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Introduction to
Business

8. Human Resources
Management

2019-2020
www.uib.cat

Outline:
1. Human Resources Management
2. Human Resources Planning and Hiring
3. Motivation (Rewarding)
4. Appraising
5. Training
6. Motivation Theories
 4. APPRAISING
Performance appraisals consists on the identification,
measurement, and management of human performance in
organizations.
1. Identification determines which job characteristics the manager should
be examining when measuring performance.

2. Measurement is making managerial judgments about how “good” or

“bad” employee performance was (based on the judgement type –
absolute vs. relative or the unit measured – trait, behavioral and
outcome appraisal instruments)

3. Management is to provide workers with feedback and coach them to

higher levels of performance
 4. APPRAISING
Assessing the work of employees is a key function of human resource
management
• It can be seen as a periodic assessment of the performance of the
individual’s future potential

Two main purposes:

• Administrative purposes: whenever they are the basis for a decision
about employee’s work (E.g. promotions, termination, and rewards)
• Developmental purposes: when it is used for future-oriented
decisions to improve employees’ performance and strengthen their
job skills (E.g. providing feedback, counseling employees on effective
work behaviors, training and other learning opportunities)
 4. APPRAISING
When measuring performance, eventual errors should be taken into account: Rater’s
errors: reflect underlying biases by the rater. Examples:

• Halo effect: the tendency to rate similarly across dimensions

• Range restriction: to restrict all ratings to a small portion of the rating scale. Three
forms of range restriction are common:

– Leniency errors: restricting ratings to the high portion of the scale

– Central tendency errors: using only the middle points of the scale
– Severity errors: using only the low portion of the rating scale

• Personal bias: to rate workers on the bases of race, nationality, sex, age or other
factors
• Comparability:
• Supervisors should use the same measurement criteria, however this is
difficult
• Solution: Frame-of-reference (FOR) training
• Scenarios, role-playing, etc.
• To “calibrate” raters to same standards
 5. TRAINING
• Nobel Prize to Gary Becker in 1992

• Human capital theory applies to the acquisition of knowledge or skills,

investment in education...

• Ways of investing in human capital:

– Formal schooling
– On-the-job training (learning-by-doing)
– Others…

• Human capital is one of the most important factors that contributes to

economic growth
– The return on investments in education increased in the 80s and 90s
– Technological change is “skilled biased”
 5. TRAINING
Training: the acquisition of human capital that improves
workers’ skills/knowledge

□ On-the-job training can be through an explicit course or

learning by doing
□ Off-the-job training

Training raises worker productivity

 5. TRAINING
• To decide if it is efficient to provide training, it is necessary to
compare costs and benefits

– Benefits depend on :
• Increase in productivity
• Duration of the worker’s career
• Selection/screening

– Costs depend on:

• Direct Cost of training
• Training duration (time lost without producing)

• Who appropriates the benefits of training?

– The firm does not consider total training profits, but only the net profits
after discounting the wage increase it has to pay to the worker
 5. TRAINING
• At t=0, invest in education/training in order to increase future
productivity
– C0 = cost of training
– qt = productivity without training
– Qt = productivity with training

• You should invest in training if

Qt − qt
C0 + q0  
t (1 + r )t

• It is efficient to invest in training whenever the present value of the

future flow of benefits exceeds the costs of making the investment
 5. TRAINING
• Co ↑, q0 ↑ → less investment

• r ↑ → less investment

• T ↑ → more investment
(difference between men and women?)

• Qt-qt↑ ↑ → more investment

(training has other non-monetary benefits)

 5. TRAINING
• Depends on the extent to which the acquisition of skills can be
used outside the firm:

– General human capital:

Skills or knowledge that are useful in all kinds of firms. Increase the
productivity in any firm.
Workers should pay for it and ask for a higher salary (if the firm pays,
then less salary or long term contracts)

– Specific human capital:

Skills or knowledge that are useful only in one firm. Increase the
productivity only in one firm.
Workers and firms should share costs and benefits.
 TRAINING AND DEVELOPMENT
• Training refers to a planned effort to modify or
develop knowledge, skills and attitudes
through learning experiences (teach
organizational members how to perform
current jobs. )

• Development is a broader concept referring to

general growth of an individuals skilled and
abilities through conscious and unconscious
learning (builds workers skills to enable them
to take on new duties).
© Siobhán D. Tiernan, Michael J. Morley
and Edel Foley 2006
 5. TRAINING
Career Development:

– It is different than training

– It is an ongoing and formalized effort that recognizes people as a vital
organizational resource.
– It focuses on enriching workers and furthering their capabilities.
– Can play key role in recruitment
– Tries to meet both employer and employee needs
– Increasingly responsibility shifted to employees
– Too much emphasis is harmful to organizational effectiveness
– Women and minorities often excluded from informal career
development activities
– Promotion, Transfer, Turnover
 5. TRAINING
Three main phases of Career Development :

1. Assessment phase
• Goal: to identify employees strengths and weaknesses
– Self-Assessment:
• Skills assessment
• Interest Inventory
• Clarifying Values
– Organizational Assessment:
• Promotion Forecasts
• Succession Planning

2. Direction phase (Determines the type of career employees want, Individual

Career Counseling, Information Services - Job-posting systems, Skills
inventories, Career paths, Career resource center)

3. Development phase
 MOTIVATION

• ‘There is a correlation between

organisations that go to a lot of
trouble to motivate their staff &
profitable business performance’
(Pettinger 1994)
 5. MOTIVATION THEORIES
Human Relations is concerned with employees’ needs, goals and their impact
on job performance

