The Association of Business Executives

Diploma

1.21HRM
HRM1207

Human Resource Management

morning 5 December 2007

1 Time allowed: 3 hours.

2 Answer any FOUR questions

3 All questions carry 25 marks. Marks for subdivisions of questions are shown in brackets.

4 No books, dictionaries, notes or any other written materials are allowed in

this examination.

5 Calculators, including scientific calculators, are allowed providing they are not
programmable and cannot store or recall information. Electronic dictionaries and
personal organisers are NOT allowed.

6 Candidates who break ABE regulations, or commit any misconduct, will be

disqualified from the examinations.

7 Question papers must not be removed from the Examination Hall.

HRM1207 ABE 2007 R/500/3696

 Answer any FOUR questions

Q1 Examine and evaluate the respective roles of HR professionals and of line managers in the
following contexts:

(a) Recruitment and selection (15 marks)

(b) Career development (10 marks)

(Total 25 marks)

Q2 It is often said that essential parts of the HRM professionals toolkit include the skills of
interviewing and negotiation.

(a) Summarise the skills required in interviewing and explain and justify three situations
(other than recruitment or selection) in which the HRM professional would be required
to exercise the skills of interviewing. In your explanation, identify and justify which
specific interview skills are most important in each of the three situations. (15 marks)

(b) Explain and justify two situations in which the HRM professional would be required to
exercise negotiation skills, and summarise the specific skills that would be required.
(10 marks)
(Total 25 marks)

Q3 (a) Summarise the purposes of Human Resource Planning and outline the processes
involved. (10 marks)

(b) A strategy of expansion based on reducing layers of organisation hierarchy, increasing

span of control and increasing use of IT and automation has implications for Human
Resource Planning. Describe and justify three of these possible implications.
(15 marks)
(Total 25 marks)

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Q4 Recruitment is commonly considered to be a set of processes designed to attract candidates
for employment, whereas selection encompasses the processes by which the most suitable
candidates are chosen.

(a) Describe and explain what organisations should do before they set out to fill a vacancy
caused by someones departure, retirement or resignation. (6 marks)

(b) To what extent should adverts for a vacant post promote the organisation as much as
they describe the vacancy itself? Explain your answer. (3 marks)

(c) What are the advantages and disadvantages of job application forms? (6 marks)

(d) Summarise the advantages and disadvantages of both the panel interview and the
one-to-one interview when used for selection purposes. (10 marks)
(Total 25 marks)

Q5 (a) Explain the difference between training and development. (6 marks)

(b) What is meant by a learning organisation? (4 marks)

(c) In a learning organisation, what are the respective responsibilities of the employee and
the employer with regard to the development of the employee? Give reasons for your
answer. (15 marks)
(Total 25 marks)

Q6 (a) What is meant by continuous appraisal and why might it be viewed as appropriate by
the various participants in the appraisal process? (14 marks)

(b) In what circumstances might it be argued that continuous appraisal is not important?
(5 marks)

(c) An important aspect of appraisal is the development of trust between the appraising
manager and the employee being appraised. In what ways can a worthwhile degree of
reciprocal trust be created between these two parties to the appraisal process?
(6 marks)
(Total 25 marks)

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Q7 The Stakeholder view of Corporate Social Responsibility (CSR) suggests an organisation
should be responsible to all its employees as stakeholders. Imagine that your Managing
Director has argued that to do all these things would increase costs by 10% and so 10% of
employees would have to be made redundant.

(a) Explain, with examples, what is meant by the Stakeholder view of CSR and outline an
alternative view. (13 marks)

(b) Present an argument, based on CSR, to persuade the Managing Director that a 10%
reduction in employees is not necessary in the circumstances he describes.
(12 marks)
(Total 25 marks)

Q8 Employee reward strategies are intended to attract, retain and motivate employees. Many
organisations focus on remuneration to attract employees, benefits to retain them and
bonuses and incentives to motivate them. Some organisations go further and operate a total
reward system.

