Linard_Dynamics of Human Resources Planning

8/9/2019 Linard_Dynamics of Human Resources Planning

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DYNAMICSOF

HUMANRESOURCESPLANNING

byKeithLinard

Keithlinard#@#yahoo.co.uk (Removehashestoemail)

LubomirDvorskyAWorkinProgress

xxxxxxxxxxxxx


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Centre for Business Dynamics and Knowledge

Management, University of NSW (ADFA),

Australia

Abstract

DYNAMICS OF HR PLANNING

The objective of this project is to assess, identify and model major components influencing an

organisations dynamics and its performance. There is a growing evidence that organisational

effectiveness, an organisations capacity to achieve its goals and to fulfil members needs, is a

function of the congruence between people, process, structure and environment. (Michael

Beer, A Social Systems Model for Organization Development)


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TABLE OF CONTENTS

1. THE MODEL ..................................................................................................... 5

1.1 Staff Supply Chain .................................................................................................... 5

1.1.1 Employee Categories .............................................................................................. 5

1.1.2 Progress Delay ........................................................................................................ 6

1.1.3 Turnover .................................................................................................................. 6

1.1.4 Hiring Policies ....................................................................................................... 11

1.1.5 Cost of Hiring ........................................................................................................ 11

1.1.6 Hiring delay ........................................................................................................... 11

1.1.7 Temporary Staff .................................................................................................... 11

1.2 Competence .............................................................................................................. 121.2.1 Skill Index ............................................................................................................. 15

1.2.2 Formal training ...................................................................................................... 15

1.2.3 On the job training ................................................................................................ 15

1.2.4 Supervision of Novices ......................................................................................... 16

1.2.5 Professional Development .................................................................................... 16

1.3 Capacity .................................................................................................................... 16

1.3.1 Productivity ........................................................................................................... 16

1.3.2 Motivation ............................................................................................................. 181.3.3 Morale.................................................................................................................... 20

1.3.4 Employee Satisfaction .......................................................................................... 20

1.4 Workload .................................................................................................................. 20

1.4.1 Planning ................................................................................................................. 20

1.4.2 Impact of Management on Planning ..................................................................... 20

1.4.3 Unplanned work .................................................................................................... 20

1.4.4 Monthly Workload Pattern ................................................................................... 20

1.5 Work completion ..................................................................................................... 20

1.5.1 Quality Approval ................................................................................................... 201.5.2 Rework .................................................................................................................. 20

1.5.3 Work deferred ....................................................................................................... 21

1.6 Work Stress .............................................................................................................. 22

1.6.1 Definition ............................................................................................................... 22

1.6.2 Effects of stress ..................................................................................................... 23

1.6.3 Burnout .................................................................................................................. 24

1.6.4 Impact on Absenteeism ......................................................................................... 24

1.6.5 Stress Remedies .................................................................................................... 24


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1.7 Innovation ................................................................................................................ 24

1.8 Organisational commitment .................................................................................. 27

1.9 Management Effectiveness ..................................................................................... 27

1.10 Service Quality ......................................................................................................... 28

1.11 Customer Satisfaction ............................................................................................. 29

1.12 Research and development and Innovation ......................................................... 29

1.13 Fraud ......................................................................................................................... 33

1.14 Governance .............................................................................................................. 33

1.15 Communication ....................................................................................................... 33

1.16 Finance ...................................................................................................................... 34

1.17 Organisational Performance .................................................................................. 34

1.18 Human Capital ........................................................................................................ 38


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LIST OF FIGURES

Figure 1 - Staff Supply Chain ...................................................................................................... 5Figure 2 - Staff Turnover ............................................................................................................. 7Figure 3 - Staff Hire ................................................................................................................... 11Figure 4 - Formal Training ....................................................................................................... 15Figure 5 - Supervision of Novices .......................................................................................... 16Figure 6 - Rework ....................................................................................................................... 21Figure 7 - Work Deferred ......................................................................................................... 21Figure 8 - Innovation Capital ................................................................................................... 25Figure 9- Communication ........................................................................................................ 33


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INTRODUCTION

Periodically, attempts have been made to develop a human resource valuation model,

capturing costs related to acquiring and developing a skilled workforce, and to allocate these

costs to the work and services performed. But without a consistent framework for external

validationwithout which it is impossible to measure progress within a firm, much less

generalise across companies - or a cost-effective means of capturing and manipulating the

necessary information inputs, these models have not generated widespread acceptance.

Drawing on the vast amount of literature across many disciplines we attempt to decribe the

driving forces and cause and effect relationship among the major elements of a professional

organisation.

Competitive advantage and ultimately superior performance stem not only from the

uniqueness and variety of the firm's current resources, but also from how they change over

time as a result of management policies applied. (John Morecroft, Resource management

under dynamic complexity).

Human resource skills are essential to future managerial success, as you can see from

observing what the best top managers say about their most critical challenges. Increasingly,

successful CEO's describe their success in terms of skillful management of people. Jack

Welch, CEO of GE, describes his "lessons for success", including "The only way I see to get

more productivity is by getting people involved and excited about their jobs", "Anybody who

gets this [CEO] job has got to believe in the gut that people are the key to everything and "If

you're not thinking all the time about making every person more valuable, you don't have a

chance."29 (John W. Boudreau, Human Resources and Organization Success)


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GLOSSARY

Word. [Click and type definition here.]


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1.THE MODEL

Stocks:

Management staff

Support staff

Budget

Workload

Skills

Motivation

Morale

Job satisfaction

1.1 Staff Supply Chain

1.1.1 Employee Categories

Figure 1 - Staff Supply Chain

Attriton_Rate Attriton_Rate Attriton_Rate Attriton_Rate

progress2 progress3 progress4

Progress_delayProgress_delay

Competent__ ExpertsTrained_ Skilled_

Progress_delay

Competent_AttRate Skilled_AttRate Expert_AttRate

Progress_delay

Novices

Novice_AttRate

Support_Staff_hire progress1

Trained_AttRate

Attriton_Rate

InitNovice InitTrained InitCompetent InitSkilled InitExpert

Executive_Staff_hire

! !

!

!


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Using the Hubert L. Dreyfus concept we have introduced five skill levels in our model.

Support staff are hired at the Novice level and as they acquire skills move trough Trained,

Competent and Skilled to the Expert level.

