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HRManagement The Human Resource Management

Simulation

Jerald R. Smith, Florida Atlantic University Peggy A. Golden, Florida Atlantic University Michael Deighan, Interpretive Simulations

Charlottesville, Virginia, USA

—ii— HRManagment Student Manual

Copyright Notice This manual and the simulation described in it are copyrighted with all rights reserved by Interpretive Software, Inc. Under the copyright laws, neither this manual nor the simulation may be copied, in whole or in part, without written consent of the authors, except in the normal use of the simulation for educational purposes, and then only by those with a valid license for use. The same proprietary and copyright notices must be affixed to any permitted copies as were affixed to the original. This exception does not allow copies to be made for others, whether or not sold. Under the law, copying includes translating into another language or format. Purchasing the simulation experience gives the owner the right to participate in a unique learning event. Each student or participant must purchase the simulation to take part in the event or the institution sponsoring the event must purchase for the entire group participating in the event. Limited Warranty on Media and Manuals In no event will Interpretive Software, Inc. be liable for direct, indirect, special, incidental, or consequential damages resulting from any defect in the software or its documentation, even if advised of the possibility of such damages. In particular, the authors shall have no liability for any programs or data stored in or used with the computer products, including the cost of recovering such programs or data. This simulation experience is sold "as is," and you, the purchaser, are assuming the entire risk as to its quality and performance. The warranty and remedies set forth above are exclusive and in lieu of all other, oral or written, express or implied. For more information about other products from Interpretive Software, please contact: Interpretive Simulations 1421 Sachem Place, Suite 2 Charlottesville, VA 22901 Phone: (434) 979-0245 Fax: (434) 979-2454 Website: http://www.interpretive.com Discover a Better Way to Learn. Active Learning through Business Simulations. Copyright © 1994 Jerald R. Smith and Peggy A. Golden; Copyright © 2005 Prentice Hall, Inc.; Copyright 1996 – 2007 Jerald R. Smith and Peggy A. Golden; Copyright © 2008 – 2014 Interpretive Software, Inc. All rights reserved. Printed in the United States of America. No part of this book may be used or reproduced in any manner whatsoever without written permission of Interpretive Software, Inc. Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page within the text. Graphic images used in manuals and incident videos © BigStockPhotos, iStockPhotos, and GettyImages. Footage used in incident videos © GettyImages and iStockPhotos. Audio clips © iStockPhoto.com.

http://www.interpretive.com/

—iii—

Contents

Copyright Notice ....................................................................................................................................................... ii About the Authors ................................................................................................................................................... iv Acknowledgements .................................................................................................................................................. v

HRManagement Introduction ................................................................................................................................ 7 HRManagement Quick Start Guide ........................................................................................................................... 9 HRManagement Manual ......................................................................................................................................... 10

1: HRManagement Case ....................................................................................................................................... 11 Human Resources Department Budget .................................................................................................................. 12 Staffing .................................................................................................................................................................... 13 Productivity ............................................................................................................................................................. 15 Wages ..................................................................................................................................................................... 15 Employee Benefits .................................................................................................................................................. 15 Training ................................................................................................................................................................... 17 Programs ................................................................................................................................................................. 19 Special Decisions ..................................................................................................................................................... 20 Survey Reports and Decision Analysis .................................................................................................................... 20 Next Step ................................................................................................................................................................ 20 HRManagement Decision Summary ....................................................................................................................... 22

2. HR Planning and Organization .......................................................................................................................... 23 The Planning Process .............................................................................................................................................. 25 Budget Planning ...................................................................................................................................................... 27 HR Decisions ........................................................................................................................................................... 28 Measuring Results .................................................................................................................................................. 31 Team Organization .................................................................................................................................................. 34 Summary ................................................................................................................................................................. 35

3. Operations Guide ............................................................................................................................................. 37 Simulation Navigation ............................................................................................................................................. 38 Startup .................................................................................................................................................................... 40 Decisions ................................................................................................................................................................. 42 Analysis ................................................................................................................................................................... 51 Reports.................................................................................................................................................................... 56 Environment ........................................................................................................................................................... 64 Simulation ............................................................................................................................................................... 70

Appendix ............................................................................................................................................................. 71 Budget Planning ...................................................................................................................................................... 72 Progress Report ...................................................................................................................................................... 73 Glossary .................................................................................................................................................................. 74 Index ....................................................................................................................................................................... 77

Print Date: 6/18/15

—iv— HRManagment Student Manual

About the Authors DR. PEGGY GOLDEN is currently Professor of Management and International Business at Florida Atlantic University, teaching graduate and doctoral courses in Strategy and the Environment of Business. She has also taught courses on global competition in Spain and to computer industry executives in Asia. Prior to her arrival at FAU, Golden taught at the University of Louisville for five years in a variety of areas including the management of information systems. All courses are taught through extensive use of cases, experiential exercises, and simulation experiences to reinforce the learning process. In addition to teaching college courses, Dr. Golden has also conducted numerous workshops in the development of competitive strategy, general management principles, special topics for women managers, time management, decision-making, and team-building. Consulting activities include strategic planning, systems analysis and design, and management of change. Dr. Golden is an active researcher and writer. She is currently studying corporate reputation and the interaction of corporate governance on top management team pay disparity. She has published seven management simulation games and numerous articles and papers in the area of strategy formulation and implementation, and simulation development and use. Visit Dr. Golden's homepage at http://professorgolden.net DR. JERALD SMITH is Professor Emeritus of Business Strategy and Policy at Florida Atlantic University. He is the author of eight simulation games spanning many interest areas in Management and Marketing. He has taught a broad range of courses at the undergraduate, masters, and doctoral level. He was one of the first to teach a course on the Internet as a host for professional MBAs who are on the go. Dr. Smith has consulted for Fortune 100 companies in diverse areas such as ethics training, supervision, and has helped formulate strategic initiatives for these companies. He is the author of numerous articles. MICHAEL DEIGHAN is a co-author on the new web-based editions of Airline, Entrepreneur, and HRManagement. His expertise, insight, and creativity proved invaluable and made it possible to convert these models to their current web-based versions. Michael joined Interpretive Simulations in 1989 as lead software developer and is now Manager of Content Development. He is co-author on a number of Interpretive simulations: PharmaSim, AutoSim, BizCafe, StratSimMarketing, StratSimManagement, StratSimChina, ServiceSim, CountryManager, and MarketShare. In addition to developing software, he has been teaching computer programming classes at Piedmont Virginia Community College, in Charlottesville, Virginia, since 1990. Michael received his B.A. in German and Economics from Washington and Lee University and an M.A. in German from the University of Virginia.

http://professorgolden.net/

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Acknowledgements Many professors from many universities and colleges have made several excellent suggestions concerning the algorithm and student manual. In fear that we may leave someone out, we would still like to thank the following early adopters and beta testers: Dick Barth, Bob Beaver, Robin Berkley, Monty Bohrer, Michiel Buys, Melisa Cardon, Julia M. Chambers, Chan Teng Heng, Beth Crockford, Tom Corrigan, Carrell Decker, Teri Domagalski, Janice Downton, Sandy Edwards, Ann Fiedler, Frank, Eleanna Galanaki, Paul Gillard, Gretchen Gemeinhardt, Catherine Giunta, David Hayes, Brian Hoekstra, Greet Van Hoye, Laura Kozloski, Jane Knight, Bonnie Leonhardt, Julie Indvik, Robert C. McHenry, Bob McHenry, Mary Markert, James R. Maxwell, Jim Pavelle, Latha Poonamallee, Chet Robie, Larry Siebers, Wendy L. Seligmann, Joe Smith, Pauline Stamp, Scot Trossen, Kevin Tasa, Tom Timmerman, Temeca Valian, Allen Wilson, Kenneth Zantow, Katrina Zalatan, and Deborah Zinni. If there were an Emeritus award, it would go to Emeric Solymossy at Western Illinois University–Quad Cities, Robyn Berkley at Rensselaer Tech, and Stan Malos for additional testing beyond the call of duty on the 2nd edition. Thanks to Daniel J. Koys of DePaul University for suggesting the health care incident and for providing feedback on its implementation. Thanks also to Jim Pavelle for suggesting the Progress Report form. AWARD OF HONOR James Schreier, President of Far Cliffs Human Resource Consultants ([email protected]) was instrumental in the original version and updates in salary levels and employee benefit choices to let the simulation reflect real world levels. He also contributed to a number of incidents.

—vi— HRManagment Student Manual

HRManagement Introduction —7—

HRManagement Introduction

—8— HRManagment Student Manual

RMANAGEMENT is a simulation that allows you to manage the human resources department of a medium-sized organization.

The type of organization is not industry specific and could be for-profit or non-profit, in either a manufacturing or service industry. The simulation gives you the opportunity to apply human resources concepts in an environment that encourages experimentation. As a member of a human resources management team, you will make quarterly decisions about staffing, compensation, training, and employee relations for your firm. In making your decisions,

you will need to allocate resources limited by an annual budget. You will be competing against firms run by other teams in your class, each starting with the same number of employees and with the same budget. Your goal is to improve the performance of the organization based on

measures such as employee turnover, morale, and productivity. By making decisions that are better than your competitors’, your team will get better results at a lower cost than other firms in the industry. Typically, each team's organization is left up to the team. Teams are expected to establish objectives, plan their strategy, and then make the required decisions dictated by these plans. These decisions are input directly into simulation decision screens online. When the simulation is advanced, you will be able to view the results of your decisions in a variety of company and industry reports. This process is repeated for up to 12 simulated quarters, or three years. In addition to the regular decisions, you may have to respond to issues raised by "incidents" (mini-cases), and complete supplemental assignments chosen by your instructor.

In the real world, managers must make decisions without perfect information, under conditions of uncertainty, and within time and budget constraints. This simulation is no different. Therefore, take some

time to familiarize yourself with the case before beginning the simulation. While working through your decisions, you will find it helpful to refer to the manual for information and strategy tips. To get the most out of your experience, we recommend following the steps outlined on the next page.

H

HRManagement gives you the opportunity to apply HR concepts in a simulated environment.

You compete against your peers in an HRManagement industry. All teams start from the same position.

You will gain experience working within a budget to improve the performance of human resources.

HRManagement Introduction —9—

HRManagement Quick Start Guide

READ THE CASE • Company starting position • Background on HR responsibilities

EVALUATE RESULTS • Company reports • Survey reports

SIMULATION ENDS • Evaluate team performance. • Review what you have learned.

SIM ADVANCES • Check Schedule for times. • Complete Decisions BEFORE deadline.

STARTUP DECISION • Access simulation from course website. • Input an organization name. • Team leader MUST finalize startup to

allow access to period decisions.

DECISION ANALYSIS • Staffing • Wage Rate • Training • Budget

PERIOD DECISIONS • Staffing decisions • Wages for each job level • Employee Benefits • Training decisions • HR Programs • Survey reports

Your instructor may require incident decisions and additional assignments during the simulation. Check the schedule and messages on your course website for details.

—10— HRManagment Student Manual

HRManagement Manual

HE REMAINDER OF THIS MANUAL is divided into the sections described below. Understanding and success in HRManagement will be greatly enhanced by reading this manual before you begin the simulation. The sections listed below will answer most of

the questions students typically have during the simulation experience, and reading them has the added benefit of improving your competitiveness. Finally, the operations guide and HRManagement case are also available online in the simulation software.

