Chapter 1

External Challenges Influencing Core HR Functions

Legal and Ethical IssuesGlobal ChallengesLabor Relations and Characteristics of the Changing Work ForceHealth and Safety RequirementsManagerial Issues

What are the major HRM challenges?E4Attraction and retention of quality employees

Design of benefit and wage packages that motivate sustainable employee performance

Satisfying regulatory requirementsHireFireRewardPromoteDemoteTransfer an employeeWhat are the major issues for the ENT firm?E7Creatingan Entrepreneurial Work EnvironmentTraining and Development:How do we help employees recognize their entrepreneurial potential and develop the skills to best capitalize on that potential?Recruitment and Selection:Who do we hire to be entrepreneurial and how do we hire them?Performance Appraisals:How do we guide, reinforce and help employees identify with entrepreneurial performance?

Compensation and Rewards:How do we incentivize employees to be entrepreneurial, take ownership, and stay with the company?

Job Planning and Design:What are employees asked to do and how do we allow them room to show initiative?Put it all together: An ENT HR systemE5What should firms focus on?HR practices are coordinated in a way that reflect:

What is happening in the external competitive environmentA longer-term focusWays in which the skills and behaviors of all employees can be affected in a manner that supports and helps accomplish the overall strategies of the firmE6Management faces a challenge of creating a work environment that helps employees understand:The kinds of entrepreneurial behaviors sought by the organizationTheir own innate ability to act in an entrepreneurial fashionThe incentive for acting in an entrepreneurial fashion and the disincentives for failing to do so Creating the Work EnvironmentE8HRM and the Paradox of Creative AbrasionCreative abrasion calls for the development of leadership styles that focus on first identifying and then incorporating polarized viewpoints

The probabilities for unexpected juxtapositions are sharply increased, as are the levels of mutual understanding

A corporate culture of heightened sensitivity and harmony is achieved

E9Examples of efforts to take advantage of abrasion:Hiring people who are not like current staffPutting together inter-functional teams with members that have very different backgrounds and orientationsChallenging a team with two seemingly incompatible goalsIntroducing a perspective that threatens the positions and assumptions of those in the groupBlurring responsibilities between departments or functionsBringing in consultants, staff, or speakers who hold very different points of viewHRM and the Paradox of Creative AbrasionE10HRM Policies and EntrepreneurshipGeneral AreaPractices Encouraging EntrepreneurshipPlanning/Overall Job DesignReliance on formal planningLong-term orientation in planning and job designImplicit job analysisJobs that are broad in scopeJobs with significant discretionJobs that are less structuredIntegrative job designResults-oriented job designHigh employee involvementRecruitment and SelectionReliance on external and internal sources for candidatesBroad career pathsMultiple career laddersGeneral, implicit, less formalized selection criteriaExtensive job socializationOpen recruitment and selection proceduresHRM Policies Consistent with Entrepreneurial Behavior

E11HRM Policies and EntrepreneurshipTraining and DevelopmentLong-term, career orientationTraining with broad applicationsIndividualized trainingHigh employee participationUnsystematic trainingEmphasis on managerial skillsPerformance AppraisalHigh employee involvementBalanced individual-group orientationEmphasis on effectiveness over efficiencyResult oriented (vs. Process)Based on subjective criteriaEmphasis on long-term performanceCompensation/RewardsEmphasizes long-term performanceDecentralized/customized at division or department levelsTailored to individualsEmphasizes individual performance with incentives for group effortsMerit and incentive-basedHRM Policies Consistent with Entrepreneurial Behavior (Cont.)

EEntrepreneurial Motivation: The Critical Role of Reward SystemsReward and compensation programs are the most visible and influential parts of a companys HRM system

Why do people work?FinancialPower and statusPersonal development and career enhancementSelf-actualizationSocialFriendships, camaraderieE13The Expectancy Model (Porter and Lawler, 1968)

