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B120: An Introduction toBusiness Studies

This course is designed to develop an understanding ofthe principles and practices of business, from the very

small one person firm to multi-national corporations.

Dr. Helal Afify2009

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Book 2An Introduction to Human Resource Management

(HRM) in Business

Session 1Why do people go to work?

Learning ObjectivesAfter studying this session, you should be able to:

1- Consider some definitions of HRM;

2- Characterise the nature of motivation, including its importance; and identify the factors

that motivate people to want to work;3- Understand the different views of the key theories about motivation at work;

4- Highlight the changing expectations of both employees and employers within a modern

business;

5- Explain the notion ofpsychological contract.

Definitions of HRMThe terms "human resource management" (HRM) and "human resources" (HR) have largely

replaced the term "personnel management" as a description of the processes involved in managing

people in organizations.

Personnel Management:

.is a series of activities which: first enables working people and the organisation which uses

their skills to agree about the objectives and nature of their working relationship and, secondly

ensures that the agreement is fulfilled.

HRM:

Designing management systems to ensure that human talent is used effectively and efficiently to

accomplish organizational goals.

refers to the practices and policies needed to cover the human aspect of management.

is the part of the management process that specializes in the management of people in work

organisations.

Why people might go to work?

1- Forfinancial reasons: Earning the money.2- Fornon-financial reasons: Job satisfaction; good way of meeting people and making friends;

self-esteem; work can give people an identity and to build a career).

The Nature of MotivationWhat Is Motivation?

-The extent to which persistent effort is directed toward a goal.

-A need or desire that energizes behavior and directs it towards a goal.

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-The set of forces that leads people to behave in particular ways.

-Anything that provides direction, intensity, and persistence to behavior.-A willingness to exert effort toward achieving a goal.

-An internal drive to satisfy an unsatisfied need.

-The psychological process that gives behavior purpose and direction.

-The conditions that energize, direct, and sustain work behavior.

-The inner force that drives individuals to accomplish personal and organizational goals.

-And the will to achieve.

A simple model of motivation:

The Importance of Motivation:Why do we need motivated employees?

The answer is survival

Job performance depends upon motivation, ability, and environment.

Supervisors get things done through employees and therefore need to know what

motivates them.Motivation influences productivity.

Productivity, profit etc.

Employee satisfaction & attitudes.

Employee reward schemes.

Recruitment & selection, succession planning.

Managing Diversity.

Ergonomics & work design.

What motivates people to work?

Motivation: The force that gives --------------------------------------- to the behavior.- Direction

-Effort (Intensity)

-Persistence (Sustainability)

Types of motivation: There are two distinct forms of motivation - intrinsic and extrinsicmotivation, as follows:

Extrinsic: Involves factors outside the individual, unrelated to the task being performed. Related

to tangible rewards, e.g. salary, security, promotion, conditions of work

3

Unfulfilled

Need Motivation Behaviour Rewards

Feedback

Unfu

lfille

dNeed

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Intrinsic (self) motivation: An individuals internal desire to perform a task. Related to

psychological rewards, e.g. a sense of challenge and achievement, receivingappreciation.

Theories about Motivation at workMotivation theories that specify the kinds of needs people have and the conditions under which

they will be motivated to satisfy these needs in a way that contributes to performance.

Three of the most famous theories, which three different ways of thinking about

motivation; that is:1- Type of people (McGregors theory X and theory Y).

2- The contentof motivation (Maslows need theory).3- Theprocess of motivation (Vrooms expectancy theory).

1- McGregors (1960) Theory X and Theory Y:

It comprises of two different perspectives on individual at work:

1- The kind of people they are;2- What managers need to do to keep them working.

Two fundamentally different views of human nature spawn two fundamentally different

leadership approaches:

Theory X: Theory X offered by McGregor assumes that employees dislike work, are lazy, seek to

avoid responsibility, and need to be closely controlled or coerced to achieve desired goals. It is a

negative view about people.

- Assumed that lower-order needs dominate.

Theory Y: Theory Y assumes that employees are creative, seek responsibility, and can exercise

self-direction. It is a positive view about people.

- Assumed that higher-order needs dominated.

What kind of organization do you want to be part of?

What kind of leader do you want to be?

What kind to team do you have?

2- Maslows Hierarchy of Needs Theory:- Identifies five levels of individual needs.

- Assumes that some needs are more important than others and must be satisfied before the other

needs can serve as motivators.

People seek to satisfy 5 basic needs: Self-Actualisation; Esteem;

Social (belongingness);

Safety;

Physiological.