Section 1 HRManagement Case presents information about your firm and its human resources function in a form similar to a business school case. This will also serve as an introduction to the situation at the start of the simulation. Section 2 HR Planning and Organization presents a general discussion of human resources management: situation analysis, budget planning, HR functions, and performance measures. It serves as a guide in developing and executing your HR plan. Section 3 Operations Guide explains how to use the HRManagement software, including navigating the simulation, decision entry, and detailed descriptions of the reports. This section also provides details on using the simulation decision analysis tools. Appendix provides supplemental materials to help you with the simulation experience. The Budget Planning and Progress Report forms are useful for planning and tracking your team’s decisions. The Glossary contains HR terms that are used in the simulation. An Index concludes the appendix.

T

HRManagement Case —11—

1: HRManagement Case

—12— HRManagement Student Manual

OU ARE TO ASSUME the newly created position of Human Resource Director for a medium-sized firm with over 600 employees. The firm has experienced significant expansion in the past few years; the human resource department and its functions have

not kept pace with company growth. The Chief Executive Officer (CEO) has instructed you to get the human resource department organized and build a strong HR function. You have wide latitude in this area and the CEO has encouraged you to "get this organization moving." You will want to set some ambitious, yet realistic, quantifiable goals for the Human Resource department.

Although the industry is slowly becoming unionized, currently this has no impact on your firm. At the lower job level, your workforce has both skilled and semi-skilled workers (about 500). The firm has no policy on promotions and has hired into the upper levels of management from the outside as well as promoted from within.

Employee training is currently the responsibility of each department head and consists solely of on-the-job learning; no formal instruction is provided. Economic conditions in your region are good and unemployment rates are average. Human Resources Department Budget Last year’s HR budget was $1.0 million, and nearly all of that amount was used to fund staffing needs. This year, the annual budget has been increased to $1.4 million to provide you with the extra resources you will need to strengthen the HR function. Future budget amounts will be made available as the simulation progresses. Each quarter, your remaining annual budget will be displayed in the Budget Report. As in the "real world," budgets are not guaranteed and the financial officer may need to modify your budget if conditions change. If so, you will be notified via the simulation Newsletter. Your yearly budget will need to cover expenses for hiring, wages, benefits, training, and HR programs. For hiring, training, and program decisions, the related expenses are charged against the budget in the period in which they are incurred, and you can adjust your decisions from quarter to quarter. Compensation decisions are handled a little differently, since they affect results from that period on. When you add a benefit to the employee compensation package or increase wages, your budget will be charged for the additional benefit expense or wage increase for that first quarter and that quarter only; in subsequent quarters, the firm will absorb these expenses. Carefully analyze your budget to ensure that you do not overspend. You might have to drop critical programs in the last quarter of the year if you do not have enough funds in the budget.

Y The Human Resources Department

Employee training is currently the responsibility of each department head and consists solely of on- the-job learning.

When you add a benefit to the employee compensation package or increase wages, your budget will be charged for the additional benefit expense or wage increase for that first quarter and that quarter only.


Dropping programs will have a negative effect on employee morale or safety, which could result in increased turnover, decreased productivity, and more accidents. Quarterly decisions must be made within these budgetary constraints:

• Any surplus or deficit will be carried over to the next quarter. • Any surplus will not be carried forward to the next year.

It is important, therefore, not to exceed your budget in the 4th, 8th, and 12th quarters. This is standard business procedure. Exceeding the budget at the end of the year (every 4th quarter) is a serious managerial deficiency and will have negative consequences. Your budget is limited and cannot immediately meet all your departmental needs. You must make a budgeting plan that implements your departmental objectives for the year and use it to guide your decisions each quarter. You may find that your plan will need adjustment as the simulation progresses.

Staffing It is important for you to provide enough employees at all job levels to meet production goals each quarter. This means replacing workers lost to turnover while making adjustments for changes in productivity and required units of production. There are two methods of filling positions. The first method is to hire qualified people on the open market; the second is to promote employees from within. Although the latter method has been a primary method of filling management positions in the past, a lack of formal training has often resulted in less-than-desired performance by promoted employees. One advantage to hiring from outside the firm is new hires can bring fresh ideas and new methods into the firm. There is a distinct cost difference between these two methods. Method 1: Hiring from Outside The table at right displays the outside hiring costs for each job level. Hiring costs are automatically charged against your budget when you hire a new employee (you will not need to enter hiring costs into the simulation) and should be considered while planning your budget. Hiring expenses include costs for recruiting, interviewing, and testing, and may include additional costs for employment agency fees and travel expenses.

OUTSIDE HIRING COSTS

Job Level Automatic Charge per Employee

5 $15,000 4 12,000 3 10,000 2 7,000 1 2,000

NOTE: For Year 1, your budget is $1,400,000. Twenty-five percent ($350,000) should be your target spending for the first quarter.


Method 2: Promoting from Within There is no direct cost for promoting an employee within the firm. Keep in mind, however, that employees promoted to a higher position may need to be replaced. They may also need more training than candidates recruited from outside the firm. Cost to Lay Off Employees If the firm's productivity per employee increases, it could find itself with too many employees. The firm may allow normal attrition to bring the employees needed into line or layoff the excess. The cost to layoff an employee is 50% of the hiring cost for that level. Thus, the cost to layoff each Level 1 employee is $1,000 ($2000 x 0.50). Overtime If you do not have enough employees to meet the production quota while working standard shifts, employees will have to put in extra hours to make the units required to meet sales. The firm will be charged $45 per overtime unit produced, increasing unit labor cost for the quarter. Some of the overtime cost will be charged to the HR Department budget and excessive overtime may result in a negative evaluation of HR. Demographics One of the problems facing the Human Resource Director in your organization is the lack of females and minorities at all job levels. The firm has fewer female and minority workers than would be expected given the local working population. Due to the rapid growth of the firm, little effort has been made to have a representative workforce. Although there is no litigation concerning this imbalance at the present time, the new Human Resource Director has been directed by the CEO to begin diversifying the workforce. A percentage of total hires can be established in each quarter for hiring minorities and females. The percentage represents a policy that should be considered something between an optimum and a minimum percentage. There is no guarantee that the exact number of females and minorities can be hired as other firms are also attempting to correct imbalances. Males or females can do all the jobs in the firm. The table below gives the current workforce demographics. The Labor Force in Community column shows percentages of females and minorities the firm should have as a long-range goal.

YOUR FIRM'S LABOR FORCE LABOR FORCE IN COMMUNITY Level # Employees Females Minorities Females Minority

5 20 0 (0%) 0 (0%) 25% 20% 4 25 1 (4%) 0 (0%) 20% 25% 3 50 10 (20%) 5 (10%) 30% 25% 2 60 12 (20%) 6 (10%) 35% 25% 1 500 60 (12%) 40 (8%) 40% 30%


Employee Turnover The firm’s current turnover rate of 9.8% per quarter is comparatively high. Employee morale could be a factor contributing to high turnover. Department heads estimate that morale is 50 on a scale of 0 to 100. A rating of 50 indicates morale is lackluster and many employees are coming to work with indifferent attitudes. Some managers in the firm have mentioned one or more of the following as possible causes of the low morale: the lack of a formal performance appraisal program, wage rates and employee benefits lower than local equivalents, the lack of a grievance procedure, and poor training. Productivity Direct production of your product or service is performed by Level 1 workers. Productivity at the start of the simulation is 200 units per employee. Although industry-wide figures are not available, it is felt that improvements of 10–20% can be made. Productivity is not normally the responsibility of the Human Resources manager; it is included in the simulation because of its close relationship to key human resource areas such as turnover, quality, grievances, etc. As you might expect, the higher the productivity per employee, the fewer employees are needed. If productivity increases, there will be fewer Level 1 and Level 2 workers to employ; therefore, hiring costs and all costs associated with compensation (wages and employee benefits) will be lower. Be aware that productivity can drop suddenly when there is a drop in employee morale. Wages Wage rates for the firm are below average for the local community. Decisions concerning the level of wages and benefits are not traditionally the sole responsibility of a Human Resource Director. However, the CEO has given you the responsibility for making these decisions, but you are limited to a 10% increase each quarter, and the increases must be within budget. Be careful when increasing wages in a quarter because the cost can have a significant impact on your entire annual budget. The following table illustrates the quarterly wage rates (excluding benefits) that are currently in effect at the firm, along with the local area average wage rates.

JOB TITLES AND QUARTERLY WAGE RATES Level Local Area Wages Wages at this Firm Typical Job Titles

5 $19,000 $18,000 Exec. managers; engineers 4 16,000 14,000 Dept. heads; staff specialists 3 14,000 12,000 Dept. supervisors; technicians 2 11,400 10,000 Direct supervisors; skilled positions 1 9,000 8,000 Semi-skilled positions

Employee Benefits The firm has very meager benefits; these are presently 20% of wages. Employees do not pay any part of these benefits. An analysis of your current benefits and costs (as a % of payroll) is shown in the next table.


EMPLOYEE BENEFITS %

Social Insurance Program 7.65 Unemployment Insurance 1.00 Health Care Costs (Tier 1) 4.35 Workmen's Compensation Benefits (injuries on-the-job) 1.00 Vacation/Holiday Policy 5.00 Sickness Pool 1.00

TOTAL % OF PAYROLL COST: 20.00 Vacation/Personal days earned are 10 days after one year for Level 1–2 employees and 3 weeks for Levels 3–5, with 6 paid holidays for all. Each "Add another Vacation/Personal/Sick Day" will add one additional non-work day to be accrued and used appropriately. For example, if 4 days are added, a beginning employee would have 14 days to use as vacation, personal, or sick days (10 base + 4 new). Adding one of these days could also be assumed to be another paid holiday. You will have the opportunity to add other benefits to the employee compensation package. Additional employee benefits and their associated cost (as a percentage of payroll) are shown below.

EMPLOYEE BENEFIT OPTIONS BENEFIT COST % Add 1 Vacation/Personal/Sick Day 1.60 Add 2 Vacation/Personal/Sick Days 3.21 Add 3 Vacation/Personal/Sick Days 4.83 Add 4 Vacation/Personal/Sick Days 6.46 Add 5 Vacation/Personal/Sick Days 8.10 Employee-Funded Pension 0.40 Employer Sponsored Pension—Starter 3.40 Employer Sponsored Pension—Moderate 4.15 Employer Sponsored Pension—High 6.80 Tier 1 Health Care (high deductible) 0.00* Tier 2 Health Care (lower deductibles) 3.27 Tier 3 Health Care (standard coverage) 6.81 Tier 4 Health Care (premium coverage) 9.66 Dental Care and Eye Care 0.20 Prescription Drug Plan 3.20 Term Life and Legal Services 0.10 Tuition Reimbursement 0.80 Incentive Plan 3.26

* NOTE: This is the default health care plan with the cost built into the basic benefits package; there is no additional cost charged against your budget.


Training At present, the firm does not have any formal training programs. You have the opportunity to select from a variety of training options, described in detail below. Any training funds you allocate will be displayed in your quarterly Budget Report. Training for New Hires and Promotions Training promoted employees and new hires will increase the probability of employee success and reduce turnover. Failure to train employees for their new positions will result in reduced productivity and decreased morale if they fail at their new job. You will have the opportunity to allocate any amount from $0 to $80,000 toward training new hires and promoted employees. A Training Analysis tool is available to help you calculate an appropriate training budget for your new hires and promotions.