(a) What does Herzberg say about reward as a motivator? (7 marks)

(b) What drives some organisations to introduce total reward? (10 marks)

(c) Outline and explain two benefits to those organisations which adopt a total reward
approach. (8 marks)
(Total 25 marks)

End of Question Paper

HRM1207 4
 Diploma

Human Resource Management

Examiners Suggested Answers

Section A

Q1 The people and performance research carried out for the CIPD by a team at Bath University
found that front line managers played a pivotal role in terms of implementing and enacting
HR policies and practices.
The line manager role is crucial in enabling the HR policies and practices to be implemented
and effected. (making it happen). Typically, line managers act on advice and guidance from
HR professionals who will also make arrangements to enable action. Increasingly, line
managers tend to rely on HR professionals to ensure that actions taken comply with relevant
legislation and with the organisations code of ethics (where one exists) or organisation
culture. HR professionals will also have essential expertise and knowledge which line
managers might share but may not be able to keep up to date.

(a) A useful approach to this question would be to outline the key elements of Recruitment
and Selection and then suggest (with justification) the respective roles of HR and line
managers.
Establishing the need for recruitment: equal responsibility.
Setting out job and person specifications. (Line managers should have a clear
idea of the roles and characteristics of the recruit they need. HR professionals
will want to ensure that equal opportunites are observed and that suggested total
remuneration does not present or provoke difficulties for other parts of the
organisation.)
Deciding on internal or external recruitment and on the media to be used is an
issue likely to be of more importance to the HR professional. They should have a
better idea of whether or not internal recruitment may be useful or, if it is not
offered, whether this will be disadvantageous in other respects. HR professionals
should be up to date in their knowledge and understanding of which, if any,
agencies might be useful. HR will at this stage advise on forms of selection.
Deciding on the use of application forms (and of what style) and/or of CVs will be
of interest to the line manager guided by the HR professional.
Filtering applications is most likely to be done by HR, liaising with the line
manager where appropriate.
The HR professional will recommend applicants for shortlisting though the line
manager might be the final arbiter.
HR will make arrangements, in line with earlier decisions, for selection
procedures to be set up and will usually be responsible for inviting candidates to
that process (making sure that dates and times are suitable for line manager
involvement).
Selection processes can take a wide variety of forms, some of which do not need
the involvement of line managers, but in some of which (most obviously the final
series of selection interviews) that involvement is crucial.
Decisions on selection will often be the prerogative of the line manager, guided
and scrutinised by the HR professional.
HR will make the formal offers and process matters from there on, including
induction.

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 Students might not use a structured form such as the above in their answers but, however
they present the answer, most of the points above ought to be covered.
There are 10 points listed above, some of them more complex than others (eg job
description and person specification are crucial and worth more marks for their mention than,
say, induction.

(b) Career development is not always conducted in a structured manner such as in

Recruitment and Selection above but it should be and we will assume a commonly
used structure through which to address this question.
Such a structure may be to review each employees progress and potential at regular
intervals (perhaps after an appraisal round; perhaps before salary reviews; perhaps
simply once a year on a regular date).
Typically, the line manager responsible for a number of employees will meet with the
HR professional with particular knowledge of a range of employees (such as technical,
sales, administration or junior management employees) in the presence of a senior
manager or Director and of the most senior HR manager or Director.
These senior staff will have an understanding of the short and long term needs of the
organisation and will seek to be informed of the potential for future advancement of
employees responsible to the line manager concerned and to attempt to fit that
potential into long term plans, including, where appropriate, specific training and
development (where these have not already been put into action). They must also make
sure that any gaps which may become a consequence of the development and
promotion of some employees are adequately catered for, in a timely fashion, by
development of others or by recruitment.
The role of the line manager, assisted by the HR professional, is to ensure that the
employees being reviewed have appropriate opportunities for consideration for career
development and any consequent training and that any subsequent gaps are catered
for. This should avoid the line manager having to lose staff who might be critical to the
performance of whatever part of the operations the line manager is responsible for.
Career development, then, ought to be pursued with line managers and HR
professionals in partnership. Consequences, such as training, development or
recruitment are separate from this question.

NB: Career development does not begin and end with a meeting of any kind! The
responsibilities of HR and of line managers precede and follow such appraisal.
Students might only recognise career development as part of an appraisal per se and
this should be accepted, provided that the responsibilities suggested above are
identified and explained.