1.1.2 Progress Delay

Progress delay between different levels is impacted on by

Respondents were asked how long it took to recruit the right person into a middle

management role. Just under a third (30%) cited 3 months. This varied according to company

size. 19% of small companies felt it took them up to 3 months to recruit, compared with 35%of medium companies and 37% of large companies. Financial services and IT were also more

likely than other industrial sectors to mention 3 months (39% and 38% respectively). The

mode length of time for a new recruit in middle management to become productive was up to

six months 29% of respondents. New recruits were more likely to take this length of time in

a large company (35%) than in a small company (21%). 20% of all respondents felt that it took

between 6 months and a year. Recruits in financial services and IT sectors were more likely to

up to 6 months to become productive than their peers in other industrial sectors. (PEOPLE

AND PRODUCTIVITY, Investors in People UK, October 2001)

1.1.3 Turnover


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Figure 2 - Staff Turnover

The plethora of research into the issue indicates the significance and complexity of the

problem.

Turnover comprises two types. Voluntary turnover is defined as the movement across the

membership boundary of an organization, which is initiated by the employee (Price, 1977).

Involuntary turnover, in contrast, is defined as the movement across the membership

boundary of an organization, which is not initiated by the employee (Price, 1977). Generally,

involuntary turnover includes dismissals, retrenchments and deaths (Campion, 1991).

Importantly, resignations are still the most prevalent form of turnover in Australia. According

to the Australian Bureau of Statistics (1998b), of those employees who ceased a job during the

year ending February 1998, 64 percent had left their jobs voluntarily (resigned) compared to

21 percent who had been retrenched. In terms of Australian industry trends, the average level

of voluntary turnover in the health care sector is around 20 percent (Morehead, Steele,

Alexander, Stephen, & Duffin, 1997). Further, from a human resources (HRs) perspective

Staff Turnover

JobSatisfaction

Work Stress

ManagementSupport

ExternalJob

Opportunities

VoluntaryTurnover

OrganisationalCommitment

+

-

-

-

Capacity

-

-

-

ManagementCapacity

+

-

B1 B2


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there is ample empirical evidence to affirm that the formulation of specific HR strategies (e.g.,

family friendly policies) can influence an employee's decision to resign (Hom & Griffeth,

1995). (Roderick D. Iverson, An event history analysis of employee turnover)

Emotional exhaustion is a component of burnout and is considered to be a chronic condition

resulting from the stress of work (Maslach & Jackson, 1981; Miller et al., 1990). Burnout is

frequently found in human services organizations where employees have direct contact with

the public, such as in hospitals (Pines, 1982). Emotional exhaustion is associated with

increased employee turnover (Wright & Cropanzano, 1998). ((Roderick D. Iverson, An event

history analysis of employee turnover)

Job opportunity is sometimes described as environmental opportunity (Bluedorn, 1982),

opportunity (Price & Mueller, 1986), and the predictability of finding an acceptable alternative

(Mobley, Horner, & Hollingsworth, 1978). Job opportunity does not refer to the availability of

jobs within the organization, but to the jobs that are external to the organization. Although

Farrell and Rusbult originally hypothesized alternative value (i.e., job opportunity) to influence

job commitment, it is anticipated to directly impact on turnover. The supply and demand

created by the job market effects the mobility of employees. Where employees consider theycan obtain a job as good, better or much better than they presently have, the propensity to

leave is increased

Employee orientations reflect the affective responses to the job and organization. These

comprise the orientations of job satisfaction, organizational commitment, and intent to leave.

Job satisfaction refers to the overall degree to which an individual likes her/his job (Price &

Mueller, 1986), organizational commitment to the degree of loyalty to the organization (Porter

et al., 1974), and intent to leave as the behavioral attachment to the organization (Iverson &

Roy, 1994). There is strong support for the negative relationships of job satisfaction and

organizational commitment and the positive relationship of intent to leave with voluntary

turnover (Cohen, 1999; Farrell & Rusbult, 1981; Hom & Griffeth, 1995; Lee & Maurer, in

press; Lee, Mitchell, Wise, & Fireman, 1996; Mueller et al., 1994; Price & Mueller, 1986;

Somers, 1996; Weil & Kimball, 1995). (Mueller et al., 1994). (Roderick D. Iverson, An event

history analysis of employee turnover)


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Apart from the human capital considerations of losing core employees, the cost of turnover

can be immense. A recent study of high performing Australian female mangers reported the

total turnover costs (direct and indirect) associated with separation, replacement, and training

to be around AUS$75,000 (Abbott, De Cieri, & Iverson, 1998). (Roderick D. Iverson, An

event history analysis of employee turnover)

(Kelley & Thibaut, 1978) proposed that employee turnover is determined by a combination of

job rewards and costs (i.e., job-related variables), job investments (i.e., personal variables),

alternative values (i.e., job opportunity), and employee orientations (i.e., satisfaction and

commitment). (Roderick D. Iverson, An event history analysis of employee turnover)

Several models have postulated job satisfaction and organizational commitment to be

antecedents of turnover (e.g. Williams and Hazer, 1986; Farkas and Tetrick, 1989; Arnold and

Feldman, 1982). Clegg (1983) contends that satisfaction and commitment have been the most

frequently investigated components of affect with regard to turnover decisions. One factor

that has been frequently associated with both work attitudes and turnover intentions is job

stress. Lofquist and Dawis (1969) argued that increasing levels of job tension or stress may

lead to a decision to quit. A study by Sheridan and Abelson (1983) showed that whenindividuals' perceived job tension exceeded a threshold limit, they quit. Bedeian and

Armenakis (1981) found that job- induced tension causally affected satisfaction which, in turn,

influenced propensity to leave. (A.R. Elangovan)

Companies with better organization culture have better retention rates [51]. Mone says that as

management shuffles the organization by reorganising, downsizing, and eliminating layers of

workforce, there is a direct impact on the employees of the organisation. One of the

dysfunctional consequences of downsizing is that survivors of the shrinkage get nervous,

experiencing increased stress and job insecurity. Mone suggests that it is not always the

poorest performers who leave; in fact it is often the highest performing workers who find

good alternatives and are the first to leave.

Retention is really a construct and not just one variable. Researchers focus on different

aspects. For example, Muhammad found that stressors, such as work overload and role


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ambiguity, might cause the employee to have low job satisfaction and motivation,

subsequently resulting in low organizational commitment, burnout and high turnover [41].