MINIMUM TRAINING FOR NEW HIRES AND

PROMOTIONS

JOB LEVEL PER EMPLOYEE

5 $3,000 4 2,000 3 2,000 2 1,000 1 200

Training for Managers and Supervisors Sometimes hiring on the open market gives the firm a well-trained manager or supervisor who requires no further training. However, whether promoting from within or hiring from outside the firm, it is believed that supervisors and managers will be better prepared and have a greater chance of success when they take advantage of a training program. Experienced managers can also benefit from ongoing management training. You will have the opportunity to allocate any amount from $0 to $80,000 to manager and supervisor training. The chart (shown next) lists a variety of training programs and costs. This information is given to assist you in entering an amount ($) for manager, supervisor, and other employee training costs. A normal class size for training would be 20 employees. The simulation does not allow you to select specific programs (as described in the chart below) but does assume the more you allocate, the more training is conducted.

NOTE: When promoting, do not forget to hire new people for the positions vacated by workers who are moving up the corporate ladder. The most common error made by students is failing to hire the correct number of employees to replace those who have resigned or been promoted.


TRAINING PROGRAM COSTS (SAMPLE) PER EMPLOYEE

A half-day program in technical skills for production supervisors $1,000 A one-day program on management skills for supervisors $2,000 A half-day program on various topics; such as time management, stress management, managing change, computer skills, etc. $1,000

Safety and Accident Prevention Program One of the problems facing the Human Resource Director is an accident rate that is higher than it should be. It is believed that this is caused by high employee turnover (i.e., there are always new, untrained employees coming into the firm), a less than satisfactory morale level, and a lack of any type of accident prevention or safety program. The accident rate for the firm (as measured by employee days lost per 1 million employee-hours) is 494; the industry average is also 494. However, these rates are above local accident rates and those of many other industries. It is estimated that the cost for a safety program could range from $1,000 to $20,000 or more, per quarter. As Human Resource Director, you have the budget funds necessary and the option of implementing such a program. In order to have a full-time Safety Director, you will need to allocate at least $12,000 per quarter. You may allocate any amount to this category from $1,000 to $80,000 and the more you allocate, the greater the emphasis placed on safety and accident prevention aspects of your firm. Quality Program At the present time, the firm has an "average" quality rating of 50 using an index ranging from 0 (extremely low quality) to 100 (high quality). Although quality control is not normally the responsibility of a Human Resources Director, it is incorporated into the simulation because it is closely related to personnel areas such as grievances, training, and turnover. The quality of the goods produced (or services rendered) will be found on the quarterly Production Report. At the present time, product/service quality is checked at the end of the process (post-process control). A minimal quality control program can be established with $4,000. A program to train supervisors to conduct quality checks during the process (concurrent control) could be established for $5,000 per quarter. An allocation of $13,000 per quarter would need to be set in order to have a full time Quality Control Manager. A Total Quality Management (TQM) program could be established for $25,000 per quarter, which includes a full time manager and concurrent controls. A more formal quality control system could be established with funds of up to $40,000, or more. To summarize, you may allocate any amount to this category from $1,000 to $80,000, and the more you allocate, the greater the emphasis placed on the quality aspects of your firm.

NOTE: Although the simulation allows for large amounts to be allocated in these expenditure categories, there will be a point of diminishing return. This point is reached when your increased expenditure no longer produces an increase in benefits as great as the expense.


Programs There are six programs available that will have a positive impact on the Human Resources division. These programs include: 1) an employee participation program, 2) a system for handling employee grievances, 3) an orientation program for new employees, 4) a computerized HR Information System, 5) a procedure for evaluating employee performance, and 6) an affirmative action program. The costs for these programs differ and range from $3,000 to $12,000 per quarter. Below each program title is some background information about the firm and some possible benefits that will result from initiating these programs. Keep in mind, however, that any benefit gained can be lost if these programs are discontinued due to budgetary constraints in a later quarter. Employee Participation Contemporary human resource practices include various employee participation programs that attempt to give workers more self-direction and control over their work and working conditions. Programs range from voluntary problem-solving groups to formal quality circle programs. The program costs include funds for establishing and supervising new training programs and pay for employees' time while they attend training sessions. Results from this type of program are typically an increase in employee morale and a decrease in turnover. Grievance Procedure The firm does not have a grievance procedure; department heads handle grievances informally. The department heads estimate there were 31 grievances last quarter. It is felt there are probably many more than this number, but employees either quit or continue working with lower morale instead of seeking resolution. The high turnover rate and average morale index adds credence to this theory. A formal grievance procedure should increase employee morale and decrease turnover. Orientation Program The firm does not have an orientation program for new employees. This fact could possibly contribute to the higher than average accident and turnover rates. Orientation programs for new employees tend to reduce accidents and decrease turnover. Human Resource Information System Human Resource records and the record keeping system have not kept up with the rapid growth of the firm; only payroll records and payroll checks are computerized. The Human Resource Director has received a bid for $11,000 per quarter to install and maintain personnel records on a computer. The vendor claims the benefit of this system would be improved decision-making in all areas of the Human Resource function—benefits, selection, staffing, training and development, performance appraisal, and job analysis.


Performance Appraisal System The firm does not have a formal performance appraisal system. Some employees complain that the supervisors and managers give raises and perks to those they like and not necessarily to those who are the most productive. Increased morale and greater productivity are likely to result from this new system. Affirmative Action Program The percentage of female and minority workers at the firm is lower than the local working population. Hiring has been generally done on a "walk in" basis, and there is no formal plan to increase the number of women and minorities employed. This program would assign a high-level manager to assume the additional duties as Affirmative Action Officer. The AA Officer will develop goals and initiate programs to achieve the hiring targets you set in your staffing decision. Special Decisions If your instructor selects this option, each quarter you will have a mini-case, which is termed an Incident. Your team will need to debate the issues being presented by the incident and enter the appropriate response. If you have trouble choosing from the options provided, you must still select the one closest to your opinion. An incident response is a required decision and is not optional. Incidents represent a "window of opportunity" for you, and due to simulation constraints, an incident will only be available during the quarter in which it is offered. Any costs will be automatically charged and will appear in your budget report. Survey Reports and Decision Analysis To help you allocate your budget among the different human resource functions for which you are responsible, HRManagement provides several analysis tools you can use to check your decisions. Use the Staffing Analysis to make sure you are filling all the open positions, and the Training tool to check if you are providing enough training to your new hires and promotions. The Wage Rate Analysis tool calculates the impact of your wage increases on payroll and the budget. Finally, the Budget Analysis allows you to project the cost of your decisions for the quarter and calculates the amount of your annual budget remaining. For information about what is happening in the industry, you can purchase survey reports on wages, training, and production in other firms. In addition, a report showing performance on a number of different HR measures, such as employee turnover, accident rates, and morale, is available. These reports can be very helpful in determining what works well in the industry—and what doesn’t—as you strive to improve performance in your company. Next Step As the new Human Resources Director, challenging decisions demand your immediate attention. First, you must formulate a plan for your department to guide you in making decisions each period. Your first simulation decision is to choose a name for your organization so it will stand out from the other firms in the industry. Once the startup decision has been finalized, you will be


able to make your regular quarterly decisions. See the table on the next page for a summary of the quarterly decisions. The CEO of your company has high expectations as you start your new position and is looking for improvement in a number of key areas, such as higher quality and morale, lower turnover and accident rates, and a more cost efficient operation overall. Be sure staffing needs are met to ensure production continues smoothly, but do not neglect the longer-term goals that will make your company a better place to work in the years to come. Good luck as you put your management skills to the test in the world of HRManagement!


HRManagement Decision Summary

DECISION INPUT RANGE COST

Staffing

New Hire Number of new hires for each

job level. Use negative number for layoffs.

Changes limited to 25% of current

employees.

Varies by job level: $2,000–15,000 per

employee.

Promotion Number of promotions into job levels 2–5.

Input cannot exceed number of

employees in lower level.

No direct cost.

Demographic Targets Target percentage for female and minority hires. 1 to 99 No direct cost.

Compensation

Wages Amount to increase (or

decrease) quarterly wage for each level.

Changes limited to 10% of current

wages.

Increase x number of employees. Impacts

budget in first quarter only.

Benefits Choice of Holidays, Pensions, Health Benefits, and Other.

Select 0 or more benefits.

Benefit cost is a percent of payroll.

Impacts budget in first quarter only.

Training and Development

New Hires and Promotions Budget amount. $0–$80,000 Amount input.

Training for Mgrs. and Supervisors Budget amount. $0–$80,000 Amount input.

Safety & Accident Prevention Budget amount. $0–$80,000 Amount input.

Quality Program Budget amount. $0–$80,000 Amount input.

Employee Programs

Employee Participation Yes/No N/A $12,000

Grievance Procedure Yes/No N/A $6,000 Orientation Program Yes/No N/A $3,000

HR Information System Yes/No N/A $11,000

Performance Appraisal System Yes/No N/A $5,000

Affirmative Action Program Yes/No N/A $7,000

Special Incident Response to incident. Choices vary. Varies.

Survey

Wages Choose OK to purchase. Report available immediately.

Once purchased, cannot be undone.

N/A $1,000 for each report.

Training Production

Performance

HR Planning and Organization —23—

2. HR Planning and Organization


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UMAN RESOURCE MANAGEMENT is essential to the operation of any organization that employs human labor to perform work. This is true for a labor-intensive business like a hotel as well as a capital-intensive operation such as oil drilling; a charitable

organization such as a non-profit hospital as well as a for-profit automobile manufacturer. All require the selection, motivation, and development of human resources so the organization can achieve its goals. Although the industry in the simulation is not specified, the experience gained by managing the human resources department in your organization can be applied to a wide range of industries. In the HRManagement simulation, we have attempted to combine human resource elements found in the real world with the typical business environment. As director of the human resources department, you must work to balance the demands of management with the needs of employees. You must decide what to do based on the firm’s situation and your limited budget, and employees will respond to your choices. Quarterly reports provide feedback and show your progress in all the decision areas. Market research provides information on how well you are doing compared to other firms in the industry.

In the real world, managers must make decisions without perfect information, under conditions of uncertainty, and within time constraints. This simulation is no different. Your team will need to get as much information as possible through the survey research reports provided each quarter, keep good records in order to study the interactions between decision variables, and then make decisions for the next quarter.

It is recommended that you not use the "stab in the dark" method of making decisions but rather plan to hold certain variables constant while manipulating others. This will allow you to begin to determine which elements are more effective in obtaining desired results. Do not rely on information gathered from others who have competed in the simulation in the past, as your instructor can change the simulation environment for each class. All teams will make a few mistakes throughout the simulation but mistakes happen in the real world, too. Remember to keep your enthusiasm and competitive spirit high and do not allow a few setbacks to affect your play. Simulation Objectives Your team's performance will be evaluated using the goals you and your CEO (instructor) have set. An example set of goals might be to provide a service of the best quality, at the lowest cost, while maximizing employee morale. In accomplishing your goals, you will also need to manage the budget for your department.

H Human Resource Management


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As in the real world, your firm will not have enough funds in the budget to implement every available improvement option. Your team must make choices as to what variables are most important and concentrate your budget expenditures on those factors. You will, in a sense, be competing with all other teams in your industry to be the most successful firm. But your decisions will also have an impact on their results as you compete in the local labor market for the industry. The Planning Process The planning process is an important key to your success in HRManagement. To make good decisions, you must start by analyzing your current situation, decide where you want to go, and finally, make a plan for getting there. The questions below should help guide your team in its discussion about the direction you plan to take as you take over the human resources department of your firm.

Situation: Where are we now? Who are our employees? What do they want?

What do we do well? Where do we need to improve?

Goals: Where do we want to go? What value should we provide to management? What value to employees?

