Professional Documents
Culture Documents
Human Resources
in Research and Practice:
The RQ Reader
This book is published by the Society for Human Resource Management (SHRM). The interpretations, conclusions, and recommen-
dations in this book are those of the authors and do not necessarily represent those of the publisher.
Copyright 2011 Society for Human Resource Management. All rights reserved.
This publication may not be reproduced, stored in a retrieval system, or transmitted in whole or in part, in any form or by any means,
electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the Society for Human Re-
source Management, 1800 Duke Street, Alexandria, VA 22314.
The Society for Human Resource Management (SHRM) is the worlds largest association devoted to human resource management.
Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the
interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsid-
iary offices in China and India. Visit SHRM Online at www.shrm.org.
Human resources in research and practice : the RQ reader / Society for Human Resource Management.
p. cm.
Includes index.
ISBN 978-1-58644-207-1
1. Personnel management. 2. Human capital. I. Society for Human Resource Management (U.S.) II. Research quarterly (SHRM
Research Dept.)
HF5549.H87185 2011
658.3--dc22
2010035100
10-0460
Contents
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Additional SHRM-Published Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
v
Preface
Human Resources in Research and Practice: The RQ Reader offers a broad spectrum of topics on human resource management
(HRM) essential in todays global world. This book presents both research and a practical focus about key areas in people manage-
ment. Each chapter includes perspectives and experiences of HR professionals in the fieldwith real-life scenariosto illustrate the
many challenges and opportunities encountered in HRM.
HR professionals, students, and professors all will value the richness of information and resources that provide a solid foundation
of knowledge and opportunity for learning about the top issues of human resources. For the HR professional: This resource covers
extensive ground, useful and important for everyone, in the HR field. For the student: Whether an undergraduate, in grad school or
working on a dissertation for a Ph.D., the student will find a wide range of learning that can be directly applied in the classroom, cita-
tions for papers, and group study work. For the professor: Each chapter presents structures to serve as the basis for classroom discus-
sion, supplemental reading, and/or project assignments.
***
In closing, it is my sincere hope that the reader will use this book to go beyond his or her current knowledge base, find ways to make
solid and meaningful contributions to his or her organization, and finally, to become the ultimate professional.
Strategic HR
Management
Chapter 1
Leveraging Employee Engagement for Competitive
Advantage: HRs Strategic Role
The challenge today is not just retaining talented ing of the many concepts and aspects of employee engage-
people, but fully engaging them, capturing their minds ment as well as offer recommendations to foster engagement.
and hearts at each stage of their work lives. 1
Trends in Employee Engagement
Employee engagement has emerged as a critical driver of Today, society and business are witnessing unprecedented
business success in todays competitive marketplace. Further, change in an increasingly global marketplace, with many
employee engagement can be a deciding factor in organiza- companies competing for talent. As organizations move
tional success. Not only does engagement have the potential forward into a boundaryless environment, the ability to
to significantly affect employee retention, productivity and attract, engage, develop and retain talent will become increas-
loyalty, it is also a key link to customer satisfaction, com- ingly important. In view of these changes, a number of
pany reputation and overall stakeholder value. Thus, to gain trends, as identified in the SHRM Special Expertise Panels
a competitive edge, organizations are turning to HR to set 2006 Trends Report, are likely to have a significant impact
the agenda for employee engagement and commitment. on employee engagement (see Table 1.1). For example, the
Employee engagement is defined as the extent to which increased demand for work/life balance and the changing
employees commit to something or someone in their orga- relationship between employers and employees are driving
nization, how hard they work and how long they stay as a the need for HR professionals and their organizations to
result of that commitment.2 Research shows that the con- truly understand what employees need and want and then
nection between an employees job and organizational strat- determine how to meet those needs while at the same time
egy, including understanding how important the job is to developing and leveraging workplace talents at all levels.5
the firms success, is the most important driver of employee
Table 1.1 Top Trends Lead to Focus on Employee Engagement
engagement. In fact, employees with the highest levels of
commitment perform 20 percent better and are 87 percent less QQ Employee-employer relationship evolving/changing to partnerships.
likely to leave the organization, which indicates that engage- QQ Increased demand for work/life balance.
ment is linked to organizational performance.3 In contrast,
QQ HRs greater role in promoting the link between employee performance and its
job satisfactiona term sometimes used interchangeably with impact on business goals.
employee engagementis defined as how an employee feels QQ Increasing focus on selective retention for keeping mission-critical talent.
about his or her job, work environment, pay, benefits, etc.4
QQ Work intensification as employers increase productivity with fewer employees
and resources.
Employee engagement is a complex concept, with many
issues influencing engagement levels. Consequently, there QQ Acquiring and keeping key talent reemerging as top issues of concern.
are many pathways to foster engagement, with no one kit QQ Decline in traditional communication methods and increase in cyber communica-
tion.
that fits all organizations. While each company may define
employee engagement differently, ultimately, the key to effec- QQ Needs, wants and behaviors of the talent pool driving changes in attraction,
selection and retention practices.
tive engagement will be rooted in the flexibility of approach
Source: Adapted from Society for Human Resource Management. (2006). SHRM Special
most appropriate for each individual firm. For example, the Expertise Panels 2006 Trends Report. Alexandria, VA: Author.
company may consider a best practice and then determine
the likely outcome of this practice in its workplace. This In addition, trends in workforce readiness highlight the
Research Quarterly is written to provide HR professionals and importance of organizational success. To ensure that new
other business leaders with the knowledge and understand- workforce entrants attain the essential skill levels needed
Chapter 1: Leveraging Employee Engagement for Competitive Advantage: HRs Strategic Role 3
in todays workplace, business leaders have the responsibil- decisions related to their performance, can access information
ity to partner with schools (e.g., high schools and two- and about company costs and revenues, and have the necessary
four-year colleges) and other organizations to provide knowledge, training and development to do their jobsand
learning opportunities, such as internships, summer jobs are rewarded for their effortsthey are more productive.8
or job shadowing.6 The continued acceleration of change,
As highlighted in a recent report by the SHRM Foundation,
both domestically and globally, places greater emphasis
employee engagement can be measured in dollars and can yield
on the role of HR to develop effective employee engage-
significant savings. For example, at the beverage company of
ment strategies for the current and future workforce.
MolsonCoors, it was found that engaged employees were five
Engagement as a Driver for times less likely than nonengaged employees to have a safety
Organizational Success incident and seven times less likely to have a lost-time safety
Engaged employees work harder, are more loyal and are more incident. In fact, the average cost of a safety incident for an
likely to go the extra mile for the corporation. There are engaged employee was $63, compared with an average of $392
different levels of engagement (see Table 1.2), and under- for a nonengaged employee. Consequently, through strength-
standing the types of engagement provides perspective into ening employee engagement, the company saved $1,721,760
employee behaviors that can either positively or negatively in safety costs in 2002. In addition, savings were found in
affect organizational success. Employee engagement can be sales performance teams through engagement. In 2005, for
considered as cognitive, emotional and behavioral. Cognitive example, low-engagement teams were seen falling behind
engagement refers to employees beliefs about the company, engaged teams, with a difference in performance-related costs
its leaders and the workplace culture. The emotional aspect of low- versus high-engagement teams totaling $2,104,823.9
is how employees feel about the company, the leaders and
Related to productivity, employee health is a critical factor in
their colleagues. The behavioral factor is the value-added
employee engagement. Conditions that support health and
component reflected in the amount of effort employees put
psychological well-being are open communication, respect,
into their work (e.g., brainpower, extra time and energy).7
trust, teamwork and positive work relationships. The Gallup
Organization, a leader in employee engagement research,
Table 1.2 Levels of Employee Engagement
found that employee physical health and psychological well-
Engaged employees work with passion and feel a profound being affect the quality and quantity of work. For example,
connection to their company. They drive innovation and move the 62 percent of engaged employees feel their work positively
organization forward.
affects their physical health. Yet that number drops to 39
Not engaged employees are essentially checked out. Theyre percent among nonengaged employees and to 22 percent
sleepwalking through their work day, putting timenot energy or
among employees who are actively disengaged. In addi-
passioninto their work.
tion, 54 percent of disengaged employees say their work
Actively disengaged employees arent just unhappy at work: theyre
has a negative effect on their health and 51 percent see a
busy acting out their unhappiness. Every day, these workers undermine
what their engaged co-workers accomplish. negative effect on their well-being. The implication for HR
Source: Adapted from Engaged employees inspire company innovation. (2006, October
and managers is that engaged employees are more likely
12). Gallup Management Journal, http://gmj.gallup.com to view the organization and job as a healthy environment
and therefore more likely to support the organization.10
Employees who are highly involved in their work processes Research also shows that customer loyalty is closely related to
such as conceiving, designing and implementing workplace employee engagement. In a recent empirical study, the relation-
and process changesare more engaged. As highlighted in the ship between the availability of organizational resources (i.e.,
literature, the link between high-involvement work practices training, technology, autonomy) and employee engagement
and positive beliefs and attitudesas associated with employee in work units was found to have a positive effect on employee
engagement and generating behaviors leading to enhanced performance and customer loyalty. When employees feel more
performanceis an important driver for business success. For engaged in their work, the climate is better for service and
example, a recent study analyzed 132 U.S. manufacturing the customer receives better-quality service, thus promoting
firms and found that companies utilizing high-performance customer loyalty. The practical implication is that the organiza-
work systems had significantly higher labor productivity than tion (e.g., service organizations, such as banks, hotels, restau-
their competitors. When employees have the power to make rants, membership associations) must focus more on keeping
Chapter 1: Leveraging Employee Engagement for Competitive Advantage: HRs Strategic Role 5
dignity and respect creates a workplace culture that fosters loy- Managers who demonstrate the following characteristics
alty and engagement.19 Such organizations often demonstrate promote employee engagement: (1) show strong commit-
proactive practices and best outcomes by weaving retention and ment to diversity; (2) take responsibility for successes and
engagement deeply into the fabric of the workplace culture. failures; (3) demonstrate honesty and integrity; (4) help
find solutions to problems; (5) respect and care for employ-
The Power of Communication ees as individuals; (6) set realistic performance expecta-
Clear, consistent and honest communication is an important tions; (7) demonstrate passion for success; and (8) defend
management tool for employee engagement. HR promotes direct reports.22 The organization will want to rethink
thoughtful communication strategies that encourage employee keeping managers who foster disengaged employees and
engagement by keeping the workforce energized, focused therefore lose valuable talent to other organizations.
and productive. Such strategies are critical to long-term
In addition, HR practices can make the difference between
organizational success. In addition, strategic and continuous
effective engagement and valuable human capital joining
communication lends credibility to the organizations leader-
the competition. For example, a study about the impact of
ship. (On the other hand, lack of communication or poorly
HR practices and organizational commitment on the profit-
communicated information can lead to distrust, dissatisfac-
ability of business units found a close relationship between
tion, skepticism, cynicism and unwanted turnover.) Brand-
HR practices, operating expenses and firm performance. In
ing, for example, is a type of communication strategy that addition, employees were found to be more committed to
can promote employee engagement by sending the right the organization when managed with progressive HR prac-
message about the company, its mission, values and prod- tices. At a large food-service corporation with operations in
ucts/services to the workforce and marketplace at large. the United States and Canada, the study results were put to
practical use when the senior HR executive used the data in
To recharge employee morale and support of the organizations
presentations to demonstrate the kind of performance the
objectives, HR can foster an environment for engagement
company might see as a result of developing and implement-
by developing a targeted, proactive strategic communica-
ing proven HR practices. Going one step further, to assist
tion plan. The communication strategy can provide focus
business-unit leaders whose groups were not meeting perfor-
on organizational goals and determine methods of com-
mance goals, the company developed a portal to help identify
munication and information points for different audiences
key performance deficiencies and now offers information on
(e.g., employees versus media). Key points for HR to consider HR practices to help increase performance.23 As this study
are: (1) communicate from the top down to build employee demonstrates, HRs role in promoting employee commit-
confidence and buy-in; (2) involve employees whenever mentincluding coaching managers to be effective people
possible, such as through focus groups; (3) communicate managersis a significant factor in employee engagement.
and explain all aspects of change, negative and positive; (4)
personalize communications to address the question whats
Barriers to Employee Engagement
Often in the form of rules, workplace culture and behaviors,
in it for me?; and (5) track results and set milestones to
barriers to engagement can be damaging to employees, custom-
evaluate the objectives of the communication plan.20
ers and stakeholdersand ultimately, to the organizations
Commitment to the Organization financial success. In fact, by operating in a black-and-white
The number one factor that influences employee commitment world, even HR can act as a barrierdepending on how work-
is the manager-employee relationship. The manager creates place policies and practices are implementedrather than help-
the connection between the employee and the organization, ing to motivate employees through innovative and proactive
and as a result, the manager-employee relationship is often the practices. Also, barriers can prevent efficiency, do not promote
deal breaker in relation to retention. A recent study shows a positive and engaging work environment and may damage
that employees who trust their managers appear to have more the ability of an organization to act quickly. Importantly, bar-
riers can prevent customers from getting what they need.24
pride in the organization and are more likely to feel they are
applying their individual talents for their own success and To be better positioned to address barriers to engage-
that of the organization. However, the findings show only 56 ment, organizations must determine what is working and
percent of employees feel their manager has good knowledge of what is not. The Gallup Organization, for example, identi-
what they do and promotes the use of their unique talents.21 fied 12 indicators that link employee satisfaction with posi-
6. Is there someone at work who encourages your development? 7. Effort above and beyond the minimum.
7. At work, do your opinions seem to count? 8. Understanding the link between ones job and the organizations
mission.
8. oes the mission/purpose of your company make you feel your
D
job is important? 9. Prospects for future growth with ones employer.
11. In the last six months, has someone at work talked to you about
your progress? The financial and competitive advantage of employee
engagement efforts can be demonstrated by measuring
12. In the past year, have you had opportunities at work to learn and
engagement and commitment initiatives. The construction-
grow?
equipment maker Caterpillar documented significant sav-
Source: Copyright 1993 1998 The Gallup Organization, Washington, D.C. All rights
reserved. ings as a result of increasing employee engagement. For
example, the company reaped an $8.8 million annual sav-
ings from decreased attrition, absenteeism and overtime
In addition, stress levels in the workplace have increased at a European plant, had a 70 percent increase in output
substantially due to the pressures of competition, technol- in less than four months at an Asian Pacific plant, and
ogy that promotes the fast-paced 24/7 global economy experienced a $2 million increase in profit and 34 percent
and the blurring of boundaries between work and home increase in highly satisfied customers at a start-up plant.27
life. For example, a 2004 study found that 27 percent of
To effectively measure and manage predictors of employee
U.S. employees were overwhelmed by how much work
engagement, it is best to use a combination of tools. Depend-
they had to do and 29 percent often or very often did not
ing on the purpose, there are many measures from which
have time to process or reflect on the work they did. Over- to select. Examples of measures include predictive internal
worked employees make more mistakes and tend to have surveys and/or focus groups, detailed gap analyses by division,
higher levels of stress and physical health problems, experi- location, department, workplace, etc., and communication of
ence clinical depression and neglect caring for themselves.26 prediction gaps and progress to the organization. Many com-
The message for HR is that stressed employees are likely panies use engagement surveys as a primary measurement tool
to be less engaged and less productive in the workplace. to determine how well talent is being managed. Such surveys
Chapter 1: Leveraging Employee Engagement for Competitive Advantage: HRs Strategic Role 7
are often considered much more than a measure of employee Global Perspectives of Employee Engagement
satisfaction. Rather, engagement surveys also encompass other Across the globe, critical factors for HR leaders are perfor-
dimensions, such as intent to stay, employee trust and orga- mance and retention. Due to the new employment contract
nizational commitment. Once engagement data are gathered, in todays globally competitive and rapidly changing envi-
the next logical step would be to examine the relationship ronment, retaining talent has become very challenging. As
between the engagement measures and business results. By highlighted in the 2006 report on SHRM Special Expertise
asking relevant questions about employee engagement, HR Panel trends, demographic changes are leading to increased
diversity in the global labor market. The shift from main-
can learn information to better determine levels of motivation,
stream and emerging markets to a multicultural majority is,
trust/distrust and overall company spirit, help minimize the
in turn, leading to changes in HR business practices, such as
risk of potential key skill losses around concerns about rewards,
the design of recruitment, benefits, training, motivation and
recognition and career development, gain a measure of the
rewards systems.31 Trust and loyalty are also coming to the
effectiveness of management, and evaluate the effectiveness of
forefront in global firms as important issues that HR must
HR strategies and systems, such as performance management.28 address. In addition, among the global drivers for engagement
To get a sense of employee engagement levels or possible are leadership, work/life balance, branding and opportunities
issues, research also suggests using pulse surveys or ad-hoc to use employee talent. A study by Mercer, for example, found
that companies with a high profile or good employer brand in
surveys with a structured questionnaire. For example, a recent
China appeared to have more success attracting candidates.32
empirical study in the banking sector indicated a relation-
ship between job satisfaction, quality and productivity and A recent global workforce study by Towers Perrin considered
customer service. The study found that three linked factors key success factors of employee engagement, job satisfaction
influenced employee empowerment and customer treat- and high performance. It surveyed 86,000 employees at all
ment: HR management practices (service training and ser- levels of the organization in mid-size and large companies
vice rewards), service systems practices and service leadership in 16 countries across four continents about attitudes,
practices. This study provides HR and employers with food needs, work ethic and personal commitment of people to
for thought regarding the relationship between job satisfac- their jobs and companies. The findings reveal that people
tend to stay with organizations considered as talent-
tion, employee engagement, retention and financial results.29
friendly and progressivethat is, organizations that have
In addition, organizations concerned with retention among leading-edge work environments and people practices.33
new hires may use engagement surveys to track turnover
However, while certain factors of engagement are considered
during the first 30, 90 or 180 days or even the first year of
to be universal, to effectively promote engagement, HR leaders
employment. Specific measures for new-hire engagement might
will need to be aware of country, regional and cultural dif-
include (1) percentage of employees completing a compre- ferences when designing employee engagement and commit-
hensive orientation process; (2) percentage completing an ment initiatives. To illustrate the myriad of different drivers in
entrance interview; (3) percentage coached by a buddy or different countries, for example, consider these top attraction
mentor; (4) percentage of new hires considered outstand- drivers: in Canadacompetitive base pay, work/life balance
ing performers; and (5) first-year voluntary turnover rates. and career advancement opportunities; in Indiafocus on
On the other hand, measures of sustained employee engage- the reputation of the organization as a good employer; in the
ment may include (1) absenteeism rates; (2) performance/ United Statescompetitive health benefits; in Germany
quality rates; (3) training hours per employee; (4) ratio of the level of autonomy; in Japanthe caliber of co-workers;
internal to external hires; (5) top-performer voluntary turn- and in the Netherlandsthe collaborative environment.
over rates; (6) overall voluntary turnover rate; and (7) per- These differences suggest that each country and/or culture
centage of employees completing individual development has certain factors seen as important in the workplace.34
plans.30 Ultimately, employee engagement measures provide To retain top talent, research also shows that while compensa-
employees with regular opportunities to give open and honest tion and promotions are important, employers need to pay
feedback. HR can use the data for strategic advantage to more attention to soft issues, such as job quality, flexibil-
understand and work toward improving engagement, talent ity and individual differences. A landmark study of global
retention, positive company reputation and company growth. men and women executivesand the relationship between
Create an inclusive work environment: Building on research from 2004 and 2005, this study
QQ Provide equal opportunities. examines how employees in North America, Europe and
QQ Educate the workforce about diversity and inclusion. Asia-Pacific feel about their organizations and jobs. The top
QQ Broaden the acceptable leadership styles for both women and men.
reason people stay is for fulfilling work (44 percent). The
findings also reveal that 35 percent of employees are likely
QQ Guard against reverse discrimination.
at risk of leaving their organizations. Top reasons include
Address work/life needs:
career, the work itself and the manager. Interestingly, only
QQ Reduce expectations of very long work hours. 38 percent of employees had seen visible actions to increase
QQ Provide role models. employee engagement. More than 30 percent are consider-
QQ Rethink career paths. ing leaving, and only 12 percent of employees intend to stay.
Support involvement in activities outside of work.
QQ
Recommendations
Source: Adapted from Galinksy, E., Salmond, K., Bond, J. T., Brumit Kropf, M., Moore, M.,
Determined by company mission and culture, proactive and
& Harrington, B. (2003). Leaders in a global economy: A study of executive women and
men. New York: Families and Work Institute, Catalyst and The Center for Work & Family. best outcome practices around employee engagement vary for
each organization. Below are recommended strategic actions
Studies on Employee Engagement
for HR to strengthen engagement.
In recent years, a number of studies have focused on employee
engagement and its link to company performance and sustain- Clearly and consistently communicate organizational goals
ability. The following studies highlight the role of employee and objectives.
engagement in todays business environment. HR profession- Establish policies and practices that promote a workplace
als who seek proactive practices that positively affect employee culture that stimulates employee engagement.
productivity will find this research pertinent to their work. Align organizational goals to day-to-day work.
Chapter 1: Leveraging Employee Engagement for Competitive Advantage: HRs Strategic Role 9
Maintain an open dialogue among senior management, In Closing
managers and employees. The level of engagement determines whether people are pro-
Reward managers whose behavior fosters employee ductive and stay with the organizationor move to the compe-
engagement. tition. Research highlights that the employee connection to the
Listen carefully to what employees want and need. organizational strategy and goals, acknowledgment for work
Provide opportunities and challenges to leverage the respec- well done, and a culture of learning and development foster
tive talents of employees. high levels of engagement. Without a workplace environment
Do a pulse checkare employees engaged? Find out what is for employee engagement, turnover will increase and efficiency
working and what is not. will decline, leading to low customer loyalty and decreased
Hold managers accountable for demonstrating organiza- stakeholder value. Ultimately, because the cost of poor
tional values, development of team members and results. employee engagement will be detrimental to organizational
Be sure that employees know how they can contribute. success, it is vital for HR to foster positive, effective people
Genuinely thank employees for their contributions. managers along with workplace policies and practices that
focus on employee well-being, health and work/life balance.
To remain competitive in todays global marketplace, organiza- From a historic perspective, the OD field began about 50
tions must change. One of the most effective tools to promote years ago. Changing and dynamic, organization development
successful change is organization development (OD). As HR is a values-based interdisciplinary profession with a behavioral
increasingly focuses on building organizational learning, skills science approach, drawing from many fields: anthropology,
and workforce productivity, the effective use of OD to help business, counseling, economics, education, management,
achieve company business goals and strategies is becoming a organization behavior, psychology, public administration and
broad HR competency as well as a key strategic HR tool.1 sociology. OD helps improve organizational effectiveness, with
its major focus on both the total system and the interdependent
While there are variations regarding the definition of OD, parts of the company. OD professionals work to increase
the basic purpose of organization development is to increase organizational effectiveness and performance, working closely
an organizations effectiveness through planned interventions with many stakeholdersfrom employees and management
related to the organizations processes (often company-wide), to customers, stockholders and the community at large.5
resulting in improvements in productivity, return on invest-
Over time, the OD profession has evolved and broadened
ment and employee satisfaction.2 Yet while OD and human
in scope. In the late 1980s, leaders in the field suggested
resources may be viewed by some as competing disciplines, in
that organization development would better serve firms
fact, the overarching goal of these two fields is complemen-
by becoming more strategic.6 In 1988, researchers Jelinek
tary: to promote and sustain organizational success. Further and Litterer expanded OD by referring to it in terms such
illustrating the link between OD and HR is the fact that as team building, group decision, job design and helping
organizational assessments typically fall under the responsi- teams cope with stress.7 Today, HR leaders can use the
bility of HR and the principles and value of OD correspond collaborative approach of OD, through thoughtfully
with many aspects of the HR mission. This article provides planned and long-range strategies, to address organizational
background on the complex field of OD and highlights how challenges in todays dynamic business environment.
HR can use OD for the betterment of the organization.
The Business Link Between OD and HR
The Evolving Field of Organization Development Since OD helps identify and effect organizational process
As HR, in the role of strategic business partner, leads initiatives and design change, it is of immediate use to HR leaders.
aimed at organizational design, process and performance, OD OD brings analytical skills and objective problem solving
offers HR professionals a wealth of tools, models, theories to the complex human system. As researchers Cummings
and competencies invaluable for a competitive business and Worley point out, OD practices are of direct value
environment. However, until recently, OD and human regarding organizational workforce skills and learning,
resources were considered distinct and separate entities. For including goal setting through performance management,
example, OD has roots in social sciences and applied behavior, reward systems, career planning and workforce diversity.8
with values based in humanistic psychology, whereas the In fact, over the next five to 10 years, the demand for HR
field of human resources is based in human capital theory, to effectively use OD in relation to organizational change
behaviorism and performance engineering.3 Today, the division will become even more critical. Changes in the marketplace
between OD and HR is less clear. In fact, the literature already point in that direction. For example, as Generations
indicates that these two disciplines are melding together, with a X and Y move into key leadership positions, the workplace
growing collaboration and integration between OD and HR.4 will become more diverse. Changes such as new advances in
By using OD as part of its skill set, HR can broaden its QQ Organizational learning
depth of knowledge and skills regarding change and better QQ Global strategic orientation
support the organization. For example, a recent study points QQ Ethics change management
to the expectation of using change and innovation as a
QQ Process improvement
critical element for competitive advantage. According to the
Organization design
IBM Global CEO Study 2006, 65 percent of the worlds top
QQ
corporate CEOs plan to radically change their companies QQ Whole system analysis
in the next two years due to pressures from competitive Source: Adapted from Yaeger, T., & Sorensen, P. (2006, Winter). Strategic organization
markets. The study, which polled more than 750 top CEOs development: Past to present. Organization Development Journal, 24(4), 10-17.
