HRM Answer Final Exam

1. Human resource management is one of the essential functions in organizations

which deal with managing human resources. Why do you think human resource
management is vital for organizations and what is the aim of strategic human
resource management? Justify by giving practical examples? (8 points)

Strategic human resource management connects people with organizational goals.

With strategic human resource management, the HR department is building the link
between an organization's most valuable assets its people and the strategic direction
of the company.

HRM can be defined as the effective management of people in an organization. HR management

helps bridge the gap between employees’ performance and the organization’s strategic
objectives. Moreover, an efficient HR management team can give firms an edge over their
competition.

 Recruitment: One of the major responsibilities of a HR manager is to recruit personnel.

The success of an organization largely depends on the workforce employed, so it is
essential that the right people are hired for the right role.
 Learning and development: Learning is a continuous process and essential to enhance
employees’ productivity. HR managers are responsible for the orientation and induction
of new employees, as well as the professional development of existing employees. They
are responsible for strategizing development programmers. Furthermore, they must have
the ability to identify and analyze the areas that employees need training for.
 Building employee relations: Effective employee relations go a long way in boosting
productivity and contribute significantly to an organization’s success. Employee relations
strategies are implemented to ensure that an organization caters to the overall well-being
of employees.
 Compensation and benefits: A major component of a HR manager’s job role is
handling compensation and benefits. They are responsible for devising compensation
strategies, performance management systems and compensation structures, as well as
negotiating pay and benefit packages with potential employees.

 Strategy management: This is an important aspect of any organization and plays a vital
role in human resource management. HR managers manage strategies to ensure the
organization reaches its business goals, as well as contributing significantly to the
corporate decision-making process, which includes assessments for current employees
and predictions for future ones based on business demands.
 Benefits analysis: HR managers work towards reducing costs, such as with recruitment
and retention. HR professionals are trained to conduct efficient negotiations with
potential and existing employees, as well as being well-versed with employee benefits
that are likely to attract quality candidates and retaining the existing workforce.
 2. Job analysis is a systematic process of determining the skills, duties, and knowledge
required for performing jobs in an organization. Further, job analysis information
is important for several interrelated human resource management activities.
Explain, how job analysis information is important for other human resource
management functions? Explain how the job analysis information is collected
through the job analysis methods?

Job Analysis plays an important role in recruitment and selection, job

evaluation, job designing, deciding compensation and benefits packages, performance
appraisal, analyzing training and development needs, assessing the worth of a job and
increasing personnel as well as organizational productivity.

Job analysis involves collecting and recording job-related data such as knowledge and skills
required to perform a job, duties and responsibilities involved, education qualifications and
experience required and physical and emotional characteristics required to perform a job in a
desired manner.

The main purposes of conducting a job analysis process is to use this particular information to
create a right fit between job and employee, to assess the performance of an employee, to
determine the worth of a particular task and to analyze training and development needs of an
employee delivering that specific job.

Let’s understand the concept with the help of an example. If the job of an executive sales
manager is to be analyzed, the first and foremost thing would be to determine the worth of this
job. The next step is to analyze whether the person is able to deliver what is expected of him. It
also helps in knowing if he or she is perfect for this job. The process doesn’t finish here. It also
involves collection of other important facts and figures such as job location, department or
division, compensation grade, job duties, routine tasks, computer, educational, communicational
and physical skills, MIS activities, reporting structure, ability to adapt in a given environment,
leadership skills, licenses and certifications, ability to grow and close sales, ability to handle
clients, superiors and subordinates and of course, the presentation of an individual.