Staff experience is a necessity in maintaining work quality. Szajna [53] and Ravichandran [49]

point out that 25 percent of the project failures can be attributed to programmer turnover.

Indeed, turnover may lead to a loss of human resources weakening competitive positions.

While employees with low turnover tendency are characterized by high job satisfaction and

job security perceptions [20], employees with high turnover intent may be filled with

frustration and may not concentrate on their jobs. We measure turnover intent of existing

employees; this indicates the degree of contribution of the employees. Campion suggests that

the measures should be viewed as lying on a continuum rather than on one of the two ends.

Lower employee turnover intent may indicate better employee retention.

{Brenda L. Mak, Hy Sockel, A confirmatory factor analysis of IS employee motivation and

retention, Information & Management 38 (2001) 265-76}

Conceptually, behavioral commitment is the extent to which an employee plans to continue

membership with the current employer. The literature sometimes calls it intent to stay,

propensity to leave, intent to quit, or attachment (Halaby, 1986; Mowday, Porter, & Steers,

1982; Price, 1997).

Satisfied employees are more likely to be committed to the company, less likely to search for

employment elsewhere, and more likely to stay in the company. This finding is not surprising

or unusual, given that these variables were postulated to mediate, and indeed did mediate, the

impacts of a substantial number of exogenous variables on behavioral commitment. The total

effects of job satisfaction and organizational commitment are roughly the same, with jobsearch's effect being approximately 70 percent as great as these affective response variables.

Before the 1970s, job satisfaction was the only mediating variable examined in the causal chain

leading to employee retention. Industrial and organizational psychologists in the mid-1970s

and later (Mobley, 1982; Mowday et al., 1982; Porter et al., 1974), however, began to suggest

that organizational commitment is a more important mediating variable than job satisfaction.

Similarly, sociologists interested in employment relationships have given more attention to


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organizational commitment than to job satisfaction; Hodson (1991) has even questioned the

value of continuing to study job satisfaction. Recent sociological accounts, notably Halaby

(1988) and Halaby and Weakliem (1989), further argue job search as an important mediating

variable, while diminishing the importance of both job satisfaction and organizational

commitment.

Opportunity is another important environmental determinant in this study. Employees who

have alternative and more rewarding jobs available in the local labor market are less satisfied,

less committed, more prompted to search for a job elsewhere, and less likely to stay in the

company. The finding thus suggests that job openings affect behavioral commitment across

cultures. (Sang-Wook Kim, Behavioral commitment among the automobile workers in South

Korea,)

1.1.4 Hiring Policies

Figure 3 - Staff Hire

1.1.5 Cost of Hiring

1.1.6 Hiring delay

1.1.7 Temporary Staff

Staff Hire Requirements

mpetent_AttRate

Novice_AttRate

Expert_AttRate

roficient_AttRate

dvanced_AttRate

Executive__Staff_departed

Decision_SupStaff_hire

Automatic_Hire_Switch

Admin_SupStaff_hire

Tech_SupStaff_hire

ProfServ_SupStaff_hire

SES_Staff_hire

ES_Staff_hire

Executive_Staff_Gap

Decision_ExecStaff_hire

Support_Staff_Hire_Delay

Executive_Staff_Hire_Delay

Executive_Staff_Hire_Actual

Support_Staff_Hire_Actual

Support_Staff_Gap

Support_Staff_departed

Automatic_Hire_Switch


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1.2 Competence

Individual competencies can be specific to a job context, and may not be transferable to

another context. There are also generic competencies that have been identified as important

for individual learning such as being able to accept negative feedback without becoming

defensive (Argyris & Schn, 1978), having an orientation to self development (Pedler,

Burgoyne & Boydell, 1991), acquiring external knowledge (Bertini & Tomassini, 1996), and

having a scanning imperative (Nevis et al. 1995). Interpreting requires more than competence

and capability, however. It requires both motivation, and direction or focus. It is this nexus

between what individuals can do (capability), what they want to do (motivation), and whatthey need to do (focus) that enhances individual learning (Watkins & Marsick, 1993).

(Nick Bontis at al., Managing ab organizational learning system by aligning stocks and flows,

2000)

Human capital has also been defined on an individual level as the combination of these four

factors:

Your genetic inheritance;

Your education;

Your experience; and

Your attitudes about life and business

(W. Hudson, Intellectual Capital: How toBuild it, Enhance it, Use it, John Wiley & Sons, New

York, NY, 1993)

The 2% Challenge As you read this, the information inside your company the raw material for

decision-making is increasing about 2% per month. That means...

TRAINING One-quarter of last years training programs are out of date or useless

CHANGEThe half-life of any change effort is just over 18 months


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BRANDWithin two financial quarters, over 10% of your loyal customers will be confused as to

what your brand stands for - ...Simply due to information overloads impact on your brand

positioning

CAPABILITIES, SKILLS Every 1100 days, your workforces ability to transform information into

work becomes twice as important - ...Every three years, the amount of information you need

to capture, organize, communicate, understand and build into solutions will double.

MATERIALS FOR WORK If you havent completely purged, replaced or updated 100% of your

organisational knowledge in a 36-month cycle, you cant compete effectively - ...Your ability to

make fast, innovative, right decisions will be out of date.

(The Jensen)

Both the primary and secondary research identifies lack of training and development as

perhaps the principal barrier to increased staff, and therefore organisational, productivity.

Correspondingly, providing adequate training to staff was viewed as among the most

important enablers of increased organizational productivity, both by employers and

employees. The major enablers of productivity are seen as:

having staff with appropriate skillsets

having a good training and personal development programme (clearly correlative)

having a clear management structure good resource planning.

( Investors in People UK, PEOPLE AND PRODUCTIVITY)

Measuring the effects of training on productivity is difficult. In most cases, wages are often

used the theory being that the growth in wages over a workers lifetime is largely the result

of productivity gains caused by training. The Institute for Fiscal Studies (IFS) reported several

studies regarding the impact of training on subjective measures of performance. In the UK, a

study identified that a 5% increase in the proportion of employees receiving training

was associated with a 4% increase in productivity . US data showed that a 10%


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increase in training is associated with a 3% increase in growth (on a subjective

productivity scale) ( Investors in People UK, PEOPLE AND PRODUCTIVITY)

There is also some evidence that training can reduce labour turnover (Harrigan 1979). In the

right conditions, low turnover and high levels of training can reinforce each other. (Office of

Employment, Training and Tertiary Education, Victoria, Australia)

The main result is that we find a statistically and economically significant effect of training on

industrial productivity. A 5 percentage point increase in training is associated with a four

percent increase in productivity and a 1.6 per cent increase in hourly wages. Lorraine Dearden,

Howard Reed, John Van Reenen, Who gains when workers train?