Source: Adapted from McLean, G. N. (2006). Organizational development: Principles, A home care company serving 6,000 clients implemented
processes, performance. San Francisco: Berrett-Koehler Publishers, Inc.
an organizational change initiative, with the overall goal to
move from a centralized allocation and control of services
Client-focused, OD is based in open-systems theory and and resources to an empowered partnership approach to
approaches and uses action research to focus on process (the service delivery. To achieve this goal, organization leaders
way things happen) and determine the best pathway and used a number of strategies, such as vision- and goal-set-
rationale for change. Planned interventions are based on ting exercises, recognition and rewards to promote commit-
results from active inquiry and assessment of both internal ment, the use of change champions, and train-the-trainer
and external environments. For HR and OD professionals programs. Other venues included a comprehensive com-
alike, to successfully effect cultural change in the company, munication plan, media releases and brochures for clients.
change initiatives work best with a bottom-up approach.15 For However, in the one-year follow-up, the findings indicated
example, once the system components are evaluated, HR can that while staff were making an effort to implement the part-
use OD in short, quick, market-driven interventions as well nering strategies, in fact, the long-standing service delivery
as system-wide with numerous variables. At the same time, behaviors, norms, expectations and goals had not changed
as HR leaders know, the value of organization development significantly. The study results suggest that although much
as a powerful catalyst for change is found when the entire information was disseminated, it did not reach everyone at
company is engaged in the process. OD is particularly effec-
all levels to the same degree. Consequently, there was re-
tive when supported by the CEO and senior management.16
sistance to the projected change. At the client level, for ex-
Interestingly, based on the results of a recent survey that ample, there was deep skepticism and confusion about the
assessed the field of OD, the critical strong points noted in processes. The misinterpretation and misunderstanding of
OD are directly of value to HR professionals. For example, the flexible client-driven care initiative further exacerbated
OD promotes adaptive learning and knowledge management resistance to change. Since providers tended to implement
essential for organizational growth, creativity and innovation. tasks and procedures in terms of their individual interpre-
Learning also promotes diversity of thought and experience tations of the initiative, the partnering processa critical
in decision-making, key factors for leadership development.17 aspect of the initiativewas often overlooked. The overall
outcome was a transfer of work from higher to lower lev-
It is important to differentiate between OD and change
management. While each has similar goals (e.g., promoting els. Consequently, it was the clients who were expected to
greater organizational effectiveness, productivity and return bear much of the burden regarding their own care. However,
on investment), the underlying reason to use one process that intention, as part of the change initiative, was not well
over the other is distinctly different. As researchers Beer communicated to clients. Unfortunately, many were either
and Nohria suggest, O change (the organizations human unprepared or unable to proactively serve in the capacity
capability) is planned (e.g., usually long-term, system-wide of partner with their case worker. In addition, case workers
planning), while E change (economic value) is market- found their decision- making authority diminished. Overall,
driven and does not follow OD principles. In contrast to the change initiative, as viewed by the organization, was
OD interventions (such as O change), change management unsuccessful.
cal with a commitment to application.20 Researchers Worley QQ Skills for developing transformational leaders capable of championing change
and transforming organizations.
and Feyerherm identified the core knowledge competen-
cies for OD professionals: organization design, organization QQ Ability to use and promote reflection, dialogue and exploration to understand is-
sues, differences and values of paradoxes and not rush to find a single problem
research, system dynamics, history of organization devel- solution.
opment and change, and theories and models of change. Source: Adapted from Eisen, S. (2002). A Delphi study of global trends, implications for
In addition, they determined six core skill competencies: managers, emerging intervention strategies, and future competencies in OD. Retrieved from
www.sonoma.edu/programs/od/delphi/. [Material used with Permission from Saul Eisen,
managing the consulting process, analysis and diagnosis, Ph.D.]
designing and choosing appropriate interventions, facilitat-
ing and process consultation, developing client capability,
and evaluating organizational change.21 From an HR per- Organizational Context and Learning
spective, there are many opportunities to use these com- Essential for the advancement of OD is a workplace envi-
petencies on both individual and organizational levels:22 ronment that promotes learning. In addition, in view of
the complexity of todays business world, the ability to do
HR Professional critical self-reflection thinking and learning is at the root
1. Using self-assessment tools (e.g., gap analysis) for success.
of the organization review process. Peter Senge of the Mas-
2. Developing a self-development plan. sachusetts Institute of Technology Business School is one
3. upporting performance reviews, mentoring, coaching and
S of the researchers known for the development of a learning
feedback sessions. organization model. This model promotes the development
4. Determining targets for promotion or career development. of openness and trust, finding new ways of reframing and
thinking through issues and problems, team development
Organization
1. Focusing on the organizations priorities. through learning and the development of a shared set of
values and vision for the organization. While not a guarantee,
2. Assisting in budgeting for employee development.
a strong culture of organizational learning can significantly
3. Assisting in the development of succession planning.
contribute to the success of organization development.24
4. reating measures to evaluate the success of strategic initiative
C
implementation. Learning not only promotes retention and career develop-
ment but also supports the organizations ability to remain
Looking at the future of OD and how to best work with
competitive. As HR professionals collaborate with manage-
organizations, Dr. Saul Eisen developed 32 broad and long-
ment to promote learning, it is essential to be cognizant
reaching competencies for success in the 21st century (see
of core aspects and values of organizational learning (see
Table 2.3). The overarching goal is to build high-performance
Table 2.4). Thus, the ability to evaluate, design and imple-
organizations that are a great place to work, with focus on
ment organizational learning and development programs will
both performance and people to lead to a competitive advan-
likely become a key OD competency for HR professionals.
tage.23 These competencies offer insight into development
plans for HR leaders to expand the OD skills of their staff.
Once the issue has been identified, there are many OD The most commonly used evaluation approach is Kirkpat-
interventions available. Some pertain strictly to working with ricks four levels of evaluation. Often applied to training
individuals, such as self-assessment tools (e.g., Myers-Briggs and development, this approach was first developed in the
Type Indicator and DiSC), as well as coaching and mentor- 1950s and updated in the 1990s and consists of four steps:
In an economic downturn, the collection of organizational ticularly during difficult economic times, speaks to how
knowledge and its application are likely to determine the next organizations truly value their employeesand will either
generation of industry superstars. Education and learning promote or deflate trust, performance and ethical behavior.1
are cornerstones of the Obama administration, and President
As companies cope with the economy, HR can be instrumental
Obama strongly urges people of all ages to continue to learn.
in helping organizations leverage knowledge-based resources
Each individual needs to grow intellectually and prepare to
for business results. As highlighted in Creating People Advan-
contribute to society and to his or her organization. In a
tage, critical HR challenges focus on three strategic categories,
global marketplace, successful companies focus on the educa-
all related to knowledge management: (1) developing and
tion of their current workforce as well as the next generation.
retaining the best employees (talent, leadership development,
Trust, relationships and dialogue are the foundation for work/life balance); (2) anticipating change (demograph-
building organizational knowledge sharing. As a stra- ics, change, cultural transformation, globalization); and (3)
tegic business partner, HR can forward organizational enabling the organization (becoming a learning organiza-
successdomestic and globalthrough the develop- tion).2 As indicated in a SHRM April 2009 poll of U.S.-based
ment, retention and transfer of organizational knowledge. organizations and multinational companies, the primary focus
With knowledge management (KM), business success is of companies now is workforce planning. Although hiring
achieved in a culture of learning and workplace planning. expectations are low, talent management priorities remain
This Research Quarterly presents key factors and solutions high despite the economic downturn (see Figure 3.1).
that HR can leverage, through knowledge management,
Sustainability
for competitive advantage in a challenging economy.
Sustainability depends on effective knowledge management
Business Case practices. From an organizational standpoint, sustainabil-
Historically, the world of work has evolved from manual labor ity refers to the business as a whole, including the employer
to mechanical and technical expertise to a knowledge economy. brand, human capital, business ethics, social responsibility and
Today, success requires agility and adaptability, largely depen- financial well-being. At the SHRM 2008 Executive Round-
dent upon the quick assimilation and application of knowledge table Symposium on Sustainability and Human Resource
to develop and respond to new technologies, new products Management Strategy, senior executives from around the
and new services that can lead to a competitive edge. While world discussed the opportunity for HR to provide strategic
some firms may view knowledge management as nice to leadership in sustainability. They emphasized that sustain-
have, proactive organizations see KM as a key component of ability is a people issuerecruiting, developing and engaging
an effective business plan. Developing a knowledge manage- employees for maximum performance and profitability.3
ment strategy aligns with business viability and sustainability.
When considering research implications of knowledge mea-
Knowledge begins with people. Retaining the right talent surement, one viewpoint is to use three related themes, as
in todays tough economy presents a strategic opportunity described by management author and researcher John W.
to build a stronger organization. As a source of innova- Boudreau. First, measures focus on aggregated units of
tion and competitive advantage, KM is an important HR analysis (e.g., groups of individuals, such as profit centers,
and managerial tool. However, for effective collaboration of alliance partners and companies, to regions and economies).
knowledge in organizations, communication and trust are Second, measures aim to explain the link between knowledge
essential. How organizations treat their employees, par- and the strategic value of the organization: the value-chain
Note: Respondents who indicated not applicable were excluded from this figure.
Source: SHRM Poll: Programs and Practices to Confront the Workplace Effects of the Downturn in the Economy (SHRM, April 2009).
heightened awareness of barriers to knowledge sharing and ing the problem. Rather, the challenge was the management
collaboration in situations where team boundaries can con- of the political process regarding the behaviors of different
tribute to the difficulty of making informed decisions. teams of engineers, each influenced by their respective ar-
eas of expertise.
Mini-Case Study #1: Managing Knowledge
Work: Specialization and Collaboration Knowledge Management Tools for Hr
of Engineering Problem-Solving17
The following four KM practices are tools that foster learning,
This study explored the tacit dimension of knowledge cre-
knowledge sharing, retention and transfer: communities of
ation and knowledge sharing practices of three semicon-
practice, storytelling, knowledge retention practices and leader-
ductor manufacturers in Japan and Korea to examine the
ship development.
social processes of expert teams (design, process and
process integration) and how they cooperate across team Communities of Practice (CoPs)
boundaries, with various viewpoints from team specializa- In todays economy, CoPs are instrumental in creating new
tion. These teams were responsible for trouble management business opportunities through staff with internal expertise
in the production of an integrated circuit semiconductor who translate new insights into new services and products.18 By
device. The study revealed that the primary challenges to bringing together groups that cross organizational boundar-
the development of a successful knowledge management ies (various teams, business units, divisions), HR can promote
process were not the strategies for collecting and identify- knowledge learning and sharing. Usually voluntary, what makes
Table 4.1 Ten Biggest Agents of Change Business Drivers for Change
In todays marketplace, change is a necessity. Business trends
1. Merger or acquisition influence the decision of an organization to make changes,
2. New boss as do stakeholder expectations, environmental factors, demo-
3. Move to shared services graphic shifts, and social, global and political developments.
Change initiatives are often broad in scope, with an impact
4. Outsourcing
on the entire workforce. For example, when a company
5. Unwanted exposure decides to strengthen its brand to increase positive percep-
6. Downsizing tion by its consumersand thus increase profitsthis process
7. Going for growth requires acceptance and agreement from all employees.4
8. Under new management Change initiatives can be placed in the following categories:
9. New technology (1) strategic changelooking at the organization as functional
parts (e.g., mergers, acquisitions, consolidations); (2) leadership
10. Going public
changereconfiguring the organizations leadership (e.g., cre-
Source: Kubiciek, M. (2006, July 5). 10 Biggest agents of change. Personnel Today, 17.
ating succession programs for availability of qualified leaders);
(3) cultural changeprograms that focus on human aspects
Change managementthe formal process for organizational (e.g., the relationship between managers and employees); (4)
changeis the systematic approach and application of knowl- cost cuttingeliminating non-essential activities and opera-
edge, tools and resources to leverage the benefits of change. tions; and (5) process changefocusing on how things get
Change management means defining and adopting corporate done (e.g., reengineering a benefits administration process).5
strategies, structures, procedures and technologies to deal
Change initiatives are complex (see Table 4.2), with success
with change stemming from internal and external conditions.2
never a guarantee. A 2005 Conference Board study highlights
Increasingly, change management is seen as a permanent busi-
that broad change initiatives often address the business process,
ness function to improve productivity and profits by keeping
organizational structure and/or organizational behavior simul-
organizations adaptable to the competitive marketplace.3
taneously. The criteria most commonly factored into select-
However, to create pervasive and sustainable change, there ing a change strategy or model includes market demand (68
are often barriers to overcome. Typically, barriers develop percent), availability of budget (52 percent), availability of other
as a result of the organization not closely addressing the resources (47 percent), changes in leadership (41 percent), and
Source: Adapted from Beer, M., & Nohria, N. (2000, May/June). Cracking the code of change. Harvard Business Review, 137.
employee satisfaction and turnover (37 percent).6 Further, when The findings from the SHRM 2007 Change Management
an organization decides to implement a change initiative, the Survey Report reveal that HR involvement in major change
reason for the anticipated change often determines the timing. is substantial. For example, 73 percent of HR respondents
Timing is influenced by the type of change: anticipatory, reac- said they were involved prior to the change being introduced,
tive or crisis. For example, a company may be trying to keep 22 percent during implementation, and 5 percent after the
ahead of the competition (anticipatory), making changes in change went into effect. Eighty-eight percent reported that
response to business trends (reactive) or dealing with an unex- the HR department was a point of contact for questions and
pected crisis, such as a damaged organizational reputation or concerns to assist employees in the transition, 76 percent
a natural disaster (crisis). Whatever the reason, HR should be coordinated meetings and communications, and 11 percent
prepared for any type of change by understanding the business were responsible for calculating the post-implementation
drivers for the change as well as employees potential reactions.7 return on investment for major organizational change. In
fact, 23 percent of companies had HR staff devoted full time
HRs Role in Change Management
to change management programs. The top three reported
Through change management, HR has an opportunity to
major planned or implemented changes were new and/or
make a significant impact onand contribution tothe
revised performance management and review processes (58
organization. HR is best suited to identify and coach individu-
percent), facilities change (57 percent) and organizational
als in the company to lead change efforts. Also, by identify-
culture change (54 percent). The findings also highlight key
ing and recommending change tools and techniques, as well
areas of HR involvement: (1) clearly communicating plans and
as addressing barriers, HRs overall role is that of change
goals regarding change initiatives; (2) hiring and developing
architect. As change agent, HR fills four primary roles: 8
effective leaders; (3) designing and implementing transpar-
1. hange champion: HR publicly supports the change defined by
C ent reward systems; (4) giving people the opportunity to be
the organizations top executives.
involved in change processes; and (5) overall, making each
2. hange facilitator: HR enables change, such as providing insights
C interaction with internal clients a positive experience.9
regarding the company culture, history and political dynamics
to external facilitators or developing programs for internal Once it has been determined how effective change will be rec-
consultants.
ognized, HR is often responsible for designing metrics to mea-
3. Change designer: To help managers and employees better sure the progress and success of the change initiative, as well
understand a change initiative and have a sense of ownership, HR
redesigns the corresponding HR systems (e.g., total rewards, staff as communicating progress to employees. Surveys and score-
development, communication practices). cards are among the most commonly used metrics for change
4. hange demonstrator: Within HR itself, HR manifests change and
C initiatives. These vehicles work best when tailored to focus on
serves as an example of effective transformation. the most relevant factors of the change initiative or as a way to
A 2005 study by The Conference Board explored factors of 1. Identify the stakeholders and determine what you need as well as
large-scale organizational change. The results showed that the what support you are likely to get.
degree of success depends in great part on how an organiza- 2. Make a case for change.
tion develops its capacity to achieve change. Key success factors 3. Determine strategies that will help you continue to make the case
identified were balancing the need to implement change, for change throughout the life of the project.
maintaining daily operations and implementing short- and 4. Determine who will lead and who will take part in planning the
long-term change for the future. The top three challenges change.
were people issues (e.g., employee engagement, staffing/talent 5. Look for potential resistance.
problems and turnover), organizational resistance and commu-
6. Undertake all subsequent actions in a way that allows you to
nication weaknesses.11 Yet, when organizations expect change mitigate problems.
on a regular basis, research suggests that change initiatives
7. Create a vision that lets people know where you are headed.
may be more likely to succeed. In their book, Built to Change,
8. Develop a plan for reaching the vision.
researchers Edward E. Lawler III and Christopher G. Worley
point out that by coming from the perspective that change 9. Create measures of success and timelines.
is normal, organizations are better placed to drive change by 10. Keep the change alive.
building practices that encourage change rather than hinder it.
11. Develop contingency plans.
Intel, GE, Microsoft and PepsiCo are examples of organiza-
12. Celebrate and learn from this change.
tions that have fostered the capability to manage change.12
To evaluate change readiness, a simple assessment can be made Source: Adapted from Maurer, R. (2006, Spring). Creating a shift. The Journal for Quality
and Participation, 29(1), 21+.
by taking the following steps: (1) develop a list of the major
change activities currently taking place and identify which
ones compete for budget, staff time and other resources; (2) Competencies to Manage Change
estimate the level of effort required for each activity; and (3) For todays HR professional, the ability to manage change
compare this required effort to the change initiative being is essential. For some HR practitioners, change manage-
considered. These factors will provide information regarding ment is a relatively new area and necessitates gaining a solid
the anticipated change and the organizations capacity to take understanding and in-depth knowledge of the wide range of
on additional planned change.13 A more structured assessment factors related to change (e.g., through on-the-job or formal
can be done by observing employee behavior to gauge possible training programs). The top three key competencies regard-
QQ Lack of understanding of the urgency of change fold: (1) the communication to the hospitals workforce
QQ Unclear rationale for change regarding these changes was clearly appropriate and effec-
QQ Mixed messages from top and middle management tive in that it negated possible barriers; and (2) because
QQ Too many initiatives at one time
employees had an opportunity to talk about their reac-
tions to the change (supported by the organizations par-
QQ Underestimation of barriers; lack of due diligence
ticipatory philosophy), they were therefore less likely to
QQ Changed or diminished priorities; lack of focus
experience high stress levels in relation to the change.
QQ Inadequate employee mobilization and engagement
QQ Cultural mismatch in mergers and acquisitions that seek to blend two contrast-
In addition, this study is representative of the growing inter-
ing cultures est in the human factor in organizational change. The results
Source: Adapted from Guy, G., & Beaman, K. (2005). Effecting change in business enter- suggest that HR professionals need to be sensitive to the
prises: Current trends in change management. New York: The Conference Board.
reactions of the workforce regarding change while at the
same time acknowledging that change can be challenging.
Mini-Case Study #1: Health Care Industry35 The study also illustrates that when significant and numerous
Resistance to change is a common barrier. Focusing on the change initiatives occur within the same time frame, having
experiences of the workforce of a large unionized hospital, appropriate support from top management and establishing
this study explores whether discomfort with change is re- an environment that encourages employee participation will
lated to the individual or to the change itself. support positive results during and after implementation.
In a single year, this organization underwent three ma- Change Management in the Global Environment
jor change initiatives: a structural change, a technological Change in global organizations can be complicated by factors
change and a relocation of the workplace. Conditions were such as national and regional cultural mores, cross-cultural
positive for change, as senior leadership was committed communication (often in different languages), different
and involved in the implementation of all three changes. employment legislation and different time zones. In addition,
The changes were also supported by the hospitals partici- the global workplace is often virtual, and thus, opportuni-
patory philosophy, continuous communications and an or- ties for face-to-face communications regarding change may
ganizational change specialist who had been involved with be rare. Further, the cultural impact of change and how it is
the change preparations for over a year. It should be noted, communicated influence the likelihood of change effective-
In order to fully value human capital, we must go beyond Broadly stated, HR metrics measure efficiency (time and cost)
the view of human effort as purely individual. We, humans, and the effectiveness of certain activities. Yet mastering
affect each other profoundly, and it is the way we affect each human capital measures can be a very complex undertaking.
other that determines our value to our organizations. And, it Today, HR professionals are expanding the traditional
is the way that strategic human resource professionals bring metrics, such as head count, time-to-fill and turnover,
this understanding to the fore of their organizations that to KPIs that align with corporate objectives and create
determines HRs value at the senior management table. 1 greater stakeholder value. However, KPIs often demand
large amounts of data and technological support. In
In 1995, the seminal study by management guru Mark addition, the trial-and-error required to set appropriate and
Huselid linked high-performance work practices with com- meaningful measures comes into play, as well as patience and
pany performance and revealed that workforce practices had an education of those involved. Yet despite these challenges,
economic effect on employee outcomes such as turnover and 84 percent of companies expect to increase the application
productivity, as well as on short- and long-term measures of of human capital measures in the next few years.4
corporate financial performance.2 This study marked a new era
With a clear line of sight on workforce and organizational per-
of measuring the influence of HR to promote effective orga-
formance, effective use of KPIs also illustrates HRs in-depth
nizational performance, sustainability and financial success.
understanding of the links to business success. KPIs help build
As HR positions itself as a strategic business partner, one of the the credibility of the HR department, demonstrate HR value
most effective ways to do so is to support the strategic business and foster respect and partnership with senior management and
goals through key performance indicators. Key performance the C-suite. For example, when an HR professional not only
indicators (also known as KPIs) are defined as quantifiable, shows that a new recruiting program resulted in a lower time to
fill positions in the organization, but can also demonstrate that
specific measures of an organizations performance in certain
the program yielded an additional amount of revenue because
areas of its business. The purpose of KPIs is to provide the
billable staff were able to start at client sites more quickly, he or
company with quantifiable measurements of what is deter-
she builds HR credibility. Credibility is increased because HR
mined to be important to the organizations critical suc-
is able to link HR activities to firm performance and communi-
cess factors and long-term business goals. Once uncovered
cate it in financial/business terms. Additional critical reasons to
and properly analyzed, KPIs can be used to understand and
measure human capital include steering human capital resource
improve organizational performance and overall success.3
allocation, winning business cases for human capital invest-
Why Measure Human Capital? ment, tracking human capital activities to develop human capi-
The primary motivation to measure human capital is to tal predictions, linking variable compensation to human capital
improve the bottom line. To design better KPIs, it is essential best practices, delivering human capital information required
for HR to understand what is important to the business by law and providing investors with information on human
capital performance. Some firms even use KPIs to enhance
and what key business measures exist. In addition, the drive
their company image as a progressive employer of choice.5
to measure human capital reflects the change of role of
human resources from administrative to that of a strategic Further, with many HR functions increasingly being out-
business partner. In general, human capital measurement sourced, credibility is earned through activities and outcomes
is a measure of effective human resource management. that result in deliverables that promote and lead to organiza-
Chapter 5: Maximizing Human Capital: Demonstrating HR Value with Key Performance Indicators 35
tional success.6 Consequently, it is important to select KPIs that KpisA Strategic Management Tool
are most meaningful to the organization. For example, logical To think strategically about measurement and how best to use
KPIs to select are those that reflect drivers for human capital KPIs as a strategic management tool, it is essential to under-
measurement, such as financial outcome measures (e.g., rev- stand the meaning of the measurements and their purpose.
enue growth and cost reduction) and performance drivers (e.g., This approach will not only be beneficial to help better manage
customer satisfaction, process technology innovation, product the HR function, but also will naturally lead to aligning
technology innovation, globalization). Within that frame- HRs goals and objectives with those of the organization.9
work, the most common categories of people measures include
According to a recent national longitudinal study on the
turnover, productivity (revenue, profit per employee), employee
assessment of human resource organizations, strategy is the
satisfaction/employee engagement, recruitment, diversity,
top high-value add for HR. However, in only 60 percent of
remuneration, competencies/training, leadership, and health
companies did the HR executive see HR as a full partner. In
and safety. Most frequently measured are turnover, voluntary addition, 24 percent of executives outside of human resources
resignation, average compensation, average workforce age, viewed their HR counterparts as working at lower levels of stra-
diversity and compensation/total cost. Such KPIs will help HR tegic involvement, compared with 40 percent of HR executives.
professionals predict what they need to know to act in a timely The study suggests that activities related to strategy provide
and effective manner and identify ideas and areas where HR the most high-end impact for HR to demonstrate its value (see
can develop new initiatives, or revisit others, to obtain stron- Table 5.1). In addition, the relationship between business strat-
ger results.7 Clearly, KPIs are the wave of the future for HR. egy activities and HRs strategic role points to areas where HR
can contribute: growth, the core business, quality and speed,
Culture, Stakeholders and Kpis
information-based strategies, knowledge-based strategies, and
As the saying goes, what gets measured gets managed. The
organizational performance. The study data also reveal key stra-
company culture and corresponding values define what is mea-
tegic HR activities that link business emphases with the organi-
sured. Therefore, when HR considers important KPIs, the first
zations strategic focus: (1) having a data-based talent strategy;
place to look is at corporate culture and what is most valued
(2) partnering with line managers to develop business strategy;
within that culture. In addition, stakeholders (both internal
(3) providing analytic support for business decision-making; 4)
and external) go hand-in-hand with company culture. A stake-
providing HR data to support change management; (5) driving
holder is an individual or entity with a stake in how the orga-
change management; and (6) making rigorous data-based deci-
nization performs and/or conducts itself. Internal stakeholders
sions about human capital management.10 From these HR strat-
are employees, line managers, senior management, C-suite and
egy activities, key performance indicators can be developed.
the board of directors. External stakeholders include sharehold-
ers, customers, vendors, the community and the government. Table 5.1 HR Value-Added Strategic Activities
Working closely with internal stakeholders is beneficial for HR QQ Help identify or design strategy options.
to (1) prioritize capabilities and create action plans to deliver QQ Help decide among the best strategy options.
them; (2) focus on deliverables rather than doables; (3) build QQ Help plan the implementation of a strategy.
relationships of trust; and (4) help resolve misconceptions of
QQ Help design the criteria for strategic success.
HR.8 Different stakeholders have different criteria. The key pri-
QQ Help identify new business opportunities.
ority is to give business partners the information they need to
manage the company. For example, senior management values QQ Assess the organizations readiness to implement strategies.
performance measures that predict and lead to future organiza- QQ Help design the organizational structure to implement a strategy.
tional financial success and sustainability. On the other hand, QQ Assess possible merger, acquisition or divestiture strategies.
while one employee considers the availability of upward career QQ Work with the corporate board on business strategy.
mobility very important, another employee stays for health QQ Recruit and develop talent.
care benefits. As a result, training to promote opportunities to Source: Adapted from Lawler III, E. E., Boudreau, J. W., & Mohrman, S. A. (2006). Achiev-
move up in the organization and informational sessions about ing strategic excellence: An assessment of human resource organizations. Palo Alto, CA:
Stanford University Press.
employee benefits packages may be important. Overall, most
important are KPIs that track key business indicators of human
capital issues. HR must focus on KPIs that best illustrate At the same time, when determining strategic KPIs, it is essen-
stakeholder values that will lead to organizational success. tial to consider who designs human capital measures and how
In addition, benchmarking can make human capital metrics To be more specific, a lagging indicator represents information
more valuable. When used wisely, benchmarking data can that is the result of change or an event. Lagging indicators, for
protect programs that are performing well, create support for example, are measures of profits, sales and service levels. They
organizational change and help executives in HR and other reveal various aspects regarding the success or failure of a firm.
disciplines make strategic decisions that affect their organi- Lagging indicators are particularly useful for shareholders,
zations.13 By focusing on internal benchmarks, customized creditors and government agencies. Lagging indicators do not,
measures may help improve the alignment of activities to however, help a company react quickly, show what specifi-
HR strategy. However, caution should be used with external cally went wrong or right, or indicate exactly what needs to be
benchmarks due to mixing apples and orangesthat is, dif- done to improve. In general, lagging indicators are not useful
ferent industry sectors and underlying issues in benchmarking in managing on a day-to-day basis.17 In contrast, a leading
measures. Also, external benchmarks tend to emphasize results indicator precedes, anticipates, predicts or affects the future.
rather than processes. Because an external benchmark does For example, higher employee turnover can precede outcomes
such as lower customer service scores. Of the two indicators,
not explain what part of the process can lead to better results,
the leading indicator is more useful for investments or predic-
the use of external measures may not always be appropriate
tions. The state of the major stock markets, for example, is a
for internal use. In the rapid expansion of highly advanced
leading economic indicator for the global economy. Figuring
e-learning programs, for example, different programs may
out how to measure events, practices, initiatives or outcomes
deliver the same content at the same low cost, but the qual-
helps to determine the most valuable leading indicatorsthat
ity of the programs is not revealed in the benchmark itself.14
is, those indicators that may lead to clear outcomes.18 However,
Overall, the top KPIs for human capital and HR effectiveness part of the difficulty is clearly proving what indicators lead and
can be used by all companies, regardless of size or industry. For with what degree of influence. For example, while the avail-
example, the Hay Group found that the most admired com- ability of talent is generally thought of as a leading indica-
panies had effective business practices in the following areas: toras one can measure the quality of hire from it (the larger
organizational culture, strategy implementation, attraction and the talent pool, the more likely you are to hire more qualified
Chapter 5: Maximizing Human Capital: Demonstrating HR Value with Key Performance Indicators 37
Figure 5.1 | The Effects of Selection and Supervisor Training on Turnover
5
Quality/Fit Rating (4-pt. scale)
Annual Turnover (as decimal)
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
Note: Percentages do not total 100% as multiple response options were allowed. HR professionals whose organizations have not identified behavioral competencies were excluded from
this analysis.
Source: SHRM Weekly Online Poll (January 2008)
people)it is also a lagging indicator in comparison to certain the company can accurately forecast the demand for talent
political decisions. For example, consider how changes in a by division and title three years in advance.19 The HR score-
local taxation rate, perception of crime and ratings of school card, based on the format of the balanced scorecard, is a key
quality affect peoples desire to move to a city and become management tool to strengthen HRs strategic influence in the
part of the talent pool. Here, political decisions lead and talent organization. The scorecard has four perspectivesstrategic,
availability lags. In general, the most useful measures are lead- operational, financial and customerthat help organize and
ing indicators, as they may predict future firm performance. track areas where HR adds value: (1) the strategic perspective
focuses on measurements of effectiveness of major strategy-
Scorecards and Dashboards linked people goals; (2) the operational perspective reflects
In recent years, HR scorecards and dashboards have gained the effectiveness of HR processes; (3) the financial perspective
popularity as a management tool. Documenting and track- relates to financial measures of HR value to the organization;
ing defined metrics validates human capital investments. For and (4) the customer perspective focuses on the effectiveness
example, firms are increasingly tracking employee movement of HR from the internal customer viewpoint. Depending on
as a metric. Cisco Systems, Inc., the California-based com- the organizations business goals, these perspectives also help
munications giant, views building talent as a priority and has determine KPIs that best demonstrate HR value (see Table
added to its dashboard of people measures a metric to track 5.2).20 Additional key benefits of the HR scorecard are (1)
how many people move and the reason why, including revenue reinforcement of the distinction between HR doables and
per employee. This KPI allows Cisco executives to quickly HR deliverables (i.e., a policy implementation is a doable
identify divisions that are creating new talent. Another firm, and becomes a deliverable when it creates employee behaviors
Valero Energy Corp. in San Antonio, developed a recruit- that drive strategy); (2) HRs ability to control cost and create
ment model using human capital metrics based on applying value; (3) measurement of leading indicators; (4) assessment
the supply-chain business process to labor. Scorecards help the of HRs contribution to strategy implementation and to the
company track the labor sources that provide the most produc- bottom line; (5) support of HR to manage its strategic respon-
tive employees. Using a detailed analysis of these metrics, sibility; and (6) encouragement of flexibility and change.21
Chapter 5: Maximizing Human Capital: Demonstrating HR Value with Key Performance Indicators 39
To begin, HR went back to its performance assessment process 65 percent of organizations are not measuring the ROI for
and considered people who left in each of the four categories: HR technology systems.