What are our goals? Are they measurable? Can we do it better than the competition?

Strategies: How will we get there? How will we fill positions? How should we compensate employees?

What training is needed? What programs? What can we do to stay within budget? Situation The first step in the planning process is to analyze your current situation. Be sure you understand the structure of the organization, the capabilities of its people, and their limitations. Make a list of the strengths and weaknesses within the organization. Be specific, including measures such as employee compensation, turnover and morale, and product quality and cost, as well as available resources. Next, look at the environment you are working in. Note any opportunities or threats facing your organization and the industry. Examples might include labor relations, wage competition, government regulation, and technology impacts on the industry. The internal and external analysis answers the question, "Where are we now?" and establishes the foundation for looking toward the future in preparing goals and strategies. Goals Once you have analyzed your current situation and operating environment, the next step is to select goals. Goals are a description of what you want to accomplish. They will guide you in your decision-making, and should not change significantly from quarter to quarter. Your firm should express its goals in some quantifiable fashion such as a percentage, ratio, or total dollars so that the firm's CEO and your instructor can readily evaluate them. Also, although less easily


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measurable, some objectives, such as being an "aggressive" firm, are completely in line with reality and might well impress the CEO. Goals may also be expressed in superlatives such as "the most," "the biggest," and so on; or within some comparative framework such as "average" or "group median;" or in a combination of the two such as "better than the average." Goals easily achieved are often less commendable than ambitious goals only partially fulfilled. Some areas for setting goals in HRManagement are turnover, productivity, overtime, absenteeism, morale, quality, accident rate, wages, minority and female workforce, unit labor cost, and grievances. Each quarter, you will need to evaluate your results to see if you are getting closer to your goals and adjust your strategy accordingly. You will also want to compare your results with competitors' to see if you have set your goals too low. Strategies While goals express the position of your firm at some point in the future, strategies are policies for reaching these goals. They answer the question, “How will we get there?” You should consider different strategies for accomplishing your goals and pick the one that is best for your organization. You may decide to stress some decision areas more than others. To be successful, you will need to state clearly your strategies to achieve your goals. While not as detailed as your quarterly decisions, your strategies help guide your decisions for staffing, wages, benefits, training, and new programs. The following are some sample goals and strategies for an HR department. Your team may have an entirely different emphasis from the list given here.

GOAL STRATEGY To be the highest paying firm in the industry. Spend 50% of available budget on wage increases To increase morale to 90. Allocate money to employee benefits every third quarter.

To be a people-oriented firm. Aim to fill 25% of all job vacancies with minority or female employees.

It may be difficult to comprehend the interrelationships among items on various reports. To improve quality, you may wish to implement a quality program, but this may affect your turnover rate or prevent you from increasing wages due to budget constraints. In other words, it is rarely obvious what the human resource manager should do to help the firm achieve its management goals. Performance in one area may be improved but only at the expense of another area, resulting in a conflict with your overall goals. HRManagement forces you to be aware of these

NOTE: One professor points out that perhaps wages and percentages of female/minorities should be treated as strategies instead of goals. The reasoning is that they are not ends but means to better morale (wages), and productivity (well-managed diversity). This may be a good discussion point for your team.


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tradeoffs and relationships and should help participants to better plan their future human resource objectives. Budget Planning Once you have set your goals and decided on the strategies to achieve them, you will need to decide how much spending to put behind each of your decisions. Deciding how much to spend is part of the budgeting process. There are three basic approaches to budgeting:

• Zero-based budgeting requires managers to justify each line item, showing the benefits from the spending, and the total budget is then calculated as the sum of the line items.

• Incremental budgeting starts with an existing budget that acts as a “baseline” to which adjustments are made. It is useful when things are going well and there is no need for drastic changes.

• Performance-based budgeting starts with defined goals and a fixed amount available for spending. Managers must determine the most efficient allocation of funds to reach the goals.

Since the Human Resources Department in your simulated firm did not exist before you took over, there is no baseline budget for you to go by. A zero-based budget would require you to present to the CEO the total amount you want to spend over the next year, broken down by each decision category, with a justification for each line item. Since the CEO has already given you a spending limit, your task is to use a performance-based process to make the most efficient use of the funds in reaching your goals. Still, you may find the other two ways of thinking about budgeting useful: you will need to justify individual spending proposals within your group, and you can save time by adopting an incremental approach as you establish spending levels that work well and simply need adjustment. When allocating your budget to meet performance goals, you will find it helpful to take the following steps.

1. Set spending guidelines based on strategies. 2. Track spending to stay within budget. 3. Check results against performance measures. 4. Make adjustments to improve results.

When creating spending guidelines, start with general categories such as staffing, training, and compensation, each correlating with your strategies, and weight their importance. Some functions, such as staffing, satisfy an immediate need, so you may have a tendency to focus on them. Be sure not to neglect activities whose impact may not be so obvious or may take longer to see. For example, you may decide to initiate a grievance procedure to reduce grievances. It would be unreasonable to expect grievances to go down in the first quarter of the program, and they may in fact go up as employees find an outlet for their complaints. But in the long run, the change in policy should lead to fewer grievances and better morale for all employees.


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As you make quarterly decisions, track the cost of the decisions and refer back to the spending guidelines to make sure you are sticking with the budget. Here you will need to distinguish between expenditures that must be kept up each quarter and those that may occur less frequently. For example, once a program is adopted, it will need to be maintained, so you should plan for that as a quarterly expense in the budget. A wage increase, on the other hand, does not necessarily have to occur every quarter, so you might account for that as an annual expense rather than a quarterly expense. After the simulation is advanced, check results to make sure your decisions are moving you closer to your goals. Do this by comparing previous quarter measures against the current quarter, keeping in mind all variables that could have an impact on results. There are three kinds of problems you should look for: the wrong course of action, the wrong amount of effort, and interconnections between actions. An example of the wrong action might be cutting wages to reduce unit cost: if wages are already low, you might lose your best employees because of the cut, and unit costs could actually go up as turnover increases and productivity drops. As an example of insufficient effort, you might increase employee benefits thinking it will improve morale, but if the increase is too small, you might not see any change. There is a connection between promotions and training: promoting employees is a good way to fill positions, but if you do not train them properly, it could lead to reduced productivity and increased turnover. Based on your results analysis, you will want to make adjustments to your decisions. That might be as simple as changing how much effort you are putting into an activity, or switching from one activity to another. In general, you do not want to change your plan, just its implementation. If you do find that things are not working out no matter what you try, it may be time to bring in an outside consultant to discuss your plan, its implementation, and the results you are getting. A few final tips as you plan your budget for HRManagement:

• Be sure to divide up the work among all the members of the team. • Do not plan to spend everything: leave room for error. • Reach a consensus on the plan before starting to make decisions.

HR Decisions HRManagement has many options to choose from to implement your strategies. In order to make the best choices, it is important that you understand the different kinds of decisions, how they are related, and the impacts they have on company performance.


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Staffing Staffing decisions in the simulation include internal promotions, external hires, and demographic targets for hiring new employees. When filling open positions, you will find that it is less expensive to promote employees from a lower level, and then fill the lower level positions. But the decision is not without cost. Although the promoted employees may know their way around the company, they will need effective training in order to be productive in their new positions. With external hires, you have the opportunity to bring fresh ideas and more diversity to your firm. Your demographic targets will have the most impact if you hire from the local labor market, since the number of female and minority employees available for promotion is limited. When you hire new employees, consider the importance of a good orientation program to get them up to speed quickly. And though they may be bringing skills from previous employment to your firm, they will still need training to maximize productivity. Setting hiring goals is just the start of cultivating diversity in your workforce. An affirmative action program will help to meet those goals. And although there is no specific decision in HRManagement to make, it is important to educate employees about different styles of learning and the value of diverse points of view in improving quality and productivity in the organization. In addition to the immediate task of filling positions for the next quarter, you should also set longer-term goals to improve productivity and reduce turnover, so that you can reduce the cost of staffing while lowering the unit cost of your product or service. While the impact that compensation, training, and employee program decisions have on staffing may be difficult to quantify, they are an important part of your long-term plan to meet your firm’s objectives. Compensation Compensation is the reward the company gives to employees for the work they do. It can be paid directly in the form of wages, or indirectly as employee benefits. Wages and benefits are the primary motivators of employee performance and they have a direct impact on morale. When considering the value of compensation, employees will compare their current wages and benefits with previous levels as well as levels of compensation outside the firm. While the benefits decision in the simulation is a percent of pay that applies to all employees, wages are set by job level, and it is important to keep in mind relative wages within the company as well as the industry and local community. Performance appraisal is often linked to compensation, since employers want to reward the most productive individuals in order to retain them. However, if the appraisal system is flawed, wage increases can actually be perceived as unfair and decrease morale. In HRManagement, you do not have the ability to grant increases to individual employees based on performance appraisal, so you should treat any wage increase as the average increase for all employees in the job level. Increasing compensation has two costs in the context of the simulation. First, any increase will be charged against your budget in the quarter it takes effect. The second cost is the increase in


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payroll or benefits expense, which might increase the unit cost of the product or service. Whether an increase in compensation does in fact increase unit cost depends on its impact on productivity. To give a simple example, consider company A that pays 100 workers $10/hr. to produce 1000 units in 40 hours, while company B uses 65 employees at $15/hr. and company C pays 55 employees $20/hr. to complete the same work. Which has the lowest unit cost? Given that: unit cost = labor cost ÷ units produced you can calculate the unit costs for each company:

Keep in mind that these calculations use current levels of productivity and wages as factors of unit cost. Given the impact compensation has on productivity, should you wait until productivity increases to increase compensation, or increase compensation in order to improve productivity? Training The training decisions in HRManagement allow you to undertake formal programs to improve overall performance of the organization, as well as the performance of specific groups of employees. A description of each type of training and its effects is given in the table below. You may allocate up to $80,000 to each of the training options. While it might be tempting to allocate the maximum amount, keep in mind that doing so may be a less than optimal use of funds due to diminishing returns on your spending. Starting with the suggested training amounts and then increasing the amounts as you gain experience with their effects, will lead to better results.

Training Description Suggested Starting Amount Impacts

New Hires & Promotions

Trains employees in their new positions. Required amount varies with level and

number of positions filled.

Per hire/promotion: Level 5: $3000 Level 4: $2000 Level 3: $2000 Level 2: $1000 Level 1: $200

accident rate, absentees, morale, productivity,

quality, turnover

Managers & Supervisors

Helps Level 2–5 employees develop their managerial skills. Especially important for

new managers.

Per new manager/ supervisor:

$1,000-$2,000

morale, quality, productivity

Safety & Accident

Prevention

Educates employees on the importance of safety in the workplace. $5,000-$10,000 accident rate, absentees,

productivity, quality

Quality Program

Supports various quality control initiatives, depending on budgeted

amount. $15,000-$20,000

quality, productivity, turnover, absentees,

accident rate

Company Employees Hourly Wage Labor Cost (40 hours)

Unit Cost (1000 units)

A 100 $10 $40,000 $40 B 65 $15 $39,000 $39 C 50 $20 $40,000 $40


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HR Programs In addition to staffing, compensation, and training decisions, HRManagement allows you to allocate resources toward a number of programs in the areas of employee relations, efficiency improvement, and legal compliance. These programs may take a while before you see measurable results. You should be patient and avoid initiating and then dropping programs, which can cause confusion and have a negative impact on the organization. A description of each of the programs, along with their costs and impacts is given in the table below.

