something new. Its big

intervention is cultural intervention i.e. Change in organizational culture. We define it with three

components:

Beliefs: Values the concept of right or wrong Norms; standards, so being set of that org you have to act upon its norms. So the members

who come later on take the history/legacy of organizations a set of stories. So these all

outcomes are the standard of the organizations. When an employee learns all these cultural

value of that organization he is engrossed in that organization. Now when that individual is

so engrossed in that organization it not possible to change him. This culture shows a proper

fit between employees and organization. Now problem entails when there is change in

environment and accordingly you have to get change in your organizations and if you willnot get change then this fit between organization and employee will not be possible. So you

have implement change in your environment, in your beliefs, values and norm and also the

change in the mindset of your employees. So this whole concept is Organizational

Transformational Intervention. It is ultimately manageable and if it is not changed then its

outcome will be very horrible.

Strategic Change:

The major difference between cultural intervention and Strategic Change is that in cultural

change the basic philosophy of org is that the companys main mission is not changed but in

strategic change you have to change the mission of organization rather you redefine the mission.

In other words you change altogether the whole strategy / objectives of the organization. The

main example is of General Electric, 1980. It acquired 330 businesses and sold 230 business and


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they closed 73 tasks. The used a massive way of change. So after such a drastic change they

acquired new business and sold business and then redefined their mission.

03rd

InterventionHigh Performance Work System:

We take it a form of intervention. We talk about transforming the whole organization. The

organizational level strategy means; alignment of with common system. H.R. related system and

their proper alignment. And work practices (HR) now they exist in form of system and its impact

we straight away take with performance. This intervention which we take it in the its major

change at org level will that now your focus will be on performance and you have to take you

practices in form of system. It is complicated subject. The main focus of HPWS is that now

practices are implemented in the form of work systems and for that we have to take system

theory that how we implement it as system theory either we implement it in the form of HR

bundles. So there is combination of different work system and these practices support each other

within that system and missing of a single system will impact on the performance. So these all

systems ultimately work as a system. Further, we take HPWS as an intervention.

Career Development:

The research which was made in 1990s is psychological contract. There is close relation between

psychological contract and career development. There are different perspective and in different

ways CD is defined:

i. With reference to occupation Theme: i.e. my career is Accounting/salesii. With reference to Tenure Theme: with this refence career is defined relative to tenure

spent in organization i.e. passing of time in organization. So time spent in an organization

is also defined with tenure.

iii. Advancement Theme: progression in any occupation. Again we use advancement ascareer.

iv. Involvement Theme: in any task or job excessive involvement is called involvementtheme. For example; an individual sings songs all the time which socially is not accepted

but being a career he is at right.


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v. Stability of Work Pattern: You do not switch the sequence of work and do not docareer switching. So an individual continuously work in particular work.

Models: For the advancement of career different people have developed different models.

The most popular models have been given by Greenhous,2000. He divided career development

in five stages:

Stage-1 = 0 to 25 years (Occupation choice)

It is linked with age. It is such a stage of your career you prepare yourself for occupation choice.

You select career. It is in the background of Levinson (1986) model life stages model. He

divided Human mind in five stages. Holland also gave a model of this type. Holland said about

career said; individuals choice of career is the expression of his personality. An individuals

personality can be judged with his career but if the career is selected by choice not by force. The

model of Holland is : RIASEC

Realistic investigative Artistic Social

Enterprising ConventionalSo he defined personality codes with the personality of the individuals and if the personality ofindividual is matched with these codes then job performance will be improved a lot.

Stage-2-(18 to 25)

Organizational Entry. In this time period career choice is going and we also accept the job

because if we have best choice we accept the job.

Stage3(25-40)

This is a time period of early career ie. establishment and achievement, learning. Once you start

the career. It is such a period when an individual has to go ahead. This is a stage of achievement

in case you have chosen the career by choice. This is a period of enhancement. Your learning

also increases. If the career is selected by choice then Ok otherwise no learning/achievement.


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Stage4 (40-55)

Lewinson made the life turning model in which turning point was 40 years in which he has

shown change in the maturity level of an individual, his thinking pattern was changed. The

individual re-invests his life. Individual thinks that almost half of life has passed. He thinks

which decisions he has made good and which bad. This is the stage of re-appraisal. In case of re-

appraisal you think to either continue the same career and to leave the career. In case of not

achieving the goals you go for career change. The people think of going towards another career.

As if you have not got success in 15 years then you will change the career. If you are expert then

people think you as mentor, people give you value because of your learning. So first 15 years is

the period of achievement and after that you get reward of that period.

Stage-5 (55 to Retirement) Last stage

The main concern of this stage of your career is on productivity. If you are giving productivity

then you are successful and you will be working even upto.70years Further this stage is difficulty

psychologically as before that stage you have achieved so many successes but now younger

generation has taken your stage so you have to be strong psychologically. In some case the

people even do not continue their job/career.

The Role of S.H.R. in Career Development.