3. Availability of time during recruitment and selection process is considered as one of the
factors which determine company’s ability to hire the right candidate for a job. Therefore,
if you are a human resource manager of an organization how do you think you could
overcome this problem. Justify by giving practical examples? (5 points

Team or individual interviewer? Structured or patterned interview: Pre-set questions

asked of all candidates. Nondirective interview: Minimum of questions not planned in
advance. Open-ended questions; interviewer follows the candidate’s lead. Situational and
problem-solving interview: Candidate describes how he or she would solve a problem.
Behavioral interview: Candidate describes how he or she responded to a specific
situation. In the past, the supervisor may have been the only person interviewing a
candidate but now most organizations use an interview team consisting of representatives
 from the various areas of the organization. Multiple interviewers represent broader areas
of interest and when interviewing is completed, there is more than one person to make the
selection decision. The downside to team interviews is that the larger the team, the more
difficult it will be to find a time and a place in everyone’s schedule to make the interview
happen. In addition, candidates are likely to find a panel interview more stressful than an
interview by a single person. In a structured or patterned interview, the interviewer
follows a pre-set list of questions that are asked of all candidates. This allows for
consistency in the process, ensures that important questions are not left out and helps
guarantee that all candidates are assessed by the same standards. The nondirective
interview is conducted with a minimum of questions asked by the interviewer and
questions are not always planned in advance. This technique involves open-ended
questions such as “tell me about the work you do in your field,” allowing the candidate to
express his or her thoughts and feelings that might be relevant to the job and allowing the
interviewer to follow the direction set by the candidate. Situational interviewing is
characterized by questions like, “what would you do in this situation?” allowing the
candidate to speculate on how they would handle a particular job problem. Behavioral
interviewing asks the candidate to “describe what you did in a particular situation?” It
requires the candidate to give real examples of past actions and results and it is based on
the theory that past behavior is a good predictor of future behavior. Generally, behavioral
questions are more likely to give real-world information that may be relevant in making a
good selection decision.

4. Organizations follow different human resource management policies in their

recruitment process, some give priority for internal source and others for external.
Which source of recruitment do you recommend? Justify your argument by giving
practical examples? (5 points)
Internal sources are considered as the best sources of recruitment as it provides
opportunities for better development and utilization of existing human resources in the
organization. But external take time to understanding organization culture.

5. As one of the basic activities in selection process interview is vulnerable to

discrimination. Why do you think it is vulnerable to discrimination and as a Human
Resource Manager of a particular firm what mechanisms do you think you will
employ to minimize this problem? Justify by giving practical examples? (6 points).

There are some human resource strategies that can be used to minimise conscious and
unconscious discriminations. Greenwald and Banaji (1995) state three strategies that can
be used in reducing discrimination at the work place: • Blinding • Consciousness raising •
Affirmative action In blinding, the decision makers are unaware of, or blind to the
characteristics of the applicants that decisions maker be use to discriminate against such
applicants. Blinding technique may include exclusion of certain information that can help
the decision makers in discriminating against an applicant. An example of blinding was
used during audition of orchestra. Before blinding was introduced, both male and female
musicians stand in front of judges, it was discovered that many male musicians used to
pass the audition more than females. Behind the scene was introduced, that is musicians
stand where their identity are not known by the judges. 44 | © A b a y o m i A k i n t o l a
Gladwell (2005) reported that the percentage of female musicians in professional
orchestras significantly increased when applicants auditioned behind screens in order to
conceal the applicant’s gender from selection committees. The technique of behind the
scene audition was successfully used to reduce discrimination in many orchestra
auditioning. One of the shortcomings of the behind the scene audition is that the selection
committee’s decisions are made with full knowledge of an individual’s background. So it
is impossible to achieve total blinding of decision makers (Chao & Willaby 2007). This is
one of the major set-back of blinding, it is impossible to achieve total blinding during
hiring process. Applicants’ name will be revealed and especially if the applicant is invited
for interview. How can we blind the face of hiring managers during job interviews? This
remains a big dilemma. Consciousness raising highlights the impact of discrimination to
the decision maker (Chao & Willaby 2007). Raising the awareness of the source and
features of judgment bias can reduce the effects of unconscious discrimination. Lastly,
affirmative action plans are instituted to favor members of disadvantaged groups in order
to rectify past explicit discrimination practices as well as avoiding likely future implicit
discrimination. Chao and Willaby (2007) argue that affirmative action is a controversial
human resource strategy because it may lead to “reverse discrimination” and this raises
questions whether affirmative action can lead to hiring on merit. Reverse discrimination
is biases against members of a majority group in an organization, because it considers
other factors other than merits. In human resource, consciousness raising and affirmative
action programmes are usually used than blind selection. Hiring on merit requires the
hiring manager to follow the basic staffing model of KSAO. This stands for knowledge,
skills, abilities and other characteristics (Heneman et al. 2010, p.9). This staffing model
posits that when there is need to select an applicant for a new vacancy. The 45 | © A b a y
o m i A k i n t o l a applicant is matched with the vacancy using only the KSAO
frame.The KSAO model can be outlined as follows. Jobs are characterized by the job
requirements, for example, commission sales plan, challenge and autonomy. Applicants
are characterised by their level of qualification, for example, interpersonal skills, software
skills, payroll experience etc. The degree of fit between the job requirement and the
applicant’s characteristics should be the decision base of selection during hiring process.
Hiring process that follows this procedure will lead to desirable human resource
outcomes such as attracting qualified employees, increased employee performance,
retention of employees, low turnover, avoiding shirking, and employee satisfaction
 6. Training and development is one of the basic HRM functions in organizations.
However, besides its value as one of the core functions in HRM there are still
debates on its contribution. For example, some Managers believed that training and
development is a cost for organizations and other think it is an investment. What is
your stand about this debate? How do you think organizations could make training
and development an investment rather than a cost? Justify by giving practical
examples? (7 points)