Q2 (a) Whyte and Plenderlieth provide the following overview of interviewing:

1. An interview is a controlled conversation with a purpose
2. It requires clear objectives, careful planning and an appropriate atmosphere
3. The structure of most interviews includes: set-up; preliminaries; agenda;
conclusion; evaluation
4. Effective verbal communication requires command of the six micro-skills of
encouraging; asking; reflecting; summarising; giving information and giving
opinions
5. It is important in interviews to observe and to use non-verbal communication.
6. Non-verbal communication can be subdivided into: gestures; eye-contact;
nearness; emphasis and silence
THREE situations where interview skills are required may be chosen from:
appraisal, grievance, discipline, counselling, exit interviews. (Marks will not be awarded
for examples in recruitment and selection). Students might identify other situations
which will be rewarded provided they are justified.

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 The most important skills in each situation may be argued from a wide range. Provided
they are justified, full marks will be given. If the skills selected are not justified but fit the
situation in the opinion of the examiner, marks will be awarded.

Examples are:

Appraisal: Agenda must be prepared and must contain clearly identified issues
relevant to the individual.
Conversation must take place. It is argued that the interviewee (the employee) ought
to be enabled to speak for 60% to 70% of the time.
Micro-skills: ask, encourage, reflect, give information.

Grievance: Principal objective is to discover the true nature of the grievance; then to
resolve the grievance at the lowest possible (hierarchical) level.
Agenda is fact-finding.
Micro-skills: ask, encourage, reflect, summarise several times.

Discipline: Here, it may be suggested, a fact-finding interview (see notes re grievance)

precedes the subsequent disciplinary interview, where the facts are known.
The objective, then, is to effect a change in behaviour.
Agenda (after the fact-finding): sets out facts; asks for employee comments; delivers
reprimand or sanction; sets out expected standards.
Micro-skills: information giving.

Counselling: Informal setting; Agenda is delving, dealing, doing.

Micro-skills: delving: asking, encouraging, lots of reflecting, summarising (in several
loops).
Dealing: summarising the problem; asking, encouraging, reflecting; some giving
information in the form of feedback.
Doing: asking, encouraging, summarising.

Exit interview: Objective is to discover the reason for the resignation and to leave the
employee with a good impression of the organisation.
Preliminaries: need to establish rapport quickly.
Agenda: fact-finding.
Micro-skills: asking, encouraging, reflecting, summarising.

(b) Negotiation

Situations:
(Note: it is acceptable for candidates to offer situations other than the examples which
follow, so long as they relate to HRM professionals.)
Examples:
Negotiating:
with line managers about HRM matters, such as reward, training, recruitment, etc
with superiors about changes or implementation of HR policy (eg changes in
conditions)
with individuals about changes in their jobs (content, location, department and so
on)
Negotiating is necessary when there is a difference between what two parties seem to
want but a desire or a need to reach agreement. Negotiation is preferable to dictation
when it is desirable that each party becomes committed to the outcome. Negotiation is
an alternative to insisting on particular targets or objectives or the other party refusing
to accept them. Persuasion is an aspect of negotiation in that one party will try to
persuade the other to their point of view.

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 The essence of negotiating is to assess the other partys position to try to understand
what it is that they want or what might prevent or inhibit them from agreeing to what
you want.
Each party should feel that they have not been beaten. (Some call this a win-win
outcome but it is often more realistic to avoid placing the other party in a position with
which they are uncomfortable and which they will resent, sooner or later).
Allowing time for negotiation, looking for common ground, avoiding getting into spirals
of attack or defence, testing and summarising are some of the skills involved, but the
principal skill is prior investigation, informal discussion and planning.