The productivity effect of training is over twice as large as the wage effect, implying that

existing estimates have underestimated the benefits of training by focusing on wages.

(Lorraine Dearden, Howard Reed, John Van Reenen, Who gains when workers train?)

Black and Lynch have managed to construct a more representative sample of U.S.

establishments matched to the LRD (Longitudinal Research Database, an administrative data

source). In the cross section (Black and Lynch, 1995) they identified some effects of the type

of training on productivity, but they could find no effects at all when they controlled for plant

specific effects (Black and Lynch, 1996). Ichinowski et al (1997) argue that training per se is

likely to be less important than the overall combination of complementary human resource

practices. They demonstrate this in their panel of steel finishing mills. Black and Lynch (1996)

and Bartel (1995) do not find strong evidence of such interactions in their data. (Lorraine

Dearden, Howard Reed, John Van Reenen, Who gains when workers train?)

Managers feel that the most important skills required from their employees to carry out their

jobs effectively are problem solving and team skills, and more generally the ability to learn new

skills. Training of employees increased slightly in all areas compared to three years ago. On

average, 68% of the employees receive training. Computer and other office equipment training

is provided almost universally, while more than 90% of the units report professional and

technical training. The employees themselves initiate almost 1/3 of all training. (Anil Verma

and Zsuzsanna Lonti, Changing government workplaces)


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Future challenges identified by managers include several issues, such as employee burnout and

fatigue, loss of experience and corporate memory, employee morale, and hiring and staffing.

(Anil Verma and Zsuzsanna Lonti, Changing government workplaces)

1.2.1 Skill Index

Human capital theory sees training as an investment in skills which increase productivity.

1.2.2 Formal training

Figure 4 - Formal Training

1.2.3 On the job training

On the econometric side several micro studies have found impacts of training on subjective

measures of performance. In the US, Bartel (1995) found a significant relationship between

formal on-the-job training and the subjective performance ratings of professional employees

Formal Training - Staff Development

SD_moving

SDD_out

SD_Moving_Avg

Staff_Development_Impact_on_TurnoveEffectOfSDev_ProgressRate

SD_Dollars_Index

SDD_in

Impact_of_Mngm_Effectiveness_on_SDired_prc_of_TP_On_formal_training

tual_prc_of_TP_On_formal_training

SD__Trg_MAvg

Impact_of_Formal_Trg_on_Skills_Increase

!!! !


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by using the 1986-1990 personnel records of a large US manufacturing company. Also on US

data, Barron et al. (1989) find that a 10% increase in training is associated with a 3% increase

in the growth of a subjective productivity scale, while Russel et al. (1985) find similar results

for a sample of retail stores. (Lorraine Dearden, Howard Reed, John Van Reenen, Who gains

when workers train?)

1.2.4 Supervision of Novices

Figure 5 - Supervision of Novices

New staff generate hidden a hidden workload for experienced staff and each new recruit

requires on-the-job coaching. (John Morecroft, Resource management under dynamic

complexity)

1.2.5 Professional Development

1.3 Capacity

1.3.1 Productivity

In most instances, employee performance is determined by three things:

Ability;

Work environment; and

"Expert" time required to supervise Novices

Accum_Support_Expert_time_spent_on_OJT

Monthly_Expert_time_on_OJT

Monthly_Expert_time_on_OJT_rati

Effective_Support_Experts_availNovicesmount_of_Expert_time_for_OJT


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Motivation

(Griffin, R.W. (1990), Management, 3rd ed., Houghton Mifflin Company, Dallas, TX, p. 437.)

If an employee lacks ability, appropriate training can be employed. If there is an environmental

problem, altering the environment to promote higher perfor-mance is the key. However, if

motivation is the problem, the solution is more complex and more challenging. For

motivational problems, the best source of information is the employee. Employees must be

asked on a regular basis what sparks and sustains their desire to work. Their responses may

lead the employer to redesign jobs, increase pay, change the working environment, or give

more credit for work done. The key is, however, that managers avoid the assumption thatwhat motivates them, motivates their employees as well (Wessler, 1984, p. 29).

(Carolyn Wiley,What motivates employees according to over 40 years of motivation surveys)

The Jensen Group

mmmm

Another related concept that has become very popular among managers and organization

psychologist is work commitment or attachment to work. The assumption here, as well as

with the work ethic is that people who demonstrate high values on these characteristics are

somehow more effective or productive and consequently more valuable as employees and

managers. Such a causal relationship is more often assumed than tested. Causality, as we shall


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see, is more likely to run in the other direction. People having high levels of education and

skill and occupying jobs with a fair measure of autonomy are very likely to hold high work

ethic values. People with lower skills, education, and control over their work tend to espouse

low work ethic values (MOW, 1987, 261-3).

Buckley and Casson (1994) have argued that the main threat to the position of economics as

an explanation of economic behavior "comes from accumulating evidence that cultural factors

are key determinants of economic performance". They argue that culture can be considered to

be a major component of human capital. The argument is that people in two different

countries may have identical skills, but one country's workers may be more productive

"because the moral content of the local culture makes them better motivated" (p.1040). The

"moral content of the local culture" seems very similar to our description of the work ethic

but the validity of the argument that local cultural differences or the work ethic can be

considered as "key determinants of economic performance" has not been established. (Frank

Heller, S. Antonio Ruiz Quintanilla, The Work Ethic)

1.3.2 Motivation

A useful motivation tool is development the opportunity for employees to experience

personal and professional growth.

(Hampton Hopkins, A challenge to managers: fiveways to improve employeemorale)

Poor retention can be due to employee turnover, burnout, and lack of commitment. Turnover

of employee should be well managed, because the people who leave may be among the best

employees [[37] M.A. Mone, Relationships between self-concepts, aspirations, emotional

responses, and intent to leave a downsizing organization, Human Resource Management 33

(2), 1994, pp. 281298.].

