MIT SCHOOL OF BUSINESS

PGDM – Case 6 Semester - I
Subject Name: Human Dynamics

HOW GOOGLE CHOOSES EMPLOYEES

Finding the best engineers, programmers, and sales representatives is a challenge for any company, but it's especially rough for a company growing as fast as Google. In recent years, the company has doubled its ranks every year and has no plans to slow its hiring. More than 100,000 job applications pour into Google every month, and staffers have to sort through them to fill as many as 200 positions a week.

Early on, the company narrowed the pool of applicants by setting a very high bar on traditional measures such as academic success. For example, an engineer had to have made it through school with a 3.7 grade-point average. Such criteria helped the company find a manageable number to applicants to interview, but no one had really considered whether they were the most valid way to predict success at the company.

More recently, the company has tried to apply its quantitative excellence to the problem of making better selection decisions. First, it set out to measure which selection criteria were important. It did this by conducting a survey of employees who had been with Google for at least five months. These questions addressed a wide variety of characteristics, such as areas of technical expertise, workplace behavior, personality, and even some nonworking habits that might uncover something important about candidates. For example, perhaps subscribing to a certain magazine or owning a dog could be related to success are Google by indirectly measuring some important trait no one had thought to ask about. The results of the survey were compared with measures of successful performance, including performance appraisals, compensation, and organizational citizenship (behaving in ways that contribute to the company beyond what the job requires).

One important lesson of this effort was that academic performance was not the best predictor of success at Google. No single factor predicted success at every job, but a combination of factors could help predict success in particular positions.

From this information, Google compiled a set of questionnaires that were related to success in particular kinds of work at Google: engineering, sales, finance, and human resources. Now people who apply to work at Google go online to answer questions such as "Have you ever started a club or recreational group?" and "Compared to other people in your peer group, how would you describe the age at which you first get into {i.e., got excited about them, started using them, etc.) computers on a scale from 1 [much later than others] to 10 [much earlier than others]?" The data are analyzed by a series of formulas that compute scores from 1 to 100. The score predicts how well the applicant is expected to fit into the type of position at Google.
Michael Mumford, an expert in talent assessment at the University of Oklahoma, says that, in general, this approach to predicting performance is effective, but only when it relies on reasonable measures. So, starting a club might be a way to measure leadership behavior, but owning a dog (a measure Google abandoned) should be u.sed only if the employer can find an explanation for why it is relevant.

Questions 1. Analyse the case 2. Besides the questionnaires, what other selection methods would you recommend that Google use? How would these improve selection decisions?

MIT SCHOOL OF BUSINESS

PGDM – Case 7 Semester - I
Subject Name: Human Dynamics

Bridging the Generation Gap

For a pair of colleagues born four decades apart, Penelope Burns and Rinath Benjamin spend a lot of time together. Burns, 68, and Benjamin, 29, are sales agents at the Manhattan office of employment agency Randstad USA. They sit inches apart, facing each other. They hear every call the other makes. They read every e-mail the other sends or receives. Sometimes they finish each other's sentences.
This may seem a little strange, but the unconventional pairing is all part of Randstad's effort to ensure that its twenty something employees—the flighty, praise-seeking Generation Y that we have read so much about—fit in and stick around. The Dutch company, which has been expanding in the United States, is hoping to win the hearts, minds, and loyalty of its young employees by teaming them up with older, more experienced hands. Every new sales agent is assigned a partner to work with until their business has grown to a certain size, which usually takes a few years. Then they both start over again with someone who has just joined the company.
Randstad has been pairing people up almost since it opened for business four decades ago. The founder's motto was "Nobody should be alone." The original aim was to boost productivity by having sales agents share one job and trade off responsibilities. The system has been refined over the years, and now each week one person is out making sales calls, and the other is in the office interviewing potential workers and handling the paperwork. Then they switch.

Knowing that Gen Yers need lots of attention in the workplace, Randstad executives figured that if they shared a job with someone whose own success depended on theirs, they were certain to get all the nurturing they required. Of course, Randstad doesn't simply put people together and hope it all works out. First it figures out who will play well with other people. To assess that, the human resource department conducts extensive interviews and requires candidates to shadow a sales agent for half a day.