Example : Line managers will be keen to make or to avoid changes which they
perceive will make it easier/more difficult for them to achieve their objectives. HR
professionals must understand the individual line managers likely perceptions and
fears and plan to resolve them either before or during negotiation.
Example: Employees (asked to change job content, location, department, etc) may feel
vulnerable if they dont recognise capability; resentful if they perceive a loss of status
or power and stressed if they fear (for example if relocation is involved) that their
partner/family may be adversely affected.
Example: In an appraisal, the appraising manager will have targets and objectives
already in mind but will want the employee to accept and, ideally, to suggest such
targets. If the employee understands that continuous improvement is necessary and
that his or her manager must be able to satisfy his/her superiors then the employee
ought to be prepared to negotiate and to reach agreement as to what is possible and
what will satisfy. (In the same way, the manager needs to understand the source of the
employees initial reluctance, whether it be lack of confidence, misunderstanding,
unwillingness to commit to training or any other reason. Each partys understanding of
the others position and fears (which may be elicited through conversation and
questioning) will help towards reaching a mutually acceptable resolution which is
another key aspect of negotiation.

The above are just examples of the kind of preparation which HR professionals must
undertake before engaging in negotiation.
Astute students will recognise that negotiation precedes change and, from their
understanding of managing change will be able to present convincing answers.

Q3 (a) Students are usually adept at outlining the purpose and processes of HRP, sometimes
repeating, by rote, outline answers from previous papers.
For example, students might define HRP as:
ensuring an organisation has the correct staff at the right time, with the right skills and
abilities in the right place.
Or
the process for ensuring that human resource requirements of an organisation are
identified and plans made for satisfying these requirements. Bulla & Scott (1994).

The process doesnt take part in isolation; it should be a part of business planning and
take place within the context of the labour market.
The aims of HRP are to make the best use of human resources, anticipate the
problems with surplus staff and develop a well trained and flexible workforce, thus
reducing an organisations dependence on external recruitment.
The process has, typically, four phases or steps:
forecasting future needs for labour
analysing the availability of supply and demand
drawing up plans to match supply with demand
monitoring the implementation of the plan

HRM1207 8
 Achieving the aims of HRP requires: resource strategy; turning broad strategies into
action plans: demand forecasting; supply forecasting analysing existing staff;
resources; employee turnover and wastage; analysing the effects of promotions and
transfers; analysing changes in conditions of work; analysing sources of supply;
forecasting requirements; flexibility; productivity and cost analysis; action planning
overall Human Resource development, recruitment, retention, flexibility, productivity and
downsizing and finally control and review of the plan.

(b) Two elements of strategy are identified (reduced levels of hierarchy automatically leads
to increased span of control); IT and automation are not the same thing but so closely
related in this context as to be taken as one.
There are numerous consquences:
Reduction in the number of supervisors or managers which means that some
supervisors or managers will need to be redeployed which may mean they must
be trained to do different jobs or made redundant.
This reduction in need for supervisors and managers means that some of those
employees in lower levels of the original structure who had aspired to become
supervisors or managers face more competition for that promotion and some will
not be promoted. Training and development plans for these employees will need
to be altered.
Employees at the lower levels will, as the strategy is implemented, need to take
more responsibility and to become skilled in more tasks and roles.They will have
to be trained and developed quickly so that they can be empowered to carry out
these new responsibilities.
It is probable that the total number employed will be reduced (the question states
that expansion is intended so this is not a certain consequence).
The emphasis on IT and automation also implies a reduction in total numbers
employed and so redundancies are again likely. Students should recognise that
such actions do not usually improve the morale of those employees who remain.
Increased use of IT and automation will lead to increased training of existing
employees and probably, though not certainly, recruitment of specialist
employees (to take on specialist tasks or to train and supervise existing
employees).

Q4 (a) The need for a new employee should be ascertained. Jobs change over time and it may
be that what has been done by the employee who left could be added to someone
elses job or the tasks divided and shared by several people. The essential point is that
there ought to be an analysis of what is required to be done, followed by the
development of a job description (if there is a job to be done) and then a person
specification, to identify the qualifications, experience and attributes of a suitable
person. Only then should the organisation proceed with the recruitment process.

(b) The preface to the question provides the answer: the attraction of suitable candidates.
Although many will work for an organisation they do not like, if the job and the rewards
seem attractive, the organisation ought to seek to employ people who have a good
opinion of the organisation and should therefore present in its advert the characteristics
of the organisation which will appeal to those whom its person specification indicates.
The key elements of the person specification ought then to suggest to a suitable
candidate that he or she is that kind of person who would like to work for that
organisation.