In other cases, even if the employees do not leave the lack of morale due to burnout or low

commitment may mirror the problems caused by employee turnover [ [38] J.E. Moore, A

causal attribution approach to work exhaustion: the relationship of causal locus,

controllability, and stability to job-related attitudes and turnover intention of the work


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exhausted employee (burnout), unpublished dissertation, Indiana University, Business

Administration Management, 1997.]

The motivation of the IS personnel to perform well is thus affected by their satisfaction with

their job situation and the perception of the effectiveness of management policies on career

development.

Job satisfaction has traditionally been defined as a positive emotional state reflecting affective

(fondness) attitude or response towards the job situation. It is an important motivator for

employee performance; it is a causal antecedent to organizational commitment [39], and

negatively related to turnover [6,54] and absenteeism [40].

Previous research has found correlation in the range of 0.50 between job satisfaction and job

involvement, job satisfaction and organizational commitment, or job involvement and

organization commitment [8].

Poulin found that the organizational work environment had a signicant impact on social

worker's overall job satisfaction. In addition, change in professional development

opportunities was positively associated with increased job satisfaction [46,47].

Within the IS arena, satisfaction has been found to be related to turnover and performance

[29]. Blankertz and Robinson [5] demonstrated that employees with high job satisfaction are

highly motivated and have little desire to leave their jobs. Thus, job satisfaction is a key factor

for employee motivation.

Babin and Boles [3] found that perceptions of supervisory support could increase satisfaction

and motivation, reducing stress and improving job performance. Thus, management supporthas a significant impact on employee motivation.

They noted that, because of changes in IS growth and promotions, there will be a greater

focus on effective management of IS professionals. They stated that some IS career

management strategies have been associated with problems, and have led to higher levels of

employee burnout and turnover.


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{ Brenda L. Mak, Hy Sockel, A confirmatory factor analysis of IS employee motivation and retention,

Information & Management 38 (2001) 265-76}

1.3.3 Morale

1.3.4 Employee Satisfaction

1.4 Workload

1.4.1 Planning

1.4.2 Impact of Management on Planning

1.4.3 Unplanned work

1.4.4 Monthly Workload Pattern

1.5 Work completion

1.5.1 Quality Approval

1.5.2 Rework


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Figure 6 - Rework

1.5.3 Work deferred

Figure 7 - Work Deferred

work_def_out

WORK_DEFERRED

work_def_in

Workload_Deferred

WORK_DONEcompleting_workhly_plan

ORG_UNIT_WORKLOAD

rework_in

rework_out

Approving

REWORK

work_def_out

WORK_DEFERRED

work_def_in

Workload_Deferred

WORK_COMPLETED

EndOf

WORK_DONEcompleting_workhly_plan

ORG_UNIT_WORKLOAD

Rework_Volume_Indexrework_in


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1.6 Work Stress

1.6.1 Definition

This paper reports on the effects of work pressure. Various studies suggest that work pressure

has increased among the working population. In the beginning of this decade about 30 % of

the working people complained about work pressure (Diekstra, et al., 1994). However, recent

statistics indicate that this number has increased to about 50 % or 60 % of the Dutch working

population (CBS, 1999; Helvoort et al, 1998).{ F.R.H. Zijlstra & R.A. Roe, Work pressure as a

determinant of burnout}

Work pressure is the cognitive energetic state that may result when persons evaluate the

impact of the work demands of the present task and the manageability of the work that still

has to be done. { F.R.H. Zijlstra & R.A. Roe}

{All demands and strain on the human body, whether physical or social, give rise to some

reaction and, as a rule, most people can cope quite adequately with these demands. However,

if the stressor, which is the name of the strain or demand, is too strong, too repetitive, too

continuous, too intense and/or the individual is too weak, a sort of tension is built up in the

body which is commonly referred to as stress.

Positive stress. Stress is not necessarily a negative phenomenon. If the tension can be

handled in a positive way it can be of positive value. An athlete taking part in a competition

will give a better performance if under stress. Even in working life stress can be something

positive if there is freedom for the individual to handle the situation. Positive stress may

enhance job satisfaction, competence and self-esteem. One can, for instance, hear an assembly

worker say: We are all under stress, busy with changing our work organisation, but we have lots of fun all

the time.

Passive stress. Strong demands and strain are likely to give rise to stress. The opposite can

also be true. Temperature is a good example: too high, as well as too low, a temperature can

be harmful. The same is true for mental demands. Experiments have been carried out where

new-born apes have been isolated from all impulses whatsoever, such as light, sound and


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touch, with the result that they have died, as some parts of their brain did not develop. This,

of course, is an extreme, but something similar is seen in a job free from all demands other

than continuous repetition of the same movements and without the slightest variation or

challenge. One can still see such jobs on assembly lines. (Dr. S. Kvarnstrm, Stress prevention

for blue-collar workers in assembly-line production)}

1.6.2 Effects of stress

{Stress in the workplace lowers the quality of working life and also has a negative effect on the

quality of life, on the whole, including leisure time. In addition, stress can severely affect

enterprise efficiency and competitiveness.

Absence due to sickness. Stress is the reason for a large part of absence due to sickness.

Stress is very seldom given as a medical diagnosis, as the effects are hidden among different

symptoms, but in workplaces where absence due to sickness is high, as much as half of it is

likely to be due to stress.

Personnel turnover. Stress has a definite influence on personnel turnover. It is an indication

of shortcomings in the workplace. When workers leave, it is impossible to say whether it is

because of stress or because of their inability to get on in the workplace. To cure the stress,

one has to cure the workplace.

Recruiting difficulties. Hand-in-hand with high figures for personnel turnover are the

difficulties encountered in recruiting a competent workforce. Assembly-line work is constantly

ranked among the least popular. Even in periods of high unemployment when the offer of

labour is at its peak, the workforce will never be as good as hoped for if the work

environment is not attractive.

Productivity. The effect of stress on productivity is impossible to calculate. However, it is

generally understood that shortcomings in quality and time delivery are often due to low

motivation from the workforce and that this, in turn, has its roots in stress. Workers time may

be bought, but their engagement, motivation and interest in the work must be earned. (Dr. S.