The main contribution in Career management or Career Development disscuss the responsibility.

The main role is of organization. The individual is doing effort but to provide carreer path is the

responsibility of organization. You work in an organization for 25 years and the org. give you

opportunity to enhance you career. Now that strategy has changed into Psychological contracts.

Psychological contracts:

Why it is involved in the Career Development. It is defined as an un-written agreement between

employees and employers based on norms of reciprocity. It is based on social exchange theory.

Initially presented by Houmen in 1960 and then Blau in 1960. In social exchange theory the

theorist say that any relationship in the world exist without norms of reciprocity. It is most

influential theory. The relationship between employee and employer is also based on norms of


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reciprocity. It is also based on psychological contracts as employee works in that organization

expects that if I am loyal with the organization then the organization should give me job security

and all the opportunity of career development. Now in 1980 different strategies started and the

most popular was cost leadership strategy that was started by Porter which was very popular. The

focus of cost leadership strategy is to take efficiency in your system and to increase. Cost is

reduced and the impact of cost deduction is transferred to your customer. Now for the companies

it was difficult to reduce the cost so they started downsizing in the whole world. Now this

negatively impacted the employees who were working properly. So in this decade the

psychology of employees changed and they started thinking that there is no need to be loyal with

your organization so a slogan was raised that no more loyalty to the organizations. After that so

many changes were made as the employees started turnover from the organization and they also

showed less commitment.

Career Development:

There was a possibility of life long career. Now employee thinks that there is no need to be loyal

with the organization and he started Zig Zag career paths and started using different paths of

careers and started protean careers. The quality that protean was that he changed himself

according to the situation. The employee transforms according to the requirement of the job.

Now the employee change their skill according to job.

Boundary Line Career:

Which means multiple careers in the multiple organizations.


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Impact on organizations.

Now organizations started their psychology. Now they think that these employees will not work

for a long time. Now they facilitate the individuals. The change at organizational level was that

responsibility changed from organizational development to individual development. The

organizations take more and more work from that individual. Now individual work in such an

organization which enhance his career and give him change enhance his career, provide him

knowledge. The companies also realized that. The types of psychological contracts are two:-

Transactional Relational

The organizations after redefinition of psychological contract categorized their employees. These

categories have many kinds. To categorize the assessment of the employees. Every organization

should have the knowledge of its central core. If the people are leaving the job from central core

then it is alarming for the organization. The organization should have a different kind of

psychological contract with its key employees. These employee paid more and they are also

given reward a lot. You take such an action that you contain your central core.


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LECTURE NO.03 - 11-05-2014

Performance Management:

We will discuss traditional performance Management

Traditional Performance Management

In traditional PM most of the focus is given to employee and his evaluation. In tradional PM

employee is focused. When the element of strategic was added in it then its focus was not only

employees but employees appraisal and evaluation is also added in it.

But in SHRM this performance management is organizational performance that how it works.

After later 1997-98 a concept of was most popular was Balance Score Card approach started

which is totally strategic in nature where three four important components are combine and then

the process of performance is determined and performance management is completed. This

process of Pr. Management starting from the tradition that here which kind of things were

focused and today when talk about strategic PM then we talk at org level, over all how org. Per is

managed and how BSC approach is used. Overall today practically all organizations focus on

BSC. They do not use single dimension of PM. How you focus on employee and their capability.

What sort of characteristics are required in org and you combined these all and practically u see

that overall performance is aligned with ur Strategy. You have developed the strategy then you

implement strategy and u see how much it is aligned the with the performance strategy. 2 nd in

SHRM there is no thing is link of Performance management and Traditional HR performance its

evaluation occurs after a certain period of time. Appraisal is yearly, half year and quarterly. You

talk about performance in a specific time and balance score card and in that evaluation is side byside monitoring there is complete back up. You are implementing strategy and aslo evaluating,

so that you may monitor the performance. There is consistent element of feed back of SHRM is

attached. So if we see with this reference to traditional HR and SHRM then we see a totally

different concept. This whole literature was developing in the last twenty years ie after 1995. For

example; BSC in 1998 and HPWS in 1995 when these all things are combined then overall a

performance management is completed.. Again its a complete discipline.


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Overview of Performance management with Tradition HR

If you talk about training performance management, compensation we see that the most

important role is strategy development from the organization and ultimately plays its role to

implement it among the employees (Traning). In the performance management the most critical

issue that here the nature of your analysis is almost is more right subjective in nature although its

related your objective criteria KPI (key performance indicators) you develop these KPI so that

you may know that what performance indicators you kept for the employees and what averages

you define and what was employees performance against these KPI. So in this context we can

that in performance management there some components which are objective in nature. You

have given some tasks and the employee done that. You gave some target / responsibility he

achieved that target which KPI. But the biggest component of PM is subjective in nature which

means that there are 2 people are involved the person who is evaluator (Rater-Boss) and the

person who is to be evaluated (Ratee-performer). There are two persons who are involved in it