(c) Application forms can be designed so that information about the candidate is presented
in a structured way. Typically, the quantitative information (education and experience) is

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 required on the first page of the application, which enables the first stage of filtering out
unsuitable candidates to be done by a junior member of staff (avoiding any need for
searching through a CV the alternative and perhaps missing a relevant element of
education or experience or being required to make a judgement as to suitability).
Qualitative information, the assessment of which requires judgement, is usually on the
later pages of an application form and is assessed by a more experienced member of
the HR staff at the second stage. It is argued that this approach also ensures equal
opportunity at least on the basis of experience and education. The argument often put
forward that people might distort what they say about themselves in CVs is weak,
since that is also possible on application forms.
On the other hand, person specifications ought not to be so rigid that candidates with
less than the required education and experience should be weeded out in this
mechanical way when it may be that some elements of their personal information (not
seen because the proper place is on later pages) make them strong candidates.

(d) The arguments for a selection panel instead of a single individual are that bias is
diminished or avoided. Stereotyping (horns and halo effects; self-referencing criteria
and so on). There is no other person present to ensure that equal opportunity in other
respects is afforded. The atmosphere; the range of questions; the extent to which
interviewees are encouraged to speak or not ; the extent of use of open or closed (or
other) questions may all vary significantly without there being bias. A minority of
managers are trained in interviewing and if the HR professional (who should be
trained) carries out the interview then the employing manager is not involved.
There is also a case for a panel in that it enables interviewees to ask a variety of
different people about the organisation.
On the other hand, panels of interviewers will consist of a number of different people
with different perceptions and bias. (Bias is a fact of human nature.) It might be difficult
to reach agreement. Avoiding this (and other difficulties, such as lack of experience of
some of the panel) leads some organisations to apply rigid controls as to who will ask
which question. Again, it may be argued that this, too, mitigates in favour of quality of
opportunity. But it may also lead to sterility in the interview process. Who is designated
to ask follow-up questions and should they not all be the same (to avoid equal
opportunity problems)?

Q5 (a) There has been a shift, in recent years, from training often defined as being focused
on imparting specific skills, usually those needed by the organisation in the short term
and not necessarily in the longer term interest of the employee to development
which is a longer term strategy to develop the individual in the long term interests of the
organisation. In order to retain the individual employees continuing commitment over
this longer period of time greater effort has to be made to ensure that the direction and
processes of development are also in the individuals interest.
The most recent change has been to learning and development wherein it is
recognised that each individual learns differently and that much of what we learn is
from our work activity. On-the-job training becomes work-based learning. Not simply
a change in terminology but a shift of emphasis to continuous long term development
and to an increasing focus on the individuals responsibility to learn.

(b) A learning organisation might be defined, for example, as one where people
continually expand their capacities to create the results they truly desire, where new
and expansive patterns of thinking are nurtured, where collective aspiration is set free
and where people are continually learning how to learn together (Senge 1990).
Morgan (1986) suggests that organisations should encourage openness and
acceptance of error and uncertainty; recognise the need to explore different

HRM1207 10
 viewpoints; offer guidelines on limits to action rather than specific targets ... and create
the kinds of structures and processes that will allow (such behaviour) to take place.

(c) In the mid-70s (in the UK, following the oil shock) the often paternalistic you do your
best for us and well look after you career development based on mutual loyalty and
driven by the employer disappeared very quickly. Restructuring, redundancies, rapid
development of technology and then increasing globalisation, more restructuring and
more job losses made impossible any long term sense of loyalty. Everyone knows, now,
that there is no such thing as a job for life.
Clearly, then, the employee has a significant responsibility for the development of his or
her career. But the organisation has a responsibility, whether through altruism or driven
by the interest of the business in retaining competent people, as Kanter suggests, to:

recruit for potential to increase competence (not just for immediate narrow skills)
offer ample learning opportunities ... the equivalent of one month per year
providing challenging jobs, rotation and promotion
measure performance beyond accounting numbers (my italics)
retrain when jobs become obsolete
recognise individual and team achievements so as to build reputations externally
provide sabbaticals
find job opportunities in the network of suppliers, customers and venture partners
tap peoples ideas to develop innovations to lower costs, serve customers and
create markets (all of which is a foundation for growth and continuing
employment)

Barrow and Loughlin suggest that organisations expect that employees will have:

a high level of education, so that they can use new technology, understand the
contribution of their role to the organisation and take decisions appropriate to
their jobs.
the ability to learn new skills and adapt to changing circumstances, being
responsible for their own learning, keeping skills up to date and learning new
processes.
the ability to work in flat structures, without supervision, setting their own
objectives, monitoring their own performance and correcting failures.
the ability to manage the interface with customers and between departments
requiring good interpersonal skills.
problem solving ability, creative thinking and contributing ideas.