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Maslows Need Hierarchy Theory

There is a hierarchy of five needs physiology, safety, social, esteem and self-actualisation; as each need is substantially satisfied, the next need becomes dominant.

1- Physiological needs: Basic needs (like food; water; clothing & shelter) satisfied through

wages;

2- Security needs: Basic protection from threats, such as safe working conditions, job security

(secure environment);3- Social needs: Desire to be accepted by others such as love; affection and belonging (Feeling

welcomed, part of the group or organisation);

4- Esteem needs: Feeling your work is appreciated by others; Recognition from others (Awards,

public recognition; Informal recognition, communicating that a job is well done);

5- Self-actualisation needs: Achieving ones potential;desire to develop capabilities to fullest.

Maslows Needs Hierarchy

Maslow separated the five needs into higher and lower orders:

- Physiological and safety are described as lower-order needs.

- Social, esteem, and self-actualisation are described as higher-order needs. Higher-order needs are satisfied internally, Lower-order needs are predominantly satisfied

externally. Lowest level needs must be met before higher level needs can be satisfied. As a need becomes

substantially satisfied, the next need becomes dominant. People start with lower-level needs

and move up the hierarchy, one level at a time.

A satisfied need is not a motivator. If you are save and well fed, you tern your attentionelsewhere.

We have an inbuilt desire to work our way up through the hierarchy of needs.

Not meeting these needs has a negative effect on our mental health.

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Safety needs

Social needs

Esteem needs

Self-

actualisation

needs

Higher-order needs

Lower-order needsPhysiological needs

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Maslows Theory and HRM:

Many businesses have used Maslows hierarchy when establishing their HRM policies.

Meeting Maslows needs through HRM policies:

The needs Can be met through

Physiological- Good working conditions

- Attractive wage or salary

- Subsidised housing

- Free or subsidised catering

Security (safety) - Private health insurance cover- Attractive pension provisions - Safe working conditions- No redundancy policy

Social (relationship)- Company sports and social clubs- Office parties, barbeques, outings

- Permission for informal activities- Encourage open communications

Esteem- Regular positive feedback- Prestige job titles

- Photographs in company news sheet- Promotions

Self-actualisation- Challenging job assignments- Discretion over core work activities

- Promotion opportunities- Encouraging creativity

Maslows Need Theory Critique: Self-Actualisation is poorly defined (measure?).

Question whether needs must be met in order to move up to the next level. Little empirical support.

More descriptive of life than theory of motivation in the workplace.

3- Vrooms Expectancy Theory (1964):Concerned not with identifying types of needs, as Maslows theory, but with the thinking process

that individuals use to achieve rewards

Vroom used the term subjective probability to describe an individuals expectation that certain

behaviours would lead to a particular outcome. Expectancy theory suggests that people will be

motivated if they feel that performance will lead to certain outcomes (pay, promotion, satisfaction,

transfer, fired, etc).

Effort Performance Reward GoalsThis choice is conscious and based on consideration of the following three factors:

Expectancy: Perception that effort leads to performance.

Instrumentality: Relationship between performance and outcome.Valence: Rated attractiveness of outcome (value)

Produced first systematic formulation of expectancy theory of work motivation Expectancy theory

states that the strength or force of the individuals motivation to behave in a particular way is:

F = E x VWhere:

F = the motivation or force to behave

E = the expectation (subjective probability) that the behaviour will be followed by aparticular outcome

V = the valence of the outcome

Approach provides a way of measuring human motivation.

Termed preference an individual has for a particular outcomes its valence.

Valence may be positive, neutral or negative.

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The Psychological Contract- What do we mean by Psychological Contracts?

- What is right & wrong; acceptable & not acceptable?

Defining the Psychological Contract:

Kotter (1973): An implicit exchange between an individual and his organisation which

specifies what each expects to give and receive from each other in their relationship.

Herriot & Pemberton (1995): The perceptions of both parties to the employmentrelationship, organisation and individual of the obligations impliedin the relationship.

Rousseau (1995): Individual beliefs, shaped by the organisation, regarding terms of an

exchange agreementbetween individuals and their organisation.

Guest and Conway (2000): The perceptions of both parties to the employment relationship,

organisation and individual of the reciprocal promises and obligations implied in the

relationship

Written Contracts

Items typically included in the Written Contract:

Job title; Description of duties; Date of appointment;

Place & hours of work;

Annual salary and other payments;

Annual holiday entitlement;

Sickness absence & payments;

Notice period for termination; Disciplinary & grievance procedures.