(Rater & Ratee i.e. Boss and Performer)

Note: The outcome / end come do matter but means also has worth i.e. how much he was

committed, how performed his job, how was behavior with his colleagues/boss, how much time

he gave to his work et. This all assessment will be done by the rater subjectively. The objective

indicators are not problematic as these can be measured but subjective indicators can not be

measured. The subjective only rater role is not involved rather employee himself is also

involved in it that how he presents himself in his job ie. Impression management. Here the rater

can be biased in decision making. This is psychological issue even in Traditional HR. If the

employee is good with the rater then if the ratee is not giving result even then his evaluation can

be good. So, how to eliminate these issues i.e. biases, impression managements very difficult

because you cannot eliminate this issue in performance management. At the time evaluation therater never see the hardworking which employee has done rather objective issues are also

involved in it.


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Rater:

How many factors impact the rater i.e. supervisor while rating so, there are different theories.

The most important theory was attribution theory mainly presented by (Keller, 1972) while its

basic present was (Harder,1920).

Everybody wants cognitive control over environment by explaining causes of others and

behavior. In simple words whenever we observe behavior of someone we have to understand

cognitive control of the environment involved in it. We see the reason behind it. We see the

environment involve in it. Unless we find the causes/reason we cannot say that why the

individual has done that job. There different types of behavior like normal / routine behavior. For

example; the normal time of class is 09 AM but a student reaches in class late then this is a

behavior not a normal behavior then the teacher will have to understand the reason behind that.

This is a sort of exhibition theory. There can be two possible reasons:-

Internal Causes External Causes

The causes which are within the control of theorganization.

For example a student comes late in school sothis is internal cause as it is within the controlof an individual to get up early in morning.

Which are beyond the control of theorganization

There is some obstacle due to some movement,agitation etc like the procession of Imran Khanand Tahir-ul-Qadri.

Two further components:

1- Fundamental attribution errors:It suggests that we have a tendency to overestimate the impact of internal factors and under

estimate the impact of external factors when we are making judgment about others. This is thebasic psyche of human being that we overestimate the internal factors and we under estimate the

external factor when we are making judgment about others.

2- Self Serving Bias:Relating our own success to internal factors and failure to external factors that we make decision

about ourselves this is internal factor and when we do not pass the exams then we attribute this


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blame to our external factor and we curse our luck. This is very important theory and on the basis

of this theory one can change himself. It describes the psyche in detail. The evaluation of

employee by a rater is a sort of behavior. If the evaluation is positive the outcome of the

employee performance will be positive.

Note; Here LMX theory the leaders when perform job at any place they distribution their

employees in two groups.

In-group Out-group

Near to level and they give high rate to theirclosed people so their performance is alsopositive. What kind of performance they givethey will be rated good. Their performance willbe counted highly.

The people of out-group will not be given goodrate even if they give high performance.

.This theory came in 1995 which is very important. In any organization of the world there are

some people who are near to the leader and they are rated very highly. Leadersexpectations are

very high about them. Now there is ability of the leader that which kinds of people he takes in his

group but unfortunately in Pakistan the people who are close to the leader is not necessary that

they will be capable.

Self-fulfilling Prophecy

The leaders expectation is very high to the people who are in their in-group why; that they are

goof performance and they will perform well. So, a theory of self fulfilling prophecy came into

being which is also called Rosenthal effect and Pygmalion effect. Rosenthal was a researcher and

he made a group of the students in three categories. He made three groups of students and then

handed over these students to the teacher:

Group A Group B Group C

These students gave good performance while inactual they were in group C but due good

expectation of the teacher they gave goodperformance. As the expectation of the teacherwas very about these students so they startedgiving good performance that is why it is calledself-fulfilling prophecy. So ultimately their

While these student gave normal result.

Because the expectation of the teacher was

less than the students of group A


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performance rating is also very high.

If we combine these factors then there are different theories. For example the literature of biases

was written by ___________ who says that while making decision we are very biased because of

different reasons. So if we combined factor this entire factor we will say that performance of

organization or appraisal is actually decision making. If an individual has to make decision

making about other performers then there will impact of ______ and biases; for example which

kinds of factors are there and how much time you have and what is the situation? When we make

decision we have to see following factor in account:-

Availability: that the information is readily is available and by making base we make decision.

Representation: here we take into account the past performance of the individual. The

individual performs well all the time. So we have to see his performance. Then we predict future

performance on the basis of past performance. So when we combine all this factor then the

process of decision making is completed by the rator, there will be contribution, biases and then

the process of decision making will be started. In organizational performance means matter more

than the ends. When we combine all these factors then the process organizational performance is

completed. Only doing much hardworking you cannot be rated highly so means matter a lot

than outcome or End

Role of Ratee:

The role of rate is also very important. Mintzber said in 1990 that organizations are inherently

political arenas and one needs political skills to survive and succeed. Here the researcher talked

about the political and said that your criteria of performance matters a lot. If the criteria of PM is

simple the political issues will be less and if the criteria of PM will be vague there the chance of

politics will be a lot.