Q6 (a) Managers should not consider appraisal to be an annual event but should continuously
(frequently and regularly) speak to and listen to employees.
Thus, the manager and employee are aware, as events occur and as time goes
by, of the extent to which the employees performance and development and
the extent to which the organisations support for the employee are in line with
what was agreed at the previous appraisal.
This continuous awareness of progress (or lack of progress) is important for two
reasons: (i) that changes which need to take place, to improve employee
performance or enhance organisation support, do so as soon as possible and are
not suddenly discovered or argued about a year later. And (ii) so that the formal
appraisal, the interview, discussion and debate, is based on this continuing
awareness and does not depend on what might or might not be remembered.

(b) Where appraisal takes the form of agreeing simple, easily measurable targets (such as
sales targets) it might be argued that the only thing that matters is the extent to which

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 the employee meets those targets. An employee subject to an annual target might
object that regular monitoring of progress (which is in principle a good idea) is, in
his/her perception, too much pressure.

(c) The development of trust takes time. Each party must be honest with the other. It takes
time for each to verify the other partys comments. The working relationship between
the two must be based on truth, as must every appraisal and any subsequent actions. It
is often the case that an admission of failure (I cannot do this the way I think you
wish it to be done) leads to an increasingly trusting relationship. (Imperfection is more
readily believed than protestations of perfection.) It is important to realise that each of
the parties involved must be honest with the other. If the manager is not able to provide
the support (in training or resources) which has been promised he/she must say so. If
the manager is not satisfied with an employees performance, but doesnt say so until,
say, the appraisal interview, that will not help to develop trust between them. Anything
which is agreed between the two parties must, first, be clarified, so that each clearly
understands what is agreed, and then whatever is agreed should either be done or the
other party should be told that it is not done and why it is not done.

Q7 (a) Students should outline their understanding of the Stakeholder view of CSR. Such
as:
Corporate social responsibility (CSR) is an expression used to describe what some
see as a companys obligation to be sensitive to the needs of all of the stakeholders in
its business operations [Wikipedia accessed Sept 4 2006]

CSR is concerned with the ways an organisation exceeds the minimum obligations to
stakeholders specified through regulation and corporate governance.
[Johnson et al (2005)]

But the case for not pursuing such a philosophy because it is costly is exemplified by:
Few trends could so thoroughly undermine the very foundations of our free society as
the acceptance by our corporate officials of a social responsibility other than to make
as much money for their stakeholders as possible [Milton Friedman (1970)]

Examples of behaviour towards Stakeholders are that customers should be sold

products and services which meet standards expected at fair prices with warranty and
after-sales support where appropriate. Organisations should work with suppliers to
secure profit for both and suppliers should be paid on time. Shareholders investment
should be protected and they should be rewarded with a fair return. The community
should not be disadvantaged and where appropriate ought to benefit. Employees are
already mentioned in the question. Competitors must not be slandered (and
organisations must not collude with competitors since this disadvantages customers).
And so on.

(b) Few organisations take a serious view of CSR because of altruism and there is no
point is suggesting that such an MD would be persuaded by an argument that
employees should be treated so because its right. This is a popular assertion in
students answers to questions on CSR and it is worth no marks in this case.
However, many organisations are increasingly responsive to stakeholders needs out of
enlightened self-interest and this is the essence of the argument to be put forward in
part (b): the argument must be founded on corporate interest .