HR Program Description Cost Primary Impacts Employee Participation

increases employee involvement in the organization $12,000 morale, productivity, turnover

Grievance Procedure

provides a safe way for workers to report problems $6,000 grievances, morale, turnover

Orientation Program

helps new hires adjust to the organization $3,000 productivity, turnover

HR Information System

may improve decision-making in all HR functions $11,000 efficiency, morale, grievances

Performance Appraisal

improves evaluation of employee performance $5,000 morale, productivity, quality

Affirmative Action may help you achieve your target minority workforce goals $7,000 female and minority %

Note that some programs can have both primary and secondary benefits. For example, an employee participation program may improve morale by getting employees more involved in the organization, but it can also make other training or programs more effective by improving the way those activities are implemented. Measuring Results Once you have made your decisions for a quarter and the simulation is advanced, considerable data is available from internal reports and industry research. You will need to interpret the results of these reports in order to monitor the effectiveness of your decisions, and modify them as necessary to meet your goals. The company dashboard is a good place to start in tracking general performance measures, such as morale, quality, and unit cost. But you must also learn to calculate some basic ratios in order to measure the effectiveness of your decisions, and to identify areas of the company that need attention. Purchasing research on your competitors' activities and results in the industry will also help you in your analysis and lead to better decisions going forward. In this section we will look at several measures, how to calculate them, and how to interpret them.


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Turnover Employee turnover is the rate at which the organization needs to replace employees. It is calculated as:

So, if 20 employees leave a company that has 100 total employees, turnover would be 20÷100 or 20%. In the simulation, turnover is 9.8% at the start and is calculated each period based on the number of resignations in the quarter. High turnover is expensive, and has both direct and indirect costs. Direct costs are the cost of hiring and training new employees. Indirect costs come from the lost experience and skills of workers that have left the company. Some causes of high turnover are low compensation, inadequate training, and poor job satisfaction. Productivity The level of productivity provides a quick measure of the effectiveness of your HR decisions. It tells how many units of a product or service each level 1 worker is able to produce in a quarter. The general formula for the calculation is

So, if 100,000 units are produced by 500 workers in a quarter, the calculation would be

If productivity is going up, that is a good indication that your compensation, training, and program decisions are having an impact on the efficiency of workers in the organization. If productivity is dropping, it could be a sign of staffing or training problems, or that employees are generally not motivated in their work. In addition to monitoring productivity within the company, you can also compare your productivity with industry averages to see how well you are doing relative to the competition. Unit Labor Cost The unit cost of labor helps you evaluate the impact of your staffing and compensation decisions on the bottom line. Increasing compensation can have multiple effects. On the one hand, higher wages cause labor costs to increase. On the other hand, higher wages can lead to better retention and productivity, which reduces costs. Tracking unit costs over time allows you to see the total impact of decisions to improve compensation and raise productivity.

turnover = separations ÷ total employees

productivity = units produced ÷ number of level 1 workers

productivity = 100,000 ÷500 = 200 units/quarter


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In HRManagement, unit labor cost is calculated based on the following equations:

If unit costs are falling, that is an indication that your decisions are helping the bottom line. Lower unit costs can also provide justification for an increase in compensation to improve employee morale and retain productive workers. If unit costs go up, you need to identify the cause. A corresponding drop in productivity indicates a staffing or training problem. Higher costs along with improved productivity may be a sign that you are trying to use a large wage increase to motivate employees instead of using a more balanced approach. Return on Investment Return on investment (ROI) is an important measure of the efficiency of an investment. In the simulation, it can be used to measure the effectiveness of spending on compensation, training, or other programs. Because the ROI measure readily coverts to a percent, comparisons can be made across types of spending and over time. The ROI is calculated as

As an example, if an orientation program costing $3,000 increases retention of new employees and reduces hiring cost by $3,300, then the ROI would be calculated as

Tracking return on investment may influence your decision-making for the going forward. If you have very high return on investment for training, you might choose to invest even more. On the other hand, if ROI is 0 or negative, you may consider cutting back on the activity, and use the budget in a more productive way. When using ROI, keep in mind that not all the effects of your activities are easily quantified, so it should not be the only consideration when making decisions. Nevertheless, ROI is a good tool to have as you try to make the best use of limited resources.

unit cost = labor cost ÷ units produced labor cost = payroll + benefits + overtime cost benefits cost = (benefits % – 20%) x payroll overtime cost = overtime units x $45

ROI = 𝒈𝒈𝒈𝒈𝒈𝒈𝒈𝒈 𝒇𝒇𝒇𝒇𝒇𝒇𝒇𝒇 𝒈𝒈𝒈𝒈𝒊𝒊𝒊𝒊𝒊𝒊𝒊𝒊𝒇𝒇𝒊𝒊𝒈𝒈𝒊𝒊−𝒄𝒄𝒇𝒇𝒊𝒊𝒊𝒊 𝒇𝒇𝒇𝒇 𝒈𝒈𝒈𝒈𝒊𝒊𝒊𝒊𝒊𝒊𝒊𝒊𝒇𝒇𝒊𝒊𝒈𝒈𝒊𝒊𝒄𝒄𝒇𝒇𝒊𝒊𝒊𝒊 𝒇𝒇𝒇𝒇 𝒈𝒈𝒈𝒈𝒊𝒊𝒊𝒊𝒊𝒊𝒊𝒊𝒇𝒇𝒊𝒊𝒈𝒈𝒊𝒊

ROI = 𝟑𝟑,𝟑𝟑𝟑𝟑𝟑𝟑 − 𝟑𝟑𝟑𝟑𝟑𝟑𝟑𝟑𝟑𝟑,𝟑𝟑𝟑𝟑𝟑𝟑

= 𝟑𝟑𝟑𝟑𝟑𝟑𝟑𝟑,𝟑𝟑𝟑𝟑𝟑𝟑

= 0.10 = 10%


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Other Measures Other measures can be used to evaluate the effectiveness of your HR decisions. They can also be used to compare your performance with your competitors’. Below is a list of these measures along with their descriptions.

Measure Description Initial Value

Absenteeism This is the total number of days missed by all employees in a quarter. It measures general health and motivation of the workforce.

498

Accident Rate The accident rate is the employee days lost per 1 million employee-hours. It is a good measure of safety in the organization. 494

Grievances The grievances reported each quarter measure the level of problems in the company as well as how comfortable employees are with reporting problems.

31

Morale The morale of the workforce is reported on a scale from 0 to 100, with 100 being the highest. 50

Quality Quality is also measured as an index from 0 to 100, where 100 is the highest level of quality in the product or service. 50

Team Organization Getting off to a good start is critically important in managing a firm or participating in a simulation. Your team should be organized as soon as it is formed. Specific duties should be assigned with each person to be held accountable for his/her responsibilities. It is recommended that you assign a "lead" person to head up the team, perhaps with the title of Director of Human Resources.

If you do decide to operate as a self-managed work team, you should consult your course textbook or other resources in order to learn how to make it work. Picture your team functioning as a team, rather than as a "group"—can you visualize the difference? The duties that we have described below are merely a suggestion for your team's firm. If there are fewer team members than jobs, share responsibility of an open position. Refer to the following chart for suggested roles and record keeping duties.

TITLE RECORD KEEPING DUTIES HR Director % Female and Minority Employees, Over/Under Budget, Morale

Operations Liaison Quality Index, Productivity per Employee, Overtime Units, Unit Labor Cost, Quality Budget vs. Industry Average

Director of Safety Training

Accident Rate vs. Industry Average, Safety Budget vs. Industry Average, Absenteeism, Training Budget vs. Industry Average, Training for Promotions, Turnover vs. Industry Average

Wage and Salary Administrator

Wages vs. Industry Average, Benefits vs. Industry Average, Grievances, Employee Participation Programs in the Industry

NOTE: Although a team may operate as a leaderless group, it often requires one person to keep things moving.


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Peer Evaluation Your instructor may ask you to complete a written or online peer evaluation either at mid-term and/or at the end of the semester. When duties have been clearly assigned at the beginning, a peer (performance) evaluation will be easy to accomplish. This evaluation is to be completed without consultation with other team members. You should be very honest in evaluating the performance of your team, as your instructor knows the strengths and weaknesses of your team from administrative reports that are furnished each quarter to him/her. It is imperative, however, that you be able to verbalize the team's performance. There is great learning value in taking a historical look at your team's decisions and outcomes.

Summary HRManagement provides the opportunity to manage the human resources department of a simulated mid-sized organization. You will need to work as part of a team to improve the performance of your firm, making staffing, compensation, training, and program decisions in response to changing budgets and production requirements. Successful teams will start with a well-thought-out plan, make appropriate decisions to implement the plan, and monitor the effects of their decisions over several simulated years. Along the way, you will gain a better understanding of the role HR plays in organizations and society.

NOTE: If a team has interpersonal problems, the team must solve them or it will go through the simulation crippled with conflict. Managing team conflicts is an important part of the educational process for you as future managers.


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Operations Guide —37—

3. Operations Guide


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Simulation Navigation

RMANAGEMENT IS DESIGNED to be easy to use and is compatible with most Internet browsers. This chapter contains the information needed to make the decisions for each quarter and an interpretation of the results found on the reports. This section will first

detail simulation access and then will give an overview of the decision-making process of HRManagement. Each page of the HRManagement site contains an easy-to-use menu system consisting of three parts: (1) specific menu options and links to decision-making tools and input screens, found on the left side of the HRManagement browser window; (2) navigation and general control buttons across the top; and (3) pull-down menu to show the current week in the upper right-hand corner. Refer to the informative sidebar to the right of each simulation screen for more in-depth information about that particular screen.

The navigation and general control buttons found at the top of the simulation screen are: Back, Home, Print, Help, and Logout. The [Print]

button applies to the report currently on the screen. For instance, if you click the [Print] button when viewing the Budget report, the report will be sent to your default printer. Clicking the [Help] button will open the operations guide. The [Back] button lets you reach the last page you visited and the [Home] button brings you to the homepage of the simulation.

H

6 Main Menu categories Navigation Buttons Change the Period View Industry, Firm, and User Info Side Bar Notes


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The links on the left of the HRManagement window lead to information and tools you will need to analyze your current position, plan a strategy, and input your decisions. These links are divided into six categories: Startup, Decisions, Analysis, Reports, Environment, and Simulation. One of the easiest ways to find out more about an option is just to try it out. The menu system is expandable and collapsible. For instance, click on the button to the left of STARTUP, and the Briefing, Case, and Startup Decision will collapse back into STARTUP. The right-hand sidebar contains context-sensitive information.

The box in the upper right-hand corner of the simulation screen has a pull-down menu that lets you choose which

quarter you would like to view. It will automatically default to the current period unless you change it. Changing this will show you your results for previous periods once the simulation has been advanced which can be helpful for reviewing historical information. Also displayed is your company name, industry team name, user ID, and team leader status. Note: All the screen shots showing data that appear in this operations guide may or may not match your particular scenario. Also note that costs are not fixed; they may increase or decrease without notice, as the simulation progresses.


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Case The Case provides background information on your firm in a form similar to a business school case and also serves as an introduction to the situation at the start of the simulation. Remember that not everything provided in the Case is immediately available to you. For example, you may not be able to enter a decision in response to an Incident unless your instructor has activated that option. Please make sure to carefully read the case before making ANY decisions.

Startup The Case provides background information you will need to help you read the reports and make decisions. Be sure to read the Case before entering your first decision.