4exceeds expectations, 3meets expectations, 2needs Of those that do measure the ROI, 68 percent measure it by
improvement to meet expectations and 1not performing determining cost savings and losses and 31 percent consider
even to minimal expectations. They looked at high turnover HR headcount.
among the 3s and 4s, which represented a loss of high perform- 10 percent of HR professionals do not know how the ROI
ers who, assuming the performance assessment was valid, were
is measured.
more valuable to the organization. They also considered high
turnover among the 1s and 2s, a possible indication that super-
visors were doing a good job of weeding out those who could Recent Studies: Human Capital
not perform. Looking at turnover rates over time, HR found Practices Drive Performance
a need for supervisor training as well as the need to improve Increasingly, research finds that best practices around human
pre-hiring screening and the overall selection process. After capital can help companies successfully compete with their peer
tracking turnover for a year following the supervisor train- organizations. The following studies highlight the importance
ing initiative and improvements in the hiring process, the end
of human capital practices to drive organizational performance.
result was that the savings in reduced turnover far outweighed
Correspondingly, KPIs that measure these practices both vali-
the cost of the pre-hire assessment and supervisor training.
date the value of HR and advance the profession at all levels.
Role of Technology and Kpis
Achieving Strategic Excellence: An Assessment
Today, the increasing demand for HR technology runs
of Human Resource Organizations27
parallel with the growing use of workforce analytics and
This national study, the fourth in a series on the HR func-
KPIs. HR technology systems are fast proving to be a
tion in large corporations, focuses on measuring whether
critical vehicle for HR to contribute value to their organi-
the HR function is changing to become more effective and,
zations. While initially used primarily by large organiza-
tions, more small and mid-size companies now use software more specifically, whether HR is changing to become an
products to both effectively measure human capital invest- effective strategic partner. The key findings show a strong
ment and track a wide range of HR metrics. Further, relationship between what is happening in the HR func-
there is growing evidence of cost savings in organizations tion and a companys strategic focuses. The degree to which
that effectively use HR technology. Consequently, HR in the firm has knowledge and performance strategies is the
companies of all sizes will increasingly use technology to degree to which HR is viewed as a strategic business partner.
better showcase the effects of human capital initiatives.25 Overall, with the importance placed on talent management,
the emphasis on human capital, knowledge and competen-
Research by management gurus Boudreau, Lawler and
cies creates a favorable environment for the HR function.
Mohrman points to the critical role of technology and the cor-
responding strong relationship between HR and IT. Two key SHRM 2006 Human Capital Benchmarking Study28
findings reveal that, due to technology, completely integrated This executive summary provides HR professionals with key
HR IT systems lead to the highest level of HR effectiveness, human capital measures from nearly 600 organizations on
and the effectiveness of the HR IT system is strongly related
HR departments and their expenses, employment, health
to the overall effectiveness of the HR organization. Further,
care, compensation, and organizational revenue and size. The
the SHRM 2005 HR Technology Survey Report emphasizes the
key findings reveal changes and trends in the workplace. For
importance of return on investment (ROI) to build a business
example, of the 57 percent of firms that expected their HR
case to incorporate HR technology systems in the firm. The top
department expenses to increase, 11 percent were in durable
five successes of HR technology systems are: increased accuracy
of employee information; decreased cycle time for processing goods manufacturing. For all industries, the median for HR
employee information transactions; less time spent by HR staff expense per full-time employee was $1,072. And in 2005,
on administrative work; greater access by managers to employee organizations also increased their hiring by more than 50
information; and the HR departments ability to manage the percent from the previous year. Telecommunications, ser-
workforce with the same number of HR staff. Yet, few organiza- vices (profit) and biotechnology industries had the top three
tions document the advantages of HR technology systems:26 highest medians for percentages of positions filled in 2005.
Recommendations gram relative to the previous one and learned that employee
Selecting practical KPIs requires thoughtful consideration of perception of the new program was extremely favorable.
the message behind measures and their corresponding effect
3. W
henever possible, the impact of recruiting is
on the organization. The real-life examples belowstart-
best described in terms of financial gains.
ing at the idea stage and ending at results with meaning-
ful measuresdemonstrate HR value through KPIs. Example: An organization wanted to know the effect
of its new recruiting program. The program was able to
1. Q
ualitative measurement is one path to
reduce time-to-fill by an average of seven days, which
assess qualitative characteristics of the
meant new employees could start billing sooner to client
workforce, such as engagement.
sites. Since the average daily bill rate per person was $900,
Example: A public agency was experiencing high cus- the recruiting program was able to increase the firms
tomer complaints and low staff morale. A combination revenue by $6,300 per new billable employee hired.
of open-ended survey and focus group outputs was ana-
4. R
etaining older workers for future leader-
lyzed, and leading indicators were identified. Training
ship roles depends on what they most value.
was specifically designed to target the key areas, and as
a result, customer complaints fell as morale improved. Example: A survey by a multinational corporation of its
older worker population in North America and Europe
2. E
mployee feedback provides useful per-
revealed the following top three key values: (1) support
spectives on HR efficiency.
from managers; (2) ability to make ones own job-related
Example: Health care costs were unusually high and cus- decisions; and (3) opportunities for advancement. Lead-
tomer service was very poor for the last fiscal year. Six months ership development programs were created to retain key
after a new health care provider was chosen, costs were down talent from this group. Over a two-year period, tracking
by 20 percent. The organizations HR manager developed a of performance, mentoring and promotions of older work-
survey for employees to provide feedback about the new pro- ers in the leadership development program found that
turnover rates for older workers decreased by 28 percent.
Chapter 5: Maximizing Human Capital: Demonstrating HR Value with Key Performance Indicators 41
Table 5.3 Examples of Key Performance Indicators for the ROI of international assignments through cost estimat-
Global HR Effectiveness
ing, tracking and comparison. A recent global relocation
QQ Design and implementation of an international HR information system. trends survey, for example, found that 70 percent of companies
QQ Development of global leadership through cross-cultural assignments. required a statement of assignment objectives prior to funding
QQ Development of a global mindset for all employees through training and develop-
assignments. In addition, to minimize expatriate turnovera
ment. global HR KPI64 percent of companies found opportuni-
QQ Cost reduction of expatriate assignments. ties to use international experience, with 50 percent of firms
QQ Implementation of formal systems that improve worldwide communications.
offering a greater choice of positions upon return and 43
percent offering repatriation career support.32 However, as
Source: Adapted from Sparrow, P., Brewster, C., & Harris, H. (2004). Globalizing human
resource management. London: Routledge. highlighted in an SHRM case study on repatriation, different
assignments have different measures of success and, conse-
quently, different results. A common KPI is the retention
Yet measuring the contribution of HR on an international
rate of expatriates following repatriation for one and/or two
level becomes ever more complicated due to factors such as
years. Other measures may also reflect softer results, such as
complexities of scope, authority level, and political, cultural
managerial approach shifts or cultural changes. The concept
and legislative barriers that directly affect the link between
behind using a variety of measures is to create a report card
organizational performance and HR. Two approaches are
that can provide a broad view of the assignment overall.33
recommended: identifying and proving the link between
organizational performance and people management, and using In Closing
methods of evaluation of the global HR functions contribu- Becoming more facile with metrics in general is a goal of
tion. The measure of the global HR function also often rests many HR professionals. Further, as more HR professionals
on perceptions of effectiveness from key stakeholders become immersed in human capital measurement, they can
that is, the companys worldwide employees and managers. more effectively use key performance indicators to illustrate
Therefore, the ability to market HR globally as a source of the value of human capital investments through successful
competitive and strategic advantage is fundamental to measur- organizational performance at many levels. These impor-
ing the contribution of the corporate global HR function.31 tant steps will increasingly demonstrate the high value-add
required by the C-suite to be a true strategic business partner.
Measuring the value of international assignments, for example,
is a critical success factor for global HR. Companies measure
Staffing
Management
Chapter 6
Talent Management: Driver for Organizational Success
It is nearly unanimous that HR can and should add more value
to corporations. The best way to do this is by being a business Table 6.1 Common Principles of the Talent Management
Agenda
partnerby directly improving the performance of the busi-
ness. This can be accomplished by effective talent management, 1. Expectations regarding the differentiation of talent.
helping with change management, influencing strategy and a 2. The role of line leaders in the development of people.
host of other value-added activities that impact effectiveness. 1 3. Philosophy regarding the movement of people across businesses
and functions.
In a competitive marketplace, talent management is a pri-
mary driver for organizational success. Broadly defined, talent 4. The role of diversity in staffing strategy.
management is the implementation of integrated strategies or 5. Beliefs about hiring for potential versus hiring for position.
systems designed to increase workplace productivity by develop- Source: Why the leadership bench never gets deeper: Ten insights about executive talent
development. (2002). HR. Human Resource Planning.
ing improved processes for attracting, developing, retaining
and utilizing people with the required skills and aptitude
to meet current and future business needs.2 A recent study Yet different companies may not define talent the same way.
shows that 85 percent of HR executives state that the single The belief in talent and its impact on the bottom line are at
greatest challenge in workforce management is creating or the heart of talent management. To be effective, the talent
maintaining their companies ability to compete for talent.3 mindset must be embedded throughout the organization,
Without question, effective talent management provides starting with the CEO. Going beyond succession planning
one of the most critical points of strategic leverage today. for top leadership positions, companies that value talent
have a deep appreciation for the contribution of individu-
Offering enormous business value, talent management is
als at all levels, now and for the future. In essence, talent is
complex and continually evolving. Influenced by external
the vehicle to move the organization where it wants to be.6
factors such as the economy, global expansion and mergers
and acquisitions, critical success factors for effective talent Drivers for Talent Management
management include alignment with strategic goals, active To gain competitive advantage, the demand for human capital
CEO participation and HR management. Over time, common drives talent management. Talent management strategies focus
themes around talent management are emerging, such as the on five primary areas: attracting, selecting, engaging, devel-
role of line leaders in the development of talent (see Table oping and retaining employees. Although pay and benefits
6.1). Overall, the main recurring themes are CEO involve- initially attract employees, top-tier leadership organizations
ment, culture, management, processes and accountability.4 focus on retaining and developing talent (see Table 6.2).7
Research shows that organizations increasingly focus on Workforce trends drive talent management strategies. Factors
talent management. Moving from reactive to proactive, such as an increasingly global and virtual workforce, differ-
companies are working hard to harness talent. According ent generations working together, longer life expectancies
to SHRMs 2006 Talent Management Survey Report, 53 and an empowered and autonomous workforce have forever
percent of organizations have specific talent management changed the workplace. Due to demographic changes, the
initiatives in place. Of these companies, 76 percent consider workforce is also increasingly diversefrom age, gender
talent management a top priority. In addition, 85 percent and ethnicity to lifestyles, migration patterns and cultural
of HR professionals in these companies work directly with norms. Organizations are already taking advantage of these
management to implement talent management strategies.5 workplace trends. For example, The Home Depot, Inc.,
Chapter 7: Workplace Diversity: Leveraging the Power of Difference for Competitive Advantage 53
level of diversity management, however, organizational leaders Advantages
must have a clear understanding of how they define diversity as Six key reasons to tie workplace diversity to organizational
well as what exactly the organization does with the experiences strategic goals and objectives are: (1) greater adaptability and
of being a diverse workforce.5 flexibility in a rapidly changing marketplace; (2) attracting
and retaining the best talent; (3) reducing costs associated
An Inclusive Corporate Culture
with turnover, absenteeism and low productivity; (4) return
The concept of inclusion is increasingly important in the
on investment (ROI) from various initiatives, policies and
discussion of workplace diversity. In many ways, this evolution
practices; (5) gaining and keeping greater/new market share
reflects societal values in the workplace. For example, two
(locally and globally) with an expanded diverse customer base;
beliefs commonly held by Americans are that everyone deserves
a chance (equal opportunity, sometimes referred to as the and (6) increased sales and profits. Workplace diversity can be
level playing field) and that all people should be treated viewed as having both direct and indirect links to the bottom
with dignity and respect.6 The values of equality, respect and line. In business, the preferred equation for success is a single
opportunity for all represent the cornerstone of workplace action that directly impacts financial performance. Workplace
diversity. Inclusiveness is thus a win-win dynamic: it generates diversity, however, is a complex phenomenon. Consequently,
opportunities for growth, flexibility and adaptation in the the link of workplace diversity to financial success is not always
marketplace for both the employee and the organization. immediately apparent, nor is it always linear. Two examples
below illustrate scenarios with direct and indirect links of
The Business Case for Workplace Diversity workplace diversity to organizational performance.9
Increasingly, the case for workplace diversity as a business
imperative is gaining recognition by leaders in the business Direct link: Organizations that expand their customer
world. At a symposium sponsored by The Conference Board base most effectively do so with a workforce that is
regarding diversity in the workplace, for example, 400 reflective of their clients. DuPont, for example, considers
executives agreed that diversity programs help to ensure the diversity a business imperative vital to ongoing renewal
creation, management, valuing and leveraging of a diverse and competitiveness in the 21st century. This philosophy
workforce that will lead to organizational effectiveness and was illustrated when the company learned how one small
sustained competitiveness.7 change could directly translate into significant profits. At
DuPont Merck, the sales of an anticoagulant drug in the
One of the major drivers behind the business case is the Hispanic markets were low. When a Hispanic manager
demographic changes that directly affect the labor pool and noticed that the drug was only labeled in English and
available talent (see Table 7.2). These changes are significant.
consequently translated the instructions into Spanish,
In an organization, human capital and workforce relationships
sales improved significantly. Now, educational materials
are the backbone of success. The flow of information between
for the drug are translated into 15 languages and bring in
colleagues, work teams, customers and suppliers, for example,
millions of dollars in new business.10
depends on the quality of relationships and talent in the
workplace.8 Consequently, workplace diversity is increasingly Indirect link: Having access to and retaining talent
viewed as an essential success factor to be competitive in from a worldwide diverse labor pool is key to gaining a
todays marketplace. competitive edge in the global marketplace. To expand
and keep their market share, Nortel views lost revenue
Table 7.2 Demographic Trends Transforming the Workforce due to turnover as a reason to support diversity. With the
QQ Greater diversity in the labor pool: By 2008, women and minorities will
cost of replacing an employee at $55,000 and turnover
represent 70 percent of the new labor force entrants, and by 2010, 34 percent at 7 percent (compared to 17 percent in the information
of the U.S. workforce will be non-Caucasian.
technology industry), the overall turnover cost is still
QQ An aging workforce: By 2010, the U.S. workforce will have an increase of 29 quite high. For example, 7 percent attrition for 80,000
percent in the 45-64 age group, a 14 percent increase in the 65+ age group
and a 1 percent decline in the 18-44 age group. employees translates to replacing 5,600 people. Thus,
QQ Globalization: In the next decade, 75 percent of new workers will likely be
when 5,600 (people) is multiplied by $55,000 (the cost of
from Asia, while North America and Europe will have 3 percent of the worlds replacing one employee), turnover cost is $30.8 million!
new labor force.
Thus, at Nortel, attracting and keeping talenta key
Source: Hewitt Associates. (2004, February). Preparing the workforce of tomorrow.
aspect of workplace diversityhas a significant impact on
Retrieved March 21, 2005, from www.hewitt.com.
the bottom line.11
In what ways does your organization actively leverage the diversity of employees for the purpose of increasing com-
petitive advantage? (Number of Respondents = 310)
Source: Society for Human Resource Management. (2004, August 3). SHRM/Fortune Diversity Weekly Survey. Retrieved March 25, 2005, from
www.shrm.org.
Source: Society for Human Resource Management. (2004, August 3). SHRM/Fortune Diversity Weekly Survey. Retrieved March 25, 2005, from www.shrm.org.
Firms are increasingly aware of the impact of diversity their company to family and friends. The result is lower
initiatives on organizational effectiveness. For example, factors turnover and a positive employer brand that better attracts the
that affect organizational profits are highlighted in a study best talent in the marketplace.14 A prime example of diversity
by the Society for Human Resource Management on the partnerships is that of Pitney Bowes, the No. 1 company
impact of diversity on the bottom line. HR professionals from on the 2004 DiversityInc Top 50 Companies for Diversity
companies on Fortunes list of Top 100 Companies to Work list, with recruitment initiatives and partnerships developed
For state that diversity initiatives provide organizations with a with organizations such as the National Urban League and
competitive advantage by positive improvements in corporate
the National Society of Hispanic MBAs. Another example
culture, employee morale, retention and recruitment (Figure
is that of Ford Motor Co., the No. 1 company on the 2003
7.1). For example, 40 percent of companies ensure leadership
DiversityInc Top 50 list, that made community relations a
development programs are available to all employees, 34
priority: Ford spent six percent of its total procurement budget
percent increase innovation by tapping talent of employees of
($3.2 billion) with its first-tier diversity suppliers.15
all backgrounds, and 31 percent utilize diverse experiences for
special projects and assignments.12 Money Talks
The shift in purchasing power in the United States provides
The importance of positive community relations also illustrates
the link between workplace diversity and the business case. further evidence for the business case for workplace diversity.
When organizations develop external partnerships with According to the Selig Center for Economic Growth, the
minority communities and suppliers, for example, this can lead purchasing power of minorities in the United States will
to good will and a reputation as an employer of choice.13 quickly outpace that of whites in the next five years. In 2009,
When employees are proud of their organization for its for example, the combined buying power of African-Americans,
contributions and connections to the community, they are Hispanics, Asian-Americans and Native Americans is expected
more loyal to their employer and more likely to boast about to exceed $1.5 trillion, more than triple the 1990 level by a
Chapter 7: Workplace Diversity: Leveraging the Power of Difference for Competitive Advantage 55
gain of $1.1 trillion or 242 percent. In contrast, the buying diversity initiative costs. This ratio is also referred to as a cost-
power of whites will increase by 140 percent.16 to-benefit ratio. Specifically, the DROI calculation is the net
benefit of the diversity initiative divided by the initiative costs:
Thus, in order to ensure that the companys sales and
DROI percent = (net diversity initiative benefits initiative
marketing teams reach the minority groups with funds to
costs) x 100. This formula is the same basic formula used to
purchase its products and services, one of the most effective
evaluate other investments in which the ROI is reported as
avenues is to utilize the knowledge of minority employees
earnings divided by the investment.22 For example, the initial
who can relate to different groups in the marketplace. Verizon
cost of a diversity awareness program may be $50,000. The
Communications, for example, utilizes its African-American
measurable value of the program is determined to be three
spokespeople, such as the actor James Earl Jones, to attract
years. During a three-year period, the program will have a net
African-American consumers.17 Fannie Mae, a leading
savings of $30,000 ($10,000 per year). Since the average book
mortgage lending firm, wanted to reach the many minorities
value is approximately half the cost, the average investment in
who did not yet own homes; in the United States, only 46
this case is $25,000 ($50,000 2). The average ROI = annual
percent of African-Americans and Hispanics own homes,
savings average investment: $10,000 $25,000 = 40 percent.
compared with 72 percent of whites. The company utilized
diversity training as a strategic business initiative to reach a Short- or Long-Term Investment
segment of the population that could profit from their service.18 The business advantage for workplace diversity is clear. Yet
companies often expect short-term results. The challenge is to
Finally, the SHRM 20042005 Workplace Forecast notes that
demonstrate measurable impact on financial success as well as
one of the top economic trends is expansion into the global
realistically manage expectations. Rather than a quick fix, the
marketplace.19 Organizations can better capture, keep and serve
business case for workplace diversity is a long-term investment
their international customer base when their own workforce
and offers sustainability in a competitive marketplace.
such as sales, marketing and customer serviceunderstands the
needs of other cultural and ethnic groups. Senior Managements Role
Visibility, communication and accountability are key to
Metricsthe ROI of Diversity
achieving a competitive diverse workforce. A recent study
As with all business initiatives, measuring the return
on what makes and breaks diversity initiatives found three
on investment of diversity makes good business sense.
critical points of leadership: (1) accountability; (2) a passion for
Measurement of diversity management can be considered in a
diversity; and (3) sustained involvement. Visible commitment
number of areas, such as organizational culture, demographics,
throughout the organization is important: adding diversity on
accountability, productivity, growth and profitability. For
the agenda at executive meetings and company conferences,
example, measuring diversity leadership commitment may
appointing diversity candidates to top positions, and assigning
involve many individual factors, such as the development
clear roles and responsibilities to the senior management
of diversity vision/mission statements by a specific date,
team regarding diversity management. Accountability creates
the number of times diversity is mentioned as a strategy in
sustained involvementthat is, holding managers accountable
executive presentations, the percentage of board representation
to deliver diversity results. Participation in diversity councils is
by group, the percentage of diverse employees who were
recommended as a development path for senior leadership.23
promoted due to mentorship and the percentage of diversity
strategy plans implemented.20 However, simply placing women and/or minorities in high-
profile positions, for example, is insufficient. Rather, the more
To determine the return on investment, hard and soft data
effective approach is to hold management accountable for
must be converted to monetary values. There are five basic
results. Consequently, to get middle management and employee
steps: (1) identify a unit of measure that represents a unit
buy-in, top management must establish clear implementation
of improvement; (2) determine the value of each unit; (3)
and reporting requirements. At DuPont, for example, senior
calculate the change in performance data; (4) determine an
management ensures accountability for diversity management
annual amount for the change; and (5) calculate the total value
by integrating diversity into the overall business performance
of the improvement.21
evaluation process, including developing cost and profit
The diversity return on investment (DROI) is calculated objectives as well as how compensation is determined. The
by using the diversity initiative cost and benefits to get the company also uses targeted career development initiatives to
benefit/cost ratio (BCR). BCR = diversity initiative benefits help diverse people fill key work assignments, thus supporting
Chapter 7: Workplace Diversity: Leveraging the Power of Difference for Competitive Advantage 57
Different groups have different needs, and they want their
Table 7.3 HR Competencies for Diversity Management
needs recognized and met. Acknowledgment of different
needs yields greater employee satisfaction, employer loyalty QQ Active/nonjudgmental listening.
and, in turn, lower turnover and greater productivity. As a QQ Willingness to challenge ones own concepts about diversity.
result, more organizations offer programs to address issues QQ Collaboration skills.
such as work/life balance and demands for more flexibility
QQ Experience with conflict resolution and change management.
with telecommuting, adoption support, flexible health and
dependent care spending accounts, elder care and domestic QQ Sensitivity toward terms labeling groups regarding diversity.
partner benefits.36 QQ Ability to identify diversity issues and understand related tensions.
under-represented talent in the workplace. One study reveals QQ Openness to learning about others who are different.
that in the majority of companies, individuals with disabilities QQ Ability to educate others on how to build diverse people skills.
comprise less than 10 percent of their total workforce. The QQ Ability to provide appropriate responses.
study recommends top management lead by example and hire
Source: Adapted from Carr-Ruffino, N. (1999). Diversity success strategies. Boston:
qualified individuals with disabilities on their staff. Through Butterworth-Heinemann.
training and focus groups, HR leaders can improve sensitivity
Aligning the Diversity Process with
toward employees with disabilities.37
Strategic Business Goals
Training The organization that best utilizes the full potential of all
Within the context of workplace diversity, training plays a key employees intentionally and thoughtfully aligns workplace
role in retaining talent. The role of training is to promote diversity with strategic business goals by following these steps:
workplace harmony, learn about others values, improve
cross-cultural communication and develop leadership skills. Define diversity. Clarify the role of workplace diversity
Awareness training raises understanding of diversity concerns in the organization, including leadership roles and
by uncovering hidden assumptions and biases, heightening expectations for diversity initiatives. In vision and mission
sensitivity to diversity in the workplace and fostering statements, highlight the importance of diversity (for
individual and group sharing. Skill-based diversity training example, is the organizations philosophy on inclusion
improves morale, productivity and creativity through effective clearly stated?). Place the vision and mission statements
intercultural communication.38 Leadership development, on the company Web site as a public statement of the
team building and mentoring programs are also examples organizations commitment to workplace diversity.
of organizational training that promotes growth and Communicate commitment by allocating the necessary
collaboration. An overlooked area regarding retention is cross- resourcesstaff, budgets and timeto move the diversity
cultural competence within the organization, often a missed process forward.41
opportunity to address minority retention concerns.39
Establish accountability. With senior management,
Finally, working in a diverse organization requires diversity HR diversity leaders should develop challenging yet
competencies for everyone, including HR (see Table 7.3). Yet realistic goals for diversity interventions. Demonstrate
not all HR professionals are experts in diversity. A survey notes organizational commitment: (1) appoint senior executives
that only about one-third of companies think their HR staff to diversity task forces for succession planning, education
has the skills to serve a diverse U.S. workforce and only 22 and training initiatives; (2) recruit diversity candidates for
percent believe HR has the skills to serve a global workforce.40
senior leadership positions; and (3) establish diversity goals
HR professionals best qualified to deal with workplace
and objectives for all leadership levels in the performance
diversity have experience in areas such as team building,
management process and reward programs. Demonstrate
change management, conflict resolution and cross-cultural
commitment to workplace diversity by developing
communication.
solutions when problems are identified through employee
attitude surveys, focus groups, etc.42
Chapter 7: Workplace Diversity: Leveraging the Power of Difference for Competitive Advantage 59
in place measures designed to enforce the right to be treated minorities are seen as a growing workforce as well as customer
equally.48 base.51
1. The Racial Equality Directive 2000/43/EC prohibits Enhancing Competitive Advantage through
discrimination on the grounds of a personal racial or Diversity Management: Recommendations for Hr
ethnic origin. Assess
Conduct a top-to-bottom critical assessment of all company
2. The Employment Equality Directive 2000/78/EC
policies and programs. Determine if there are biases that create
prohibits discrimination on the grounds of religion or
potential challenges for diverse employees. Review diversity
belief, disability, age or sexual orientation.
initiative results (e.g., recruitment of top talent, retention
However, the establishment of a Directive does not guarantee strategies, succession planning, career development goals) to
immediate results or even substantial progress. While EU determine if the workplace is structured to exclude certain
Directives require member states to meet the minimum employee groups. Determine where changes in organizational
legislative standards, more work is needed to achieve workforce culture, policies and programs need to be made.
diversity. For example, a recent report notes that while gender Capitalize
employment and education gaps are closing, the gender gap in Promote diversity initiatives to the top agendas of senior
the EU remains almost unchanged.49 management by capitalizing on reputation as a diversity
Drivers and Benefits of Diversity in Europe management consultant.
In Europe, there is a growing recognition of the benefits of Dialogue
workplace diversity for both the society and the economy. Develop and maintain continuous dialogue with the CEO and
To remain competitive, however, there are a host of issues senior management regarding diversity as a business strategy.
to address, from racial and ethnic diversity and new roles of
women to work/life balance and an aging population coupled Discover
with declining birthrates. A recent study notes that a third of Through focus groups, confidential employee surveys and exit
the top European companies are gaining competitive advantage interviews, determine how diversity initiatives are viewed and
from diversity management. These progressive organizations, gather feedback for improvement.
rather than seeing diversity as a regulatory response that Network
requires anti-discrimination and equal opportunity policies, Network with other HR professionals to learn different
view diversity management as a vehicle to develop an engaged, approaches to diversity management, challenges encountered
motivated and heterogeneous workforce to develop creative and recommended best practices.
business solutions in the global marketplace.50
Learn
Another study notes the three most often mentioned benefits To best utilize a diverse workforce, profit from lessons learned.
of workplace diversity by European companies are: (1)
improved team effectiveness and cooperation; (2) improved In Closing
productivity; and (3) improved customer markets with broader There is no best way to manage diversity. The identification,
access to labor markets. Other drivers considered moderately selection and purpose of diversity initiatives and their
beneficial are improved employer image, more openness to development and implementation differ from company to
change, improved morale and commitment, ease of entry company. The likelihood of success is dependent on business
into new markets and enhanced effectiveness of complex needs and workforce issues as well as situational factors, such
organization. Overall, the most important shifts in workplace as the organizational culture and workplace environment.
diversity are in the areas of gender and ethnic diversity. For Ultimately, the strength of commitment by the CEO, senior
example, as women obtain higher professional degrees and management and HR leadership will determine whether the
qualifications and earn more money in the marketplace, they organization successfully leverages workplace diversity for
are increasingly viewed as important in the workplace. Ethnic competitive advantage.