The market for skilled finance professionals is extremely competitive today, and shortages of
these workers aren’t likely to end anytime soon. In fact, many believe that demographic patterns
will only worsen the talent crunch.

Rather than continuing to wait around for candidates with the right specialized finance skills to
walk through the door, companies might be wiser to ramp up their training and development
initiatives. Many businesses scaled back, or even ended, their professional development
programs during the last recession. For organizations that haven’t renewed their efforts in this
area, now is a good time to do so.

Training and development initiatives that build job skills in the finance function are, without
question, a win-win. For employers, these initiatives elevate the knowledge and quality of the
workforce. They also enhance efforts to recruit top talent. Job candidates choosing a new
employer want to see that a company will give them a chance to develop their skill set and
advance their career within the organization. Providing opportunities for training and
development helps they visualize a possible career path.

There’s another reason, too: potential turnover. The skills gap means that a company’s current
staff members have increasing incentives to pursue other opportunities in this job market. In
a Robert Half Finance & Accounting survey released last fall, 88 percent of the finance and
accounting professionals who responded said that they are “very” or “somewhat” concerned
about keeping their skill set current over the next three to five years (see Exhibit 1, below). And
64 percent said the ability to gain new skills is “very important” when evaluating a new job
opportunity (see Exhibit 2). Companies should intentionally give employees access to
meaningful training and development programs so they don’t have to turn to a competitor to find
those opportunities.
 7. Organizations provide different total reward for their employees because of their
employment relationship. As one of the human resource management policies
organizations follow different compensation policies. For example, some
organizations use seniority and others performance as a bases of total reward
management? Which total reward policy is relatively important? Justify by giving
practical examples? Furthermore, discuss the different forms of equity that
organizations need to maintain and the mechanism to assure equity in general (8
points).