Motivation is determined by:1.Belief that effort/hardwork will be recognized or evaluated by employers (expectancy)2.Belief that a positive appraisal will yield rewards (valence)3.Belief that the reward is worth it (instrumentality)Entrepreneurial Motivation: The Critical Role of Reward SystemsE14Entrepreneurial Motivation Expectation That: Importance Rating:EFFORTSPENT ON ENTREPRENEURIAL ACTIVITIESSUCCESSFULPERFORMANCEEVALUATION REWARDPerceived Equitywilllead towilllead toINDIVIDUAL MOTIVATIONTO BE ENTREPRENEURIAL ON THE JOBis a function ofPorter and Lawlers Expectancy ModelE151.Employees do not understand what management means by being entrepreneurial on the job2.Believe it is possible to accomplish entrepreneurial behavior in this company no matter how hard one tries3.Perceive that they are personally capable of being entrepreneurial, then he/she is likely to be unmotivated. Alternatively, the employee may believe that it is possible to be entrepreneurial, but they see no linkage between doing so and how they are evaluated4.There is no formal appraisal or assessment of the employee5.The performance appraisal criteria are unclearWhy might employees lack entrepreneurial motivation?E166.The criteria on which employees are evaluated do not explicitly include innovativeness, risk-taking and proactive efforts7.Other non-entrepreneurial criteria receive much more emphasis8.The evaluations are done in an arbitrary or unfair fashion9.Managers asking for one behavior, but actually rewarding some quite different behavior10.The employee believes the reward will be earned regardless of the evaluation (e.g., everyone around here gets the same reward)

Why might employees lack entrepreneurial motivation?E1711.There are ways to get a good evaluation without actually doing entrepreneurial things (e.g., politicking). 12.The employee has come to find other ways to earn the reward without putting effort towards entrepreneurship (e.g., currying favor with the boss). 13.Rewards are being offered that are too small given the effort that is required to push an entrepreneurial initiative through in the face of lots of internal resistance14.The type of reward being offered is not the one to which the employee currently attaches the most importance15.The reward is considered inequitable or unfair, possible because of what the employee knows other people are receiving, especially when he/she thinks these other employees are performing to a lower standard. Why might employees lack entrepreneurial motivation?E18Employees put a percentage of their salary at risk and then can either lose it, double it, or triple it based on team performance;Personalized innovator jackets, shirts, leather folders are given to employees who make entrepreneurial contributions;When a new idea is accepted by the firm, the CEO awards shares of stock to the employee;Employees are given $500 to spend on an innovative idea that relates to their job;A firm rents out a major sports stadium, fills the stands with employees, families and friends, and then has innovation champions run onto the field as their name and achievement appears on the scoreboard;Creative ways to motivate employees to be entrepreneurialE19A company sets targets, and then 30% of incremental earnings above target is placed into a bonus pool which is paid out based on each employees performance rating;

Small cash awards are given to employees who try something new and fail---and the best failure of the quarter receives a larger award;

Some companies have point systems where employees receive differing amounts of points for different categories of innovation contributions. Points are redeemable for computers, merchandise, free daycare, tuition reimbursement, and other types of rewards.

E20Additional guidelines for successful employee recognition programs as defined by Kanter (1994)

Principle 1: Emphasize success rather than failure. Managers tend to miss the positives if they are busily searching for the negatives.

Principle 2: Deliver recognition and reward in an open and publicized way. If not made public, recognition loses much of its impact and defeats much of the purpose for which it is provided.

Principle 3: Provide recognition in a personal and honest manner. Avoid providing recognition that is too slick or overproduced, but also too cheap or superficial.

Principle 4: Tailor your recognition and reward to the unique needs of the people involved. Having many recognition and reward options will enable management to acknowledge accomplishment in ways appropriate to the particulars of a given situation, selecting from a larger menu of possibilities.E21Principle 5: Timing is crucial. Recognize contributions throughout a project. Reward contributions close to the time an achievement is realized. Be sure people understand why they receive awards and the criteria used to determine rewards.

Principle 6: Avoid their perception that the awards are being given in a manner that is paternalistic, and that seems random and casual.

Principle 7: Strive for a clear, unambiguous and well-communicated connection between accomplishments and rewards. Be sure people understand why they receive awards and the criteria used to determine awards.

Principle 8: Follow up on the recognition or award. Reinforce it in meetings, in newsletters, at end of the year meetings, an in employee annual reviews.

Principle 9: Recognize recognition. That is, recognize people who recognize others for doing what is best for the company.E22What does an efficient entrepreneurial HR manager look like?Efficiently gets proposed actions through red tape and into practice;Displays enthusiasm for acquiring skills;Quickly changes course of action when results are not being achieved;Encourages others to take the initiative for their own ideas;Inspires others to think about their work in new and stimulating ways;Devotes time to helping others find ways to improve products and services;Goes to bat for good ideas of others;Boldly moves ahead with a promising new approach when others might be more cautious;Vividly describes how things could be in the future and what is needed to get there;Gets people to rally together to meet a challenge;Creates an environment where people get excited about making improvements.E23