As a concept and as a reality, culture is broad and multifaceted. Business Case for Cross-Cultural Hrm
On a daily basis, culture influences who we areas individuals, With the advent of globalization, research on cross-cultural
families, communities, professions, industries, organizations organizational behavior has become a pathway to understand
and nationsand how we interact with each other within and the dynamics of multicultural domestic and international
across regional and national borders. Defined as a set of values workplaces.5 In fact, successful organizations of the 21st cen-
and beliefs with learned behaviors shared within a particular tury require leaders who understand culturally diverse work
society, culture provides a sense of identity and belonging.1 environments and can work effectively with different cultures
From language, communication styles, history and religion that have varying work ethics, norms and business protocols.
to norms, values, symbolism and ways of being, culture is Yet, diverse cultures create HRM challenges. As Lisbeth Claus,
everywhere. Ph.D., SPHR, GPHR, associate professor of global HR at
Willamette University, points out, the HRM challenges lie
Human resource management is the formal structure
between the various types of culturesthe cultures of emerg-
within an organization responsible for all decisions, strate-
ing and developed countries and the growing heterogeneity of
gies, factors, principles, operations, practices, functions,
the workforce in terms of multiculturalism.
activities and methods related to the management of
people.2 Gaining cross-cultural competence takes time, education, expe-
rience, openness and sensitivity. When people lack intercultural
In domestic and global workplace settings, people in organiza-
skills, miscommunications can damage business relationships,
tions reflect their respective cultures. As shifting demographics
deadlines can be missed, projects may fail and talented people
bring together people of many cultural backgrounds, human
will go to the competition. Key HR responsibilities are to
resource management (HRM) must be thoughtfully exam-
understand how cross-cultural factors interact with HRM, be
inedand sometimes alteredto support organizational goals.
the conduit for organizational learning for cross-cultural intelli-
SHRM Special Expertise Panel members point out that for
gence and foster cross-cultural communication throughout the
sustainability, organizational leaders must expand their perspec-
organization.
tives from a local to a worldly view.3 SHRMs 2008 Workplace
Forecast highlights several trends in culture that will likely have Cultural Value Dimensions
a major impact on the workplace: (1) heightened awareness Cross-cultural intelligence is the ability to switch ethnic and/or
of cultural differences in domestic and global workplaces; (2) national contexts and quickly learn new patterns of social inter-
greater need for cross-cultural understanding/savvy in business action with appropriate behavioral responses. This competence
settings; (3) managing talent globally; (4) greater emphasis on is essential to work effectively in multicultural environments.
global leadership competencies; and (5) increased use of virtual Thus, linking future career paths and global business success
global teams.4 with cultural competence is important for HR to emphasize,
with the goal that managers are motivated to acquire new
Thus, HR professionals experienced in workplace diversity and
behaviors and skills and understand the benefits of learning
cross-cultural communication are well-positioned to develop
from different cultures.6
and implement culturally appropriate HRM strategies, policies
and practices. While not exhaustive, this Research Quarterly To become culturally competent, the first step is to have a solid
focuses on selected cross-cultural factors in HRM in todays understanding of ones own values and how they shape cultural
workplace and provides insights for HR to better serve the identity. Within this process, it is also important to realize that
needs of the organization. different cultures often exhibit different values. Cross-cultural
As illustrated through these four corporate culture models, To successfully achieve our business goals, establishing
approaches to work, authority, problem solving and relationship and maintaining relationships with distributors is an essen-
building differ. This information provides HR with additional tial strategy. Some of our customers are large firms, man-
insight when working with companies of different corporate aged by graduates from the elite university I attended. This
cultures. link creates strong networking opportunities. Once this jan
pehchan (connection) is made, it is critical to invest time
Building Business Relationships
in this relationship, and I always counsel my subordinates
Building optimal business relationships requires global fluency. on the importance of relationship building. One employee
Global fluencydefined as facility with cultural behaviors in particular is very good at maintaining relationships. He
that help an organization thrive in an ever-changing global works hard to do so, even going to the airport or train sta-
business environmentis a competitive advantage to establish tion without prior arrangement to meet clients upon their ar-
and maintain good business relationships.17 To promote people rival, once at 5 a.m.! This effort shows that he is sincere and
working effectively with those of other cultures, cross-cultural demonstrates how far he will go to maintain this valuable
training assists employees in becoming knowledgeable about relationship. This personalized service adds to our commit-
cross-cultural communication in terms of their own cultural ment to nurture a long-term business relationship.
values, behaviors and assumptions, and those of other cultures.
Cross-cultural communication also includes global business Effective cross-cultural communication is necessary to build
etiquettefrom greeting behaviors, exchanging business cards and maintain business relationships. To support their organiza-
and toasting at business dinners to work attitudes, appropri- tions, HR professionals can develop HRM practices and poli-
ate work attire and nonverbal communication. To not cause cies that promote cross-cultural training and reward managers
offense, it is helpful to be aware of differences in greetings, for their part in educating employees on effective cross-cultural
such as the handshake.18 Another differing communication communication.
We should change the situation. Some situations should be accepted as they are.
2. Information Search Gathering facts Gathering ideas and possibilities
3. Construction of Alternatives New, future-oriented alternatives Past-, present- and future-oriented alternatives
From a cross-cultural viewpoint, Paul Evans, Vladimir Pucik Career Perspectives Across Cultures
and Jean-Louis Barsoux, experts in global HR management, Research about cross-cultural perspectives on careers offers
point out that it is global mindseta state of mindthat insights on similarities and differences from cultural and
differentiates global managers. Global mindset is the ability to national contexts. Career development, a part of human
work effectively across organizational, functional and cross- resource planning, is an HRM strategy within talent manage-
cultural boundaries. The strongest mechanism to develop ment. However, Western career attributes and definitions,
global mindset is the international assignment. HR can foster which dominate the career development literature, are not
development of global mindset by ensuring that talented always representative of how people in other cultures view and
employees worldwideno matter their passport countryhave formulate careers. Proactive career behavior by individuals to
equal access to opportunities. Focused learning programs can promote their career plans, for example, is uncommon in high
also promote global mindset. Multinational corporations such power distance cultures, where HR decisions are usually cen-
as Unilever, Johnson & Johnson and General Electric have tralized. Where hierarchical status takes priority, decisions for
Individual Organization
In interacting with others, does national origin have an impact on Do you recruit your employees from the global talent pool?
whether you give equal status to them?
Do employees of every nationality have equal opportunity to climb
Does being in a new cultural setting result in fear, anxiety or to the top of the career ladder?
excitement?
Do you perceive your company as having a universal identity or a
When living in or visiting another culture, are you sensitive strong national identity?
to cultural differences, without becoming a prisoner of these
differences?
Source: Adapted from Gupta, A. K., Govindarajan, V., & Wang, H. (2008). The quest for global dominance: Transforming global presence into global competitive advantage, 2nd edition.
San Francisco: John Wiley & Sons, Inc.
For the first time in history, four generations work side-by-side research shows that people born at the beginning or end of a
in many organizations. The working generations span more generation (referred to as tweeners) can exhibit values and
than 60 years, including so-called Traditionalists, Baby Boom- attitudes from two different generations.5
ers, Generation X and Millennials/Generation Y. All bring
Generalities about generations can provide insight on values
different experiences, perspectives, expectations, work styles
and expectations in the workplace. The oldest generation,
and strengths to the workplace. Despite the perceived genera-
Traditionalists (also known as Veterans, Matures, Depression
tion gap from differing views and potential conflict, organiza-
Babies) grew up following the worldwide economic depression,
tionsand especially HRhave the opportunity to capitalize
with World War II as the major event in their childhood. They
on the assets of each generation for competitive advantage.
view work as a privilege and have a strong work ethic grounded
Predictions in Workforce 2020 (published in 1997) focused on in discipline, stability and experience.6 The Baby Boom genera-
demographic change as a major global force shaping the world tion, born after World War II, is the largest generation in the
economy.1 More than a decade later, SHRMs 2008 Workplace United States and has had a significant impact on societies
Forecast upholds these predictions with key demographic worldwide. Defining events of this generation include the space
trends: (1) the aging population, (2) retirement of large num- race, rock and roll, and womens liberation. Baby Boomers tend
bers of Baby Boomers, (3) generational issues and (4) a greater to be idealistic, driven and optimistic.7
demand for work/life balance. At the same time, the loss of
Different experiences have shaped Generations X and Y. A
talent due to the retirement of older workers will likely drive an
much smaller generation than the Baby Boomers, Gen Xers
increased focus on skills, labor shortages and retention strate-
were known as latch-key children with both parents working.
gies for the current and future workforce.2
They grew up during the time of high divorce rates and mas-
Thus, in their respective industry sectors, HR leaders have the sive job layoffs of the 1980s. They are independent, creative,
opportunity to create competitive success by strategically man- skeptical and distrustful of authority. In contrast, the younger
aging generational differences in terms of differing experiences, generation (known as Millennials, Generation Y, Nexters)
values and expectations. While not inclusive of all generational experienced terrorist attacks in their formative years, including
workplace issues, this article provides perspectives for HR and September 11th, and technology has always been a part of their
organizational leaders on selected key aspects of the multigen- lives. They are confident, team-oriented, patriotic and social
erational workforce and offers recommendations, primarily for minded. Since their parents typically planned their activities,
U.S. organizations. they are accustomed to having structured lives.8
Todays Four Generations An extensive study on generational differences found that lead-
Generally, the concept of a generation is attributed to social ership style preferences are reflected in selected admired leaders
scientist Karl Mannheim from his work in the late 1920s.3 of each generation. Baby Boomers, for example, prefer leaders
Grounded in shared life experiences and defining historical and who are caring, competent and honest, as reflected in their
cultural events during individuals formative years, each genera- choices of social leaders: Martin Luther King and Gandhi.
tion has different collective memories, expectations and values. Generations X and Y want leaders to challenge the system and
As such, a generation is defined as an identifiable group that create change: Ronald Reagan, Tiger Woods, Bill Gates. Each
shares birth years and significant life events at critical develop- generation ranked honesty, competence and loyalty among the
mental stages.4 At the same time, it is very important to avoid top leadership qualities, with honesty being the most impor-
stereotyping people from different generations. For example, tant. For HR and organizational leaders, this means that firms
Millennials 14% and increasing Optimistic, able to multitask, tenacious, Motivational, collaborative, positive,
Born 1981-2000 rapidly technologically savvy, driven to learn and grow, educational, organized, achievement-oriented,
Ages 8-27 team-oriented, socially responsible. able to coach.
The proportion of women and minorities in the workforce will rise By 2020, according to the U.S. Census Bureau, the proportion of women in
dramatically. the workforce will have gradually increased to about 50 percent.
The average age of the population and workforce will rise, and the pool of The continued presence of top-level older employees may cause dissension
young workers entering the labor market will shrink. among their middle-aged subordinates eager for promotion.
The workforce is aging and thus becoming less willing to relocate, retrain or Older workers will need different benefits, such as elder care programs.
change occupations, yet the economy is demanding more flexibility.
To increase workforce participation, firms and governments will need to
Need to recognize the importance of a flexible workforce through company accommodate unconventional working arrangements to encourage people
and national policies (e.g., flexible workforce programs, revised pension to return or remain in the workforce (e.g., parents, older workers).
systems, promotion of retraining and lifelong learning).
The U.S. population and workforce will gradually become more ethnically
Immigrants will represent the largest share of the increase in the population diverse.
and the workforce since World War I.
Sources: Author compilation from several sources.16
diversity that cannot be overlooked: multigenerational diversity. Anand, Sodexo senior vice president and global chief diversity
Today, there are greater numbers of workers from each age officer. This appreciation of generational diversity, and initia-
group that bring both new opportunities and challenges. If tives customized to meet the needs of each generation, allows
organizations want to thrive in this competitive environment of each group to fully contribute and be a part of the growth
global talent management, they need employees and managers and success of the organization. Clearly, organizations that
who are aware of and skilled in dealing with the four genera- proactively use the strengths of different generations in the
tions that make up the workforce. workforce are best positioned for success.
The existence of four generations is a major factor in talent Ethics and Generational Differences
management. In its Competitive Workforce category, A recent SHRM white paper, Ethics and Generational Differ-
SHRMs Human Capital Leadership Awards Program recog- ences: Interplay Between Values and Ethical Business Deci-
nizes organizations with workforce readiness efforts aimed at sions, examined how different generations approach questions
anticipating and meeting current and future business needs of integrity and purpose. The authors point out that with
in a changing economic climate. In 2008, Sodexo, Inc. was a value systems and motivation at the heart of ethicsand
finalist in that category for its innovative strategies in multigen- divergent value systems seemingly inherent within the four
erational talent acquisition and engagement. Since recruitment generational groupsthe existence of varied ethical perspec-
and retention of a multigenerational employee pool are key to tives among co-workers is not a surprise. They emphasize that
Sodexos business strategy, HR leaders at the companys U.S. understanding differing viewpoints on ethics in the workplace
headquarters in Gaithersburg, Maryland, launched a multifac- will help organizations make sound ethical business decisions.18
eted recruitment initiative. For example, Sodexo established a
A common complaint among generations focuses on work
presence on social networking sites such as YouTube and Linke-
ethic. Much of this conflict stems from how the term work
dIn to attract younger workers and created a new recruitment
ethic is defined and interpreted. Traditionalists and Baby
initiative aimed at veterans that translates military experience
Boomers may criticize the two younger generations about
and skills into civilian jobs at the company. As a result, in 2007,
their lack of work ethic, with the oldest generation consider-
there was a 24 percent increase in the number of job applicants,
ing a strong work ethic as demonstrated by being part of the
including a 38 percent rise in minority candidates and a 32
organization (and physically present in the office, in terms of
percent increase in gender diversity.17
actual hours) for long periods of time. Baby Boomers consider
At Sodexo, understanding what drives each generation, and a combination of factors, such as collaboration, teamwork and
what their underlying experiences are, is the key to creating meetings, as evidence of work ethic. In contrast, Generation X
a cohesive work environment where our people feel valued and Millennials see work ethic as working hardoften autono-
and empowered to work together effectively, said Dr. Rohini mouslyand having a positive impact on the company, while
6. To make ethical guidelines relevant to everyone, establish ongoing training Companies that are successful in attracting Millennials are
and support sessions. creative in their culture, HR policies, programs and work
7. Look for commonality among employees of different generations. environment. A survey by Human Resource Executive, in part-
8. Embrace diversity of opinion and methodology. nership with the Great Place to Work Institute, identified 18
9. Err on the side of more communication, such as using more types of media:
Great Companies for Millennials. Facets of corporate cultures
face-to-face meetings, e-mail blasts, etc. sought include:22
10. Remember to respect the dimensions of differing generations (age,
Managements actions match its words.
technological savvy, alternative work experiences, innovation, etc.)
Adapted from: Guss, E., & Miller, M. C. (2008, October). Ethics and generational dif- Employees are appreciated for good work and extra effort.
ferences: Interplay between values and ethical business decision [SHRM white paper].
Retrieved from www.shrm.org.
Employees are involved in decisions that affect their jobs
or work environment.
Engaging the Millennial Generation Employees are treated as full members of the company, no
The Millennial generation challenges organizations, HR and matter the position.
managers on many levels. The literature points out that this
generation can be high maintenance, and yet, when compa- Promotions go to those who best deserve them, and the
company culture is a team or family environment.
nies provide the resources and flexibility to be creative, Mil-
lennials also can be highly productive. To attract, engage and Marriott International Inc., for example, offers workplace
retain Millennials, organizations must understand what types flexibilitya benefit highly sought by young employees. In its
of work environment and learning experiences they want. Each Teamwork Innovations program, employees are encouraged
generation ranked honesty, competence and loyalty among to identify and eliminate redundant work. At one Marriott
the top leadership qualities, with honesty being the most hotel, teams were able to cut 40 percent off the time that it
important. took to turn over a shift and, with this time savings, were
In India, the concept of hierarchy has traditionally strongly successful include (1) collaborative discussion, decision-mak-
influenced business decisions, such as strategy, promotions and ing or problem solvingproviding an opportunity to express
communications. Yet, in todays Indian workplace, older work- respect and inclusion of all employees; (2) training managers
ers view hierarchy as more important than do people of the on dealing with generational differences; (3) teambuilding
younger generation.32 activities; and (4) creating mentoring programs to encourage
workers of different generations to work together and share
Additionally, it should be noted that the concept of the Baby
experiences.35
Boom generation exists only in the developed world, with
other nations not having the concerns resulting from this 2. Succession planning: HR and organizational leaders must be
large generation. For example, many countries (e.g., Latino aware of the internal talent pool, encompassing all genera-
Christian, Arab and African nations) did not have a significant tions, from which possible successors can be selected and
reduction in fertility rates, nor did they embrace factors such as developed. Regarding age-based demographics, HR needs to
access to contraception, the changing role of women in society have a basic understanding of the different values and work
and more recent focus on work/life balance.33 attitudes of each generationimportant information for
cultivating and sustaining a preferred corporate culture.36
Finally, for the multigenerational workforce in Europe, the
literature is rather limited. However, a new study from the 3. Mentoring: The goal of this strategy is to help ensure the
Journal of Managerial Psychology explored workplace learn- transfer of knowledge from one generation to the next. As
ing, organizational commitment and talent retention among older workers look toward retirement, mentoring can be
European managers across generations. The results show that an effective vehicle to capture organizational knowledge.
younger generations have stronger learning orientation and Structured mentoring programs are well suited for knowl-
lower organizational commitment than older workers. Impor- edge transfer. An important step is to survey the younger
tant practical HR insights include focus on offering leader- workers, learn their goals and developmental needs, and then
ship development, fostering learning goals and organizational pair them with more experienced employees. Also, using a
commitment, and managerial emphasis on learningall key variety of mentoring models is helpful. Examples include
retention factors for the younger generations.34 one-on-one mentoring sessions, senior leadership discussion
panels, group mentoring programs and even speed mentor-
ing, where employees sit with organization experts and ask
Three Key Management Strategies questions. Another model increasingly used is senior staff
1. Organizational communication: This key strategy is impor-
and leaders coaching younger employees in the onboarding
tant to retain talent and avoid potential conflict. A SHRM
process. This process begins in the hiring period and can
survey revealed a number of ways to successfully work with a
last for up to a year, giving younger workers direct attention
multigenerational workforce, with communicating infor-
and professional development early in their career.37 The
mation in multiple ways, such as oral and written, as the
following mini-case study presents a successful mentoring
most successful. Different generations have varying levels of
program.
comfort with technology, such as e-mail, while others prefer
face-to-face communication. Other approaches found to be
In a closely connected world, todays economics have changed from its people to compete efficiently in existing and emerging
how organizations do business. The pivotal point of competi- markets.3
tive advantage now focuses on attracting, developing and
Table 10.1 Top Global Expansion Business Practices
keeping the right talent. As Dr. Vladimir Pucik, professor of
strategy and international HR at IMD Business School, states, QQ Evaluate policies and programs to ensure organizational objectives are met.
Ask any senior executive in a company that operates across QQ Align global business objectives and needs.
national boundaries, irrespective of national origin, about
QQ Identify a group of qualified potential candidates.
the major source of tensions in his or her job, and the answer
QQ Plan for long-term career paths.
most likely will be the samethe ever-increasing complexity of
business problems he or she needs to tackle[] Complexity in QQ Establish criteria to measure assignment success.
the competitive environment drives the need for more complex QQ Require completion of a minimum of one assignment as a condition of executive
advancement.
business strategies, building and sustaining global organiza-
Source: Adapted from Brookfield Global Relocation Services. (2010). Global relocation
tional capability [] and the critical building blocks for this trends: 2010 survey report. Woodridge, IL: Author.
capability are all very closely linked to people, their mind-set,
and behaviorscreating an important new domain for the HR
function.1 Thus, the increasing fast pace of change requires that compa-
nies thoughtfully strategize their global workforce planning to
This article addresses many aspects of global talent essential remain competitive. According to the 2010 McKinsey Global
for proactive global HR leadership, from global mindset and Survey, executives worldwide believe that the most important
cultural adaptability, to staffing mobility trends, and safety and global development in the next five years is the shift of the
security. Beyond the articles are areas such as international global economic activity from developed to developing econo-
employment law, immigration/visas, unions, benefits and mies with growing number of consumers in emerging markets.
compensation practices, tax implications, pensions, and global Corporate challenges center on being able to find the right
HRIS systems. talent to meet the companys strategic goals, particularly in
view of low birth rates and the aging workforce in many devel-
Global Business Practices and Global Talent
oped economies. The survey found that less than 40 percent
Global talent is rising to the top of the talent management
of executives were confident about having the talent needed in
agenda for HR professionals and their organizations. A leader
the next five years to meet strategic goals. Many are looking for
in organization culture change, Dr. Donald T. Tosti notes
talent in three areas: emerging markets (44 percent), new talent
that global competition is creating an evolutionary process
entering developed labor markets (41 percent) and talent from
in which a common core of business practices and behaviors
developing markets moving to emerging markets (35 percent).4
will guide the most successful organizations. One key differ-
Ultimately, the strength of an organization is its global human
ence between biological evolution and this business evolution
capital and how it is optimized.
is that business leaders can take action now to be sure their
organizations will be among those that thrive in the global Global Mindset
environment2 (see Table 10.1). As highlighted in the Towers A global mindset is the underlying foundation essential for suc-
Perrin study, Winning Strategies for a Global Workforce, the cess in todays marketplace. According to management scholars
boundaryless business environment will continue to drive Evan, Pucik and Barsoux, global managers are defined by
changes in where a company does business, and what it needs their state of mind. That is, a global mindset is what allows
Anti-corruption Training Explains what it means to QQ Group Dependence: Degree of importance of the individual or group
act as an agent or representative for the company. Every QQ Hierarchy: Consideration/perception of rank in relationship to others
country and locale has an accepted culture of conduct- QQ Receptivity to Diversity: Country of origin, race, gender, race, religion, ethnicity
ing business. The information contained in this session QQ Relationships: Important for business relations/interactions
demonstrates the impact of conducting business in a fair
QQ Space: The degree of space and privacy needed for personal comfort
and equitable manner and how the morale, productiv-
Status attainment: Perceived level of success
ity and profitability of the company are driven by the
QQ
Employee
Relations and
Organizational
Development
Chapter 11
Leadership Development: Optimizing Human Capital for
Business Success
Many organizations continue to jump from one quick fix to the determined. At Colgate-Palmolive Company, for example,
next, never stopping to truly understand the issues of leadership leadership is governed by three core valuescaring, continuous
and the changing dynamics that are at work in the market- improvement and global teamworkand the company carefully
place. 1 monitors how development fits with its business model and
objectives.7
In todays changing times, effective leadership is a key compo-
nent of organizational success. With the impending retirement Leadership development is fraught with challenges and
of the baby boom generation, changing demographics and opportunities (see Table 11.1). Todays fiercely competitive
limited resources, leadership development is rising to the top marketplace requires staunch devotion to excellence and the
as an organizational priority. Corporate investment in leader- ability to see the big picture that affects the changing face of
ship development in 2000, for example, was estimated at $50 leadership. For example, successful organizations have moved
billion. At the same time, a new paradigm is emerging, shifting from security to pay for performance in knowledge-intensive
from authoritative leadership and position power to collab- work environments that demand adaptability, innovation and
orative leadership and knowledge power.2 And organizations flexibility. Therefore, firms that produce effective leaders who
are increasingly under pressure to show return on investment engage peoples passion for a better tomorrow will truly foster
for training and development. Reflecting business needs, the business success.8
SHRM 2006 HR Strategic Management Survey Report points
Table 11.1 Five Dilemmas of Leadership Development
out that 74 percent of HR professionals perceive leadership
development as one of the core areas where HR can make a 1. T
he extent to which and the way in which leadership can really be taught.
strategic contribution.3 From a strategic standpoint, therefore,
2. The changing nature of leadership.
HR is ideally placed to lead the way to foster talent for future
3. The comparative nature of leadership.
leaders.
4. T
he measurement and evaluation of leadership development interventions.
Linking Leadership Development 5. T
he integration of leadership programs with other organizational systems
with Business Success such as career development or reward systemsand the degree of linkage
Leadership development is defined as formal and informal with business strategy.
training and professional development programs designed Source: Adapted from Storey, J. (2004). Leadership development through corporate
universities. Training & Management Development Methods, 18, 4, 441+.
for all management and executive-level employees to assist in
developing the required leadership skills and styles to deal with
a variety of situations.4 Increasingly, organizations are linking Critical Leadership Skills
leadership development with business value and organizational In the discussion and context of leadership development,
success. A recent study found that the more organizations do there are some important points to keep in mind. First, the
toward developing leaders, the greater the financial success.5 terms leader and manager are often used interchangeably,
When linked with organizational strategy, leadership develop- although the literature points to differences between leadership
ment programs and leadership competencies effectively support and management. The primary difference, simply put, is that
profound long-lasting change.6 However, according to a recent managers control and solve problem whereas leaders motivate
survey of globally recognized leaders responsible for leadership and inspire. Similarities include creating relationships to accom-
development, leadership development must first be aligned plish an agenda and working to ensure that people get their
with the business of the organization before its value can be jobs done.9 Second, there is debate regarding whether leader-
Chapter 11: Leadership Development: Optimizing Human Capital for Business Success 87
ship can be taught. The overarching agreement, however, is who they are, particularly when under stress. Common causes
that the learner must have a personal commitment to learning of derailment are arrogance, bullying, self-centered ambition
the necessary leadership skills, behaviors and competencies and and betrayal of trust. Certain flawed behaviorssuch as
then exhibiting these behaviors.10 Third, there is also debate arrogance, emotional instability and abrasivenessare more
about whether leaders are made or born.11 damaging at upper-level positions, which have high stakes
and thus potentially higher costs of failure. Solutions include
According to the Center for Creative Leadership, resourceful-
getting feedback, using a coach, analyzing potential factors of
ness, composure, straightforwardness, decisiveness and build-
derailment (e.g., business failures, stress from events, problems,
ing and mending relationships are essential leadership skills for
environments) and using small failures to prompt awareness
business success.12 In contrast to other skills, such as technical
through learning and change.18
skills that change over time, intangible skills are of enduring
value. Additional key soft skills include initiative, communi- Finally, since todays leadership roles are increasingly com-
cation, collaboration/teamwork, people development/coach- plex and diverse, the role itself determines certain key skills.
ing, personal effectiveness/personal mastery, planning and Operational rolesthe more traditional management posi-
organizing, and presentation skills.13 The Gallup Leadership tionsrequire self-confidence and flexibility. Advisory roles
Institute Summit on Authentic Leadership points to the impor- that provide support in a specific area (e.g., HR or IT) require
tance of leading with authenticity. Authentic leaders, highly excellent people skills, influence and organizational knowledge.
aware of how they behave and think, positively affect sustained Collaborative roles that accomplish work through others are
performance and are optimistic, confident and resilient with highly proactive, requiring tenacity at gathering information.
high principles, values and ethics.14 Talent management skills, Overall, the more strategic and sophisticated the role, the wider
including diversity management across cultures, genders and the essential repertoire of leadership skills.19
age groups, in conjunction with strategic thinking for global
competition and technology application, are also essential.15 An Integrated-Solution Approach
Consequently, when seeking future senior-executive mate- to Leadership Development
rial, organizations often value personal leadership traits more Many organizations struggle to find the right strategy to
highly than business-oriented capabilities. Thus, being open to bridge the leadership gap. Some focus on a single-method
change and growth, having the courage to make decisions that approach (e.g., classroom learning) while others use the multi-
feel right, building strong relationships both internally and solution approach with a hodgepodge of programs and no
externally, and motivating and inspiring others are necessary strategic process in place. In todays complex business environ-
skills for success.16 ment, the integrated-solution approach, with its holistic and
strategic focus, works best to (1) transfer vital skills and ideas
One of the most critical skills in todays competitive mar-
to leaders; (2) enhance performance; (3) reinforce corporate
ketplace is building and maintaining trust. Building
culture and values; (4) drive business results; and (5) adapt to
trustthrough transparency, honesty, communication and
changing business realities. One of the advantages, for example,
actionsdoes not happen overnight. Being viewed as credible
is the focus on critical moments in the leadership lifestyle, such
and trustworthy requires that one deliver on agreements or
as the first time being a people manager or moving into an
explain why it is not possible, be clear about expectations and
executive position. During transitions, leaders need to learn
take responsibility for ones mistakes. An ongoing dialogue is
new ways of thinking about their roles or risk derailing or
essential. For example, it is important to spend time getting
failing. The integrated approach offers a synergistic, strategic
to know the desires and hopes of each person on the team. If
and sustainable pathway for organizations to build leadership
trust is violated through actions or in the eyes of the employee,
capacity. Alignment to organizational strategy with long-term
the leader must work it out directly and quickly. Along with
planning for best use of resources requires serious commitment
actions, saying I am sorry and Ill fix it goes a long way
on the part of the organization, senior leaders and HR (see
toward reestablishing trust. Trust leads to sustainability, por-
Table 11.2). With its comprehensive strategy, the value of the
table both domestically as well as globally.17
integrated-solution approach is that it focuses on the selection
Poor leadership skills, however, along with unethical behavior of appropriate development options and, most importantly,
and incompetence, contribute to leadership failure and can aligns them with business goals and objectives, ensuring that
be costly (e.g., poor company reputation, loss of customers, organizations can be proactive and responsive because they are
increased turnover). Leaders fail because of how they act and aware of what is happening in the business.20
the firms ability to effectively accomplish this goal. After 5. The use of succession planning to reinforce the corporate culture.
much reflection, the HR executive realized that the organi- 6. A process that focuses primarily on leadership development.
zation was not ready for this type of solution because it did 7. A process that is a real organizational priority.
not yet have a culture in which leaders were open to receiv- Source: Berchelman, D. K. (2005, Fall). Succession planning. The Journal for Quality and
ing feedback that an assessment center would generate. Participation, 28, 3, 11-13.