Kvarnstrm, Stress prevention for blue-collar workers in assembly-line production)}


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1.6.3 Burnout

An organizational culture that becomes too stressful, abusive, inconsistent with its employees'

needs and desires may experience personnel burnout. Physical and emotional exhaustion may

increase this risk, which may become debilitating, with depression, internal personal problems,

and mental or physical illness.Muhammad found that work stressors, such as work overhead,

role ambiguity, conflict and resource inadequacy, were significantly related to `burnout'

symptoms in the form of psychosomatic health problems, when though the employee is not

entertaining the concept of leaving, the organization is no longer getting proper benefits from

the employee.

{Brenda L. Mak, Hy Sockel, A confirmatory factor analysis of IS employee motivation and

retention, Information & Management 38 (2001) 265-76}

1.6.4 Impact on Absenteeism

1.6.5 Stress Remedies

A key factor when reorganising work to minimize stress factors is the development of

competence. Competence is said to be a sum of knowledge, will and ability. (Dr. S.

Kvarnstrm, Stress prevention for blue-collar workers in assembly-line production)}

1.7 Innovation


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Figure 8 - Innovation Capital

In the model tested here (see Figure 1), individual innovative behavior is viewed as the

outcome of three interacting systems -- the individual, leadership, and the climate for

innovation. Here, climate represents the signals individuals receive relative to organizational

expectations regarding innovation (Kanter, 1988), and leadership has often been posited as an

important influence on both climate formation (e. g., Litwin & Stringer, 1968; McGregor,

1960) and innovation (Kanter, 1983; Peters & Waterman, 1982).

{Susanne G. Scott, Reginald A. Bruce, The Influence Of Leadership, Individual Attributes,

And Climate On Innovative Behavior}

R&D and Innovation Capital

InnovationCapital

OrganisationalKnowledge

Capacity

R&D Resources

Rework

Job Security

Productivity

Innovation CapitalLife Expectancy

InnovationCapital

Implemented

+

-

+

+

+

+

+

-

OrganisationalCapacity

-

Level ofCommitment

Management

Resources

+

+

ResourcesAvailable

+

+

-


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The complexity of innovation management is partly caused by its comprehensive

understanding. Traditionally, innovation management deals with all stages of the innovation

process (Schumpeter 1961):

invention, i.e., the phase where new products are developed;

innovation, i.e., the phase of introducing new products in the market;

imitation or diusion, i.e., the spread of new products in the market.

Although the problems in the rst stage are highly dynamic and complex, the second and

third stages - the phases of innovation and diffusion - are as, if not more, important to control

as the phase of research and development. This becomes obvious when empirically derived

new-product failure rates and innovation costs are analyzed. Figure 1 illustrates the cascading

process of innovation activity and the related innovation costs. On the one hand, only


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approximately 40%of all research projects are successful from a technical point of view, 22%

have a chance of being economically successful, and 18% of the research projects are stopped

because they have no potential to be successful in the market place. Hence, 22% are

introduced to the market, but only 40% of them are really a success. On the other hand, more

than 50% of all innovation costs 1 occur in the second and third stages of the innovation

process (Mansfield et al. 1981). This shows the importance of the phases of innovation and

diffusion and the necessity for competent and sophisticated management in these stages.

1.8 Organisational commitment

Loyalty loss is an antecedent of turnover intentions. Loyalty, or organizational commitment,

has most commonly been studied as attitudinal or affective; it may be dened as a relative

strength of individuals' identication with the involvement in a particular organization.

Commitment has also been studied from a behavioral perspective, as proposed by Salancik

[50]. Behavioral commitment is tied to some future outcome and defined in terms of the cost

to leave the organization. Salancik's view is derived primarily from the commitment model of

Kiesler [33], where the focus is on behavior. Essential conditions are explicitness, revocability,

volition and publicity. One example is employees' response to improve communication [43]

and performance.

1.9 Management Effectiveness

Supervisory consideration and organizational commitment

Supervisory consideration refers to leader behaviours concerned with promoting the comfort

and wellbeing of subordinates[35]. It is hypothesized that employees who believe their

superiors are considerate leaders will be more committed to their organizations than those

who do not perceive their managers as such[31]. DeCotiis and Summers[23], Morris and

Sherman[36] and Zaccaro and Dobbins[28] all found empirical support for this view, although

the latter reported a rather low correlation. Johnston et al.[31] found that consideration did

not influence organizational commitment directly in their study. It only exerted an indirect

influence by reducing role conflict and thus improving job satisfaction. Based on the reported


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empirical findings, Figure 2 shows that it is hypothesized that supervisory consideration will

have a positive influence on organizational commitment.

(Christo Boshoff, Gerhard Mels, A causal model to evaluate the relationships)

1.10 Service Quality

We are looking at a services providing organisation and its development

Improving service quality promises a myriad of benefits. It costs far less to keep a customer

than to win a new one, for example, and perceived high-quality service firms ca charge up to10% more for their products than competitors (Daniel H. Kim; Service Quality Excellence:

Mastering the Moments of Truth; The Systems Thinker, Vol.3, No.7, September 1992)

Add the bit from Sterman talking about the falling quality of services in the US

Quality, as seen by the customer, is determined by each encounter with front-line personnel.

The net benefit of millions of dollars worth of capital equipment, buildings, salaries, etc. that a

company has assembled will be judged, in large measure, by the quality of those interactions.

Those moments of truth are numerous, ephemeral and difficult, if not impossible to measure.

And yet, the long-term reputation and success of a service company is largely riding on them

(Daniel H. Kim; Service Quality Excellence: Mastering the Moments of Truth; The Systems

Thinker, Vol.3, No.7, September 1992)

This would also suggest that the success and the quality of services provided will largely

depend on the quality of the employees in the organisation

Add the bit from TQM about Employee sat impacting on Customer sat

Many firms have been able to achieve significant competitive advantage by offering superior

service quality (Albrecht and Zemke, 1985; Collier, 1994; Lovelock, 1994; Schmenner, 1995;

Zeithaml et al., 1990). However, assuring quality in services is, in some ways, a more difficult

proposition than assuring quality in manufacturing. Two factors, in particular, contribute to

this difficulty. The production process of services involves the interaction of employees and


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customers, making it difficult to insure consistency and reliability in the service process and

resulting product. Additionally, quality judgments of an intangible service are determined by

individual customers perceptions and expectations, making it difficult to discover and correct

service failures. Thus, both the employees and the learning ability of the firm are thought to

play a critical role in achieving superior service quality. Most experts agree that a learning

organization whose employees have a clear vision of the importance of service quality to the

organization and are motivated to provide that quality will achieve superior service quality.