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Startup Decision One Startup Decision is required at the beginning of the simulation; you will need to enter a name for your firm. When your team has thoughtfully agreed upon a name, the team leader will need to enter the business name into the simulation decision screen. When this has been entered and finalized, the remaining simulation menu items will become accessible.

Glossary The Glossary provides a list of important terms (and their definitions) for learning the principles of marketing and competing in HRManagement. The Glossary also appears in the Appendix of the HRManagement manual. Click the link to access the document.

NOTE: Once your firm has been named and that decision finalized, you will not be able to change your firm name.

NOTE: At the beginning of the simulation, you will be required to create a name for your firm. Your firm name must be completed and finalized before you can proceed past the startup menu.

Startup Be sure to read the Case before making your Startup Decision. It is important to select a name that could stand the test of time and perhaps even be adaptable to a new strategy should you later decide to change your strategy. While any team member can enter the company name, only the leader can finalize the decision. Once the startup decision has been finalized, you will not be able to change it. The Glossary provides a list of important terms used in the simulation. Click the link to access the glossary document.

Company Name Finalize Decision Submit


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The DECISIONS menu is where your team will enter its plan each period before advancing the simulation. The decisions will include staffing, training, benefits, and programs, as well as special decisions involving incidents that are common in human resources management. Making decisions is the culmination of your analytical process. It is important to realize that some of your decisions will have more of an immediate impact, while others may have longer-term implications. In any case, they should be part of an integrated HR management plan that is well thought out and appropriate in the local environment.

Decisions


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Staffing Your organization has five different job levels, each with its own staffing needs. Before making your Staffing decision, use the Staff Analysis tool to project the resignations at each job level along with the number of employees required to meet production goals. Changes in productivity and production may affect the number of employees required in a quarter. Use the decision input screen to enter the number of new hires and promotions for each job level. If you are overstaffed at a job level and wish to layoff personnel, enter a negative number in the Hire column. Failure to provide enough employees at each job level may result in overtime in order to meet production goals and/or higher turnover rates. Review the Staff Analysis report after making your decision to verify that the projected number of employees is sufficient for each level. There is a direct cost associated with hiring from the outside. The cost of layoffs is 50% of the hiring cost. View the Budget Analysis to see the impact of your decisions on the budget. In addition to hiring and promotion decisions for each job level, enter target percentages for female and minority hires. Allowable inputs are 1–99; these percentages will be used when selecting new hires. To take a more proactive approach to female and minority hires, use the Affirmative Action Program along with hiring targets. Results of your decisions will be shown under Demographics on the Reports menu.

# New hires & Promotions for each job level (negative # for layoffs). Target % of females & minorities.

Decisions Staff job levels by hiring new employees or promoting existing ones. You may not change any staffing level by more than 25% per quarter. Enter target hiring percentages for females and minorities. Target percentages must be from 1–99. Use the Staff Analysis to determine staffing needs and to review your decisions. To lay off personnel, enter a negative number in the Hire field for that job level. If you promote from a level, you may need to hire replacements for those being promoted. Use the Budget Analysis to see hiring/firing costs and the effect on your budget. The team leader may optionally lock decisions to prevent additional changes this period.


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Wages Wages for each job level may be changed in any decision period by entering the amount into the Wages decision input screen. The figure you enter here is for a quarterly wage increase (or decrease) per employee. The first quarter of a wage increase, the cost will be charged against your budget; in subsequent quarters, the cost will be picked up by production. After entering a wage increase decision, check the Wage Rate Analysis to see the projected cost(s). You may also check the Budget Analysis to see the effect on your budget. The example below illustrates how the additional cost of a small wage increase is calculated. The Curr. Company Wage values used here are from Quarter 0. Wages Decision Screen Wage Rate Analysis

Planned Increase Cost/Job Level Total Cost

Quarterly Wage Increase for each job level.

Decisions Use this screen to enter wage changes by job level. Any amount entered here is per employee. Wage changes are limited to 10% of current wages. You may enter wage changes any period. Your budget will be charged the wage increase only during the first period in which you enter the change; thereafter, the firm will pick up the cost. You can check the wage increase/decrease effect on your budget by viewing the Budget Analysis screen. To see either total increase costs or costs by job level, view the Wage Rate Analysis screen. The team leader may optionally lock decisions to prevent additional changes this period.


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Benefits You may wish to select additional benefits beyond the basic 20% provided at the beginning of the simulation. You may choose from additional holiday, pension, health, and other benefits. Benefit costs are a percentage of total payroll. Any cost incurred from an increase in employee benefits will be charged to your budget only during the quarter in which you add it. Thereafter, the extra cost is absorbed into the production department's operating budget. Check the Budget Analysis to see the effect on your budget. Benefit decisions carry over from one quarter to the next. Decreasing employee benefits after they have been increased will be accompanied by a drop in morale.

Benefit Expense Example: a 4% benefit would cost $236,400 (total wages $5,910,000 x 0.04). Note the relatively high cost of adding benefits. Do not miscalculate and spend your entire budget!

Increase or decrease Current Benefits. Select or deselect Additional Benefits.

Decisions Use this screen to select additional benefits. Use the Budget Analysis tool to calculate the cost of adding an additional benefit. The cost of adding a benefit will be paid from your budget only during the period in which the benefit is added; thereafter, the cost will be absorbed by the production department. The team leader may optionally lock decisions to prevent additional changes this period.


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Training Each quarter, you can allocate budget dollars to a variety of training programs. You can allocate any amount from $0–$80,000 per program. Keep in mind, there is a point of diminishing return in training, as with any other expenditure in the simulation. New Hires and Promotions Formal training to prepare new and promoted employees for their new position. Use the Training Analysis tool to calculate the minimum required training investment for new hires and promotions. The more you allocate to employee training, the more training is conducted. Training for Managers and Supervisors Ongoing training specifically designed to develop the skills and leadership of managers and supervisors. Safety and Accident Prevention The amount you allocate should mirror the importance you place on safety and accident prevention in your firm. In order to have a full time Safety Director, you would need to allocate at least $12,000/Qtr. Quality Program Allocate funds to the quality program to improve the quality of your product or service. The more you allocate, the greater the emphasis placed on the quality aspects of your firm.

Enter ($0–80,000) for each type of Training.

Decisions Use this screen to allocate budget dollars to a variety of training programs. You can allocate any amount from $0–$80,000 per program. For New Hires and Promotions, use the Training Analysis tool for minimum training allocations. Training for Managers and Supervisors helps Level 2–5 employees develop their managerial skills. A Safety and Accident Prevention program may decrease accidents and reduce absenteeism. A Quality Program may help to increase your product quality index. The team leader may optionally lock decisions to prevent additional changes this period.


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Programs Select one or more employee performance programs. In most cases, any program you begin should not be discontinued once initiated or morale problems may result. Employee Participation Program ($12,000/Qtr.) Provides employees more self-direction and control over their work and working conditions. This might be accomplished through voluntary problem-solving groups or formal quality circle programs. Grievance Procedure Program ($6,000/Qtr.) Provides a formal and safe procedure for reporting and resolving employee grievances. May help decrease employee turnover and boost morale. Orientation Program ($3,000/Qtr.) This "no-frills" orientation program helps new hires adjust to working for the organization. Human Resource Information System ($11,000/Qtr.) This system would improve decision-making in all areas of the Human Resource function (benefits, selection, staffing, training and development, performance appraisal, job analysis). Performance Appraisal Program ($5,000/Qtr.) This program provides a formal process for setting goals and evaluating employee performance. Affirmative Action Program ($7,000/Qtr.) Assigns an Affirmative Action Officer who will develop goals and specific programs aimed at achieving a workforce that mirrors community workforce demographic percentages.

Continued on next page . . .

Decisions Select from a variety of program options. Discontinuing an employee program may result in morale problems. An Employee Participation program increases employee involvement in the organization. A Grievance Procedure provides a safe way for workers to report problems. An Orientation program helps new hires adjust to the organization. An HR Information System may improve decision-making in all HR functions. A Performance Appraisal program improves evaluation of employee performance. An Affirmative Action program may help you achieve your target minority workforce goals. The team leader may optionally lock decisions to prevent additional changes this period.


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Programs Decision Screen

Select the check box for each type of Training Program you wish to add. To discontinue a program, uncheck the box.


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Special Each period your team may have to deal with a special problem, or "Incident." Read the full Incident by clicking Read Incident and discuss the issues with your team before selecting the appropriate response. Some incidents may not offer a choice that you like; select the one closest to your opinion. An Incident response is required and is not optional. The problems change each period and you will not be able to modify your decision for an incident once the simulation is advanced. Any costs will be automatically charged against your budget and will appear in your budget report. Once the simulation is advanced, feedback on your response will be reported in the Newsletter, in addition to an announcement about the current period's Incident.

Select your Incident response and submit your decision.

Decisions Each quarter your team may have to deal with a special problem, or "Incident." The problems change each period and you will not be able to modify your decision for an Incident once the simulation is advanced. Read the Incident mini-case, watch the video, and discuss the issues with your team before making a decision. Some Incidents may not offer a choice that you like; select the one closest to your opinion. Your response to an Incident may or may not have an effect on your budget. Check for feedback on your Incident choice in the Newsletter after the simulation has been advanced. The team leader may optionally lock decisions to prevent additional changes this period.


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Decision Summary Refer to the Decision Summary to review your current quarter decisions. In addition, select a different period to review former period decisions. It may also be worthwhile to print this out for your records, though you may always view old decisions by changing the week from the period drop-down menu at the top of the screen. This printout will contain the same information as in each decision menu for the period, but all in one place. Displayed are the following decision categories: Staffing, Wages, Benefits, Training, Programs, and Special. IMPORTANT: Remember to check the Decision Summary screen at the end of your decision process to make sure all your choices have been entered and saved correctly. Also note that you can change your decisions as often as you like until the simulation is advanced.

The Decision Summary displays each decision made during the current quarter. Review this report before advancing the simulation to the next period.

Decisions Use this report to view your current and previous period decisions. Be sure to check this report at the end of your decision process to make sure all your choices have been entered and saved correctly. You can change your decisions as often as you like until the simulation is advanced. The team leader may optionally lock decisions to prevent additional changes this period. View previous period results by using the Quarter drop-down menu.


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The ANALYSIS menu consists of links to resources that will help you analyze the current situation and predict the effects of decisions under consideration. The Staff Analysis, Wage Rate Analysis, Training, and Budget Analysis screens display data which should help you evaluate the results of your human resource management and budget allocations.

Analysis


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Staff Analysis The Staff Analysis report helps you determine staffing needs for each job level in the coming quarter. Starting with the beginning number of employees, it adjusts for resignations and your Hiring and Promotion decisions to calculate projected number of employees. The estimated total required for each job level is based on projected productivity and production units required next quarter.

Use the Overage /Shortage line to make sure you are providing adequate staffing for each level.

Analysis This screen displays staffing overages and shortages per job level, based on your current staffing decisions. The Est. Total Required is based on the projected productivity and production units required next quarter. Make adjustments in the Staffing decision to meet projected production staffing needs. The Cost of Hires/Layoffs shown here is based on your current hiring decisions. Check the Budget Analysis to see the effect your current hiring decisions will have on your budget.


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Wage Rate Analysis The Wage Rate Analysis will help you to estimate the cost impact of wage increase decisions against your budget. The first quarter of a wage increase, the cost will be charged against your budget; in subsequent quarters, the cost will be picked up by production. Any changes to wage decisions will result in a change to this report.

Wage Rate increases (from Wages decision).