Chapter 11: Leadership Development: Optimizing Human Capital for Business Success 89
individuals as leaders, team leadership and/or individuals who middle management, a company can develop a broader talent
can lead the entire organization.27 pool. A transparent succession planning process also helps
to identify additional talent. For example, at Eli Lilly, a top
Developing the Leadership Pipeline
company in succession management, the HR managers and the
Talent development is the most critical aspect of managing
succession management team can access the company intranet-
human capital. Research shows that best companies for lead-
based succession management tool to consider an employees
ers, working hand-in-hand with succession planning, create a
current level, potential level, experience and development
leadership pipeline through (1) encouraging leaders at all levels
plans.30
to create work climates that motivate all employees to perform
at their best; (2) making leadership development a priority for Ensuring a diverse mix of people in the leadership pipeline
everyone, not just an HR issue; (3) providing job shadowing such as women and racial/ethnic minority groupsfurther
opportunities for mid-career managers; (4) helping leadership adds to available skills. However, research shows that organiza-
teams as well as individual leaders work better together; (5) tions are not optimizing leadership development opportunities
ensuring high-potential individuals have 360-degree feedback; for diverse groups. Common barriers to minority advancement,
(6) providing mid-level managers with leadership development for example, are the scarcity of mentors and personal networks,
early in their careers; and (7) providing external coaches to the lack of visible assignments and significant line experience,
senior managers.28 By using a number of leadership develop- and, for women in particular, family responsibilities. Solutions
ment options, companies can foster a more inclusive and exten- include holding managers accountable for training on diversity
sive group of potential leaders (see Table 11.4). and associated attitudes and behaviors as well as progress on
diversity metrics. Organizations can also provide work/life
As highlighted in the SHRM/Catalyst Employee Development
support to their workforce. However, research shows that only
Survey Report, 80 percent of organizations use a number of
38 percent of companies have formal diversity and inclusion ini-
initiatives to develop future leaders (e.g., formal coaching, job
tiatives, and of these, 25 percent offer leadership development
rotation, high-visibility assignments, formal career mentoring,
programs to women and racial/ethnic minority groups. In
leadership forums, identification of high potentials, succession
general, formal career mentoring for women (14 percent) and
planning). In general, large organizations use leadership train-
racial/ethnic minority groups (13 percent) is underutilized.
ing (88 percent) and development planning (79 percent) more
Large organizations with diversity initiatives and more staff
than medium-sized organizations (81 percent and 76 percent,
devoted to diversity are twice as likely to use formal coaching
respectively) and small organizations (50 percent and 57
and high-visibility assignments for women and racial/ethnic
percent). And 49 percent of organizations effectively identify
minority groups than are small and medium organizations.31
high-potential employees, while 25 percent do not.29 Casting
a wide web to expand the leadership pipeline translates into Yet developing more and better leaders is not the sole focus of
more potential talent. For example, at Sonoco Products, a large the leadership pipeline. Broadly, certain themes highlight the
manufacturer of packaging products, the succession process state of leadership development today: (1) leadership develop-
considers lower-level employees with leadership potential as well ment increasingly occurs within the context of work; (2) there
as senior management. By identifying linchpin positions (those is critical reflection about the role of competencies in leader-
essential to the long-term health of the firm) and including ship development; and (3) companies are revisiting the issue
Source: Weiss, D., & Molinaro, V. (2006). Integrated leadership development. Industrial and Commercial Training, 38, 1, 3-12.
Chapter 11: Leadership Development: Optimizing Human Capital for Business Success 91
A survey of CEOs and 1,000 senior executives of more than 75 intelligence is a relatively new concept, described as the ability
companies in 28 countries highlights that global literacy is the to switch national and/or ethnic contexts and quickly learn
new leadership competence required for business success. To new patterns of social interaction with appropriate behavioral
be globally literate means seeing, thinking, acting and mobiliz- responses. Linking global business success and future career
ing in culturally minded ways. Two key predictors of success paths with cultural competence is an important area for cor-
in the global marketplace are leadership development across all porate trainers to emphasize, so that managers are motivated
levels of the company and valuing multicultural experiences/ to learn new behaviors and skills and understand the benefits
competencies. As the world becomes more economically inte- of learning from different cultures. Yet while role plays, case
grated, the ability to value and leverage cultural differences is studies and simulations are helpful to develop cultural intel-
one of the top global literacies.41 ligence, it is immersion in the culture itself that truly makes the
difference.43
Evans, Pucik and Barsoux, experts in global HR management,
point out that it is the global mindseta state of mindthat For multinational corporations, moving talent across organiza-
differentiates global managers due to their ability to work tional silos via succession management helps develop leaders in
effectively across organizational, functional and cross-cultural different businesses and geographies. Procter & Gamble is par-
boundaries. HR can foster development of the global mindset ticularly rigorous about global talent management, requiring a
by ensuring that talented employees worldwideno matter prior overseas assignment for candidates for president of a busi-
their passport countryhave equal access to opportunities ness line. Some companies are exploring actions to help speed
(see Table 11.5). The strongest mechanism to develop a global up global leadership development. A relatively new approach is
mindset is the international assignment. In addition, multi- sending high-potential employees on foreign assignments early
national corporations, such as General Electric, Unilever and in their careers for a period of six months to a year. However,
Johnson & Johnson, have effectively used in-house experiential 86 percent of companies that use this development method
action-learning programs for a broad cross-section of high- have rated it as not very effective or only moderately effective.
potential employees to speed up the development of the global Another innovative approach is to move experience to people,
mindset.42 rather than people to experiences, by reengineering develop-
ment opportunities (e.g., company action-learning projects for
international collaboration experiences). Yet while it may seem
Table 11.5 Most Effective Practices to Develop Global Business like a good idea to accelerate development, complex leader-
Leaders
ship and cultural lessons are often best learned in stages. It
1. Longer-term international assignments. takes time to truly develop a global leader, from working with
2. International cross-function team participation. different cultures and understanding complex relationships to
3. Internal management/executive development programs. developing cultural skills and attitudes to behave effectively in
4. Development of global management teams.
a multinational context.44 Today, with the dramatic economic
growth in Asia-Pacific in recent years and a forecast that by
5. Mentoring and/or coaching.
2015 this region will account for 45 percent of the worlds
6. International leader development centers.
gross domestic product, much of the attention of the business
7. 360-degree feedback. world has been focused on Asia-Pacific. Local and interna-
Source: Kramer, R. J. (2005). Developing global leaders: Enhancing competencies and tional companies are working hard toward effective leadership
accelerating the expatriate experience. New York: The Conference Board.
development. A major challenge is the current limited supply of
leadership capability in contrast to the anticipated need and the
Thus, in todays global marketplace, effective cross-cultural resulting severe competition for talent. For example, in some
leaders are those who are able to behave differently in differ- sectors, Bangalore and Shanghai have annual turnover rates
ent cultures and respect different values, work ethics, business greater than 40 percent. International organizations are seek-
protocols and the cultural diversity of their workforce. Suc- ing to reduce the number of expatriates and localize leadership.
cessfully leading organizations in the 21st century requires Key benefits of local leadership are speaking the local language
emotional and cultural intelligence to understand regional and and understanding the nuances of Asian cultures. Other drivers
ethnical cultural diversity of global working environments and to develop leaders in Asia-Pacific include substantial growth
cross-cultural communities worldwide. The concept of emo- prospects for business, availability of raw talent, expansion of
tional intelligence has been around for some time. Yet cultural learning infrastructure in commercial and government facets,
Chapter 11: Leadership Development: Optimizing Human Capital for Business Success 93
Table 11.6 Six Trends for Leadership Development
In todays marketplace, where companies seek a competitive employee and employer. Employees are expected to come to
edge, motivation is key for talent retention and performance. the workplace with the intrinsic motivation and desire to be
No matter the economic environment, the goal is to create a successful, be value-added and contribute to the obtainment
workplace that is engaging and motivating, where employees of an employers vision. Conversely, it is incumbent upon the
want to stay, grow and contribute their knowledge, experience employer to provide resources, opportunities, recognition and
and expertise. a cohesive work environment for employees to be successful.
evolutionary psychology and neuroscience, are: (1) acquire 3. Find out directly from employees what motivates them.
(obtain scarce goods, including intangibles such as social 4. Personally congratulate employees for their excellent work.
status); (2) bond (form connections with individuals and
5. Recognize the needs of employees.
groups); (3) comprehend (master the world around us); and
6. Establish good channels of communicationbe (physically)
(4) defend (protect against external threats and promote
accessible and available.
justice). Using these four drives, Nitin Norhia, Boris
7. Use performance as the basis for promotion.
Groysberg and Linda-Eling Lee developed a new employee
model for motivation, published in Harvard Business Review. 8. Have a promote-from-within policy.
They conducted two major studies to find out what actions 9. Publicly recognize employees for good work (if culturally
managers can take to satisfy these drives and increase appropriate to do so publicly).
employee motivation. The study surveyed about 5,000 10. Include recognition as part of morale-building activities to
employees in two global companies (a financial company celebrate group success.
and an IT services firm), as well as employees from Fortune 11. Have clear goals.
500 companies, about commonly measured work indicators:
12. Foster a sense of community.
engagement, commitment, satisfaction and intention to quit.22
Source: Adapted from Top 20 ways to motivate employees. (September 2008).
SuperVision, 69/9, 26.
These studies revealed that organizational levers of
motivation can influence certain drivers and motivational
indicators. For example, a reward system can satisfy the Recognition and Rewards Programs
drive to acquire by discriminating between poor and good As emphasized earlier, for employees to remain motivated,
performers, tying rewards to performance and providing recognition is essential. Direct line managers have one of
Chapter 13: Performance Management: Getting It Right from the Start 103
Finally, while companies worldwide want their employees to 1992, 1994, 1996) representing a combined total of 2,800
perform well across the board, there is an increasing focus on firms. As with the previous study, this survey compared specific
key talentthose critical few employees who, by virtue of their HR management policies and practices determined to influence
skills, will and do play an important role in creating share- the quality of high-performing employees over an extended
holder value. How will organizations go about identifying, period of time. Survey results for the bottom 10 percent
rewarding and retaining this talent? These are the individuals of firms (42) versus the top 10 percent of firms (43) were
who form and maintain pivotal relationships with customers, compared. At the conclusion of the study, the results totaled
fulfill the vision for the organization, lead and motivate others, $158,101 versus $617,576, respectively, in sales per employee,
establish goals, remove obstacles, identify resources and tools, versus $3.64 to $11.06 market value to book value per share of
and know when its time to move new leaders forward who can stock, and a turnover rate of 34.09 percent to 20.87 percent,
make a difference. respectively. This distinction represents a 391 percent return
on investment for the top 10 percent of firms. How was this
Making the Business Case
accomplished? According to the authors,
HR practice leaders have long held the belief that a com-
panys performance management system can lay the founda- the most striking attribute of these comparisons is not
tion required to support the strategic planning efforts of the any one HR management practiceit is not recruit-
organization. Although the empirical research to support these ing or training or compensation. Rather, the differences
hypotheses and demonstrate the economic impact of perfor- are much more comprehensiveand systemic the very
mance management activities is limited, there are credible best firms in our sample are much more likely to have
research studies available to amply demonstrate what can be developed a clear strategic intent and communicated it
accomplished when a qualified plan is placed in motion. Four effectively to employees.5
of these studies are highlighted here.
Current Performance Management Practices: Center for
Corporate Culture and Performance Study Effective Organizations/University of Southern California
This groundbreaking 11-year study included more than 200 This 2003 survey of 55 HR managers from medium and
companies from 22 industries and compared financial and large companies, mostly members of the Fortune 500, was
operational performance measures of companies with perfor- conducted by the Center for Effective Organizations at the
mance-enhancing cultures to those companies whose cultures University of Southern California (USC). As noted by the
did not exhibit performance-enhancing characteristics. It dem- authors, there is little research data to establish the impact of
onstrates how unwritten rules and/or shared values can either many practices recommended in the writings on performance
lead to the success or to a failure to adapt to changing markets management, nor is there much information available to HR
and the environment (Table 13.1).4 As the authors point out, practice leaders about what companies are actually doing at
fundamental to the process of establishing a performance- this time. This study attempts to bridge the gap between these
enhancing culture is effective leadership. two voids. A representative sampling of the data collected and
resulted is provided in Table 13.2.6 This particular dataset
suggests that senior management plays an important role in
Table 13.1 Impact of Performance-Enhancing Culture on the establishment of the performance management system in
Corporate Performance
most companies. However, the findings also indicate that, as a
Organizations Organizations Without general rule, there is little accountability in relation to how well
With Performance- Performance-Enhancing
Enhancing Cultures Cultures managers may or may not do appraisals, nor are there calibra-
Revenue growth 682% 166% tion meetings in use for comparison purposes to ensure the
Employment growth 282% 36%
validity of the system companywide. Interestingly, there is a
Stock price growth 901% 74%
strong direct relationship between leadership by senior manage-
Net income growth 756% 1%
ment and ownership of performance by line management, and
in favor of the use of calibration meetings as part of the perfor-
From Corporate Culture and Performance, John P. Kotter and James L. Heskett, p. 78
mance management system. That is, the stronger the leader-
ship by senior management, the more likely line management
High-Performance Work System Index took ownership of their performance. As such, the authors
The second study, which was based on 429 firms in 1998, concluded that senior and line management ownership in the
is actually the fourth biennial survey (i.e., prior survey years: performance management system should be fostered, to include
Perf. Management
Little or No Some Moderate Great Very Great System Differentiation
Extent Extent Extent Extent Extent Mean Effectiveness Effectiveness
Note: For Correlation Coefficients * = Significant at the .05 level. ** = Significant at the .01 level. *** = Significant at the .001 level.
Reprinted from Current Performance Management Practices by Lawler, Edward E. III and McDermott, Michael with permission from WorldatWork, 14040 N. Northsight Blvd., Scottsdale,
AZ 85260; phone: (877) 951-9191; fax: (480) 483-8352; www.worldatwork.org, 2003, WorldatWork. Unauthorized reproduction or distribution is strictly prohibited.
Chapter 13: Performance Management: Getting It Right from the Start 105
study ranks participants based on eight key attributes; a ninth establishing an effective performance management system and
is added for the Global Most Admired Companies Study (see getting it right from the start.
Table 13.3).8 A companys final score is the average of all the
Critical Success Factors:
scores that the company receives on the various attributes. If Mirror your corporate culture and valuesEnsure that the
the financial indicators are separated, four out of the eight or
core values and beliefs important to your organization are
nine remaining attributes speak to what the human resources fully integrated into your performance management system.
or the human capital assets contribute to the organization: Design development and planning phaseMake provi-
innovativeness, the overall quality of the management, the sions for executive involvement by having visible CEO
ability to attract and retain talented people, and the quality of and senior management support from the outset. This
the products or services. The success of each of these factors will facilitate buy-in and companywide acceptance for
is ultimately dependent on the people that are engaged, the the process. Include management and employees in the
opportunities for growth and development offered to them, design phase to ensure that they understand the process
and the degree of focus the organization is able to maintain from the ground floor up and are active contributors.
over time. But, getting back to the original questionover the Focus on the right company performance measuresAgree
last five years, shareholder returns for AMAC have been 26 as a team on those vital few measures (the core 10 to 20)
percent versus 11 percent for their peer companies, or two and that will give your organization a clear line of sight and the
a half times the return. highest degree of confidence it needs to determine how
well it is doing in relation to major goal achievement. These
Table 13.3 Fortune Survey of Most Admired Companies
are the measures that should be shared with line manage-
Eight key attributes:
ment and synchronized with other reporting processes
to keep the entire organization informed of its progress
1. Innovation
in relation to all other supporting goals and objectives.
2. Quality of management
Link job descriptions to the performance manage-
3. Long-term investment value ment systemEnsure that your employees can see the
4. Social responsibility direct relationship between the job competencies they
5. Employee talent are required to bring to the job, their job descrip-
tions, and the goals and objectives targeted in their
6. Quality of products or services
performance plan; if the link is unclear, this document
7. Financial soundness
should be brought into alignment and re-visited at
8. Use of corporate assets
least annually thereafter at each performance review.
Global organizations only: Differentiate performance fairly and objectivelyThe
9. Effective global business performance ability to differentiate performance is critical. Performance
differentiation requires the appraiser to acknowledge that
there will, in all likelihood, be gradations of employee
Getting It Right from the Start performance. For example, the vast majority of employees
A number of parallels can be drawn between the findings of may perform their jobs according to expectations based
the AMAC study, in particular, and the research studies pro- on their level of experience and time in service. However,
vided earlier in this article. There is no question that there are some may far exceed expectations and others may fall
many paths that can be taken and serious commitments made far short of required expectations. Companies are more
to the design, development and implementation of a formal likely to achieve the results that they desire when they are
performance management system within ones organization. conscientious about assessing the talent of their employees
There are no one-size-fits-all solutions for any organization. fairly and objectively in accordance with clearly delin-
Each organization is unique and must find its own niche in eated standards of performance and/or in terms of relative
the marketplace. However, most would agree that whether contribution (i.e. essentially compared to the contribu-
our organizations are large or small in revenue or in human tion of others) that can be defended by the organization.
capital, there are certain fundamental criteria that could apply Train managers in performance managementMake
to all equally. The following critical success factors are recom- an upfront investment in training to ensure that manag-
mended as ground zero for all organizations serious about ers have the skill sets required to participate fully in the
Chapter 13: Performance Management: Getting It Right from the Start 107
and other key human capital asset investment programs. As gradations of performance used as common reference points or
such, the implementation of such programs will require careful anchors for rating employees on various job dimensions. Devel-
planning and integration, to include a provision for ensuring oping a BARS assessment tool is expensive and time-consum-
that they are meeting the needs of the organization philosophi- ing. It is based on extensive job analysis and the collection of
cally, strategically, and in full compliance with all internal and critical incidents (examples of very good and bad performance
external company requirements. Examples of performance information) for a particular job.
appraisal systems include:
360-Degree Feedback
Graphic Rating Scales (GRS) 360-degree feedback is the process of collecting perceptions
GRS lists a number of factors, including general behaviors about a persons behavior and the impact of that behavior
and characteristics (such as attendance, dependability, quality in the workplace from that persons work associates. These
of work, quantity of work, and relationships with people) on individuals typically include an employees supervisor and other
which an employee is rated by the supervisor. Supervisors rate
members of line management, direct reports, fellow co-work-
individuals on each factor, using a scale that typically has three
ers, internal and external customers, and vendors and suppliers.
to five gradations (e.g., unsatisfactory, marginal, satisfactory,
Other names for 360-degree feedback are multirater feedback,
highly satisfactory, outstanding). Thus, the system allows the
multisource feedback and group performance review. This form
rater to mark the performance of an employee on a continuum.
of assessment is favored, in particular, for employee develop-
Because of its simplicity, graphic rating scales tend to be one of
ment purposes.
the most frequently used forms of performance appraisal.
Management by Objectives (MBO)
Ranking
MBO is a process through which goals are set collaboratively
Ranking consists of listing all employees from highest to lowest
for the organization as a whole, various departments and/
in order of performance. The primary drawback of the ranking
or subfunctions, and each individual member. With MBO,
method is that the extent of the differences in performance
among the individuals is generally not well defined. Points may individuals are evaluated, usually annually (although interim
be assigned to indicate the size of the gap to overcome this meetings to certify progress are recommended), on the basis of
drawback. how well they have achieved the results specified by the goals.
MBO, or goal setting, is particularly applicable to nonroutine
Forced Distribution jobs, such as those of managers, project leaders and individual
In forced distribution, the ratings of the employees in a par-
contributors.
ticular group are disbursed along a normal bell-shaped curve.
The supervisor would apply a certain percentage of the ratings Certifying Your Performance Management System
within his or her group to each performance level on the scale, Any organization making a concerted commitment to perfor-
based on the number of employees within his or her group. In mance management has made a significant investment in time,
order for this method to be fair and equitable, it must assume effort and resources. As such, it will be crucial that this system
that the widely known bell-shaped curve exists in a given group be assessed on a periodic basis, just like any other resource of
in relation to job performance. As a general rule, the spread of value in the organization.
performance appraisal ratings does not typically resemble the
normal distribution of the bell-shaped curve. Instead, 60 per- The following self-diagnostic is offered as a resource in this
cent to 70 percent of the workforce of an organization rates in effort. This tool can be tailored to meet the particular needs of
the top two performance levels. While this pattern could reflect your organization.
above average to exceptional performance on the part of many Periodic System Assessments
employees, it could also reflect leniency bias, i.e., a tendency by Is your existing performance management system (PMS) meet-
the supervisor to rate at the high end of the rating scale. ing the criteria set by your organization? An annual audit of
Behaviorally Anchored Rating Scales (BARS) your performance management system should be performed to
BARS attempts to assess an employees behaviors instead of ensure that it is aligned with its culture and business strategy.
characteristics. Descriptions of possible behaviors are matched Using a graphical rating scale of 1 (strongly disagree) to 5
against those that the employee most commonly exhibits. The (strongly agree), rate your performance management system in
assessment tool contains sets of specific behaviors that represent relation to the following statements:
ues; it reflects our desired company culture. Sharing data across HR and other business ap-
Our PMS has the full commitment and active partici- plications (including pay, learning and develop-
pation of our CEO and senior management team. ment, workforce, and succession planning).
Our business strategy is clear, including our key business Providing the necessary level of data se-
drivers and the metrics used to track them (e.g., financial, curity and archiving.
operational, employee engagement, customer and client). Our PMS is capable of real-time analysis of perfor-
Our managers understand how to cascade our company mance data to identify trends in relation to:
goals down through the organization to ensure that they Performance differentiation.
Individual goals are truly linked to our busi- Performance gaps/developmental needs.
ness drivers, and effective two-way commu- Our internal business partners are able
nication links are clearly established. to access and use the PMS.
Our performance appraisal process distinguishes between Upon completion of the self-assessment, you should have a
observable behavioral dimensions and the frequency good starting point to begin to weigh the strengths and weak-
of those behaviors (examples: appraisals based on core nesses of your performance management system.
competencies or the mastery of certain behaviors).
In Closing
Our PMS incorporates feedback from mul-
As noted in the introduction, if an organizations performance
tiple sources (e.g., 360-degree feedback and/
management system is effective, it will be a key building
or another form of multirater feedback).
block to its human capital management system. It should serve
Our PMS outlines clear standards of performance and
as the basis for accurate measures of individual performance
rewards eligibility for high performers, solid perform-
and thus individual rewards. It should be designed to provide
ers and marginal performers in the following scenarios:
feedback to employees about their strengths and weaknesses
Merit increases.
and, therefore, recommendations on developmental opportuni-
Annual incentives.
ties that will impact career progression for the employee and
Long-term incentives.
succession planning for the organization. It should also serve as
Discretionary incentives.
a viable feedback mechanism regarding training and develop-
Our PMS provides an ongoing compre-
ment requirements for all competency and skill levels through-
hensive training program for:
out the organization. Finally, it should be the central means by
Managers conducting performance appraisals.
which performance challenges and opportunities are identified,
Individuals being appraised.
solutions are implemented and the effectiveness of these efforts
Our PMS provides additional support services for profes-
assessed.
sional and career development to managers and employees.
We are able to accurately determine the ROI of the PMS. These options are limited only by the imaginations and creativ-
Our existing technology supports our PMS ob- ity of the individuals who are assigned, or who volunteer, to
jectives as designed (i.e., in accordance with work on them. It will be up to the management of the organi-
system requirements) to include: zation to ensure that it does not stand in the way of progress,
The various raters and reviewers we ensuring that the possibilities are effectively communicated to
wish to involve in the process. its employees, that recognition and rewards are forthcoming to
The capture of information throughout the them, and ongoing investments continue to be made in devel-
performance cycle (including planning, oping its most important asset, the people it employs.
Chapter 13: Performance Management: Getting It Right from the Start 109
Chapter 14
Successfully Transitioning to a Virtual Organization:
Challenges, Impact and Technology
In todays world, organizations increasingly conduct business key factors to successfully transition to a virtual organization
in a virtual workspace, whether their employees are located in and includes real-life scenarios to illustrate both effective and
different countries, cities or venues in the same city. The virtual ineffective approaches, with a focus on leadership styles, the
workspace can be defined as an environment where employees effectiveness of virtual working teams, communication, tech-
work away from company premises and communicate with their nology, virtual meetings and management, and global virtual
respective workplaces via telephone or computer devices. The teams. HR and organizational leaders will find this article of
virtual organization has different and/or greater challenges than value to better understand the challenges of the virtual work-
the traditional face-to-face workplace environment, with lines of place, discover ways to address these challenges and implement
work crossing over geographies, markets, countries and cultures, solutions that will promote business success.
alliances, partnerships, and supplier networks. The virtual office
Leadership Styles
is the office of the future, says John R. Wilson, J.D., Esq.,
Effective leadership is the number one factor that influences
president and CEO of Goff Wilson, P.A., and a member of the
success in a virtual organization. Maintaining cultural identity,
SHRM Global Special Expertise Panel. As technology advances
employment brand and employee/manager satisfaction requires
and live video becomes high definition, the need and expense
consistent and regular communication. Leadership skills are
of brick and mortar offices diminishes. However, we lose some even more essential for virtual work. They include a strong
of the human factor, which is unsettling and difficult to replace, focus on relationships, emotional intelligence, a track record
no matter the technology or organizational skills of those of results and innovation, a focus on process and outcome,
involved. A major challenge for the human resource professional and the ability to give positive and constructive feedback. Also
will be to instill within the virtual office the nuances felt only important is the ability to teach and coach others and provide
with real human interaction. recognition both formally and informally in ways that show
The very nature of virtual work requires planning and thought- appreciation and motivate continued success. HR should be
ful design. The development and evaluation of virtual teams part of any pilot program to help leadership understand, antici-
present a unique opportunity for HR to partner with many pate and mitigate management problems. When HR has experi-
ence in participating in a virtual team, it lends credibility for
different elements of the business. The benefits to the busi-
HR to fully participate and respond to problems as they arise.
ness stakeholders of a successful virtual work program can be
significant, yet difficult to achieve without a strong strategic For a virtual team leader, flexibility is paramount. Leaders
HR function. Further, with increasing dependence on technol- need to be more flexible in how and when they communicate.
ogy for communication in the workplace, the role of leadership Some people connect on instant messenger while others prefer
is changing. The glue to the virtual organization is leadership, text messages.
the right competencies and attributes, trust and rapport, and
Protocols of communication get more and more sophisti-
management of virtual workers and teams.
cated. The more flexibility I have, the more I can connect
Organizations can learn from experiences of others in the with my diverse team, points out Elaine Orler, president of
virtual workspace. To learn what companies are doing to Talent Function Group LLC and a member of the SHRM HR
effectively transition to virtual work, the Society for Human Technology and Management Special Expertise Panel. To
Resource Management (SHRM) interviewed HR professionals me, digital connection, including voice, can provide enough
and researchers in U.S.-based and global organizations. With connection to co-workers. It is important to establish a digital
an emphasis on a solutions-based approach, this article explores rhythm with each member of the virtual team. I text, versus
Chapter 14: Successfully Transitioning to a Virtual Organization: Challenges, Impact and Technology 111
e-mail, if something is urgent, use instant messenger when we Best Practice
are in meetings, etc. It is still possible to be very connected to A senior vice president of a global pharmaceutical company
members of your team. At the same time, it is equally impor- was given responsibility for the Americas. The individual, who
tant to position leaders for success. For example, HR profes- resided in the United States, was unfamiliar with the cultures
sionals should consider these factors in structured interview of Latin America. Initially, he attended a course to enhance his
processes, provide examples to learn how candidates would cultural awareness. Next, as he prepared to communicate criti-
think and act in different virtual situations (e.g., with workers cal electronic messages to his new organization, he decided to
spread across geographies, cultures and time zones), and have translate his message into local languages and confirmed that
top candidates meet with senior leaders who can speak about each message was culturally correct. As he planned to visit each
the challenges and expectations of collaborative virtual work. cultural region, he scheduled a cultural coaching session to
Ultimately, leaders need to be able to engage everyone to work assist him in building trust and securing relationships.
toward a common vision, purpose and destiny. Critical Incident
In the virtual organization, the role of a leader tends to A senior executive of a global financial services company was
shift from one of controller to one of coordinator or coach. given responsibility for Japanese operations. The executive,
The leader manages by principle, develops a bias for a cross- who resided in the United States, was told that there had been
functional organization, promotes open sharing of information relationship and communication difficulties between the U.S.
and empowers the virtual worker, says John G. Schieman, and Japanese organizations. His plan was to communicate his
vice president of Global Programs and Marketing at Global U.S. model and request that the Japanese operation conform.