Quality is an important predictor of both market share and profitability in many markets

(Buzzell and Gale, 1987; Capon et al., 1990; Phillips et al., 1983). The importance of customer

satisfaction and service quality to service firms is evident (Jones and Sasser, 1995; Oh and

Parks, 1997; Sasser et al., 1978; Zei-thaml et al., 1993). Although evaluations of service quality

are based on many factors, it is generally accepted that attributes associated with a service

firms personnel play a key role in the determination of customer satisfaction and customer

perceptions of service quality. (Julie M. Hays, Arthur V. Hill, A preliminary investigation of the

relationships between employeemotivation/vision, service learning, and perceived service quality)

1.11 Customer Satisfaction

1.12 Research and development and Innovation

R&D activities can be described as creation of the know-how and know-why of new materials

and technologies that eventually translate into commercial development [Wheelwright-Clark

1992]. According to this definition, R&D activities can be summarised in two main phases,

which differently contribute to the company growth and shareholder value creation process.

These two phases can be identified as:

the generation, i.e. all those R&D activities whose output is mainly thetechnological progress, both incremental and radically original;

the transition, i.e. all those R&D activities whose aim is to transfer the knowledgeon the products or on the manufacturing processes [Baglieri, 1997].


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The two phases lead to different outputs. Actually, the former produces mainly a

potentiality which can take place and show its value through the latter. The way the two

phases of R&D activities contributes to company innovation processes can be represented by

the relation between the well known S-curve of the technological progress and what we call

the Step-curve, representing the transition of the technology onto the product or the

production process.

Figure 1. shows such a discontinuity. The product/process does not constantly embody the

"generation" results: the "transition" takes place only under certain conditions and at specific

times, ideally at the tangency points between the two curves.

The measure of R&D performance should allow an integrated evaluation of the expected

performance, as well as a separate assessment of the performance of the two critical phases of

R&D, namely the generation and the transition of the technology.

According to this goal, the measurement system should be articulated along two main

dimensions [Baglieri, 1997]:

the former is the "domain" of the measurement, distinguishing between the abovetwo main phases of the innovation process (metrics for "generation" should bedifferent from those for "transition", as a consequence of the different goals ofthese two phases of the overall innovation process) and the "diffusion", those

Techno

logical

Progre

ss

Investments/Time

progress limit

Transition


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activities in charge of the commercial release and the launch of the new producton the market;

the latter is the object of the measurement, distinguishing between output,process and "input". This second dimension is suggested by the importance ofmonitoring both the results (tangible and intangible) of the two phases (as ameasure of the competitiveness of the R&D activities), the way the two phasescontribute to the value creation (as a measure of their consistency to businessgoals) and, finally, the human, financial and technical resources used to start anyprocess.

The value of R&D, as the sum of the value of the Kos and Kip, is influenced by three

basic dimensions:

the incremental cash flows (intensity) related to R&D activities, emerging duringthe evaluation period;

the duration of such cash flows (time), that is related to some relevantcharacteristics of the observed sector (industry specific) and of the barriers level,

built up to defend the competitive advantage (firm specific);

the riskand uncertainty associated to the cash flows.

The ability of the R&D function to improve the knowledge attributes above, fundamentally

depends on the R&D operational conditions, i.e. on the level of efficiency and effectiveness in

conducting R&D activities. ( Enzo Bagliery at al, Evaluating intangible assets; the

measurement of R&D performance)


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1.13 Fraud

1.14 Governance

1.15 Communication

Figure 9- Communication

WorkCommunication provides the raw materials for individuals to make day-to-day choicesand decisions that lead to success

From study participant interviews: Work communication is about the exchange of useful

information and knowledge so the individual can make the necessary choices to satisfy

personal, customer, business and shareholder needs. Participants emphasized content that was

specific, easy-to-understand, consistent, clear and timely; as well as interactions that were

open, candid, two-way and face-to-face. This list represents the same challenge we saw in

Unclear Goals & Objectives. This is not revolutionary or the rethinking of communication. This is basic. Corporate America is not focused on Communication 101. If we ever get

focused, a lot of work complexity will be addressed.

Simple translation: Day-to-day, get-it-done communication must always serve two objectives:

Heres what we need to do

comms_in_progress

Coms_activities_diminishing

Communicating

Communication_Activities

Impact_of_Communication_on_Organisational_Performanc

Impact_of_Communication_on_Innovation

_spent_on_communication_infrastructure

Impact_of_dollars_on_coms

f_contributed_time_on_comms

Staff_time_contributed_to_communication

!! !!


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Heres what to look for the next time

The patterns in communication are what help people make decisions that lead to success, notjust getting stuff done. Many we interviewed were eager to have the next time patterns drive

their decision-making and discussions instead of the current fire-fighting approach to work

communication.

Senior management almost unanimously held the belief that effective communication was

directly linked to effective change. In 1992, we asked over 70 companies to show us how they

tracked the connection. We found no (0!) benchmarks or measures specifically linking

communication effectiveness to change effectiveness. These same companies tracked precisely the impact of training on plant safety, advertisings impact on sales, and

investments impact on growth. But they tracked the success of change communication

intuitively. One study participant described the science of tracking change communication as

leadership sticking a moistened finger in the air. (Jensen Group)

1.16 Finance

1.17 Organisational Performance

Fortune magazine's November 1994 cover story tells us the six reasons "Why Companies

Fail:

Identity Crisis: Top managers don't have a "mental model" of the organizationskey competencies, so they succumb to management fads, creating "changefatigue", and the work force resists their initiatives (examples include Josten's andSubaru).

Failures of Vision: Managers prepare only for the most obvious future businessobstacles, failing to create strategies flexible enough to "deal with the wildest-casescenario" (examples include the Commerce Clearing House and Quotron Systems,both of whom failed to anticipate how computer technology breakthroughs wouldfundamentally change their business).

The Big Squeeze: Managers take on excessive debt, assuming that present businesssuccess will continue, or to discourage predatory raiders. The result can be


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reduced capability to weather business downturns, resulting in divestitures andlayoffs, or even bankruptcy.

The Glue Sticks and Sticks: Organization traditions, once a source of strength,become obstacles to innovation and new thinking. Curing the problem oftenrequires tough decisions about which organizational leaders should leave, and howto create and make room for those who can think differently. Managers at DigitalEquipment Corporation (DEC), once the premier provider of networked systems,now struggle to trim a massive work force, and revitalize former flexibility andinventiveness.