Projected Cost

Analysis This screen calculates the cost of any wage increases, based on your current decision inputs. Return to the Wages decision screen to make adjustments. Check the Budget Analysis to see the effect your current Wage decisions will have on your budget.


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Training Analysis The Training Analysis screen calculates the minimum training required for New Hires and Promotions. Default values are taken from your current Staffing decision. The Total Training amount calculated here is a recommended minimum, but more training may prove beneficial.

Analysis Use this tool to help determine training for New Hires and Promotions. A minimum training budget is displayed here, based on your decision input. To change your Training decision, enter your desired budget under New Hires and Promotions. Check the Budget Analysis to see the effect your current training decisions will have on your budget.


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Budget Analysis The Budget Analysis will allow you to forecast the effect on your budget based upon your current quarter's decisions. Any changes to the current decisions will result in a change to this report. The report allows you to see the projected budget amount remaining once the simulation is advanced. Keep in mind, these figures are projections only; your actual remaining budget may vary from this projection.

Analysis Use this tool to assess the impact of current quarterly decisions on your budget. Return to the appropriate decision screen to make any adjustments to these expenditures.


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The REPORTS Menu contains reports about the current and historical performance of the Human Resources department. The simulation begins in Quarter 0. The format of Quarter 0 reports is identical to the reports you will receive each successive period during simulation play. You take over the human resource department at the beginning of Quarter 1.

Reports


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Dashboard The Dashboard becomes available after the simulation has been advanced one period and provides a graphical representation of performance measures. Use the drop-down menu to select the graphing variable you wish to view, such as: productivity, labor cost/unit, quality index, grievances, hiring cost, turnover, etc. You can access the dashboard in either the COMPANY menu, or by clicking the Labor Cost/Unit in the upper right quadrant of the simulation screen.

Reports The Dashboard provides a graphical representation of performance measures. You can also access the dashboard by clicking the Labor Cost/Unit figure in the upper right quadrant of the simulation screen. Use the drop-down menu to select a variable to graph from an array of graphing variables. View previous period reports by using the Quarter drop-down menu.

You can also access the Dashboard by clicking the Labor/Unit cost in upper right quadrant of the display screen.


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Staffing Report The Staffing Report provides information about employees at all five job levels based on simulation results. Information includes the current quarter's beginning number of employees, hires, promotions, resignations, and the total number of employees available at each level. The report also shows the number required for production this quarter, as well as a projection of the number of employees required to meet next quarter's production, and projected resignations. The line Required Next Quarter projects the number of employees needed for each job level, based on projected productivity and production units required.

NOTE: The Est. Required Next Qtr. number is calculated by dividing the required production by the projected productivity per employee. For example, 100,000 units required divided by 200 Productivity per Level 1 employee = 500 employees required.

Reports This report displays detailed information about your staff, based on previous quarter results. Projections for resignations and the required number of employees to meet next quarter's production goals are provided. View previous period reports by using the Quarter drop-down menu.


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Demographics Report The Demographics report allows the firm to monitor progress on its Affirmative Action effort. Adjusting your minority and female target percentages in the Staffing decision, and choosing Affirmative Action under the Programs decision, may help you achieve your demographic goals.

Reports Use this report to monitor the effects of your firm's Affirmative Action effort. Compare your results to previous periods by using the Quarter drop-down menu. View previous period reports by using the Quarter drop-down menu.


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Compensation Report This report provides information on compensation for each employee job level in your firm. In addition, the previous quarter's resulting number of employees and additional wage increases per job level are displayed.

Reports Use this report to view your firm's wages per employee by job level. See the Wages Survey to compare your wages with industry and local averages. View previous period reports by using the Quarter drop-down menu.


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Production Report The Production report shows the breakdown of regular and overtime production used to meet production units required for the quarter. In addition, it shows the Labor Cost/Unit and the Quality Index of the product or service produced. Investing in employee programs and training may raise your Quality Index rating and help decrease labor unit cost. Units Required Next Quarter and Projected Productivity are shown to help you in meeting your production needs next quarter.

*Unit Labor Cost: total payroll + plus additional benefits + plus overtime costs ($45 per overtime unit) / divided by units produced = equals Labor Cost per Unit

Reports This report provides feedback on your firm's production results. Refer to this report for the next quarter's projected number of production units required and productivity level. The Quality Index ranges from 0 (low) to 100 (high). The number of Level 1 employees needed next quarter is calculated by dividing Units Required Next Quarter by Projected Productivity. View previous period reports by using the Quarter drop-down menu.


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Performance Report The Performance report displays a broad range of measures showing the performance of your firm. Several important items listed here are Benefits%, Turnover%, Morale, Grievances, and Accident Rate for the current quarter. In addition, your firm's Labor Cost per Unit is displayed. Industry averages are also shown here for comparison.

Reports This report provides a variety of performance measures for your firm and industry averages for each measure. Compare your firm's grievances, morale and accident rates (and more) with industry averages. Some of the items displayed here are your firm's benefit%, productivity, turnover%, absenteeism, and Unit Labor Cost. See the Messages section of the Newsletter for feedback on specific problems you may need to address. View previous period reports by using the Quarter drop-down menu.


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Budget Report This report provides a summary of the impact of your previous decisions and notes whether you were over or under budget. Both quarterly and year-to-date expenses are shown, along with the remaining budget. Any budget surplus or deficit will be carried over to the next quarter. Any surplus will not be carried forward to the next year. Exceeding the budget at the end of the year (every 4th quarter) may reduce your budget for the next year and is a serious managerial deficiency and may have other negative consequences. Information given below is only an example. Your actual costs will be determined by your decisions each quarter.

Reports This report shows the effects of your decisions on your budget. The results shown here are from the previous period's decisions; use the Budget Analysis to forecast the impact of your current decisions. Use this report to determine whether you are over or under budget. If you have budget funds remaining at the end of a quarter, they will be carried over to the next period, but will not be carried over to the next year. If your spending exceeds your budget, you may receive a reduced budget the following year and suffer other negative consequences. View previous period reports by using the Quarter drop-down menu.

Benefit costs for your firm start at 20% of total wages. Any additional cost (benefits, research, etc.) will be displayed here.

Change graph data from Current Qtr. to Year-to-Date.


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The ENVIRONMENT menu provides links to the industry Newsletter and survey research studies that contain data similar to what is found in real world trade journals. The studies have already been purchased for the first quarter; thereafter, you must purchase them. Industry averages on these reports refer to all the teams that are competing in your industry. Any mention of local averages (e.g. wages) refers to the local community labor market where your firm is located.

Environment


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Newsletter The Newsletter provides general messages of interest to the entire industry, including a forecast of required production, changes in unit cost, and trends in wages. It also includes messages to your firm alerting you to potential problems that may require your attention, as well as incident decisions you need to make, and feedback from last period’s incident.

Environment Check the Newsletter every period to keep abreast of events in the industry. The Messages section can provide feedback on your corporate strategy. Check the Incidents section for any special decisions you need to make and for results on previous decisions. Any mention of local averages (e.g. wages) refers to the local community labor market where your firm is located. Industry averages refer to all the teams that are competing in your class. View previous period reports by using the Quarter drop-down menu.


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Wages Survey Cost: $1,000 The Wages Survey displays wages for each firm in the industry, the industry average, and the local average for each job level.

Environment Wages Survey Cost: $1,000 Use this report to compare your firm's wages to the local and industry averages. Local averages refer to the local community labor market where your firm is located. All wages displayed in this report exclude employee benefits. Use the Period drop-down menu to view data from previously purchased reports.


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Training Survey Cost: $1,000 The Training Survey displays training budgets for each firm in the industry, along with the industry average budgets. It also shows whether firms have an employee participation program.

Environment Training Survey Cost: $1,000 This research report shows training expenditures for each firm, along with the industry averages. Use this information to see how your firm compares to other businesses in the industry. Use the Period drop-down menu to view data from previously purchased reports.


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Production Survey The Production Survey shows the productivity rate, quality index rating, and labor/unit cost for each firm in the industry, along with the industry averages for these measures.

Environment Production Survey Cost: $1,000 This report shows the productivity, quality, and labor unit cost of production for each firm, along with industry averages. Use this information to see how your firm compares to other businesses in the industry. Use the Period drop-down menu to view data from previously purchased reports.


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Performance Survey The Performance Survey shows performance measures for each firm in the industry, along with industry averages for the measures.

Environment Performance Survey Cost: $1,000 Check this report to compare your firm against other firms in the industry, using key performance measures. Use the Period drop-down menu to view data from previously purchased reports.


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Advance If the Advance menu option is available to you during the simulation, the team leader can control when your game is advanced to the next quarter. In other words, once your decisions are made for one quarter, you can choose the Advance option and see your results to then determine what changes will need to be made to your decisions for the following quarter. Replay If your instructor allows it, you can go back one quarter in time by having your team leader choose the Replay menu option. This will set you back one quarter in time and allow you to make adjustments to the most recent quarter's decisions. In effect, this serves as an undo button for the simulation. Restart The team leader may choose the Restart menu option, if allowed by the instructor, to erase all decisions and results for all quarters, and completely start over. Some instructors like students to do a few practice quarters and then restart, in which case this option would be used to reset you back to the beginning of the simulation.

Options This menu item allows you to select a color scheme for your game. Use the drop-down menu to select a different color scheme from the current default setting.

Simulation This section of the menu contains links that control the game. The Advance, Replay, and Restart menu options may or may not be available during your simulation. If your instructor chooses, the advancement, replay, and restart of the game may be turned off. If your instructor does allow students to use these options, only the team leader can perform them. Advance, Replay, and Restart will only be available if running the benchmark version of the simulation. In the direct competition version, everyone will be advanced based on a schedule set by your instructor. Please see your course website for the current schedule.

BE CAREFUL WHEN CHOOSING RESTART!

Appendix —71—

Appendix


HRMANAGEMENT

Budget Planning

INDUSTRY FIRM QUARTER The Budget Planning form will help you track quarterly decisions and manage your budget.

Hiring and Promotion Training Cost

Level # To Train Cost Each Training Cost # To Hire Cost Each Hiring Cost

5 $3,000 $ $15,000 $

4 2,000 $ 12,000 $

3 2,000 $ 10,000 $

2 1,000 $ 7,000 $

1 200 $ 2,000 $

Promotion Training Cost: $ Hiring Cost: $

Hiring and Promotion Training Costs $

Other Training $

Total Training and Hiring Costs: $

Level # Emp. $ Increase Emp. Total Cost per Level

Wage Increase Raises will be given

to all employees in the same job level.

5 $ $

4 $ $

3 $ $

2 $ $

1 $ $

Total Wage Increase: $

Safety Program $

Quality Program $

Employee Benefits $

Employee Participation ($12,000) $

Grievance Program ($6,000) $

Orientation Program ($3,000) $

HR Information System ($11,000) $

Performance Appraisal ($5,000) $

Affirmative Action ($7,000) $

Survey Research $

Incident Cost $

TOTAL EXPENSES this Quarter $

BUDGET this Quarter $

Remaining BUDGET $

Appendix —73—

HRMANAGEMENT

Progress Report

INDUSTRY FIRM QUARTER Use this form to conduct an audit of the HR department performance. Compare results with your goals, and adjust your decisions to improve performance.