Dynamics, Inc., a leading provider of customized solutions to Initially, he sent an e-mail to all Japanese associates indicating
meet the challenges of globalization, virtual environments, and he was planning a visit to Japan for one day to introduce his
operational plan and obtain their commitments. He failed to
diversity and inclusion in more than 60 countries for over 25
recognize the importance of hierarchy in his communication
years. The Global Dynamics model to enhance leadership skills
by sending the message to everyone. He scheduled a one-day
in a multicultural virtual organization, based on the companys
visit, not allowing enough time to understand the culture and
experience in the field, is outlined in Table 14.1. Its essential
build relationships. During his trip, he misunderstood verbal
for organizations to promote trust and effective working rela-
and nonverbal communication, concluded that he had Japanese
tionships, with one of the first steps being the establishment of
commitments, only to discover upon his return that there were
virtual guiding principles and organization charters, Schie-
no commitments given.
man points out. Consider the following two scenarios: the first
focuses on building trust, and the second shows how assump- Team Work: Effectiveness and Communication
tions and lack of cultural awareness can lead to unexpected and Working with and managing a virtual team is very different
unwanted surprises. from managing an on-premise group. Collaboration tools,
goal definition and coaching are areas where HR can help a
manager enable a virtual team. Managers need help to under-
Table 14.1 A Model to Enhance Leadership Skills for Success stand how embracing technologysuch as instant messaging,
in a Multicultural Virtual Organization
Enhancers Derailers
screen sharing and web conferencingmay make them more
Promote trust and maintain effective working Inability to establish the additional levels of
flexible and effective. In fact, developing this set of competen-
relationships with virtual workers. trust required with remote workers. cies is necessary even for managers of on-premise teams, since
Establish virtual guiding principles and Inadequate communication skills required these technologies are as familiar as the telephone to many new
organization charters to ensure the for virtual network effectiveness.
organization is in alignment.
entrants in the workforce, points out Kristin Lundin, SPHR,
Identify and define virtual worker roles, Lack of comfort and expertise with
product manager at Salary.com and a member of the SHRM
responsibilities and accountability. technologies required for success in the Technology and HR Management Special Expertise Panel. She
virtual organization.
emphasizes that when adopting or even evaluating virtual
Establish a reward and recognition process Inability to address conflict resolution
commensurate with the virtual organization within the work group.
teams, HR needs to lay out the strategy for aligning activities
characteristics while maintaining consistency done remotely with those done at physical company locations
with traditional organization structure.
and how they can creatively integrate remote employees.
Demonstrate cultural competency when Lack of sensitivity toward different styles of
interacting globally. communication.
Research shows that to connect human beings, it is essential to
Source: SHRM interview with Global Dynamics, Inc. (www.global-dynamics.com) thoughtfully select the most appropriate technology. For exam-
A senior manager, who resides in the United States, was leading an engineering team that relied on multi-site expertise to
develop a new product for a global semiconductor manufacturing company. In his experience, managing meetings with a
combination of virtual and in-person venues was much more difficult than either one or the other, because participants in the
conference room would unintentionally dominate the discussions without including the rest of the team. Remote participants
felt irrelevant and unable to significantly contribute. To leverage the expertise of all, the manager sent Starbucks cards to all
remote participants (coffee and tea were available for the in-person group) in advance of the meeting to establish a feeling of
inclusion from the beginning. Throughout the meeting, the manager made a conscientious effort to ask the remote partici-
pants to provide their perspective first, helping the group achieve its objectives.
ple, e-mail is not the best medium to communicate an inspira- to build a win-win situation between employers and employees
tional message. Particularly in the early stages of establishing a by offering an attractive work/life balance for employees while
virtual team, it is important to consider technology that allows also reducing facilities and infrastructure costs for employers.
individuals to see and hear expressions, since nonverbal cues are Technology has developed to a level where many knowledge
key to trust and rapport. Virtual team members may also have workers have broadband access either off-premise or at home,
conflicting commitments, such as being involved in multiple points out Lundin. Even in retail or manufacturing, some
projects and multiple teams. To balance time and work com- roles are not dependent on the physical plant to be productive.
mitments, the leader needs to carefully consider other respon- In some locations in the United States and other developed
sibilities of team members when setting goals. Since in many nations, even wireless broadband has become ubiquitous. This
instances virtual team members may never meet each other, the provides the ability for an employee to have a work experience
virtual team leaders role is essential to help develop confidence that is productive and very similar, regardless of the employees
among team members to create a team identity. physical location.
When team members identify with their team, they are more Yet, productivity in the virtual workplace can be challenging.
likely to be engaged and energized to fulfill the teams goals. Olivas-Lujn notes, I recall a couple of research projects in
Miguel R. Olivas-Lujn, Ph.D., a professor of management which the cultural diversity of the team participants made it
at Clarion University of Pennsylvania and Tec de Monterrey, almost impossible to get things done on time. In contrast,
Mexico, and a SHRM Global Special Expertise Panel member, another effort that gathered responses from employees in
points out that where possible, it is still important to meet about 22 countries turned out results much faster because the
face to face, especially at the start of the project: This is more leader set up a structure that could be considered autocratic,
relevant to tasks that are not central to the teams main job, yet was highly efficient. She provided standard instructions,
such as temporary task forces, virtual teams formed with a par- offered advice and made sure each country co-author knew
ticular purpose where participants are not discharged of their exactly what to expect. This experience is also consistent with
main duties to accomplish the goal. Through the years, I have the research that suggests that diverse teams often take longer
noticed that virtual work groups have a flurry of activity and to reach the performing phase and become more productive
interaction just before and a few weeks after every face-to-face than homogeneous teams. The outcomes are more creative and
meeting. Often, much more is achieved during those weeks effective than those of homogeneous teams if the leader is able
than during the rest of the year. to manage the diversity.
In companies where a significant amount of the work is either A recent SHRM poll on HRs involvement in the virtual
knowledge-based or involves producing technology that is workforce reveals a variety of key transition factors (see Figure
easily transferred, virtual teams present a unique opportunity 14.1). This research found that within the next 12 months,
Chapter 14: Successfully Transitioning to a Virtual Organization: Challenges, Impact and Technology 113
Figure 14.1 | In what ways does your HR department currently
support your organizations virtual workforce?
Other 5%
n = 256
* e.g., web conferencing software, webinars for working virtually, social networking tools, e-learning programs.
** styles that promote trust and maintain effective working relationships with virtual workers.
Note: Asked only of respondents who said their organizations offered virtual work options. Percentages do not total 100% as respondents were allowed multiple choices.
Source: SHRM Poll: Transitioning to a Virtual Organization (2010)
22 percent of organizations expect the percentage of their and leaders on the needs of the virtual employee and to under-
employees who work virtually to increase, 76 percent expect it stand how to best support those managers and employees.
to remain the same, and 3 percent will decrease the percentage
The expansion of virtual teaming technology provides a variety
of virtual employees. The poll shows the various ways in which
of communication tools for virtual teams. Technology should
HR is working to support the organizations virtual workforce.
be a strong conduit for virtual team success. That technology
In addition, according to a SHRM survey report Workplace
is not solely based on corporate infrastructure, but rather is an
Flexibility in the 21st Century: Meeting the Needs of the Chang-
extension of that infrastructure to create and bond the team as
ing Workplace, 43 percent of HR professionals say that in the
a community of peers, emphasizes Orler, of Talent Function
next five years, a larger proportion of their workforce will be
Group LLC. Virtual communication and information sharing
telecommuting. can be accomplished using a number of vehicles, such as e-mail,
Virtual Teaming Technology intranets and the Internet, video conferencing, teleconferenc-
Virtual teams are highly dependent on collaboration technol- ing, webcasts, shared electronic whiteboards and groupware
ogy and infrastructure. For employees who never see and/or (e.g., Lotus Notes). Every organization, as it expands to work
meet each other, it can be a daunting effort to establish trust at a virtual pace, will encounter challenges when working
and rapport, effectively communicate and share information on virtually.
an ongoing basis. Obviously, technology is a large component Yet, as Olivas-Lujn points out, Familiarity trumps sophis-
of managing and enabling a virtual team. HR professionals tication. As my colleagues and I have moved from e-mail to
should be closely aware of what technologies are being offered synchronic discussion groups (chat rooms) and now to social
and used by remote workers so that they can help managers networking-based communications, I used to try to get my
transition to managing virtual teams. HR leaders need to colleagues to employ the newest technology (instant messenger,
guide their teams to evaluate and become familiar with all of Skype, etc.). However, some were too busy to learn, others
the various technology that the virtual team will be using, needed more hand-holding, and it was just not productive. I
says Lundin, of Salary.com. Understanding and using these now try to use the lowest common denominator (e-mail with
technologies will enable HR professionals to coach managers attachments or shared documents in some cases) and dont
2. Instant messaging, text messaging. Mobile devices are the number one most common tool used around the world (see
www.mocom2020.com/2009/03/41-billion-mobile-phone-subscribers-worldwide). With company plans, text messag-
ing globally for simple status checks is less expensive than phone calls, and in many countries, it is a more effective way
to reach someone. Text messaging is not limited to just a mobile device; it can be integrated into e-mail notifications and
various other standard desktop tools.
3. Voice over IP and video chat can create a sense of community among a virtual team and are a low-cost alternative to
international calling plans, from high-tech innovative virtual conference rooms offered by Cisco Systems to mainstream
readily available products such as Skype or GoogleTalk.
4. World clock. The greatest obstacle to a global virtual workforce is finding the time to meet without forcing anyone to
work unrealistic hours to participate. Several free programs offer the ability to review time zones and check availability,
and this simple consideration can foster unity in the team and a sense of equal sacrifice and commitment.
5. Dynamic project planning tools. Microsoft Project continues to be the traditional tool for project management, but
the market is moving to real-time dynamic project support tools. The new web 2.0 features word clouds, mind maps and
context-based search, with options to share information by timeline, dependency, owner or goal. Applications such as
MindJet and solutions by Matchware are easy to use and intuitive, leading to increased productivity.
Chapter 14: Successfully Transitioning to a Virtual Organization: Challenges, Impact and Technology 115
Seamless Service Recognition2
A major outsourcing firm leverages teams in Europe, North A senior manager at a high-tech company was discouraged to
America and Asia to successfully deliver client projects. While provide recognition for his distance sales group, which had
some work efforts can be completed around the clock and take recently moved into a virtual organization environment. The
advantage of time zone differences to speed up processes, team manager was finding it difficult to offer praise and recognition
members must also work together in real time. A variety of vir- in a public forum, where salespeople tend to thrive. Prior to
tual teaming technologies are used to facilitate their interaction the company transitioning these employees to home offices,
and collaboration. Web conferencing technology is used for the manager had brought the sales team together on a regular
synchronous and asynchronous communications. Team mem- basis, where they could stand up and be recognized for their
accomplishments. While the sales goals were monitored on a
bers who cannot make a conference call can listen to and view
monthly basis, the manager was finding it more difficult to
a recording of an earlier session when they are available. Team
maintain momentum without the face-to-face monthly meet-
members can also track problems online and address issues
ings, despite energy-producing events such as the team signing
while working in their respective time zones. This technology
a company for a significant contract or a new product being
helps span time zones and allows seamless work efforts.
launched in the marketplace. The manager went to the HR
Virtual Meetings, Management and Team Building director to ask for recommendations. As a result, the company
Motivation and engagement are among the top challenges chose to invest in web-conferencing and videoconferencing as
for virtual teams. Building the sense of team makes all the tools to better motivate company teams (sales included) and
difference to establish rapport and trust, encourage creativity create better real-time opportunities for recognition.
and innovation, and accomplish the mission and goals of the Virtual Training Can Be Effective and Fun
team. Managers need to find ways to provide public forums for The Inspection Division of Manheim, the worlds leading pro-
recognition, avenues to share ideas, take advantage of training vider of vehicle remarketing services, recently won the bronze
and development opportunities to strengthen the team, and award from Brandon Hall Research Excellence in Learning
celebrate the achievements of both individuals and the team. for its use of simulation/gaming in a learning program. The
The following three real-life stories portray examples of solu- division launched a state-of-the-art online training program for
tions to motivation and engagement challenges. its 1,300 highly technical vehicle inspectors, who were accus-
5. Acknowledge personal milestones, such as birthdays, weddings, birth of children, anniversaries of tenure in the company,
educational accomplishments, community service, etc.
6. Present e-gift certificates to the team. Leaders can bring these to on-site visits.
7. Invest in portable partiessend party kits (such as party hats, horns, party favors, confetti) to each member and cel-
ebrate via tele- or video-conferencing.
8. Create a location on the company intranet to post best practices and learnings.
Source: Adapted from Fisher, K., & Fisher, D. (2001). The distance manager: A hands-on guide to managing off-site employees and virtual teams. New York: McGraw-Hill.
QQ Initiate meetings with roll call of all participants; review agenda, meeting objec-
Understanding Cultural Differences
tives and timeframe. Two high-level information technology virtual teams were
QQ Identify the key roles of facilitator and scribe. formed, each with members from the United States, India,
Japan, Brazil and Germany. Both team leaders were American.
QQ Position participants in locations free of distractions or background noise.
Each team was tasked with the design and development of a
QQ Promote climate of collaboration and inclusion; encourage every attendee to
participate and express his or her view. web-based business application, which had to be available for
use within six months. The first team leader created a team
QQ Encourage participants to effectively use available technology.
charter without any understanding of cultural values and with-
QQ Conduct meeting evaluation at the close of the session.
out involving team members in the creation of the charter. The
Establish expectation for distribution of the meeting minutes.
leader decided that iterative, prototype development would be
QQ
QQ Establish next steps and make follow-up assignments. the best approach and that he would empower all team mem-
Source: SHRM interview with Global Dynamics, Inc. (www.global-dynamics.com) bers. He assigned that function to team members from Japan
and India. Establishing milestones and maintaining schedules
was critical on the project since the development life cycle was
Global Virtual Teams
only six months. This project experienced numerous false starts
A commonly quoted advantage of global virtual teams is the
and delays and failed to deliver on time.
ability of an organization to leverage competencies and skills
from all parts of the world. These teams are seen as having The second team leader, recognizing that she did not fully
the capability to solve very complex problems and open up understand cultural differences as they related to the strength
possibilities for substantial process creativity and innovative of her team, participated in a cross-cultural awareness train-
Chapter 14: Successfully Transitioning to a Virtual Organization: Challenges, Impact and Technology 117
ing program. She decided, similar to the first team leader, Finally, solid experience in conflict resolution is recommended
that prototyping was a good approach. She met with her team to successfully manage and address the complex dynamics of a
members, discussed her thoughts and asked for feedback and global virtual team. (For further reading, see Chapter 8.)
suggestions. The Japanese and Indian team members stated
In Closing
they would be more comfortable with final specifications.
Whether in a domestic or global virtual work environment,
The U.S. team members volunteered to do the prototyping.
todays virtual workplace is rapidly changing as new technolo-
The Japanese and Indian members agreed to develop the final
gies are introduced. HR should take a leadership role to sup-
product based on the completed prototype. The Brazilian
port its organization to remain competitive in an increasingly
member volunteered to evaluate the ease of use capabilities
virtual marketplace. No doubt, within months of the publica-
of the design. The team leader asked each person to provide his
tion of this report, there will be new technologies to support
or her milestones, time schedules and interdependencies with
the virtual worker and offer better opportunities for collabora-
one another. She and the German team member agreed that
tion and productivity. HR and team leaders need to ensure that
he would create and manage the final project plan. This team
all staff understand the various technologies that will make the
leader developed an understanding of the strengths each indi-
most effective use of time and resources but will also support
vidual and culture contributed to the team and leveraged those
people, communication and achievement of the business goals.
characteristics while creating an inclusive working environment.
The project was delivered on time, within budget and was well
received.
In the business world today, issues of trust, respect, fairness, Business Imperative
equity and transparency are gaining more attention. Business Organizational culture and ethical leadership are at the core
ethics includes organizational values, guidelines and codes, of business ethics. Each shapes and reinforces corporate values,
legal compliance, risk management, and individual and group and influences employee attitudes and behaviors. Broadly
behavior within the workplace. Effective leadership, with open defined, business ethics includes ethical conduct, legal com-
dialogue and thoughtful deliberation, develops the foundation pliance and, in some cases, corporate social responsibility.
of an ethical workplace, is woven into the fabric of the orga- Ethics-related outcomes can be seen in nearly every aspect of a
nizational culture and is mirrored in ethical decision-making. company, from employee perceptions of fairness, to employee
Toward this end, all organizational leaders have a key role in engagement and retention, and ultimately, as U.S. and global
establishing corporate values and modeling ethical behavior for executives note, to reputation and sustainability (see SHRMs
their workforce, organization and community. 2008 Executive Roundtable Symposium on Sustainability and
Human Resource Management).2
The importance of ethical leadership has grown exponentially.
A 2009 special report from the Business Roundtable Institute The establishment of business ethics as policy is not new. A
of Corporate Ethics and the Arthur W. Page Society focuses on number of business codes were established and in use in the
the issue of leadership and trust. The Dynamics of Public Trust 1920s. In fact, the retailer J. C. Penney Company introduced
in BusinessEmerging Opportunities for Leaders emphasizes a company code of conduct in 1913.3 The focus on business
that trust is a critical factor in business. The report points out ethics, particularly ethics policies and programs, rapidly grew in
that even in the best of times, the dynamism of trust requires the United States in the 1980s and 1990s in response to gov-
continual monitoring and rebalancing as economic and social ernment and legal pressures. The Defense Industry Initiative
situations change. Companies can create positive business (DII), created in the 1980s in response to government regula-
ethics by generating goodwill, communicating openly and tions, was developed for defense contractors to comply with a
taking advantage of opportunities for leaders to create value high standard of conduct. DII was the first organized attempt
based on a foundation of accountability, responsibility and at creating standard ethics and compliance programs. In 1999,
integrity. Ultimately, trustthrough good business ethics a survey of a sample of Fortune 1000 companies by research-
positively impacts business success in a number of critical ers Weaver, Trevio and Cochran found that only 20 percent
areas, such as employee performance, customer retention and had adopted ethics polices prior to 1976 and 60 percent since
innovation.1 the mid-1980s.4 A series of high-visibility corporate scandals
(such as Enron, Arthur Andersen, WorldCom) resulted in the
While not inclusive of all aspects of business ethics, this
Sarbanes-Oxley Act (SOX) of 2002, the goal of which is to
research article focuses on organizational culture and values as
foster truthful communication between company officers and
integral in the foundation of an ethical workplace. The primary
shareholders in publicly traded companies.
audienceshuman resource professionals, people managers and
senior managementwill find this article useful to thought- In todays global marketplace, HR, ethics and compliance
fully consider the state of business ethics in their respective officers, and organizational leadership must also be cognizant
companies, identify related challenges and opportunities, of cultural differences that influence business ethics. In dif-
and rethink how better to communicate, restructure and/or ferent countries, there are cultural variations around business
reframe policies and practices that influence the organizations ethics, such as cultural norms, legislation, communication
ethical stance. styles, etc. In Europe, for example, there is a history of socially
Chapter 15: Business Ethics: The Role of Culture and Values for an Ethical Workplace 119
mandated employee involvement in businesses, where the U.S. veys. Key questions to consider are: (1) is the company sending
style of codes of conduct may not be applicable. Other cultural the message that it promotes ethical behavior; (2) is it con-
differences, such as indirect communication styles and the need cerned with the welfare of employees or is the goal to protect
to save face, require sensitivity for ethics-related communica- the company; and (3) is the formal ethics program outsourced
tions. U.S. corporate ethics programs tend to reflect American for cost savings (on the Internet), thoughtfully focused on the
cultural norms, such as individualism. In contrast, collectivist nuances of the organizational culture, and to what degree is
societies use different communication styles to address inter- senior management involved?8
personal and ethical problems. Whether in domestic or global
companies, ultimately, the commitment to business ethics and
the foundation is built through organizational culture, with Table 15.1 Ten Questions to Assess Your Company and Its
Procedures About Decision-Making
ethical values reflected in the workplace.
in defining the importance of ethics both in how it respects 5. Are decisions made based on accurate information?
employees and how it conducts business. 6. Is honest feedback provided about why decisions are made?
An ethical culture is developed through communication, 7. Are the rights of employees respected?
The platform for an ethical workplace is the code of conduct. QQ Develop an internal campaign, with ethics as the #1 value for the organization
It describes a value system and ethical principles and outlines and employees.
specific ethical rules embodied by the organization. Written QQ Avoid stereotyping employees according to their generation.
standards of ethical conduct cover a number of areas, such as QQ Clearly identify the priorities of the company and then link them to the priorities
and values of employees to support business decisions.
compliance and laws, confidential or proprietary information,
QQ When possible, learn the values and motivation of employees and then connect
conflicts of interest, use of company assets, and acceptance of them to individual and organizational goals.
or providing gifts, gratuities and entertainment. The purpose QQ Focus on business results, not on methodology (as long as it is ethical). All
of a code of conduct is to raise ethical expectations; focus groups want to contribute and achieve but may do so differently.
on dialogue about ethical issues; encourage ethical decision- QQ To make ethical guidelines relevant to everyone, establish ongoing training and
support sessions.
making; and prevent misconduct and establish a platform for
enforcement.10 Through the code of conduct, with clear lan- QQ Look for commonality among employees of different generations.
guage and specific illustrations of how ethical principles apply QQ Embrace diversity of opinion and methodology.
to the workplace setting, organizations put employeesinclud- QQ Err on the side of more communication, such as using different types of media:
face-to-face meetings, e-mail blasts, etc.
ing managementon notice that there are consequences of not
QQ Remember to respect the dimensions of differing generations (age, technologi-
complying and expectations for certain behavior.11 cal savvy, alternative work experiences, innovation, etc.)
Adapted from: Guss, E., & Miller, M. C. (2008 October). Ethics and generational dif-
Two broad incentive categories encourage ethical behavior:
ferences: Interplay between values and ethical business decisions [SHRM white paper].
reward and recognition systems, and performance evalua- Retrieved from www.shrm.org.
Chapter 15: Business Ethics: The Role of Culture and Values for an Ethical Workplace 121
the potential vulnerability of their moral compass, says human leadership skills that are important for todays workplace: (1)
resource consultant Joy Gaetano, SPHR, president of Gaetano practical wisdompersonal integrity and good character, (2)
Group and a SHRM Ethics Special Expertise Panel member. moral reasoningcompliance with corporate ethics, and (3)
An organization that can establish clear ethical guidelines, moral feelingscost/benefit analysis (for all stakeholders).16
set policy standards and provide a culture that nurtures ethical
Mini-Case Study: Johns Decision
decision-making and values gains respect as an employer of
John Hart was a division manager at Atlantic Soda, a large
choice where a young employee can focus on optimizing his or
bottling conglomerate with more than 30 companies. He
her workplace talent rather than feel compromised by work-
was asked to meet with Bill Goodwin (his boss) and Bob
place conduct.
Martin (regional division manager for a competitor, Mid-Ma-
Ethical Decision-Making jor Pop). John had joined the firm six months earlier and was
Values drive decision-making. In the sometimes confusing known for his track record of hard work and excellent sales
maze of decisions, employees and managers may at times feel results. In Atlantics culture of rewarding performance and
conflicted by their personal values and the corporate message. talent, John had already been promoted twice. At the meet-
In todays busy workplace, managers have to make decisions ing, Goodwin discussed the intense price competition be-
quickly, are influenced by short-term pressures and therefore tween Atlantic Soda and Major Pop. He suggested that they
may fail to adequately focus on social norms and ethical princi- establish a mutual set of prices. The two principals agreed.
ples. When confronted with ethical decisions, guidelines about However, John would have the responsibility to implement
ethical-decision making are valuable tools and can be presented this arrangement in his region.
in a corporate ethics program, during a staff meeting or as
This true story illustrates an opportunity for an ethical deci-
part of an employee-manager mentorship. These guidelines
sion. Pressures were exerted by Johns manager to sway
provide a framework for learning (e.g., where do workers learn
the decision. John had options to consider: personal/com-
what is acceptable in the workplace) as well as opportunities to
pany achievement or his personal and the companys integ-
reinforce corporate values. Such discussions are important in
rity. He made the wrong choice and went to jail for his part
management trainingfor new managers, managers new to the
in the price fixing, a violation of the Sherman Antitrust Act.17
company and longer-term managers aliketo highlight how
value-based decision-making fits within the organizations mis- Corporate Ethics Programs
sion and vision (see Table 15.3). Ethics training is a key part of business ethics. It assists employ-
ees and management in clarifying their own ethical paradigms
Table 15.3 Questions and Lessons for Ethical Decision-Making
and doing the right thing when confronted with ethical
QQ What is the biggest ethical dilemma you have experienced in your career? dilemmas. In conjunction with a code of ethics, ethics training
QQ How did you respond? serves as an organizations guiding framework. Training can be
QQ What was the outcome?
delivered in many ways, such as web-based training, webcasts
and in-person training programs, thus accommodating sched-
QQ What did you learn?
ules and different learning preferences and taking advantage of
QQ How did you transfer this learning or experience into teachable moments for
others?
cost-savings opportunities. Legislation makes compliance criti-
cal (see U.S. Sentencing Guidelines for Organizations, adopted
Source: Tichy, N. M. (2003). Students meet ethical dilemma in their workplace challenges.
In N. M. Tichey & A. R. McGill (Eds.), The ethical challenge: How to lead with unyielding in 1991 and updated in 2004, www.ussc.gov/orgguide.htm).
integrity (pp. 211230). San Francisco: Jossey-Bass.