A reward is not just paid, it is actually financial, benefits and non-financial reward. According to
SHRM identified the total rewards strategy is a plan or method designed and implemented by an
organization that provides monetary, benefits-in-kind-, and development rewards to employees
who achieve specific business goals. Reward should be line with the organisational context and
culture, relative to the external market environment. It can help the organization maintain a
balance between providing market competitive wages to attract and retain talented people. The
use of total reward may procedure part of a strategic approach to reward for many employers.
Many organizations are now looking at the experience they offer in a more holistic manner when
deciding how best to attract, retain and engage existing and potential employees. The broad aim
of a total reward approach is to achieve a better balance between the needs of the employee and
the needs of the organization. For instance, some organizations might adopt a total reward
approach, providing cutting edge learning programmes together with flexible working options, as
well as more traditional aspects of pay and benefits, to recruit, retain and engage the high-quality
staff it needs to secure its business objectives. Here are four principles that organizations can use
in its total reward system:

1- The first consideration in developing a compensation and benefits system is to review the
organization’s mission and strategy. They should be an outgrowth of the strategic business plan
and the HR strategy.

2- Alignment with workforce preferences. The rewards program must consider the type of
workforce. Entry level and unskilled workers will probably have a very different rewards
package than an organization with experiences and highly educated people. This can be done by
conducting surveys.

3- Variability of payment. Although the base salary is the same to people in the same position,
variable pay arises due to performance. In their total reward, organization incorporates
performance-based incentives meant to encourage hard work. For those who perform better than
others, their higher compensation results into higher gross pay than others. Such a flexible and
adaptable pay becomes a good measure of success.

4- This fourth principle entails how payment is arrived at. Although the two determinants are
the base salary and performance-based incentives, organization adds another variable; the skills
one has to generate results and the value of an individual at the labor market. Some skills are
paid higher than others in the market. In the labor market, technical skills such as IT and system
administrations fetch higher payment than sales skills. Without observing that, the organization
can easily lose such skills which are essential to them.
These reward principles are important to the reward strategy because they help shape any
strategy that is developed. They help shape a reward that is acceptable to the employees since
when they are involved, they give their opinions to determine how the final reward will be.
Secondly, these principles ensure that the total reward is not just a reward. Rather, it is a reward
that, by aligning with the set goals, is aimed at helping the company achieve its goals and benefit
employees in a wider way. More importantly, employees are paid based on a variety of factors
such as skills, experience, and performance. Thus, they can easily optimize their pay by working
on the areas that suit each individual best.

Equity, typically referred to as shareholders' equity (or owners' equity for privately held
companies), represents the amount of money that would be returned to a company’s
shareholders if all of the assets were liquidated and all of the company's debt was paid off
in the case of liquidation. In the case of acquisition, it is the value of company sale minus
any liabilities owed by the company not transferred with the sale.

Equity Begins at Home

Home equity is roughly comparable to the value contained in home ownership. The amount of
equity one has in their residence represents how much of the home that they own outright by
subtracting from it the mortgage debt owed. Equity on a property or home stems from payments
made against a mortgage, including a down payment, and from increases in property value.

Home equity is often an individual’s greatest source of collateral, and the owner can use it to get
a home-equity loan, which some call a second mortgage or a home-equity line of credit. Taking
money out of a property or borrowing money against it is an equity takeout.

For example, let’s say Sam owns a home with a mortgage on it. The house has a current market
value of $175,000 and the mortgage owed totals $100,000. Sam has $75,000 worth of equity in
the home or $175,000 (asset total) - $100,000 (liability total).

Brand Equity
When determining an asset's equity, particularly for larger corporations, it is important to note
these assets may include both tangible assets, like property, and intangible assets, like the
company’s reputation and brand identity. Through years of advertising and development of a
customer base, a company’s brand can come to have an inherent value. Some call this value
“brand equity,” which measures the value of a brand relative to a generic or store-brand version
of a product.

For example, many soft-drink lovers will reach for a Coke before buying a store-brand cola
because they prefer the taste, or are more familiar with the flavor. If a 2-liter bottle of store-brand
cola costs $1 and a 2-liter bottle of Coke costs $2, then the Coca-Cola has brand equity of $1.

There is also such a thing as negative brand equity, which is when people will pay more for a
generic or store-brand product than they will for a particular brand name. Negative brand equity
is rare and can occur because of bad publicity, such as a product recall or a disaster.