The most famous researchers of literature about politics are Ferris and Judge, 1991.These are big name of writing on organizational politics. They actually present political

influence perspectives of the organizations. The role of rate: i) the impression

management in general and they gave it the name of assertive tactics(Ferris) which mean


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that in subjective tactics youre your evaluation is to be done then which kinds of tactics

will be used. These tactics are as under:-

Ingratiation:which they call proactive attempt. Other enhancement: flattery Conformity: yes sir. To come in in-group yes sir is necessary as boss is always right. Sub-servant Behavior: showing humility to get positive impression. Self-Promotion: To do less work and to promote it more.These tactics should not be present but these have paved their way in our organizations

strongly. In an organization perception plays its role. If a person is in the group of politics he

will see everything as good and if he will not be in that group then he will say everything is

wrong. So researchers have related these tactics with:-

Criteria of Evaluation:

If the criteria are clear in the organization then use of these tactics will be less but if criteria

is not clear / ambiguous then these tactics work more. In our country the criteria of

performance management is not clear so here End less and Meanwill effect more and

the people use these tactics and show themselves good in the eyes of boss. The concept ofOCB is a extra role behavior a positive behavior but the researcher say that OCB is

basically impression management as Good Soldier Good Actor. In the impression

management the person who is good actor he is good in the eyes of boss. Example; although

a person is not so capable but he shows himself in such a way before the boss that his

impression becomes good before the boss. He will take such a task which he actually cannot

do but to give good impression before the boss he takes that job. Now Organ says that this is

OCB while other researchers say it is impression management. OCB is also culture specific

How to change Traditional HR it in SHRM

Now in SHRM which are the factors by virtue of which performance management was

emerged in a new format.


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Strategic Performance Management: Now in its distinction HPWS is also related to it

when we take performance management from human resource practices into the domain of

work system. Now we will that performance management is how much related to work

system. For this a concept has been used which is called Balance Score Card.

Balance Score Card(Kaplan and Nortor (1992). Then in 1998 it gained popularity. Here we

see that which perspectives are actually working. This approach is a term in Kaplan and

Norton say that they used Performance as a variable and they also changed its concept.

Performance matters that your Org Perf is linked with the satisfaction of your stake holder

then we will say that Org is performing well. In this context there are four

perspective/performance indicators.

i)- Financial Performance:

It is a key financing that how should we appear to the how should we appear to

shareholders? How we will satisfy shareholders so we disclose information strategically.

So, Balance Score Card shows that which things to present at which time. The people

who are running the org they know that which kind of information will be given to

shareholders at which time. So this kind of information is also strategic information. If

we are making financial statement here we will not use all the things. Only you know

your long term objectives so BSC shows that which kind of information will be informed

at which time. It is the duty of finance org that which information is to be disclosed to the

people. So the information should be symmetrical.

ii)- Customers

To be successful how should we appear to customers? You have to disclose information

to customers strategically. For shareholder it is important but for customers innovations it

matters i.e how much you are innovative and, creative. Which products you offer, whatare you future plane. In the current scenario innovation plays its role.

iii)- Internal Business Process

it means to meet expectations of our shareholders and customers. In the first he said

expectation of shareholders and in the 2ndhe said expectation of customers. The internal

business combined both the components(S&C) and good businesses process should we


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excel? So these strategies are related to performance. Now what is their expectation as

their todays expectations will affect the future expectations. In BSC we assess our

futures strategies. If we will not make our expectation of current scenario keeping in

view the future expectation then success is not possible.

iv)- Learning and Growth:

To achieve our vision and strategies how we sustain our ability to change and improve.

How much there is room in your strategies of learning and growth. How much you are

taking change in your strategies according to external environment. How much you are

taking change that will prove that where are you standing in the market and how your

customers are satisfied with you.

Steps Involved in Strategic Performance Management to Improve

Process of Strategic Performance Management:

A. Reinforcing Organizations Mission. If you have to implement PM at strategic levethen PM should be part of your organization that how will start performance

management. Ferris says that until PM is included in your mission. Now how we

include mission in PM the first one is:

a- Role of Employees: it has comprehensively defined by Purcell (2003) and he proposedA+M+O model. So at the employee level you need A

A-Ability: if the employee has not ability to achieve mission the mission is not

possible to be achieved. The first thing is whether the employee is having the right ability

/ knowledge to implement or pursue mission.

M- Motivation:

Whether employees are motivated to do work and do well. As ability can be developed in

some forms but inspite of skills or ability if people are not motivated to work then theseall skills and abilities will have no worth for the organization. So it is the duty of manager

to understand the situation. The ability what is the ability/skill in the employee and how

work is to take from him. So understand this is the ability of a manager.


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O-Opportunity.

Only plane will not be made we have to provide opportunity to the employee. Employees

should be given opportunity to use their skill. To provide opportunity to such employee

who has that ability then the employee will be able to perform well.