The Psychological Contract Expectations

Employers expectemployees to: Employees expectemployers to:

- Work hard;

- Uphold company reputation;

- Maintain levels of attendance and punctuality;- Show loyalty to the organisation;

- Work extra hours when required;

- Develop new skills and update old ones;- Be flexible and receptive to change;

- Be courteous to clients and colleagues;

- Be open and honest;

- Come up with new ideas.

- Pay commensurate with performance;

- Provide opportunities for training and development;

- Provide opportunities for promotion;- Recognise innovation or ideas;

- Give feedback on performance;

- Provide interesting tasks;- Provide an attractive benefits package;

- Treat everyone with respect;

- Give reasonable job security;

- Provide a pleasant and safe working environment

Importance of Psychological Contracts:

Employee beliefs that their hard work and loyalty should be rewarded with long-term

employment security.

Link individuals to organizations.

Reflect the trustthat is a fundamental feature of the employment relationship.

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Motivate individuals to fulfill their obligations (if they believe the other party will do the

same). An individual may have a reason to believe that they will be recognised and promoted if they

work hard, even though this is not part of any formal employment contract. If this does not

occur as expected, they may feel that their Psychological Contract has been violated, leading

to dissatisfaction.

A healthy psychological contract is linked to outcomes (such as: positive employment

relations, employee commitment, motivation and job satisfaction), this means that they aremore likely to feel committed to their employer and motivated to work hard for them. And the

inverse will be occur in the case of week psychological contract.

Unpacking the language of psychological contract definitions:

Promises: Made by one party to another to engage in specific action.

Obligation: Commitments to be delivered by party in receipt of promise.

Expectation: Less binding language than promise and obligation.

Psychological Vs. Employee Contract:

Psychological Contracts Employee Contracts- Dynamic relationship defining employees

psychological involvement with employer.

- Reflects perceptions of expectations.

- Interpretations may not be similar.

Formal contract that specifies agreements such as

hours and type of work in return for

compensation and benefits.

Flexible WorkingOne of the main impacts on the psychological contract in recent times is the introduction of

Flexible Working for employee. Flexible working describes any working pattern adapted to suit

peoples needs.

Flexible Working Options:Part time - Job Sharing - Flexi time (gives employees some choice in the pattern of their daily

work hours) - Compressed hours - Flexible shift working/swapping - Voluntary Reduced Hours -

Teleworking /Homeworking - Annualised hours - Term time working.Advantage of Flexible Working:

Improved staff retention/loyalty - Improved motivation - Enhanced innovation and creativity -

Reduced absenteeism - Flexibility to deal with change - Increase productivity and profits.

Disadvantages of Flexible Working:

Possibility of lower wages, possible isolation and estrangement from work colleagues, difficulties

of motivation, organising, adapting and planning, and in some industries, flexible working could be

an obstacle to promotion

Measuring demotivation: absenteeismDemotivation can have serious negative consequences not only for the individual who is

demotivated but also for their co-workers and the entire organization.Symptoms of employee demotivation:

Increasing absenteeism;

High levels of turnover (people leaving the business);

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Low output and productivity;

Lateness;Frustration and unrest in work force;

Strikes and other various trade union action;

Defiant and violent behaviour of workers;

Non-cooperation, strikes.

There are two main factors that affect on the attendance at work:

1- A persons motivation at work;2- The ability to do their job.

Session 2Designing satisfying work

Learning Objectives

After studying this session, you should be able to:

1- Describe the factors that can affect job satisfaction;

2- Evaluate the job characteristics model and its implications for job redesign.

3- Provide an introduction to scientific management (or Taylorism).

4- Evaluate the potential benefits and problems of the introduction of semi-autonomous teams

and relate this to a practical business situation.

The job characteristic model (Hackman & Oldhams Job Characteristics Model):

This model looks at the relationship between core characteristics, employees psychologicalstates and key outcomes.

Diagnostic approach to job enrichment.

Five core job characteristics are particularly important (Hackman & Oldham, 1980) as

follows:

1- Skill variety: the degree to which the job requires different skills.2- Task identity: the degree to which the job involves completing a whole, identifiable piece of

work rather than simply a part.3- Task significance: the extent to which the job has an impact on other people, inside or outside

the organization.

4- Autonomy: the extent to which the job allows jobholders to exercise choice and discretion in

their work.5- Feedback from the job: the extent to which the job itself (as opposed to other people) provides

jobholders with information on their performance.

Formula to determine motivating potential of job:

When the core characteristics are highly enriched, three critical psychological states are

positively influenced.

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MotivatingPotential Score =

(MPS)

SkillVariety

TaskIdentity

TaskSignificance

3

+ +X Autonomy X Feedback

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Positive psychological states create positive work outcomes.