Anybody Out There?: Stick close to your customers, an often quoted mantra thatis more difficult to follow in practice. One key, a well-trained sales force that can

build expertise about key customers or markets, plus a system to motivate them togather and communicate information about changing tastes, and dissatisfactionamong clients. Managers must find a way to create "players", instead of"cheerleaders". High-profile examples include Cross penmakers, Merry-Go-Round fashion retailers, and General Motors.

Enemies Within: Managers who fail to consider the "human factor", risk creatinguncooperative or even hostile workers, who often have the means to scuttle eventhe best-laid business strategies. By the time employees join unions, go out onstrike, or engage in sabotage, it's probably too late to deal constructively with theproblem. Encouraging risk-taking while penalizing good-faith failures, or

admonishing cost-reductions while taking record bonuses can sap employees'loyalty and commitment, and perhaps their willingness to perform.

Organisational performance is a recurrent theme in most branches of management, including

strategic management, and is of interest to academics and practitioners (Venkatraman and

Ramanujam, 1986, p. 801). Although the importance of the performance concept (and the

broader area of organisational effectiveness) is widely recognised, some have expressed

considerable frustration with the concept. Therefore, an important issue to be addressed is to

define the domain of the performance concept. In this article we take the view adopted by

Venkatraman and Ramanujam (1986, p. 801) as defined below:

Financial performance. The domain of performance construct in most strategyresearch e.g. sales growth, profitability;

Business performance. The enlarged domain reflected in recent strategy research e.g.product quality;


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Organi sational effectiveness. The broader domain reflected in most conceptualliterature in strategic management and organisation theory.

(Mile Terziovski)


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Fang Lee Cooke, Human resource strategy to improve organisational performance

1.18 Human Capital

Generalizing from these examples, we can derive three criteria for an asset: (1) it must provide

future benefits in the form of added cash inflows or the avoidance of cash outflows; (2) given

that there is uncertainty as to the timing and potential realization of future cash flows, there

must be a generally accepted surrogate that has recognized monetary value; and (3) it must be

owned or controlled by the organisation. Previous research has argued that these three criteria

can be applied to human capital as an intangible asset. Again, criteria 2 poses the greatest

difficulty, since there is yet no consensus on what could serve as an adequate surrogate for

human capital costs. (J. Liebowitz, K. Wright)

One of the arguments against capitalizing intangible assets is that of the uncertainty of the

anticipated benefits and the difficulty in deriving a valuation. Nevertheless, it should be clear

from the examples of physical assets described above that historical cost has proven to be an

acceptable proxy for asset valuation in other cases where the uncertainty is just as great. Of the

few generally recognized intangibles, goodwill, is based entirely on the purchase price of anacquired business over its net asset basewith no guarantee that the new management will be

able to realize the gains that were assumed as part of the negotiations before purchase. (J.

Liebowitz, K. Wright)

Using a modification of Ohlson's (1995) framework the study finds that on average about

16% of all such costs are valued by the market as an investment in human capital, and that this

human capital asset amortizes at a rate of about 34% per year. Further, the human

capital asset averages about 5% of the total market value of the firm and accounts for about

16% of the difference between market and book value. The ratio of the human capital asset to

market value is found to be positively related to average salary paid to employees, operating

uncertainty, and the ratio of labor expenses to sales, but inversely related to the firms size.

(Marta Ballester, Joshua Livnat, Nishi Sinha, Labor Costs and Investments in Human Capital)


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The estimated rate of depreciation of human capital assets, has a mean of 34% and a median

of 40%. This indicates that a typical firm in our sample loses about one third of its human

capital assets every year due to such factors as turnover of employees and advancing

technologies. As a comparison, Hirschey and Weygandt (1985) find that the economic

amortization rate for R&D expenditures falls in the 10 to 20% range (depending on the

growth rate of these expenditures), whereas for advertising expenditures it falls in the 10 to

20% range in the non-durable goods sector and in the 30-60% range in the durable goods

sector. (Marta Ballester, Joshua Livnat, Nishi Sinha, Labor Costs and Investments in Human

Capital)

In order to test whether the estimated parameters and the resulting human capital asset make

economic sense, we further test the association of the ratio of the human capital asset to

market value of equity with the following firm characteristics:

1. Average salary Firms which employ quality and skilled labor force are likely to invest more

in training and developing their human capital assets and therefore, should have relatively

higher ratios of human capital assets to market value. A skilled labor force commands a higher

salary, so we expect a positive relationship between average salary and the human capital asset.Average salary is estimated by the ratio of 1997 labor expense to the number of employees.

2. Labor intensity Labor intensive firms are more likely to invest in retention and training of

this important input factor. Thus, we expect a positive relationship between the ratio of labor

expense to sales and the human capital asset.

3. Operating uncertainty When the environment is unstable, firms have to make larger

investments in human capital in order to prepare employees for the rapid changes in theenvironment. Thus, we expect a positive relationship between the standard deviation of the

return on equity (measured over the most recent five years), and the ratio of human capital

asset to market value.

4. Profitability Profitable firms do not need to make further investments in human capital.

We expect such firms to have a negative relationship with investments in human capital.


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Profitability is measured as the return on assets (income before extraordinary items divided by

total assets).

5. Growth A growing firm needs all its available resources to sustain its growth, and is less

likely to make investments to develop its human capital. Therefore, a negative relationship

between growth and the investment in human capital is expected. Growth is estimated as the

three-year historical growth of revenues.

6. Size Larger firms do not expect employees to carry out more than one task, and invest

less in their human capital. We expect a negative relationship between the investment in

human capital and size. Size is estimated as the log of total assets.

7. Competition Firms in less competitive (more concentrated) industries may invest more in

developing their human assets because they enjoy a relatively protected environment (due

perhaps to regulatory conditions and/or natural or technical barriers to entry). We measure

competition by the four-firm concentration ratio. We expect a positive relationship between

the concentration ratio and the ratio of human capital asset to market value of equity. (Marta

Ballester, Joshua Livnat, Nishi Sinha, Labor Costs and Investments in Human Capital)

(Marta Ballester, Joshua Livnat, Nishi Sinha, Labor Costs and Investments in Human Capital)


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Documents

Linard_Dynamics of Human Resources Planning