Goal Team Goal Team Results Industry Average Employee Benefits (%) Female Workforce (%) Minority Workforce (%)

Absenteeism (days)

Turnover (%)

Morale

Grievances

Accident Rate Productivity per Employee Quality

Labor Unit Cost (lower is better) Salaries and Wages Team Goal Team Results Industry Average

Level 5 Level 4 Level 3 Level 2 Level 1 Comments:


HRMANAGEMENT

Glossary

absenteeism Missing work. In the simulation, it is the total number of days missed by all employees in a quarter.

accident rate A measure of safety in the work environment. In HRManagement, it is the total number of days lost due to accidents per 1 million employee-hours. Lower rates indicate a safer workplace.

affirmative action Policies intended to increase representation of minorities in employment or education. Other terms are used for similar policies around the world: employment equity, positive action, preferential policies, and reservation.

budget

The planned amount of resources available to an organization or department within the organization. In the simulation, the budget represents a limit on the amount HR can spend in a year to meet its goals. See "performance-based budgeting."

demographics Characteristics common to a particular group or population. Typical demographic categories are gender, age, ethnicity, languages spoken, and disabilities.

diversity management

Activities aimed at getting employees from diverse backgrounds to work together to maximize productivity and quality. Where affirmative action is intended to provide opportunities for under-represented groups, diversity management attempts to use the diverse backgrounds of a workforce to improve organization performance.

employee benefits

Indirect compensation in the form of time off with pay, health insurance, retirement benefits, tuition reimbursement, etc. These rewards are considered indirect because they are separate from the direct cash payments made to employees as wages.

employee compensation

Rewards paid to employees in exchange for their labor. Compensation can be direct, as in wages, or indirect, as in employee benefits.

employee participation

The process of involving employees in decision-making, rather than simply having them act on the orders of supervisors. Adding an Employee Participation program in the simulation can increase productivity and morale, and decrease turnover.

grievance Any complaint an employee has against the employer. The complaint may involve wages, benefits, hours, or work conditions. A large number of grievances is a sign of underlying problems in an organization.

Human Resource Information System (HRIS)

An information technology (IT) system for collecting and maintaining an organization's personnel records. The data in the system are used to help manage the HR function and facilitate decision-making.

incremental budgeting

A spending plan that starts with an existing budget as a "baseline" to which adjustments are made. Incremental budgeting works well when there is no need for drastic changes in an organization.

job analysis

The process of determining the activities involved in a job, the skills needed, and the type of person required. The information derived from job analysis allows the HR department to write job specifications and job descriptions. The results of the analysis can be used in recruitment and selection, compensation, training, performance appraisal, and legal compliance.

Appendix —75—

HRMANAGEMENT

legal compliance The process of ensuring that an organization is following the rules set by government regulators for the business in which the organization is involved.

morale A measure of the mental and emotional state of the workforce of an organization. In HRManagement, this measure is reported on a scale of 0 to 100, with 100 being the highest.

orientation Activities connected with introducing new employees to an organization to help them become familiar with the buildings and equipment, employee benefits, job requirements, company procedures, etc.

outplacement Assistance given to terminated employees to help them find a new position.

overtime

Hours worked beyond the normal scheduled time for employment. Overtime pay is regulated by the government, and rules are set for the types of employees who are subject to overtime provisions, the limit on regular hours per week, and the rate at which overtime compensation must be paid. In HRManagement, all Level 1 employees and some Level 2 employees are classified as "non-exempt," meaning they must be paid overtime if they work more than 40 hours per week.

performance appraisal

Periodic review of an employee's responsibilities and performance. Having a performance appraisal system in HRManagement can help bring objectivity to the process and improve morale, productivity, and quality.

performance-based budgeting

Provision of a fixed amount of resources to accomplish pre-defined goals. This is the term that best describes the budgeting procedure you are faced with in HRManagement where, as HR director, you are given a limited budget and you must determine the most efficient allocation of funds to reach the goals.

production quota The number or quantity of goods or services required to meet expected demand or sales figures.

productivity

A measure of an organization's rate of output for each unit of input. In HRManagement, productivity is the number of units produced in a quarter by a Level 1 employee working normal hours. The actual good or service output is not specified in the simulation.

promotion

Advancement of an employee to a higher-level position in the organization. When promoting from within to fill a higher-level position in HRManagement, keep in mind that the lower level position vacated may need to be filled, and the promoted employee will need to be trained for the new position.

quality A measure of the excellence of a product or service. It may measure fitness of something for a purpose, or a lack of defects. In the simulation, quality is measured on a scale of 0 to 100, where 100 is the highest.

quality circle A group of employees who meet regularly on company time to identify problems and recommend solutions. In HRManagement, the Employee Participation program may fund these groups, among other activities.

quid pro quo

Latin for "something for something." In harassment cases, the term is used when a supervisor offers a subordinate some reward in exchange for sexual favors. It can also involve threatening the employee with punishment if demands are not met.

self-managed team (SMT)

A group of workers responsible for producing a complete product (or component of a product) or managing a project or service. The team is given authority to work under its own self-direction, and supervision by managers is diminished.


HRMANAGEMENT

staffing Recruiting and selecting a workforce to meet production goals. In HRManagement, positions can be filled by hiring from outside the firm or by promoting from within.

team

A small group of people who work together to meet common goals. In HRManagement, the term is used for the group that makes the decisions in the simulation, as well as for ways of organizing workers within the simulated organization.

total quality management (TQM)

An organization-wide approach to improving the quality of production. TQM attempts to identify and improve all factors that affect the quality of the product or service: materials, processes, testing, and management techniques. In the simulation, the level of quality control in the organization is determined by the allocation of funds to the Quality Program.

training

Providing the knowledge and developing the skills that employees need to perform their jobs. Training varies by job level and purpose. Training for new hires and promotions helps employees become productive in their new positions quickly. Supervisor training provides upper level employees with the knowledge and skills they need to manage their subordinates. Other training is designed to improve quality in the product or safety in the work environment.

turnover The rate at which an organization loses employees. It is calculated as the number of separations in a period divided by total employees in the firm.

unit cost

The cost to produce one unit of a good or service. In HRManagement, only labor costs are used (no materials), including total payroll, the cost of benefits above 20%, and any overtime costs. To calculate unit costs, divide the total labor costs by the number of units produced.

wages

Money paid to employees in exchange for work done. In the simulation, the wage set for each job level is the amount paid to an employee in a quarter. Wages are considered to be direct compensation, whereas employee benefits are considered to be indirect compensation.

zero-based budgeting

A spending plan that requires managers to justify each budget item, showing the benefits from each expense. Compared to incremental budgeting, zero-based budgeting is useful for eliminating unnecessary spending and for reallocating resources in the face of major changes in an organization.

Appendix —77—

HRMANAGEMENT

Index

A AA Officer 20 absenteeism 26 accident rate 18, 26 accidents, reduction in 19 Affirmative Action 43, 59

program 20 Affirmative Action Officer 20 affirmative action program 19 ANALYSIS

Budget Analysis 55 Staff Analysis 52 Training Analysis 54 Wage Rate Analysis 53

analysis tools 20 analyzing your current situation 25 appraisal system 29

B balancing demands 24 benefit increase 12 benefits and costs 16 benefits and morale 28 benefits that will result from programs 19 benefits, current list and costs 15 benefits, other 16 budget 8, 12, 20, 24, 25 Budget Analysis 20 budget expenses 12 budget overspending 12 budget planning 27, 28 Budget Planning form 72 Budget Report 17 budgetary constraints 13

C company dashboard 31 comparing previous quarter measures 28 compensation 29 compensation, increase in 29 compensation, training, and programs, impact of 29 current situation 25

D Dashboard report 57 decision analysis 28, 31 decision-making 24 DECISIONS 42

Benefits 45 Decision Summary 50 Programs 47 Special 49 Special (Incidents) 20 Staffing 43 Training 46 Wages 44

decisions, effectiveness of 34 decisions, impact of 25, 28 decisions, quarterly 20 descisions, summary of quarterly 22 diminishing returns 30 dropping programs, effect of 31

E economic conditions 12 employee morale 15, 17, 19 employee morale, increase in 20 employee participation program 19, 31 employee performance, motivators of 29 employee training 12 environment 25 ENVIRONMENT

Newsletter 65 Performance Survey 69 Production Survey 68 Training Survey 67 Wages Survey 66

evaluate your results 26 evaluating employee performance 19 external hires, benefits of 29

F female and minority workers 14 filling positions 13

G goals 12, 21, 24, 25, 26, 28 goals and strategies, samples of 26 grievance procedure 19, 27 grievances 18, 19, 26

H hiring 17 hiring cost 13, 15 hiring goals 29 hiring new employees 29 HR Information System 19


HRMANAGEMENT

Human Resource function 19 Human Resource Information System (HRIS) 19

I improve productivity and reduce turnover 29 improving quality and productivity 29 Incident 49 incremental budgeting 27 input screens 38 internal and external analysis 25 interpreting results 31 interrelationships among items on various reports 26

J job analysis 19

L labor unit cost 61 layoff cost 14 lowering the unit cost 29

M MARKET

Market Update 49 market research 24 menus

brief descriptions of 39 pull-down 38

minority and female workforce 26 morale 26, 27, 31 morale, decrease in 29 morale. impact on 29

N new employee orientation program 19

O objectives 29 orientation program 19, 29 overtime 14, 26

P payroll records 19 performance appraisal 29 performance appraisal system 20 performance goals 27 performance measures 57, 62 performance, affected by 26 performance-based budgeting 27 perks 20

plan, implementation of 35 policies 26 product/service quality 18 production goals 13 Production Report 18 productivity 15, 26, 32 productivity and wages, factors of unit cost 30 productivity formula 32 productivity, increase in 20 program, costs and impacts 31 programs and impacts 31 programs to improve overall performance 30 Progress Report form 73 promoting 14 promoting employees 29 promotions and training 28

Q quality 26 quality checks 18 quality circle 19 quality control system 18 quality of the goods 18 quality program 18, 26

R reduced productivity and increased turnover 28 REPORTS

Budget 63 Compensation 60 Dashboard 57 Demographics 59 Performance 62 Production 61 Staffing 58

responsibilities, assigning 34 return on investment (ROI) 33 review

historical information 39 ROI calculation 33

S safety and accident prevention 18 safety and accident prevention program 18 Safety Director 18 safety program 18 self-managed work team 34 SIMULATION

Advance 70 Options 70 Replay 70 Restart 70

simulation navigation 38 spending evaluation 28 spending guidelines 27

Appendix —79—

HRMANAGEMENT

staffing 29 Staffing Analysis 20 STARTUP

Case 40 Glossary 41 Startup Decision 41

strategies 26, 27, 28 strengths and weaknesses 25 survey reports 20

T team performance 35 team, functioning as a 34 tools

decision-making 38 Total Quality Management (TQM) program 18 training 17, 18, 46 training amounts, suggested 30 Training Analysis 20 training and its effects 30 training program costs 18 training sessions 19 training to maximize productivity 29 training, managers and supervisors 17 training, new hires and promotions 17 turnove,r decrease in 19 turnover 18, 26 turnover calculation 32 turnover increases and productivity 28 turnover rate 15, 26 turnover, causes of 32 turnover, cost of 32

turnover, decrease in 19 turnover, reduction in 17

U unit cost 76 unit cost and productivity 30 unit cost of labor 32 unit costs calculation 30 unit costs, affected by 28 unit labor cost 26 unit labor cost calculation 33

V vacation/personal days earned 16 vacation/personal/sick Day added 16 view old decisions 50 voluntary problem-solving groups 19

W wage increase 12, 15, 28, 29 Wage Rate Analysis 20 wage rates 15 wages 26, 29 wages, increase in 26 workforce demographics 14 workforce diversity 29

Z zero-based budgeting 27

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