Enriched core job characteristics will create positive psychological states, which in turn willcreate positive work outcomes only when:

- Employee growth-need strength is high.

- The employee has the requisite knowledge and skill.

- Employee context satisfaction exists.

Hackman & Oldhams Job Characteristics Model:

Job satisfactionJob satisfaction is afeelingabout working and about the job.

Job satisfaction is the degree to which an individual feels positively or negatively about

various aspects of the job.

Factor Affecting Job Satisfaction (motivation) at work:

Factor Examples

Individual Age, education, ability and personality.

Social Work relationships and the opportunity to interact with people at work (formally

and informally).

Cultural The beliefs, attitudes and values.

Organisational The nature and size of the business, the types of management and supervisory

styles, the working conditions, the type of technology used, business policies and

procedures.

Environmental Economic, social, technical and governmental influences.

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Core job characteristics Critical psychological states Outcomes

Autonomy

Feedbackfrom the job

Experiencedmeaningfulness

of the work

Experiencedresponsibility

for workoutcomes

Knowledge ofresults of work

activities

Highintrinsic

motivation

High jobsatisfaction

High workeffectiveness

Task identity

Task significance

Task variety

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Psychometric testing:

A method of assessing ability, personality, motivation and behaviour. Psychometrics deals with the scientific measurement of individual differences (personality

and intelligence).

It attempts to measure the psychological qualities of individuals and use that knowledge to

make predictions about behaviour.

Types of psychometric tests:There are two types of psychological tests used by personnel selection practitioners:

1- Tests of cognitive ability: Cognitive assessment tests attempt to measure an individuals

ability to process information from their environment.

2- Tests of personality measures: Personality measures are more concerned with people's

dispositions to behave in certain ways in certain situations.

Psychometric testing helps to (by the HRM): Reduce the risks of recruitment, Minimise the

costs of selection, Recognise the potential in people, Reduce staff turnover, Improve

productivity, Manage effective performance, Effect transition programmes, Control succession

planning.

Job Design: Job design is about how work might be organised or reorganised to meet the social needs of

individuals and operational needs of a business. The objective of job design is to remove

obstacles in the workplace that frustrate those needs.

Job design is a process of creating or defining jobs by assigning specific work tasks to

individuals and groups.

Drivers of job design:

1- A merger;2- A drop of demand for products;

3- The implementation of an equal opportunities policy;

4- Dramatically changes in the jobs (e.g., new technology or restructuring).

5- Factors related to HRM (such as: recruitment, performance appraisal, also new technology

or restructuring).

Taylorism (the classical approach of job design):

Scientific management developed by Frederick Taylor early 1900s. Systematically (five

principles) determines how work, both manual and non-manual, should be divided into its smallestelements in order to maximize labour productivity. Taylor systematically attempted to make jobs

simple and efficient (classical approach). Taylors writings continue to be influential; manybusinesses and jobs are still structured along the scientific management objective of:

1- Efficiency: achieved by increasing the outputs per worker.

2- Standardisation: of job performance, achieved by dividing up work tasks into small and

clearly specified sub-tasks.3- Discipline: achieved by establishing hierarchical authority (especially, a clear division

between the responsibilities and tasks of workers and managers).

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Socio-technical systems: Systems that include technical systems but also operational processes and people who use and

interact with the technical system. Socio-technical systems are governed by organisational

policies and rules.

Blends the sociological concerns of the worker with modern technology of robots and

computer-controlled machines. For example, Flexible manufacturing systems:Adaptivecomputer-based technologies and integrated job designs that are used to shift work easily and

quickly among alternative products.

Reflects the importance of integrating people and technology to create high-performance

work systems.

The principles of the socio-technical approach to job design are:

1- The design of one part of the system should not dictate the design of the other parts.

2- Job redesign not take place in a way that is totally removed from wider factors such as culture

and group identity.

3- Redesign should involve employees.

The problems of introducing the socio-technical approach into business are:

1- Group dynamic and interpersonal conflict:Group dynamic: Is the study of followers behavior in groups. Group cohesiveness, illusions

and differences in status and pay within small groups can lead to conflict.

2- The organisational context: Factors such as pay and the structure of rewards must be

appropriate.

3- Communication: the communication gap between senior management and the people at

lower levels.4- Management commitment: Management practice has to move in the direction of increasing

real autonomy (free from direct management) undermines managerial power and authority.

5- The impact on people in supervisory: Semi-autonomous work groups by definition need less

control and direction. This may present a difficulty for supervisors who have to appreciatethat their role has changed.

Thanks

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Prepared byDr. Helal Afify

7/3/2009