Publicly traded companies subject to the Sarbanes-Oxley Act
of 2002 (SOX) must have a code of ethics designed to deter
The concept of moral motivationwhy should I do the right wrongdoing, including a statement promoting financial integ-
thing?is the focus of a recent article in the Journal of Business rity that clearly applies to senior financial officers (see SHRM
Ethics. The authors explored moral motivation through the article about the Sarbanes-Oxley Act). Additional U.S. federal
lens of applicability to corporate ethics programs. The value laws that cover unethical business practices include the Foreign
of this study lies in offering a basis for discussion of how and Corrupt Practices Act of 1977 (FCPA), which prohibits corrupt
why decisions are made (i.e., what is the ethical foundation/ payments to foreign officials for the purpose of obtaining or
reasoning). The ethical theories of moral philosophers (Aris- keeping business; mail and wire fraud statutes, 18 U.S.C.
totles ethics of virtue, Kants categorical imperative and Mills 1341, 1343; The Travel Act, 18 U.S.C. 1952, which provides
utilitarianism/greatest happiness principle) identify key ethical for federal prosecution of violations of state commercial brib-
Timeline of Misconduct
Subprime,
Enron, etc. Madoff,
recession
46% 49%
Source: Ethics Resource Center. (2009, October). 2009 National Business Ethics Survey, www.ethics.org
ery statutes; and Federal Sentencing Guidelines, particularly reporting of actual hours worked; employee behavior putting
8.B2.1, regarding the components of an effective compliance the employees interests above those of the organizations; and
and ethics program. employees taking sick days when they are not sick.18
Based on the Federal Sentencing Guidelines, the Ethics The 2009 National Business Ethics Survey from ERC found that
Resource Center (ERC) outlines six elements necessary for during the recession, 81 percent of employees have confidence
a comprehensive ethics and compliance program: (1) writ- in their companys executives, only 23 percent believe that the
ten standards for ethical conduct; (2) training on ethics; (3) recession has negatively affected the ethical culture within the
a mechanism to seek ethics-related advice or information; (4) company, and 10 percent believe that in order to stay in busi-
a process to report misconduct anonymously; (5) disciplinary ness during the recession, their company has lowered its ethical
action of employees who violate the organizations ethics stan- standards. Employees see their leadershipeven during these
dards or the law; and (6) inclusion of ethical behavior within difficult economic timesas trustworthy, with 81 percent of
each employees regular performance appraisal. The SHRM/ respondents trusting that company executives are telling the
ERC 2008 survey report on ethics found that most organi- truth about the well-being of the organization. The study also
zations do not have a comprehensive ethics and compliance found that with more focus on business ethics, misconduct
program. Only 23 percent of HR professionals reported that decreases: specifically, misconduct declined after 2002, when
their companies had all six elements, yet other factors were in SOX was passed, then increased over the next four years, and
place: 88 percent of HR professionals said that their organiza- then declined again during the recession (see Figure 15.1).19
tions disciplined employees who violated the company stan-
dards, 75 percent had written standards for ethical conduct, 74 Ethics and Perceptions of Fairness
percent had a mechanism to report violations confidentially or Perceptions of fairness are closely tied to business ethics, at the
anonymously, and 66 percent had orientation or training on root of which are questions of justice. Also known as orga-
ethics. In contrast, more than 50 percent of organizations did nizational justice, it encompasses fairness of outcomes and
not have a specific mechanism for employees to seek advice on allocation of resources, fairness of decision-making processes
ethics-related matters, and 57 percent did not evaluate employ- and fairness of interpersonal treatment from the supervisor. In
ees on ethical conduct in their performance reviews. The most todays litigious environment, organizations must be transpar-
common types of misconduct seen by HR professionals were ent, equitable, consistent and fair in their policy development
abusive or intimidating behavior toward employees (excluding and administration. The following example illustrates how
sexual harassment); e-mail and/or Internet abuse; inaccurate policy applied inconsistently can negatively affect employee
Chapter 15: Business Ethics: The Role of Culture and Values for an Ethical Workplace 123
morale. Individual values and moral positions of an employee term, the cost is also reflected in decreased employee morale,
may end up in juxtaposition with the policies and behavior with the likely loss of valuable human capital.
of the employer, through confusion, inconsistency, and poor
Transparent procedures are important. They allow managers to
management communication and practices, bringing forth
emphasize the importance of decision-making for all employees
questions of fairness.
to minimize the belief that some receive favorable treatment
Mini-Case Study: A Lack of Transparency or differences based on other biases. When focus is placed on
An employee had worked for nearly 30 years at a well- respecting employees and their rights, the quality of interper-
established, fiscally sound bank in the commercial market. sonal relationships in the workplace improves. When people are
Unexpectedly, she found herself needing to take time off treated with dignity and courtesy, commitment to the orga-
for the care of her sick husband. Saturday morning, her nization increases along with productivity.20 Ultimately, the
husband was rushed to the hospital to undergo emergency question that HR and organizational leaders should ask is, are
surgery, and on Monday he was placed in intensive care. On our own policies inadvertently shaping our corporate cultures
that Monday, the employee made a request to her manager in ways that will undermine the reputation of the company
to use some of her 10 months of accrued sick leave to care and ultimately cost the company the loss of talent, production,
for her husband. FMLA was approved, but she was told that customer service and profits?
according to the HR department, she must use vacation
Global Perspective
time rather than sick leave.
One popular topic for HR professionals in the last few years has
After being out for a couple weeks, with more than two- been the need to develop a global mindset, but this need has
thirds of her FMLA entitlement remaining, the employee been viewed mostly through the context of individual develop-
returned to work. Her manager and a senior HR officer ush- ment. SHRM interviewed Lorelei Carobolante, SCRP, GMS,
ered her into a meeting to discuss the terms of her return to GPHR, SHRM Global Special Expertise Panel member and
work. Were concerned about your ability to come back. We CEO/president of G2nd Systems, who has extensive expertise
cant have you taking long lunches or leaving early to visit in the area of intercultural communications.
your husband. The employee assured them that this had
We often fail to recognize that the establishment of such
not been her plan but asked why it would be a problem if an cultural norms within an organization has many more business
occasional need were to arise. If we let you do it, wed have ramifications than the often-cited cases of employees assigned
to let everyone do it. Although she had planned to retire in to foreign locations and their struggle to become effective
less than six months, at this point, the employee was very contributors, says Carobolante. As our workforce, anywhere
upset and her view of the company was negatively affected in the world, is becoming more culturally diverse, developing
by this exchange and lack of support. She later learned that a global mindset is just as important at the local level as it is
sick leave use for family members was discretionary at the globally. It applies as equally to a manager in Singapore as to a
determination of the manager. An HR officer also informally manager in Toledo, Ohio. For example, we often associate com-
counseled her, saying if your own doctor were to say you munication style with culturally different norms and therefore
are too stressed to work, your sick hours would more than typically consider it merely an issue of etiquette. Sometimes,
carry you through your planned retirement date, plus youll we also appreciate its effect on productivity, but we rarely rec-
get another annual profit-sharing check. This sentiment ognize its ethical implications.
was echoed to her by several other bank officers.
When a manager provides employees with the same desk, the
The poorly communicated and inappropriately administered same computer, the same tools, but fails to provide instruc-
policiessuch as the FMLA leavecoupled with lack of tions that are equally understood and interpreted by native
sensitivity by management and subsequently perceived unfair- and non-native English-speaking employees, not only does
nesslargely contributed to the distress of the employee. This the manager foster a lack of productivity from employees who
example illustrates how lack of transparency of company poli- cannot understand the subtle implications derived from cultur-
cies can create confusion and lead to an unethical subculture. ally based expressions, but the manager then does not actively
In this case, vague policies allowed line and human resource support (and can potentially damage) an employees ability to
managers to permit or deny leave on a case-by-case basis. While excel, be successful and develop his or her professional career,
denying sick leave may save the company money in the short Carobolante continues.
Chapter 15: Business Ethics: The Role of Culture and Values for an Ethical Workplace 125
PART IV
Human Resources in
Research and Practice:
The RQ Reader
The HR
Professional
Chapter 16
Creativity and Innovation in Human Resource Management:
A Sign of the Times
In a changing global economy, creativity and innovation are heightened value for a stronger, healthier and more viable
essential for success. Creativity in organizations offers oppor- organization.
tunity for efficiencies, new ways of working, improved perfor-
The Meaning of Value Creation
mance and increased growth. While the types of breakthroughs
Within the discussion of creativity and innovation, value cre-
associated with science and technology are not typically those
ation is an important concept to understand because it is the
found in the HR space, creativity and innovation are the hall-
foundation for success. At the organizational level, maximizing
marks of human resource management (HRM).
value means that stakeholders see goals achieved, contribut-
The 2008 study by The Boston Consulting Group and the ing toward fulfilling the organizations mission. The ultimate
World Federation of Personnel Management Associations, goal of value creation is sustained value creation. Within value
Creating People Advantage: How to Address HR Challenges creation, there are two levels: personal and organizational.
Worldwide Through 2015, identifies three primary areas for Both the individual and the organization must have a clear
action by HR and organizational leaders: (1) enabling the understanding of what is meant by strategy and success, includ-
organization, (2) anticipating change, and (3) developing ing related activities and measures (see Table 16.1). Note that
and retaining the best employees.1 From a holistic and macro the value driver is the determinant of the outcome, not the
perspective, this Research Quarterly explores the critical roles of outcome itself. In the best-case scenario, value drivers have a
creativity and innovation in HRM, points to potential areas for positive long-term impact.3
creative and innovative approaches, and provides suggestions,
Table 16.1 Five Factors of Value Creation
solutions and examples from senior HR and business manage-
ment professionals. QQ A definition of what value means to the organization and to you as an employee.
Chapter 16: Creativity and Innovation in Human Resource Management: A Sign of the Times 129
1. ow does HR create value? Examples: attracting and
H Visual
retaining the best talent, reducing overall departmental Solutions can be created from working with visuals, using them
cost structure. to stimulate conversation and ideas, as demonstrated in this
story. Dealing with poor economic times, the CEO of a Japa-
2. ow does HR destroy value? Examples: hiring the wrong
H
nese perfume company asked his senior management team for
people, excessive spending, inefficient use of resources.
ideas to survive the recession. He used a visual to prompt their
3. ow do the financial goals of the company impede HR
H thinking. He gave them a picture of a king crab, with instruc-
value creation? Examples: too many initiatives, cutting tions to study it and find ideas that they could apply to their
back on the quality of the employee benefits package. organization. Examples of the connections that the senior team
made include: (1) a crab sees 360 degrees: we must improve
4. ow could HR redefine these goals? Examples: take a long-
H our market intelligence; (2) a crab has distinctive features: we
term perspective toward developing HR, give HR more need to develop a distinctive package that more clearly dif-
profit and loss focus and responsibility. ferentiates our products from our competitors; (3) a crab is a
scavenger: we need to allocate resources to table out other uses
5. hat performance metrics does HR typically use? Exam-
W
and markets for our products.
ples: increasing retention, process management (HR
transactions), development of leadership and functional Thought Walk
competencies. A change in environment can lead to new thoughts and ideas.
Jean-Jacques Rousseau, the famous French philosopher, did
Thinking Strategies for Creativity
some of his most creative thinking when traveling alone.
Max Planck, the creator of quantum physics, said that new
Taking a walk can provide refreshment and stimulus. Use
ideas are generated by creative imagination and making
objects seen or collected on a walk around the office to help
unusual associations. Fostering different thinking strate-
focus on idea-building and solutions. Walking around the
gies opens more opportunities for creative application in the
workplace and coming back with a list of things that were
workplace. Below are three examples of successful thinking
interesting, and then brainstorming with colleagues, can lead
strategies for idea generation.5 While some approaches may not
to listing related or unrelated characteristics, building ideas
be typical in the HRM context, they can be used to leverage around them, and then finding more ideas. HRM processes
imagination, idea generation and implementation. Creative that could be improved through team collaboration is an
thinking strategies can translate into solutions of innovative example of how this thinking strategy can be used.
changes or shifts in people management philosophy, organiza-
tional strategy and corporate values, as well as HRM policies, Enabling the Organization
programs and initiatives. Chapter 3 states that organizational leaders shape the work-
place environment for learningfor idea generation, innovation
Idea Bank and ultimately for sustainability.6 The key organizational prac-
The concept of the idea bank is to use items to generate tice for successful innovation is visible commitment from senior
thoughts and ideas. Fill a container (such as a file, shoe box, management to establish and promote an innovative culture.
drawer, coffee can) with items that might trigger ideas by asso- Barriers to innovation include acquiring and developing the
ciation, including interesting quotes, pictures, cartoons, poems, right talent and increasing the number of employees involved in
doodles, articles, designs and advertisements. When working the innovation process.7 The two key phenomena directly tied
on a challenge, take out a few of these items and try to make to innovation in organizations are harnessing creativity and
associations and connections. Ask yourself questions that may the renewal of the company. In some companies, innovation is
pull out thoughts or ideas related to other connections. If the strongly embedded in the corporate culturethe IT industry,
goal is to improve the business organization, for example, try for example, with Google, Microsoft and Apple. To thought-
drawing pictures, such as a circle. The circle could be seen as a fully create the culture needed for strategic innovation, HR and
cell within DNA. What could the connection be between the senior management can use a number of organizational levers.
cell that carries genetic information and the organization? The Three critical levers include the ability to judge risks and when
result might be a list of values that could become the starting to take them, managing ambiguity, and embracing unexpected
point of corporate values and codes of conduct, such as being events as learning events. At the same time, it is important to
respectful of each other in the workplace and being cooperative keep in mind that managing innovation is a paradoxical pro-
and collaborative in order to increase productivity. cess: there must be both stability and openness to change.8 HR
8. R
esist the urge to demand or expect 100 percent acceptance: keep the
Finally, success can be a large threat to innovation. Organiza- organizational goals and strategy as the priority.
Chapter 16: Creativity and Innovation in Human Resource Management: A Sign of the Times 131
is to provide leadership for innovation through the underlying bonuses (19 percent), being allowed to carry over leave into the
principles of the company culture and the cultural philosophy.12 next year (8 percent) and gift certificates (5 percent).16
HR can establish a strategy that will support the mission and
Developing and Retaining the Best Employees
the greater company innovation strategy. Several factors influ-
Managing talent is a top HR value-add for business success.
ence the selection of an innovation strategy. Internal factors
HR needs to strategically lead workforce planning, consider
include organizational mission and strategy, success of the cur-
the implications of the companys future geographic footprint
rent business model, organizational culture, technical capabili-
and implement programs that will forward talent development.
ties and funding. External factors include best practices, the
The following mini-case study portrays an example of how a
competition and rate of technological change.13
mid-size organization in the highly competitive marketplace of
Finally, it is important to state that HR leaders can affect international banking changed its approach to talent manage-
creativity through developing innovative solutions to the chal- ment and focused on its strengththe corporate culture.
lenges and issues faced by their respective organizations. At the Libby Anderson, MS, SPHR, president of EDA HR Services,
same time, they can play a role in creativity by examining and a member of the SHRM Organizational Development Special
challenging the work that they do and how they do it in order Expertise Panel and a trainer for the banks initiative, describes
to find new and better ways of accelerating organizational per- in her own words why the firm took a calculated risk and
formance. The following sections offer some examples and case invested in a new corporate training university, when most
studies of traditional HR problems with creative suggestions companies are focusing on conserving resources.
and solutions. Mini-Case Study: A New Corporate University
Anticipating Change Libby Anderson: Recently, I worked with a local bank in
Even in challenging economic times, skills shortages remain a Florida that wanted to preserve and nurture its valuable
reality. Thus, HR leaders must anticipate change to determine workplace culture, even in tough times, and thus decided to
future workforce needs, examine different economic scenarios develop its corporate training university. The main focus was
and find creative and innovative ways to address human capital to substantially raise the bar on the level of professionalism
requirements. A key area for change management is the orga- of every employee. A corporate culture of high expectations
nizations communication strategy. Recent SHRM research and productivity had made the difference in maintaining and
found that communications strategies have increased by 92 per- growing the banks customer base, and now the goal was to
cent in the economic downturn. For example, HR and senior be a world-class organization in the banking industry. With
the establishment of a new corporate university, the bank
management teams use confidence-building communications
set out to strategically and thoughtfully cultivate its internal
to assure employees of their value in the organization.14
talent. The two-day kick off workshop with supervisors and
Many organizations are carefully examining their requirements managers, who came from throughout Florida to attend the
for human capital. Approximately 53 percent of companies have event, was such a success that the organization developed
expanded their workforce planning strategies and 38 percent a one-day mandatory program for the entire workforce. This
have initiated workforce planning. Such initiatives include initiative, completed within just a few months, was an enor-
the analysis of critical positions to identify internal talent for mous investment in terms of management and employee
development to fill specific positions and/or take on broader time, requiring the use of specialized trainers in the HR field
responsibilities. As a result, leadership and career development to accomplish the goal. Ultimately, the companys strong
are gaining importance. In fact, leadership development initia- focus on professionalismfrom etiquette and personal ap-
tives have increased by 80 percent (see Figure 16.1).15 pearance to productivity and customer servicewill result in
a five-star reputation in the marketplace.
Unscheduled time off is yet another area where companies
may reduce costs. A 2009 SHRM survey report, Examining In many cases, organizations in the United States find it
Paid Leave in the Workplace, identifies a number of incentives necessary to look beyond the domestic labor market to fill
that organizations with paid sick time and PTO plans use to certain positions. Thus, talent management also warrants a
minimize employee use of unplanned time out, lower costs and brief discussion of foreign nationals in the U.S. employment
maintain productivity. Some of the most commonly offered market and the necessity for innovative approaches. However,
incentives to curb unplanned absences include compensation in the current U.S. immigration climate, retaining non-U.S.
for unused leave (36 percent), extra time off (21 percent), talent can be difficult. John R. Wilson, president and CEO of
Chapter 16: Creativity and Innovation in Human Resource Management: A Sign of the Times 133
employee is the best person for the position, he or she can employeesin contrast with the firms R&D staff elsewhere
be promoted instead of having to pay dues for many years. in the worldis their youth. Their average age is in the late
This shift is a clear stand to make the organization more at- 20s, and many managers are under age 40. In general, they
tractive to the Millennial generation. are well-educated, hard-working and very capable, but lack
the experience of R&D staff in other parts of the world. In
Managing Work/Life Balance
many cases, they tend to wait for direction rather than take
Work/life balance is an important factor for talent retention. In
initiative on their own, perhaps due to cultural factors such
fact, the 2007-2008 Towers Perrin Global Workforce Study cites
as deference to hierarchy and directives from the organiza-
work/life balance as one of the top five retention drivers world-
tions headquarters.
wide.23 One way to increase retention is to provide options to
address work/life balance through various workplace policies Based on changes in the global business environment and
and programs. The 2009 SHRM survey report Examining the growing importance of the Chinese market, even dur-
Paid Leave in the Workplace highlights a number of approaches ing a time of financial crisis, the company has decided to
to help employees balance their work and personal lives. For make fundamental changes in the role of its R&D opera-
example, 45 percent of companies report offering paid float- tion in China. Increasingly, the company has observed other
ing holidays to their workers, 33 percent include paid personal businesses operating in China launching first in China
leave, and 8 percent offer the option to purchase additional products prior to introducing them in other regions. To be
vacation leave.24 competitive, senior management has given this China R&D
operation a new role: to search for these kinds of brand-new
Flexible work arrangements (FWAs) are another way that
products and applications and to introduce them to other
organizations can help employees achieve work/life balance.
parts of the global organization.
SHRM research notes that such arrangements give employees
greater control over where and when work gets done, allow- To accomplish this task, the young Chinese R&D staff will
ing employees to optimize their work and life responsibilities. be asked to move from a secondary product adaptation role
While U.S. organizations are not required to offer formal to an integral role in the design and development of new
FWAs, this research found that such programs are beneficial products. In fact, since Chinese customers now have the po-
for both employers and employees. For example, the quality of tential of placing orders at sufficient volume, it is important
employees personal/family life is positively affected, according to integrate their needs at the start of the design process
to 68 percent of HR professionals, and retention of employees rather than building applications more suited for other mar-
(89 percent) was reported to have been positively influenced by kets and then trying to adapt them to China. Therefore, the
the implementation of FWAs. Thus, when HR and organiza- Chinese R&D employees will now be participating in global
tional leaders seek innovative opportunities to promote work/ R&D teams working on the next generation of products.
life balance, it is important to keep in mind that flexible work
arrangements are well-received.25 Ernie Gundling, Ph.D., president of Aperian Global, consults
with this multinational corporation. From a talent management
Insights in the Global Arena standpoint, he notes that these changes will require a variety
A paradigm shift is often at the forefront of innovation. Thus, of forms of strategic partnership with HR and also will have
global HR professionals must be aware of innovative trends and significant implications: (1) Chinese employees will need to feel
be open to trying new tactics. For example, managing global- that they have official permission to take on different kinds of
ization may require breaking with traditional ways of managing tasks and therefore will be watching closely to see how their
human capital to take full advantage of opportunities in new actionssuch as greater risk-takingare rewarded or punished
global markets. The following mini-case study presents such by their own managers, (2) R&D employees elsewhere in the
a scenario, where a shift in roles in a Chinese R&D operation world who are concerned about potential job loss will need to
will demand a shift in organizational culture and mindset. be convinced of the benefits of working more closely with their
Mini-Case Study: A Multinational Corporation in China Chinese colleagues to facilitate effective knowledge transfer,
A company in the high-tech industry has an R&D operation and (3) engineers eager for career development are likely to be
in China, with hundreds of engineers. To date, these China- motivated by opportunities for more challenging and mean-
based R&D personnel have been focusing on adaptation of ingful roles, which could be leveraged to improve retention in
products developed outside of China to fit the needs of the a very competitive talent market in China. As Dr. Gundling
Chinese marketplace. A remarkable characteristic of these points out, it will be important to provide language and
Chapter 16: Creativity and Innovation in Human Resource Management: A Sign of the Times 135
Chapter 17
Career Development for HR Professionals
In todays work environment, the employee is ultimately Executive: The highest-ranking individual, or group of
responsible for his or her career developmentthe process individuals, who has managerial or administrative authority
by which individuals establish their current and future career for the business operations of the entire organization, busi-
objectives, assess their existing skills, knowledge or experience ness unit or function.6
levels, and then implement an appropriate course of action to
Additionally, within HR, there are several areas of special-
attain their desired career objectives.1
ization (see Table 17.1). This list, although not exhaustive,
Although HR often provides career development opportunities provides the most common areas of HR (some areas are also
to the overall workforce, HR professionals are also accountable known by other terms, as noted in brackets.) For students
for their own careers. Interestingly, the SHRM 2008 Manag- considering HR as a career, SHRM offers guidance in its new
ing Your HR Career survey report found that nearly 75 per- career resource, Choose a Career. Choose HR (To download a
cent of HR professionals began their careers in a business area complete PDF of the brochure or request printed copies, visit
other than HR.2 Whether you are considering human resources the SHRM Student Programs web site.) Professionals inter-
as your first or next career or figuring out the next HR career ested in transitioning into HR will find that their expertise
move, career development is a vital part of career success. This from another discipline can be beneficial. Individuals with
article provides information and perspectives on what HR pro- experience in the following fields can use their expertise in an
fessionals, either new to HR or in the early years of their career, HR career: accounting (math data analysis, detail-orientation),
can do to leverage and promote their own career development sales (ability to access needs, influence people), marketing and
for the future. communications (writing and presentation skills), information
technology (programming, report writing, systems and soft-
Pathways in HR
ware technology) and administrative (data entry, writing and
Many organizations have a human resource department. Since
customer service skills, scheduling/time management).7 No
companies depend on employees for success in the marketplace,
matter the path that Career Development for HR Professionals
human resource management (HRM) is a critical function.
leads to HR, all HR professionals will want to be knowledge-
HRM is defined as the formal structure within an organization
able about their respective career development plans.
responsible for all the decisions, strategies, factors, principles,
operations, practices, functions, activities and methods related
to the management of people.3 Within HRM (commonly
Table 17.1 Specialization Areas in Human Resources
referred to as human resources or HR), there are three basic
tracks: QQ Compensation and benefits (total rewards)
Generalist: An individual who possesses the capabilities QQ Employee and labor relations
to perform more than one diversified function rather than QQ Global human resource management
specializing in or having responsibility for one specific QQ Organizational and employee development (training)
function.4 QQ Safety and security (risk management)
HR Specialist: A term used to define an individual who
QQ Staffing management (workplace planning/readiness, recruiting and retention)
has expertise and responsibility for a specific area or func-
QQ Workplace diversity
tion within the field of human resources (e.g., compensa-
tion, benefits, employee relations).5
2. What are your short- and long-term career goals? Additionally, whether you are new to the HR field, considering
a move to another company or seeking to broaden or expand
3. What types of companies and work environments are best your HR experience, there are different roads to reach these
suited to your goals?
goals. In particular, todays work environment offers many
4. Where can you find good career advice? choices that have an impact on career development: geography,
company size, industry, internal positions or external consult-
While you may not have immediate answers for all of these
ing. In terms of geography, different regions present various
questions, they provide an opening to begin the discussion
possibilities, such as lifestyle, cost of living, different climates,
about career developmentat any career stage.
proximity to family, company size and industry focus.10 For
SHRM research indicates that the top most important fac- industry sectors, HR professionals should consider the types of
tors for an individual to attain his or her next job in human services and products to which they are drawn. Another way to
resources are strategic/critical thinking, leadership and inter- select an industry is to consider the hot fields where growth
personal communication skills (see Figure 17.1). Additionally,
and opportunity are likely. Company size is another key factor.
key business partner skills for HR include strategic planning,
In todays global market, experience in a multi-billion-dollar
organizational design, change management, cross-functional
global company is highly recommended. Some companies
experience and global understanding.8 When assessing your
emphasize a friendly work atmosphere, with opportunities for
skill base and development gaps, these points are important
to keep in mind. Further, when seeking career advice, there creative and innovative projects. There are other choices to con-
are many options. According to the SHRM 2008 Managing sider, such as whether to develop a career in a company with
Your HR Career survey report, the most influential sources a well-known brand, such as Microsoft or Southwest Airlines,
of HR career advice are supervisors/managers or other high- or work as a consultant in a specialized company, using skills
level professionals in a supervisory role, colleagues, mentors/ such as speaking, writing and designing training materials.11 To
(n = 604)
Note: Data sorted in descending order. Percentages do not total 100% as respondents were allowed to select up to five choices.
Source: 2008 Managing Your HR Career: A Survey Report by the Society for Human Resource Management
2. Work with your manager to develop an action plan for However, the survey results also found that HR profession-
other developmental areas. als can encounter obstacles in advancing their careers. In fact,
these kinds of obstacles can also be seen in other professions,
such as difficulty due to a lack of specific experience in dif-
Figure 17.2 | HR Organizationsa Business Partner Model ferent organizations, industries and sectors. Other obstacles
cited include a lack of corporate HR strategy, business acumen,
leadership skills, a mentor, formal HR education, academic
VP of HR degrees and certification. Additional obstacles are the lack of a
clear HR career path, the size of the organization, and gender,
racial and age-biased glass ceilings.15
Corporate Line
Functions Functions
Finally, another key factor in career planning is the pace
that is, how quickly you want to move forward on your career
Compensation HR Generalist HR Generalist
track. Different paces have advantages and disadvantages. For
Staffing
and Benefits or Consultant or Consultant example, the advantages of the fast route are additional
responsibility, more promotions and a quicker climb up the
corporate ladder; a drawback is the loss of work/life balance
Organization HR Call HR Generalist HR Generalist (such as family time and/or non-work-related interests). The
Development Center or Consultant or Consultant
fast pace is not for everyone. Another option, taking the
scenic route, allows for family and outside interests as well as
Training or HRIS (HR steady career progress. No one pace is right for everyone, so it
Learning and Information is best to adopt a combination of both fast and more moderate
Development Systems)
paces, adjusting direction as needed.16
To assess their competency levels, HR professionals may refer QQ Building relationship of trust
to the 2007 Human Resource Competency Study. While not QQ Doing HR with an attitude (risk taking, influencing others, candidate
focused on a particular specialization of HR, this model observations)
presents a broad spectrum of HR competencies. This global Systems & Operational Executive administers the day-to-day work of managing
Processes people inside an organization by:
research project, conducted by the RBL Group and the Ross
School at the University of Michigan, in conjunction with the QQ Implementing workplace policies
Society for Human Resource Management and other parties, QQ Advancing HR technology
examined the business context and demographics that affect Business Ally contributes to the success of the business by:
the HR profession and identified six essential HR compe- QQ Interpreting social context
tency domains. The study considered the roles played by HR QQ Serving the value chain
professionals and, in particular, examined their ability to use
QQ Articulating the value proposition
knowledge.26
QQ Leveraging business technology
Outlined in Table 17.2 are the six HR competency domains: Organizational Talent Manager/Organizational Designer masters theory, research
Capabilities and practice in both talent management and organizational design by:
credible activist, operational executive, business ally, talent
manager/organizational designer, culture and change stew- QQ Ensuring todays and tomorrows talent
ard, and strategy architect. In the business ally domain, for QQ Developing talent
example, HR professionals contribute to the success of the QQ Shaping organization and communication
organization by knowing the setting or social context in which QQ Fostering communication
the company operates, articulating the value proposition and
QQ Designing reward systems
leveraging business technology. In this area, HR profession-
Culture & Change Steward recognizes, articulates and helps shape a
als demonstrate that they know the business sections of the companys culture by:
company (e.g., finance, marketing) and how the company QQ Facilitating change
makes money (i.e., the value chain of the businessthe cus-
QQ Crafting culture
tomersand their reasons for buying the companys products/
Valuing culture
services).27 By using this competency model, HR professionals
QQ
Source: Adapted from Palmer, P., & Finney, M. L. (2004). The human resource profession-
als career guide: Building a position of strength. San Francisco: John Wiley & Sons, Inc.