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LECTURE NO.4

18-05-2014

Performance Management:

What is basically Strategic Performance Management?

It is basically a process when we combined different components which are ultimately converted

in Strategic Performance management. In balance score card it is not only concerned about

organizational performance and to some extent variable performance. There are stake holders

involved what is their role, customers involved, shareholders the point of all of them not only

this thing what is actually performance and the 2ndpoint is that how could you appear i.e. how

your performance should appear. The people who you are managing that the organizations as all

the information are not disclosed with the shareholders as there are some limits for disclosing the

information there are some principles.

The principle of Disclosure:

The principal of disclosure is adopted and like that disclosing of information is also based on

companys principals. But the As in some cases if the information is disclosed it can be misused.

In principle you will disclosed such information in your finance statement which are required for

the individuals or for the shareholder otherwise you will have to face problem. So in Balance

Score Care approach or in performance the distinguishing characteristic is that what is your

actual performance and what is actually required.

The False Indicators:

In the industry Whatever the management is disclosing, like; Venture outcome, market share,

companies image whatever they are talking the positive indicators of this all they actually show

that how the companies is performing and how much the company is competent and efficient. So

instead of realistic disclosure the organizations go toward exaggeration so that their performance

could look positive. The 2nd problem with thing is that the focus of mngt is mainly short term


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because there is no such Co where management think that we will be sitting in the org. and

working in this management. So they dont go for long term projects asthe manager thinks that

after 05 or 10 it might be possible that I will not be working in this organization so the manager

thinks what the need of working for long projects is. So they go for such work which give

immediate performance so that next year when the companys board director is sitting they think

that the organization is working very well, performance is well and profit earning is more than

earning in long term. In long the profitability could be more than this. However, side by side its

positive aspects there are negative aspects of it as in most of the companies such examples are

there where big scandals were exposed. They misused the information with the collaboration of

finance people and they showed / exaggerated profitability in financial statement and these

companies started showing profitability in a very short span of time. So within the day the shares

of these companies which were sold for 500$ now they are not sold even for $0. The

shareholders faced the loss of billions of dollars just because of this thing. The shareholders

thought that companies are earning a lot and their shares will be beneficial for them. The reason

behind this that to measure or management performance of management that was in models as

per detail given below:-

Mechanics of Control (Corporate). The board of director is in tiers:-

Tier-1 Monitoring In monitoring there are independent directors and people from the Govt.and they all are monitoring the performance and these people of doingexecution have the authority to fire the individual and to restrict themthey monitor their performance. There is mechanism of control. If theorganization is not showing good performance and concealing theinformation they have this mechanism is available to check them. But inUSA etc there is a different mechanism being used than corporatedirector. They have one board of director and they have one Tier and inthat tier management is also included and they are monitoring as well as

at the work of execution. In such companies the chairman of BOD &CEO is the independent person in both Tier 1 & Tier2. This model ismainly based on trust. The CEO of the company should be trustedthinking that he is working in the best interest of the company.

Tier-2 Execution In execution there comes your whole management.


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This module is based on trust. When an agent has been hired by the company as per agency

theory you have to trust on them and assume that whatever they are doing that is in accordance

with the best interest of the company.

Whistle Blower protection. Internal and external i.e. within the organization and outside the

organization. You cannot fire the whistle blower protector unless the matter is properly

investigate. In Pakistan hiring / firing is most difficult process. In Pakistan Whistle Blower

protection board is not present. There is no other country in the world who could give such a

high protection to its employees as in Pakistan courts give much help to the employees if the

case goes to the court.

Performance Disclosure:

When you are disclosing the performance management at strategic level then an important role

comes that what is the integrity of the people of your organization. The main topics are focused

on ethics like; profits leadership, ethical leadership. These all things are focused if your

organizations are not focusing then making tiers and integrity will not be able to increased and

performance will be increased.

Strategic Performance management process:

1- Individual Role2- Role of Management3- Relating individuals objectives with organizations objectives. In this context if

individuals objectives and organizations objectives then the performance at strategic

can be evaluated. Now what should be the mechanism? In the literature the most

important support is of The Goad Setting Theory (Lock,1981). This theory has the

history of 33 years and it is still valid today. Lot of literature is available in its support.

In other domain there is a lot of support for Induction based Research the concept given by

(Lock). In social sciences totally everything has been related in numbers so induction based

theory should be used in social sciences:


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i. Specific goalii. Difficult (realistic) Goals (SMART measurement)

These goals improve performance.

Management By Objectives:

The most import relating implication of it is MBO. It is practical outcome or implication of Goal

Setting Theory. In MBO the Traditional mod of GST top to bottom approach is followed. Goals

are set at top level and then they are communicated at low level and at low level people

implement them.

The Basic Characteristics if MBO

Collective setting of Goals:You can relate this with performance. The feedback is taken from the functional level. it is

not only the responsibility of top level to set goals rather the levels of your organizations top

level, middle level and functional level. At functional level all the units set goals and then

these goals are mutually discussed collaboratively at their level and then these goals are attop level. The main objective of CSG is that you can relate this with the performance. It is

the duty of the employees working functional level and which is a sort of reactive approach.