That by treating their employees responsibly; by providing employee welfare benefits,

such as medical care, assistance with housing, extended leave, assistance for

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 dependents; by improving working conditions (enhanced working surroundings, above
standard health and safety, job security and training and development); by designing
jobs for the increased satisfaction of workers (as well as, not instead of efficiency) then
employees will perform more efficiently and effectively. McGregors X and Y theory
(especially the conclusion that we get the behaviour we expect) and Herzbergs
Motivation theory (in respect of hygiene factors) might be invoked here.
The difficulty relevant to all ideas since the beginnings of the Human Relations
School is that such improvement in motivation, loyalty and performance cannot be
proven and cannot be measured. It can be argued that many organisations which treat
their employees in such a manner are successful, but it cannot be denied that (i) they
are, by definition, different from any other organisation; each is unique and (ii) they
might have been successful anyway. It is impossible to operate two identical businesses
in identical environments and at identical times with one being operated on CSR
principles and the other on Friedman philosophies.
While it might be wise to avoid that point in trying to persuade this MD, it would be
better to admit it and to suggest that the organisation should adopt several of the ideas
from CSR and in open agreement with all employees, operate in this way for a year,
at which time if profits have not increased, other actions will be taken.

Q8 (a) Herzberg suggested hygiene or maintenance factors which need to be at an adequate

level to prevent dissatisfaction but which do not motivate. Among these hygiene factors
he placed pay or salary (along with status, company policy, security, supervision and
working conditions).
Motivators, according to Herzberg, are those aspects of work which lead to
satisfaction: achievement, advancement, recognition, growth, responsibility and the
work itself.
Students who outline Herzbergs theory are likely to conclude that Herzberg says little,
directly, about reward, other than pay which is usually taken to mean that basic pay or
salary should be adequate. More perceptive students might recognise, among
Herzberg motivators some of the aspects of work which are now being included in
total reward.

(b) From CIPD: Both new and old-economy companies are currently having to rethink
their reward strategies. Traditional companies had a paternalistic approach to reward;
one benefit for employees was that they could be relatively confident of staying with the
same employer for as long as they wished, possibly for their entire working careers.
Newer companies (particularly those in the hi-tech sectors) rewarded employees with
exciting and challenging surroundings, but with no guarantee of job security. They also
offered significant financial rewards, in the form of stock options. Now that the stock
options have lost a large proportion of their value and the traditional companies have
stopped providing a job for life, both have to look at new ways of attracting and
retaining key personnel. Demographic changes have resulted in a more diverse
workforce demanding different returns from work. Total reward is a mindset that
enables employers to look at the bigger picture.
At present, pay and benefits may be covered under a single, and controllable, flexible
benefit scheme, but the employer is still faced with the prospect of having to meet
demands for a wide range of other benefits, including better office accommodation or
more training. In a fully integrated total reward package all the elements of the
employees work become part of a single flexible package. It is only when all the
elements of the reward package (ie total rewards) are considered within the context of
business and HR strategies that the total cost of each employees job can provide the
most valuable return to the organisation. Thus total reward links cost control with the
demand by employees for greater choice and flexibility in the workplace. It also offers

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 employers the opportunity to differentiate and create cultural brand, and thence
competitive advantage; it is hard to replicate.
The driving force which encourages more organisations to move towards total reward is
competition for highly skilled and competent employees to recruit, retain and motivate
such people. As has always been the case, incentive schemes and bonuses become, in
the employees perception, simply part of the expected income and lose their incentive
effect. The significant changes over the last 30 years are in organisations inability
(because of the greater unpredictability of the global environment) to offer job security
and, often, to maintain incentive scheme forms of reward. This, coupled with
employees changing expectations, means that organisations (especially those in
competition for highly skilled employees) must offer a holistic package which their
competitors find difficult to copy.

(c) According to Thompson (CIPD):

easier recruitment of better-quality staff
reduced wastage from staff turnover
better business performance
enhanced reputation as an employer of choice

In other words, recruitment, retention and motivation!

Students might have included these in their answer to part (b) above and, if so, they
should not be rewarded twice. The question (part (b) specifically asks what drives
the move towards total reward and so, while the benefits can be seen as drivers it is
likely that those who do answer in this way will not have adequately addressed the
essence of part (b).
Combining question parts (b) and (c) was considered but thought to be insufficiently
clear, but it is quite acceptable for (b) and (c) to be marked as one.

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