Equity vs. Return on Equity

Return on equity (ROE) is a measure of financial performance calculated by dividing net income
by shareholder equity. Because shareholder equity is equal to a company’s assets minus its debt,
ROE could be thought of as the return on net assets. ROE is considered a measure of how
effectively management is using a company’s assets to create profits.

Equity, as we have seen, has various meanings but usually represents ownership in an asset or a
company such as stockholders owning equity in a company. ROE is a financial metric that
measures how much profit is generated from a company’s shareholder equity.

8. Discuss the basic challenges and opportunities of HRM in today’s organizations?

Discuss by giving practical examples? (5 points)
Due to the fluctuating economy as well as local and global advancements, there are many
changes occurring rapidly that affect HR in a wide range of issues. In the Survey of
Global HR Challenges: Yesterday, Today and tomorrow, conducted by
PricewaterhouseCoopers on behalf of the World Federation of Personnel Management
Associations (WFPMA), several challenges for human resource management were
revealed. This survey, which concluded that “despite national and regional differences,
there was remarkable unanimity,” disclosed the following top 10 human resource
management challenges:

1. Change Management
Since this is generally not a focal point for HR professional training and development, change
management represents a particular challenge for personnel management. The WFPMA finds
that “This may also be the reason why it is cited as the foremost issue as HR continues to attempt
to help businesses move forward. An intensified focus on training may be needed to develop
added competencies to deal with change management.”
2. Leadership Development
As the second of the biggest challenges for human resource management, leadership
development needs to be a critical strategic initiative. HR professionals are faced with being
expected to provide the essential structures, processes, tools, and points of view to make the best
selection and develop the future leaders of the organization. The WFPMA reports that, “Across
the globe leadership development has been identified as a critical strategic initiative in ensuring
that the right employees are retained, that the culture of the organization supports performance
from within to gain market position, and that managers are equipped to take on leadership
roles of the future so that the organization is viable in the long term.”
3. HR Effectiveness Measurement

How can improvement happen without the right tools to measure HR effectiveness? As with
many other areas of business, this profession also needs to be able to measure results in terms of
transaction management, as well as in terms of the positive influence on business. “Utilizing
metrics to determine effectiveness is the beginning of a shift from perceiving HR’s role as purely
an administrative function to viewing the HR team as a true strategic partner within the
organization,” the WFPMA says. “In fact, the next section reports that survey participants
believe a critical future issue for HR will be organizational effectiveness – again supporting
HR’s critical role as a strategic partner to management.”

This world federation also notes that, “Where HR departments have traditionally focused on
measuring their own effectiveness, there is an evolving recognition that they can provide
organizational value by measuring the effectiveness of the entire business organization. The shift
is significant as it represents movement from simply counting the numbers hired to determining
the ROI of collective and individual hires on a long-term basis. Going beyond measuring
turnover, this new approach considers ‘bad’ turnover and ‘good’ turnover along with the overall
cost of replacement hires.”

The Numbers Speak Volumes

When you start looking at the numbers, you realize the significant impact of trends and
challenges in human resource management. There are many variables that influence human
resource management. To give you a glimpse at some of the upcoming changes, the HR
Leadership Council has released the following statistics:

 One in four high potentials plans to leave their organization in the next year
 By effectively developing employees, managers can be better coaches and improve
performance by up to 25%
 Three out of five organizations have either restructured or plan to restructure within the
next six months
 Recent declines in employee engagement further decreased overall productivity by 3 to
5%
 Leaders with strong people development skills are 50% more likely to outperform
revenue expectations
 Delivering on critical onboarding activities boosts new hire performance by 11.3%
 77% of midsized companies use (or plan to use) wellness to reduce costs
 46% of midsized-company CFOs anticipate a merger or acquisition in less than six
months

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 Use data and statistics to make informed business decisions
  Leverage technology to enhance the contributions of the human resource function to an
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