These people have to follow these directions. For example; a person is working in sales and

he has been give some targets to achieve them, so he will responsible to answer the questions

of the organization.Now the objectives of org have matched with the individuals objective.

If that person does not achieve the goal then that person is countable as well.

Process of Feed-Back and Monitoring:It is very important. The target / goats you set for that whatever MBO implement that target

takes time to work. Let say a target is given in 2014 it does not mean one year it is possible

that this target has 10 milestones there are important components and for that milestones

which you initially decided you are questioned i.e. these were our objectives and in first


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quarter what we have done, what we have achieved and what kinds of were faced and again

to achieved objectives upto end is easy.

The 3rd advantage of this is that managements usually avoid long term objectives thinkingthat after 05 or 10 years we will not be here so there is no need for long term objectives. So

the management shifted them from long term objectives to short term objectives. Now the

managements for example divide long term objectives into 10 different milestones indicators.

Then the current managers work on the milestones targeted to them and they are least

concerned the milestones other than their own milestones. Every person works on him

milestone and he is least concerned with other milestone/objectives. Now the organizations

will relate these objectives with the performance of the employees. The current

organizational structure in the organizations is based on project based structure.

Project Based Structure:

The organization executes their tasks /activity rather at project level rather than at

organizational level. They define an independent project, this project has different

management, its HR is different and all other activities are different. Today it is a big

challenge to run a project.

Gain SharingIt is totally linked with your performance. In the same organizations different people are

working but reward is given to the entire persons either they work or not. This gain is

divided with target and with achieving. Now the marketing department has achieved 50%

targets now they will gain share accordingly. This gain sharing is watched at all levels of

the organizations from lower to top. Now this concept of gain sharing has changed this

concept and the reward was given to only those persons who basically have done some

job and achieved their goals.

Performance Based Pay:The organizational has changed the fixed pay system. They have divided it with fixed

plus variable. The pay / reward is given on performance and achieving of target and


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giving outputs and no one has objection of salary and reward. Now the system of pay has

also been changed. In this concept the salary is given to all the persons but according to

their performance and targets they have achieved. So the people are also satisfied as the

criteria are clear to all of them and every person is satisfaction although outwardly it

looks a sort of injustice but the people who are getting that reward they know that they

are rightful to getting that much reward/salary.. In justice procedural matters more than

distributive that through which mechanism you have gained that share. In profit sharing

your focus is on equal distribution but in procedural justice procedure matters that

whatever a person has performed the job he is given the reward accordingly. These are

outcome of Equity Theory.

Flexible Benefits (means of choices)Expectancy Theory

Your reward should match your goals. On this basis what is its integration today orgs.

Give rewards that are in form of flexible benefit. Practically when organizations give

single reward that said that said cannot satisfy the need of every employee. Practically

when practically organizations give reward to their employees they said that a single

reward cannot satisfy the need of employees. Flexible benefits are a Manu of prices.

There is long list of rewards you achieve your target and then take your reward according

to his needs; it can be in monetary term it can in for some promotion, it can be in form

of some important changing. Different people have different needs and accordingly to

that need the employee is given reward. The employee has achieved target and he looks

the menu and says that he may be given that reward which could give him maximum

satisfaction. Researchers say that financial reward to different people is not attractive in

all the cases.

Note:job is calling by God the person who works committedly he fulfills the task thinking

that as calling by God. The second example is of Munchalay Ka Soda where the lesson of

honesty is given. The concept of Islamic Work Ethics is the same. So the persons who do not

work in the organization honestly they will be in much loss. Honesty is the Best Policy


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Conclusion:

Now ultimately by making case from MBO to goal setting of individuals individuals goal

setting theory level we debate with Organizational Objectives and make assess of both at a time.

Today MBO is applied the worlds best organizationand they work in the organization. Its basic

advantage is that all goals are aligned from the lowest level to highest level. When objectives are

completed then their assessment is very easy. Performance appraisal is done at lowest level and

when performance objectives are achieved/completed then you can tell to each unit that which

unit has achieved how much objectives and overall organizations objectives have been

achieved. This process, very simple theory but itspractically implication is very important for

all the organizations.

Role of Strategic Performance Management and High Performance Work System:

HPWS is taken overall at organizational level. How this work system work in organizations.

Performance management is an important component of HPWS. But perhaps except performance

Management there is no work system or HRP which is present in almost all work systems. When

we make work system then there are different sub systems like;

Performance Enhancing Work System (PM, and HR practice) Skill Enhancing Work System (R&S, T&D and so on) Motivation Enhancing bundle of Work System(pay for performance, reward

management and so on)

The work-system or HRP in performance management suppose you can see them here

practically. But what happens that in this work system or PM as separate outcome for example;

the employee has performed well and achieved the target. Now you have to give him reward and

compensate him, there is a mechanism of gain sharing and pay for performance. Now the impact

of this work system will come on Motivation enhancing Work System The pay for

performance which you give that is linked with this work system. This is dependent on this work

system.