Motivation: An inner drive that push people behavior towards a goal

Morale: The attitude towards a job, firm and coworkers
High motivation – High moral → Higher productivity
 5. MOTIVATION THEORIES
Classical view
1. Classical Theory of Motivation
- Monetary incentives only
- Specialization
- Link between wage and output

2. The Hawthorne studies

– Hp: Physical conditions positively affect productivity
– False…job performance is rather affected by social and psychological
factors
 HAWTHORNE STUDIES
Electric Hawthorne
• The factory employed mainly women workers
who assembled telephone cabling equipment.
• The aim of the study was to establish the impact
of different conditions of work on employee
productivity.
 HAWTHORNE STUDIES
Conclusions:
• The prevailing view of the time, that people went to work purely for
money and a living, was deeply mistaken.
• Work was much more. It was first and foremost a group activity in
which other people and their behaviour, be they colleagues, managers
or observers, affected how well people worked.
• People's morale and productivity were affected not so much by the
conditions in which they worked but by the recognition they received.
• The rises in productivity were achieved under the interested eye of the
observers not because the conditions made the workers feel good but
because the workers felt valued.

19
 5. MOTIVATION THEORIES
Motivation Theories:
1.Maslow's Hierarchy of Needs
2.Herzberg Two-factors theory
3.McGregor Theory X and Theory Y
4.Equity Theory
5.Expectancy theory
 5. MOTIVATION THEORIES
Maslow's Hierarchy of Needs
- people have 5 basic needs
- Which they try to satisfy in a particular order:
physiological, security, social, esteem, and self-
actualization
 MASLOW HIERARCHY OF NEEDS
• Maslow’s ‘hierarchy of needs’ describes five
levels of need that an individual may have &
assumes that workers will be motivated to
work their way up through the levels in order
to satisfy their needs and reach their fullest
potential.
• A manager has to identify which level of needs
each employee is working towards
MASLOW HIERARCHY OF NEEDS
 5. MOTIVATION THEORIES
Herzberg Two-factors theory:
- focus on the job task and environment
- Mainly two factors affect productivity: hygiene and
motivational factors.
 TWO FACTOR THEORY
• Hertzberg was concerned with the impact of the job
and the environment on an individual’s motivation
• His objective was to identify the factors at work that
led to the greatest level of satisfaction and
dissatisfaction
• Focuses on outcomes that lead to higher motivation
and job satisfaction, and those outcomes that can
prevent dissatisfaction.
 TWO FACTOR THEORY
• He questioned people about factors which led to
extreme satisfaction and extreme dissatisfaction in
their jobs. Interviewed 200 engineers and
accountants.
• Factors leading to satisfaction = Motivators
• Factors leading to dissatisfaction = Hygiene Factors.
• Question: are accountants and engineers like other
workers?????
TWO FACTOR THEORY
 TWO FACTOR THEORY
• Herzberg’s findings indicate that satisfaction and
dissatisfaction are not at opposite ends of the
same spectrum.
– The opposite of satisfaction is not dissatisfaction and
vice versa.
– Good hygiene factors do not produce motivation but
they simply prevent dissatisfaction.
 5. MOTIVATION THEORIES
3. McGregor Theory X and Theory Y:

- Theory X: the traditional view of management

- People dislike work → they should be forced to, controlled and punished
- The average worker avoids responsibility

- Theory Y: the humanistic view of management

- People like to work and seek responsibility

Theory Z: the employee should participate in all aspects of the organization

- quality circles
MCGREGOR THEORY X AND THEORY Y
 5. MOTIVATION THEORIES
4. Equity theory:
• how much people are willing to contribute to an
organization depends on their assessment of the
fairness, or equity, of the rewards they will receive in
exchange
 EQUITY THEORY
• Based on the comparison between inputs and
outcomes
• Inputs refer to that which an individual brings to
his/her employment and includes things such as effort,
experience and skills
• Outcomes describes the range of factors that the
employee receives in return for his/her inputs-
recognition, fringe benefits, status symbols
• Employees will formulate a ration between their inputs
and outcomes
 EQUITY THEORY
• If workers perceive inequity they will try to take
action by:
– Asking for a pay rise
– Making less effort
– Leaving the job

• Employees will formulate a ratio between their

inputs and outcomes an compare against ratios
for other people in similar situations. If those 2
ratios are not equal they will take action for
equity.
 5. MOTIVATION THEORIES
5. Expectancy theory:
- motivation depends not only on how much a person
wants something but also on how likely he or she is to
get it
- Importance of expectations and distance between
expectation and reality
 EXPECTANCY THEORY
• This theory identifies important expectations that
individuals bring to the workplace and focuses on the
relationship between the effort put in and the
expectations concerning the actual reward

• (Vroom 1964): The relationship between one’s behaviour

and desired outcomes is affected by :
– Personal factors such as: Personality, Perception, Motives,
Skills, Abilities, etc
– Organisational factors such as: culture, structure,
managerial style, etc

• Employee motivation depends on depends on how the

person perceives the relationship between effort,
performance, and outcomes.
 5. MOTIVATION THEORIES
Strategies to motivate the workforce (besides rewarding):
- Job rotation
- Job enlargement
- Job enrichment
- Flextime
- Compressed workweek
- Job sharing
 References

✓ Ferrell, O.C., Hirt, G., Ferrell, L., (2014). Business. A changing world. Mc
Graw-Hill, chapter 9 and 10

✓ Lazear, E.P., (1998). Personnel Economics for Managers. Wiley, chapters 3, 5

and 6