Chapter 1 15
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Ibid.
psychological conditions of meaningfulness, safety and avail-
4
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Kaye, B., & Jordan-Evans, S. (2003, August).
6
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2
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3
Ibid.
15
Deloitte. (2008). 2007 volunteer IMPACT survey. Retrieved
4
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16
De Colle, S., & Werhane, P. H. (2007, Spring). Moral
motivation across ethical theories: What can we learn for
5
Ibid.
designing corporate ethics programs? Journal of Business
Ethics, 81, 751-764.
CHAPTER 15 17
Urbany, J.E., Reynolds, T.J., & Phillips, J. M. (2008,
1
Business RoundtableInstitute for Corporate Ethics. Summer). How to make values count in everyday decisions.
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www.corporate-ethics.org. 18
Society for Human Resource Management & the Ethics
2
Society for Human Resource Management & the Ethics Resource Center. (2008, June).
Resource Center. (2008, June). The ethics landscape in 19
Ethics Resource Center. (2009, November).
American business. Alexandria, VA: Authors. 20
Tyler, T., Dienhart, J., & Thomas, T. (2008, Winter).
3
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1
The Boston Consulting Group, Inc., and the World
4
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Federation of Personnel Management Associations. (2008).
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5
Ibid.
2
DeGraff, J., & Lawrence, K. A. (2002). Creativity at work:
6
Tyler, T., Dienhart, J., & Thomas, T. (2008, Winter). The
Developing the right practices to make innovation happen. San
ethical commitment to compliance: Building value-based
Francisco: John Wiley & Sons, Inc.
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3
Thakok, A. V. (2000). Becoming a better value creator: How
7
Ethics Resource Center. (2009, November). 2009 National
to improve the companys bottom lineand your own. San
Business Ethics Survey. Retrieved from www.ethics.org.
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8
Trevio, L. K., & Weaver, G. R. (2003). Managing ethics
in business organizations. Stanford, CA: Stanford University
4
Ibid.
Press.
5
Michalko, M. (2001). Cracking creativity: The secrets of cre-
ative genius. Berkeley, CA: Ten Speed Press.
9
Society for Human Resource Management & the Ethics
Resource Center. (2008, June).
6
Society for Human Resource Management. (2009).
Leveraging HR and knowledge management in a challeng-
10
Ethics Resource Center. (2006). Critical elements of an
ing economy. SHRM Quarterly, 4.
organizational ethical culture. Retrieved September 25,
2009, from www.ethics.org/resource/criticalelements-orga-
7
Barrington, L., Foster, G. D., van Ark, B., & Woock, C.
nizational-ethicalculture. (2009, May). Innovation and U.S. competitiveness. New
Endnotes 159
25
Robb, D. (2006, June). Harvard Business School Publishing.
26
The 2007 Human Resource Competency Study conducted 31
Poore, C. A. (2001). Building your career portfolio. Franklin
by the RBL Group and the Ross School of Business at the Lakes, NJ: Career Press.
University of Michigan, in cooperation with regional partners: 32
Hay Group Limited. (2008). Preparing for your future: Best
SHRM, IAE, IMI, AHRI, National HRD Network and companies for leaders. Hay Group webinar, January 2008,
Tsinghua University. www.haygroup.com.
27
Ibid. 33
Dooney, J., & Esen, E. (2007, November). Incentive pay
28
Caligiui, P. (2006). Developing global leaders. Human fuels HR salaries. HR Magazine, 52(11), 35-43.
Resource Management Review, 16, 219-228. 34
Miller, G. (2001). The career coach: Winning strategies for
29
Rosen, R., Digh, P., Singer, M. & Phillips, C. (2000). getting ahead in todays job market. New York: Doubleday.
Global literacies: Lessons on business leadership and national 35
Palmer, P., & Finney, M. L. (2004).
cultures. New York: Simon & Schuster. 36
Ibid.
30
McCall, M., & Hollenbeck, G. (2002). Developing global
executives: The lessons of international experience. Boston:
The 100 Best Companies to Work For, 21, 23 assessment, 13, 15, 17, 29, 35, 37, 39, 51, 60, Behaviorally Anchored Rating Scales (BARS),
89, 90, 91, 108, 120, 130, 140 108
AARP, 46, 70, 75 multi-rater, 89 beliefs, 61
absenteeism, 7, 8, 39, 54, 64 pre-hire, 40 benchmark(s), 39, 67
Accenture, 101 Atlantic Health System, 21 benchmarking, 20, 23, 37
accountability, 25, 45, 47, 48, 56, 57, 58, 93, attrition rate, 39, 84 Best Companies for Leadership Study, 96, 97
104, 105, 112, 117, 119 authentic leaders, 88 Best Employers for Workers Over 50, 75
acquisition(s), 12, 27, 32, 33, 36, 45, 71, 78 authenticity, 13 best practices, 3
Adams, J. Stacy, 98 Autodesk, 24 Black Sales Council, 57
adaptability, 19, 31, 54, 77, 81, 87 Avolio, Bruce J., 99 Bloomberg BusinessWeek.com, 96
affirmative action, 53 Avon, 50 body language, 64
Africa, 74, 80
Boston Consulting Group (The), 129
African-American(s), 55, 56
Baby Boom, 46, 57, 73, 74, 87
Boudreau, John W., 19, 40
African-American Council, 57
Baby Boomer(s), 5, 23, 51, 69, 70, 71, 73,
African-Americans in Operations, 57 Boyatzis, Richard, 99
75, 93, 121, 133
AGCO Corporation, 24, 25, 78 Boyson, Brad, 78
BAE Systems, 91
University, 78, 79 brainstorming, 15, 130
balanced scorecard, 38, 51, 91
Age Discrimination in Employment Act, 53 brand, 46
Balanced Scorecard, 49, 103
Alcatel, 67 branding, 6, 8, 46
bandwagon arguments, 128
Allianz Group, 53 Brandt, David, 31
Bangalore, 92
America Family Insurance, 24 Brazil, 25, 117, 118
Banks, D., 30
Americas Most Admired Companies (AMAC), Breaking Through Culture Shock, 81
Barsoux, Jean-Louis, 33, 67, 77, 92
105, 106 bridge-building, 17
Beatty, R.W., 49
Americans with Disabilities Act, 53 Bridges, William, 31
Becker, B.E., 49
Anand, Rohini, 71
Brookfield 2010 Global Relocation Trends,
Beer, M., 13
Anderson, Chana, 95
80, 82
Anderson, Libby, 132 behavior(s), 4, 14, 15, 16, 21, 23, 25, 28,
29, 38, 46, 49, 61, 68, 70, 77, 88, 90, BT Global Services, 33
Aperian Global, 134
92, 93, 95, 98, 107, 108, 109, 119, 120, Built to Change, 29
Apple, 130
121, 124 business
Arab nations, 74
inappropriate, 65 acumen, 138, 139, 143
Argentina, 68
learned, 61 anecdotes, 23
The Art of Coming Home, 83
Arthur Andersen, 119 organizational, 27, 91 business process outsourcing (BPO),
Index 161
partner(s), 11, 12, 19, 27, 29, 35, 36, organizational, 12, 13, 14, 15, 23, 27, competency/ies, 21, 30, 39, 46, 48, 49, 78,
40, 42, 45, 46, 47, 79, 109, 138, 139, 28, 29, 30, 32, 33, 34, 37, 41 83, 88, 90, 92, 93, 109, 111, 112, 117,
141 planned, 15 129, 130, 139, 141, 142
strategy/ies, 7, 15, 36, 37, 46, 51, 60, process(es), 28, 29, 30 global, 67, 78, 142
108, 109, 126, 130, 140 readiness, 29, 31 competitive
success, 19, 35, 39 resistance to, 32 advantage, 7, 14, 19, 25, 26, 27, 33,
system, 30 urgency of, 32 36, 39, 40, 45, 55, 60, 63, 69, 70, 75,
trends, 27, 28 Chesapeake Energy, 130 77, 91, 98, 105
viability, 19 China, 8, 12, 17, 50, 63, 64, 68, 73, 80, 101, edge, 19, 73, 95, 101
unethical business practices, 122 133, 134 environment, 71, 77
Business Roundtable Institute of Corporate Cisco Systems, Inc., 38, 115 marketplace, 3, 27, 45
Ethics, 119 CitiGroup, 57 pressures, 103
Claus, Lisbeth, 61 success, 69
Canada, 6, 8, 68 coach/es, 12, 28, 90, 107, 138 compliance, 53, 121, 122, 125
career coaching, 6, 14, 15, 25, 68, 72, 84, 88, 92, legal, 119
advancement, 8 93, 112 compressed workweeks, 47
beliefs, 68 Cochran, P., 119 The Conference Board, 21, 27, 29, 37, 54
coach/es, 139, 140 code(s) of conduct, 120, 121, 129 confidential information, 25, 121
development, 8, 9, 14, 21, 24, 48, 56, Colgate-Palmolive Company, 64, 87 conflict management, 15
57, 60, 67, 68, 80, 87, 109, 131, 134, collaboration, 13, 20, 27, 30, 58, 88, 93, 100, conflict resolution, 58
137, 138, 139, 142, 143 112, 113, 114, 115, 116, 117, 118, 121, conflicts of interest, 121
womens, 48 126, 129, 130 ConocoPhillips, 23
growth, 48, 73, 82 collaborative, 8, 12, 87, 88, 112, 129 contingency plans, 29, 132
ladder, 67 Commission of the European Communities, Copeland, Anne P., 82
mobility, 36 59 corporate culture(s), 21, 28, 36, 47, 53, 55,
moves, 141 commitment, 7, 32, 129 59, 62, 70, 72, 74, 80, 88, 89, 106, 124,
path(s), 9, 61, 77, 79, 139, 143 communication(s), 5, 6, 19, 23, 25, 27, 28, 129, 131
plan(s), 68, 139 29, 30, 31, 32, 33, 34, 39, 41, 47, 65, 68, types
planning, 11, 50, 82, 139 72, 74, 78, 79, 88, 94, 100, 102, 107, Eiffel Tower, 62, 63
progression, 108 109, 111, 112, 114, 115, 118, 119, 120, family, 62, 63
stage, 143 121, 124, 131, 138, 141 guided missile, 62, 63
success, 68, 137 culturally appropriate, 113 incubator, 62, 63
Carlson/Gallup, 39, 47 ethics-related, 120 Corporate Leadership Council, 9
Carobolante, Lorelei, 113, 124, 125 face-to-face, 32 corporate social responsibility, 83, 93, 97, 119
Caterpillar, 7 miscommunication, 62, 64 corporate university (CU) , 91
Center for Creative Leadership, 70, 88, 93 organizational, 74 cost/benefit analysis, 83, 122
Center for Effective Organizations, 104 poor communication skills, 125 Creating People Advantage, 19, 129, 131
Cepero, Fernan R., 75 worldwide, 42 creative
change, 14, 28, 29, 30 communities of practice (CoPs) , 20, 22, 23 ideas, 21
implementation, 31, 32 company programs, 128
initiative(s), 13, 27, 28, 29, 30, 31, 32, culture(s), 28, 36, 73, 75, 93, 100, tension, 15
33, 34 109, 120, 130, 131 thinking strategies, 127
failed, 32 mission, 9 creativity, 13, 21, 25, 53, 58, 93, 109, 116,
management, 12, 13, 27, 28, 29, 30, performance, 59 117, 125, 129, 130, 131, 133, 135
31, 33, 34, 36, 39, 45, 47, 58, 65, 91, reputation, 88, 132 credibility, 32, 35
115, 138 scorecard, 37 cross-cultural, 16, 25, 42, 61, 62, 63, 64, 66,
global, 33 spirit, 8 65, 67, 68, 78, 79, 82, 83, 92, 118
Index 163
behavior, 19, 119, 120, 121, 123, 125 job assignments, 16 Gandhi, 69
conduct, 119, 120, 121, 123 repatriates, 84 gap analysis, 7, 14
culture, 120, 123 turnover, 42 Gates, Bill, 69
decisions, 122 gender, 53, 59, 60, 70
dilemmas, 122 fairness, 26, 119, 123, 124, 125 diversity, 59, 60, 71
expectations, 121 Families and Work Institute, 5 General Electric (GE), 29, 67, 92
guidelines, 121, 122 family leave, 74 generation gap, 69
investigations, 25 family-friendly policies, 82 Generation X, 5, 11, 69, 70, 71, 72, 73, 121
issues, 121 family-to-work conflict, 83 Generation Y, 5, 11, 69, 73, 75, 121, 130
leadership, 119, 120, 122 Fannie Mae, 56 generational
management, 25 feedback, 14, 25, 31, 33, 41, 58, 60, 66, 118, differences, 23, 69, 70, 74, 121
paradigms, 122 120 diversity, 73
principles, 121, 122 360-degree feedback, 66, 90, 92, 108, issues, 69
problems, 120 109, 138 Germany, 8, 63, 117, 118
responsibility, 125 constructive, 111 glass ceilings, 57, 139
rules, 121 multi-rater (360-degree), 15, 90, 108, global
standards, 120, 123 109 brains, 78
thinking, 17 Feyerherm, A.E., 14 business, 41, 61, 63, 78, 79, 106, 140
values, 120 Fifth Dimension (The), 30 capabilities, 78
violations, 120 financial challenges, 73
workplace, 119, 125 incentives, 28 competition, 50, 77
ethics, 19, 71, 88, 119, 120, 121, 122, 123, integrity, 122 competitive environment, 23
125 measures, 29 expansion, 33, 45
infrastructure, 120 outcome, 36 expertise, 83, 84
officer, 120 performance, 22, 35 fluency, 63
situational, 25 reward, 21 force, 69
standards, 121 success, 35, 36 HR, 17, 41, 42, 50, 82
taskforce, 25 well-being, 19 HRIS systems, 77
training, 120, 122, 122 Finland, 25 intelligence, 78
work ethic, 8, 92, 121 firm readiness, 89 marketplace, 3, 11, 19, 56, 67, 101
ethics and compliance fit to position, 47 mindset, 42, 67, 77, 78, 92, 124, 141,
function, 120 flex time, 47 142
program, 123 flexible hours, 74 mobility, 80, 83, 84
Ethics Resource Center (ERC), 120, 123 flexible work, 23, 57 organization(s), 24, 32, 41, 101, 133
ethnic Florkowski, G., 131 organizational capability, 77
diversification, 53 FMLA, 124 peers, 73
diversity, 60 focus groups, 15, 16, 41, 58 portfolio, 142
groups, 57 Ford Motor Company, 46, 55 skills, 78
minorities, 60 foreign nationals, 132, 133 strategic orientation, 12
ethnicity, 70 France, 25, 63, 68 supply chains, 50
EU Article 13 Race and Employment Direc- Friday, Dan, 75 The Global Challenge, 33
tives, 59 functional silos, 25 Global Relocation Trends, 84
Europe, 54, 60, 74, 116 globalization, 17, 19, 33, 36, 50, 53, 54, 61,
European Union (EU), 53, 59, 60, 70 G2nd Systems, 113 68, 78, 91, 93, 94, 112, 117, 134, 141
Evans, Paul, 33, 67, 77, 92 Gaetano, Joy, 122 GlobeSmart, 24
expatriate(s), 25, 50, 80, 92 The Gallup Leadership Institute Summit on GMAC Global Relocation Trends Survey, 24
assignment(s), 24, 25, 42, 81, 83, 132 Authentic Leadership, 88 goal definition, 112
experience, 83 Gallup Organization, 4, 6 goal setting, 11
Index 165
innovativeness, 106 interactional, 64 pool(s), 48, 54
institutional knowledge, 25 organizational, 64, 123 relations, 137
integration, 91 perceptions of, 64, 65 shortages, 69
integrity, 5, 6, 70, 71, 78, 94, 119, 120, 121, procedural, 64 sources, 38
122, 141, 142 social, 13 lagging indicator(s), 37, 38
Intel Corporation, 29, 50 workplace, 64 Larrere, John, 97
intellectual capital, 16, 75, 91 Latham, Gary P., 98, 99
intellectual property, 25 Kaplan, Robert, 103 Latin America, 112
interactive virtual learning, 23 key performance indicators (KPIs), 35, 36, 37, Latino Christian nations, 74
intercultural 38, 39, 40, 41, 42 Lawler III, Edward E., 29, 40, 96, 107
communication, 58, 63 King, Martin Luther, 69 Lawrence, Paul R., 100
competence, 67 Kirkpatrick, D.L., 15, 16 layoffs, 24, 31
skills, 61 knowledge leadership, 8, 24, 27, 46, 47, 49, 51, 70, 72,
team building, 58 competencies, 14 87, 89, 90, 91, 93, 94, 95, 96, 97, 99,
internal expertise, 22 creation, 22 100, 104, 111, 119, 120, 121, 123, 125,
international employment law, 77 development, 21 129, 131
International English, 64 economy, 20, 21 authoritative leadership, 87
internationalization, 94 exchange, 25 capacity, 23, 75, 88
interpersonal skills, 13 explicit, 20 committed, 59
interview(s), 15 flow, 25 competencies, 57, 61, 87, 89, 94, 142
process, 48 integration, 21, 26 crisis, 89
entrance, 8 loss, 23 development, 13, 19, 22, 23, 24, 37,
exit, 60, 67 management (KM), 12, 13, 19, 20, 21, 41, 46, 47, 48, 49, 50, 55, 58, 74, 87,
Italy, 25, 63 22, 24, 25, 26, 91, 132 88, 89, 90, 91, 92, 93, 94, 97, 131,
organizational, 19, 20, 21, 74, 88 132
J. C. Penney Company, 119 retention, 23 failure, 88
Japan, 8, 22, 25, 33, 63, 64, 65, 66, 73, 112, sharing, 21, 22, 25 gap, 88, 91
117, 118, 130, 131 transfer, 23, 24, 25, 132 global, 42, 67, 78, 92, 113, 131, 142
Jelinek, M., 11 cross-generational, 23 lifecycle, 88, 89
job global, 25 local, 92
analysis, 108 work, 21, 22 opportunities, 57
applicants, 71 worker(s), 20, 21, 26 participatory, 51
challenge, 73 knowledge-based pipeline, 90
competencies, 106 competition, 20, 21 role(s), 48, 58, 118, 141
descriptions, 106 resources, 19 skills, 57, 58, 87, 88, 89, 96, 112, 139
design, 15, 100 strategies, 36 poor, 88
dimensions, 108 knowledge-era mindset, 89 styles, 91, 111
performance, 9, 47, 80 knowledge-sharing taskforces, 21 team(s), 49, 89
rotation, 90 Korea, 22, 64 training, 21, 90, 91
satisfaction, 21, 22, 39, 64, 73, 95 Kotter, John, 30 Leading a Multigenerational Workforce, 70
security, 82 KPMG, 23 leading indicator(s), 37, 38, 41
shadowing, 90 Kraft Foods, 57 learning, 11, 13, 14, 15, 16, 17, 21, 22, 25,
sharing, 74, 132 Kriegel, Robert, 31 48, 59, 72, 74, 92, 93, 116, 122, 129,
Johnson & Johnson, 67, 92 130
Jones, James Earl, 56 labor action-learning, 93
JPMorganChase, 46 force, 48, 54 adaptive learning, 13
justice, 123 market(s), 46, 48, 53, 60, 71, 132 culture, 21
distributive, 64 global, 8, 70 e-learning programs, 37
Index 167
initiatives, 16 outplacement programs, 30 performance-related costs, 4
intervention(s), 13, 15, 17 outsourced, 128 periodic evaluations, 13
principles, 13 outsourcing, 27, 33 Pew Research Center, 70
programs, 15 overtime, 130 Pfizer, 49, 98, 99
strategies, 17 overworked employees, 7 pilot program(s), 30, 31, 111
tools, 17 Pink, Daniel H., 99
values, 16 paid sick time, 131 Pitney Bowes, 55
work, 16 parent country nationals (PCNS) , 80 pivotal roles, 20
dialogue, 30 part-time employment, 23 planned interventions, 13
dynamics, 126 part-time work, 57 Presidents Award for Integrity and Business
effectiveness, 11, 13, 26, 27, 54, 55, pay differentiation, 109 Ethics, 121
59, 96, 140 pay for performance, 63, 79, 87, 100 proactive organizations, 19
expectations, 126 people management philosophy, 130 problem-solving ability, 12
goals, 10, 15, 121, 128 PepsiCo, 29 process improvement, 12, 128
strategic, 46, 54 performance, 3, 4, 5, 6, 9, 11, 12, 14, 19, 23, process management, 127
growth, 13, 48 24, 29, 35, 41, 42, 45, 51, 56, 66, 95, 96, Procter & Gamble, 46, 92
hierarchy, 73 97, 98, 100, 101, 102, 103, 105, 106, productivity, 3, 4, 5, 7, 8, 9, 11, 13, 20, 21,
impact, 16 107, 108, 109, 119, 121, 122, 126, 130 22, 27, 30, 31, 35, 36, 41, 45, 47, 54, 55,
interventions, 14 appraisal(s), 49, 63, 65, 66, 79, 105, 56, 58, 59, 60, 66, 72, 79, 113, 115, 117,
issues, 15 107, 108, 109, 123 118, 124, 125, 130, 132, 133
leaders, 21, 54, 61, 64, 69, 70, 95, assessment, 40 professional capacities, 140
101, 111, 119, 124, 126, 129, 133, drivers, 36, 37, 141 professional development, 15, 21, 24, 51, 68,
134 evaluation, 59 73, 74, 75, 87, 98, 109, 142
memory, 12 expectations, 6 professionalism, 131
mission, 131 feedback, 66, 67 profit centers, 12, 19
objectives, 77 firm, 35, 37, 38 profit measures, 37
priority, 87, 89 gaps, 109 profitability, 7, 19, 26, 56
process, 5 goal(s), 6, 107 project management, 130
reputation, 23, 28, 125 issues, 15 promotion(s), 14, 16, 21, 41, 72, 100, 133
resistance, 29 levels, 97, 108 readiness, 49
resources, 4 management, 8, 11, 17, 21, 25, 28, strategies, 57
scorecard, 23 31, 37, 47, 50, 58, 66, 100, 104, 107, proprietary information, 121
settings, 99 108, 115 Pucik, Vladimir, 33, 67, 77, 78, 92
silos, 92 system(s) (PMS), 9, 47, 51, 103, pulse survey, 8, 33
skills, 111 104, 105, 106, 107, 108, 109
stability, 48, 49 measures, 36 The Quaker Oats Company, 56-7
staff, 30 metrics, 127 Qualcomm, 21
strategy, 3, 10, 37, 41, 46, 47, 51, 87, objectives, 107 quality rates, 8
88, 98, 126, 129 operational, 104 questionnaires, 15
structure, 27, 36, 100 organizational, 3, 15, 35, 36, 37, 40,
success, 3, 6, 11, 19, 20, 23, 35-6, 39, 42, 46, 53, 54, 59, 97, 101, 132, 140 race, 53, 70
45, 48, 87, 102 problems, 103 racial diversity, 59, 60
transformation, 12 rates, 8 The Racial Equality Directive 2000/43/EC,
trust, 30 ratings, 39 59
viewpoint, 53 review(s), 14, 106, 108, 115, 121, 123 radical innovations, 128
vision, 30, 95 reward, 103 Rainbow Council, 57
orientation process, 8 standards, 47, 66 Rasmussen, Soeren, 99
Orler, Elaine, 111, 114 strategies, 40 rater bias, 105
Index 169
structured assessment, 29 activities, 74 trust, 14, 16, 19, 30, 36, 62, 68, 88, 95, 100,
structured questionnaire, 8 development, 14 102, 111, 112, 113, 113, 116, 119, 121,
structured survey methods, 29 effectiveness, 60 125, 139
succession engagement, 117 turnover, 6, 7, 10, 16, 20, 21, 22, 28, 29, 32,
management, 89, 92 global, 81, 133, 142 35, 36, 37, 39, 40, 41, 47, 49, 54, 55, 58,
plans, 48, 49, 50, 141 leader(s), 118 64, 65, 66, 73, 79, 84, 88, 93, 139
programs, 27 global, 134 cost, 39, 46, 48, 54
planning, 14, 21, 22, 23, 39, 45, 48, leadership, 90 rates, 41, 92
49, 50, 57, 58, 60, 74, 75, 78, 89, 90, performance, 117, 125 voluntary, 8
108, 109, 132, 142 specialization, 22 tweeners, 69
Survey of Global Talent Management Prac- style, 117
tices, 51 team-based pay, 79 U.S. Census Bureau, 71
sustainability, 9, 12, 19, 21, 26, 35, 36, 48, virtual, 112, 113, 114, 115, 116 Umpqua Bank, 73
50, 56, 61, 82, 88, 119, 125, 130, 135 teamwork, 66, 79, 88, 95, 100, 121 unfair treatment, 125
sustainable change, 27 telecommuting, 47, 58, 74, 114 Unilever, 67, 91, 92
SWOT, 30 teleconferencing, 83, 114 United Kingdom, 63, 68, 80
temporary work assignments, 74 unplanned absences, 132
tacit knowledge, 20, 23 third-country nationals (TCNs) , 80 unscheduled time off, 132
talent, 7, 8, 19, 23, 24, 29, 36, 38, 41, 45, time-to-fill, 35, 39, 41
46, 47, 49, 50, 51, 54, 55, 57, 58, 60, 61, Title VII of the Civil Rights Act, 53 vacation time, 124
65, 73, 77, 80, 89, 90, 92, 93, 95, 97, tolerance of error, 130 Valero Energy Corp., 38
98, 104, 106, 107, 122, 124, 129, 131, Top 100 Companies to Work For, 55 value(s)
132, 134 Top 50 Companies for Diversity, 55, 57 chain, 139
attraction, 37, 47 Tosti, Donald T., 77 change, 16
crisis, 51 Towers Perrin, 8, 77, 81 corporate, 23, 26, 31, 102, 119, 119,
development, 49, 90 Towers Perrin Global Workforce Study, 120, 122, 125, 127, 129
foreign, 50 133 creation, 30, 126
friendly, 8 Towers Perrin Talent Report, 105 creator, 126
global, 67, 77, 81, 82, 83 Toyota, 128 divergent value systems, 121
high-potential, 91 Toyotestsu America, Inc., 24 initiatives, 64
management, 17, 19, 40, 41, 45, 46, Traditionalists, 69, 70, 71, 121 organizational, 20, 29, 41, 119, 120
47, 48, 49, 50, 51, 67, 70, 88, 89, training, 8, 15, 17, 21, 22, 29, 32, 36, 37, 39, orientation, 17
100, 101, 131, 132, 133, 140 40, 41, 42, 58, 67, 68, 72, 74, 78, 82, 87, proposition, 133, 141
global (GTM), 50, 51, 84, 92 90, 91, 98, 100, 109, 122, 123, 131, 132, system(s), 71, 121
mindset, 45, 47, 49 137, 139 Verizon Communications, 56, 57
pool(s), 3, 20, 25, 38, 47, 48, 49, 51, awareness, 58 veterans, 71
74, 90, 133 organizational, 58, 108 virtual
retention, 21, 47, 73, 74, 95, 101, program(s), 29, 30, 37, 65, 109, 116 employee(s), 114
132, 133 retraining, 71 environments, 112
review(s), 50, 51 transformation, 16, 50 global teams, 61
strategy/ies, 23, 36, 48 transformational leaders, 14 guiding principles, 112
talent-match databases, 51 transforming organizations, 14 marketplace, 118
Talent Management Strategies Survey, 51 transparency, 119, 124, 125 meetings, 111, 113
task achievement, 21 Travel Wise: How to be Safe, Savvy and Secure network, 112
task-oriented, 63 Abroad, 83 organization, 112, 116
Taylor, S., 66 Trevio, L.K., 119 teaming, 114, 115, 116
team(s) Trompenaars, Fons, 62 workspace, 111
building, 15, 58 virtuous spiral, 96
Index 171
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