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Here you say that employeesperformance is not accurate and there are deficiencies in him for

which you have to train him. So here the impact of this work system will come on you Skill

enhancing work system

Here you will develop this HRP or WS then it will be linked with performance management.

You have to give reward or punishment to an employee and if there is not procedural justice in

you work system then it impact will come on motivation of employee negatively.

Selection: here if you see that there is lack of ability in our employees have deficiency which

cannot be removed through training. Now the nature of situation is such that you have to recruitnew work force then its impacts will come your Recruitment & Selection.

So literature suggests that your performance management system is linked with all other work

systems. It impacts on training, compensation, Recruitment & selection. The people who work

well you as reward promote them then this will impact on your career management. So

Performance management literature suggests is at the center of all other WS or HRP and all other

systems are linked /integrated with it. So if you will not run it properly then your whole

structure/system will disturb. You will create problem in selection, R&C, training,justice/reward/equity/promotion. So overall you whole the structure of your overall HPWS will

disturb in you are not effectively implementing work system. Performance management lies at

the heart of work system.


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Compensation Management

25-04-2014

Today we discuss compensation management and then we add in it the elements of strategic

compensation management. We will discuss that which element work in traditional

Compensation Management and which kind of elements have change the concept of traditional

Compensation Management into strategic Compensation Management . CM is such a

component of HR that we have added most of elements of economics in it. Our all the current

literature of CM is combination of diverse discipline. At one side eco principles and then how

we add in the discipline HR and then these both will be added and then SCM will come into

existence.

Leadership and the motivation are two theories which come into HR. The motivation theory also

work for the literature of CM. The main effect is three theories as under:-

Social Exchange Theory. It is a strong and universal theory and its element is seen in almost all

the H.R. its concept with C.M. look valid. All the transaction which human do all of them based

on some cost benefit analysis (Thomas, 1965, Blou,1964), whatever the services an employee

gives in the shape of transaction etc he will take return/benefit in return as without return no

employee works. Compensation is also a sort of transaction as an employee do a job /renders

services that is for compensation along with multiple other things. Then he thinks whether this

reward is based on justice. No employee will give services without reward but question arises

what will be the mechanism of this reward. Reward is not only in the shape/form of monetary

term rather there are other kinds of rewards so components our discussion will be based on this

concept.

If we see Social Exchange Theory and same kinds of other theories the we have add economiststheories. Here is a popular model model which is called gift exchange model presented by

(Akerlo, 1982). The economist use the name in different term. It means that wages and efforst

are mutually reciprocal gifts. Until we add utility maximization theory the concept of reward is

not possible. It was challenged in the form of prospect theory but it is applied in the concept of

economics.


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UXT0 workers have ulities for reciprocity. We combine utility and reciprocity for workers and

when we combine these two. Then this theory is completed against is effort. Whether he is

returned for his effort. It is based on two theories (SXT and UMT). When we combine

(______) (_______) (_____________) we see the elements of economics.

Equity Theory (Adam, 1965). We will base this within social exchange theory. Every individual

provide services on the basis of reward. If he _______ equity (E = R)

There are number of factors of efforts we use an element that is Job Evaluation(what is the

worth of that job on the part of individual). If there are two professional professors the reward

will be given to the professor whose is worth is more than the other like; Dr.Usman Raja and Dr.

Sajid Bashir etc. there will be lot of difference between their compensation rewards.

In the element of effort will be a problematic issue (Dr. Shoukat Tareen).

Executive Compensation: why there is a gap in salaries of CEOs. Here compensation is also

made with other.

Self outside Self inside Worth inside Worth outside

When these 04 elements will be equal then the elements of compensation will be completed.

Equity Theory: if there will be no equity then what will be its impact. There can be multiple

problems.

2ndconcept is in form of expectance theory (Victor Vroom,1964). He presented effort and reward

in different domains. He said that reward is in 03 shapes which are instrumental when:

1- Effort - performance relationship (E-P relationship)2- Performance - Reward relationship (P.R relationship)3- Rewardgoals relationship (R-G)


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1-) E = P relationship: With this effort whether your will able to achieve this goal with your

ffort / skill. If answer is yes then you will go to towards 2nd type. If there will be No the

answer will be different and effort will become Zero.

2-) Performance Reward relationship: Reward again is subjective in nature. If you

perform according to reward you get. Here reward will be in the context of organization. How

organization is giving compensation. Here reward matters in shape of monetary term as if

organization will promote you then you will do more effort and if not you will stop doing effort.

3-) Reward Goals relationship. Nature of the reward is important factor. One has to

compare it with his / her personal goals. If these are match your personal goals then effort is

exerted and if not you will not exert efforts as these reward are not matching your goals then you

will stop working.

Flexible Benefits:

When you give target of job then you provide flexible kinds of targets to choose one of them.

2nd

Discussion

EconomicPerspective: Incentives by definition are scarce so problems start from here so

further their distribution will also be not based on equality.

Basis of distribution is differentequitable. Incentives have diminishing marginal utility as we increase rewards and their utility is

diminished.

Different incentives have different impact on people. There will be different impact ofincentives of different rewards.

Types / Components of Incentives:

i)- Material: These are tangible and material having monitoring values. For example;

transport facility, perks, salary, and medical facility. So salary is calculated on the combination

of all these elements.


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ii)- Solidary Incentives: Their nature is intangible for example; Association with the

organization, status in Pakistan and. Persons working in Pak Army. So this is also a kind of

reward.

iii)- Purposive: Intangible but having some stated ends. Sometimes individuals are

performing such a job where they attain some objectives as they provide some mode or medium

by the organization. To take change in the people like teachers job, so there is sort of

psychological effort or to impart knowledge among the students. We can relate it to McCllands

need theory what need motivates individual to do the job. It also relates Vroom goal PT. What

goal expectancy is there to work? It can alsobe related to Maslows need hierarchy theory.

Then psychology and economics merge then this concept become clear.

Different other themes:

Reward / Incentives: In 1990 a discussion started (Shawartz, 1990). He said that to provide

reward in quantifying manner does not matter rather to provide reward in frequency mode

matters i.e. Frequency of rewards:

Target Reward

Activity ?

If there is change in reward they start doing effort for work and if he does not gain reward then

he stops doing activity. If we link everything with reward then utility of reward diminishes. If

every target is linked with reward then activity focus will be reward only and in case reward is

not there then effort will be zero.

Cognitive Evaluation Theory (Desis Ryan,1975). His first theory was self-determination theory.He gave two components:

Motivation Intrinsic and Extrinsic:

Motivation is based on these rewards, for example; in an experiment a group of students was

given a puzzle to solve it with extrinsic motivation. First there was an attachment of intrinsic


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motivation without reward and in the 2nd experiment a reward was also given i.e. extrinsic

motivation was included. Now their concentration shifted from intrinsic (job) to extrinsic

motivation (dollar).

So whatever you are serving somewhere for intrinsic motivation and if extrinsic reward is

included in it the ultimately the ration of job is decreased and level of motivation is also

decreased.

He (Schward) says that the people who were doing job for intrinsic motivation they have also

started thinking of extrinsic motivation. So when you will stop giving extrinsic reward the ration

of intrinsic rewards also diminishes. So, reward in shape of salary increase in not solution of

every problem as sometimes intrinsic motivation starts diminishing.

Titmuss (1970), he developed an interesting concept. He said that to donate blood requires some

intrinsic motivation like; to save life of someone. So he added monetary incentives to the donator

of blood. Now Titmus gained result that now blood donators have decreased.

Solow (1971) & Ashon (1971) they challenged it that when you add incentive of extrinsic

motivation (Monetary incentive) then intrinsic motivation is decreased.

Motivation Crowding Theory (Frey & Jegen,2001):

If crowding effects linked with inner desire and motivation and increase the extrinsic rewards,

the overall performance or outcome will decline. In this theory people do look intrinsic

motivation side by side extrinsic motivation

Welfare State:

Shelter, basic needs are the responsibility of state

Popular Background

Change in preference Model: It is based on the concept of Yarks and Dadson low:


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Wages

Hours worked

With the increase of hours wages are also increasing but after a certain period wages are

increasing but output are decreasing. For satisfaction of job extrinsic motivation should be

adequate if they are less it means you give little extrinsic factors rather is because of intrinsic

factors.


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Lecture No.5

01-06-2014

Compensation Management

Compensation and Reward Management

During the last 10 to 15 years lot of study was conducted on this topic. In this topic we have to

near it with Strategic HR. What are the components in SHRM which differentiate Tradition

Reward with Compensation management? What are the components where organizations

strategy and its reward are linked and then organization use it.

Employees Stock Ownership Reward (ESOPS)

For example in formal organizations there are ESOPS (Employee stock Ownership Plans) and

what is the basic philosophy that the reward (like; profit, bonus) which the organization has pay

to its employee annually be paid to him from the organizations stock. In this way there will be

the present of a component of ownership. As much as the organizations stock will increase theemployees stock will also increase like profit earning etc. Now basically as much as the

involvement of the employee is increasing with the organization, its mission or ultimately their

strategies in the same way the stocks of the employee are also increasing. As, we have studied an

important component in SHRM where the objectives of organization and objectives of

employees have to be aligned in the same direction.

As much as employee passes his time in the organization his stocks also increase and his

involvement in the organizations mission, objectives, strategy and profitability also increases.

Although this is a type of reward or compensation but the employees involvement and interest

with the activities of the organization also increase. He considers that if organization will earn

more he will also enjoy its benefit. Now his effort level with the objectives of the organization

increases. This is now a kind of win-win situation


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