One of the most compelling features of Randstad's partnering program is that neither person is "the boss." And both are expected to teach the other.

Soon after Benjamin started, she suggested they begin to use the electronic payroll system Randstad offers to save time and reduce their paperwork. Burns hesitated: She had been filling out time sheets for the talent (as the temporary employees are called) and wasn't sure how they would take to the new task. But Benjamin persuaded her it would ultimately be simpler for everyone.

These are relationships like any other, full of promise yet always vulnerable to dysfunction. And even the best ones require a lot of maintenance. As Lucille Santos, a 61-year-old senior agent in North Haven, Connecticut, says, "My antennae are always up," Her partner, Allison Kaplan, is 28, and this is her first office job. "We need to be sure that we're asking the right questions and saying the right things to the clients and talent," says Santos. "In the beginning, Allison might have been a little timid about telling applicants they weren't dressed appropriately. I gave her some explicit suggestions, and she learned from watching me." Santos says Kaplan has taught her to relax a little bit more at work.

Randstad used to have an employee retention rate of 50 percent, which is the industry standard. In the past year, its rate has increased to 60 percent. "We have determined a clear connection between being in a unit and feeling more successful and productive," says MR chief Genia Spencer.

Questions

1. Analyse the case 2. A sales agent for an employment agency such as Randstad would be seeking business clients to hire the agency's talent. Based on what you can learn from the information in this chapter, in the case, draft a job description and job specifications for the sales agent's job.

MIT SCHOOL OF BUSINESS

PGDM – Case 8 Semester - I
Subject Name: Human Dynamics

IBM's Management Games: No Fooling Around

Thunder crashes, lightning flashes, and a camera zooms in on a shadowy, futuristic-looking, gray-and-black office. The camera follows a female avatar in slacks and a button-down shirt as she jogs from one cubicle to the next, up a spiral staircase, and across a high gangplank as dramatic classical music plays in the background. This YouTube trailer could easily be a plug for a new shout-'em-up video game or a slasher flick. Instead, it's promoting a video game called Innov8, which IBM began selling in September 2007.

IBM says it received dozens of calls from potential customers after showing the vi4eo clip at a recent conference for clients. Designed to help tech managers better understand the roles of business people, and vice versa, players go into a virtual business unit to test their hand at ventures such as redesigning a call center, opening a brokerage account, or processing an insurance claim.

Why is one of the world's most buttoned-down organizations encouraging its people and customers to play games? IBM says that the skills honed playing massive multiplayer dragon-slaying games like World of Warcraft can be useful when managing modern multinationals. The company says its research supports that claim.

IBM tracked the leadership qualities of gamers with the help of Seriosity (a company that develops enterprise software inspired by multiplayer games), Stanford, and MIX IBM also surveyed more than 200 game-playing managers at the company over a seven-month period.

The IBM researchers found that those who are deeply immersed in online worlds that link millions of players, such as World of Warcraft, were ideally suited to manage in the new millennium. They were particularly savvy at gathering information from far-flung sources, determining strategic risks, failing fast and moving on to the new challenge quickly.

One of the key findings from the research, says Thomas Malone, an MIT professor of management and Seriosity board member, is that companies need to create more opportunities for flexible, project-oriented leadership. In fast-paced games, people can jump in to manage a team for as little as 10 minutes, if they have the needed skills for the task at hand. "Games make leaders from lemmings," says Tony O'Driscoll, an IBM learning strategist and one of the authors of the study. "Since leadership happens quickly and easily in online games, otherwise reserved players are more likely to try on leadership roles."

The study points out that games can become "management flight simulators" of sorts, letting employees manage a global workforce in cyberspace before they do so in the real world. More than half of the managers surveyed said playing massive multiplayer games had helped them lead at work. Three-quarters of those surveyed believed that specific game tools, such as expressive avatars that can communicate via body language, as well as by voice and typing, would help manage remote employees in the real world.

IBM, of course, has every reason to stress the importance of online gaming. It's trying to fashion itself as the go-to consultant for business games, working with more than 250 clients. For now, IBM's challenge is convincing companies that online games are more than just a frivolous pursuit. IBM also is pouring millions into developing what it calls "the 3D Internet," in the hope that corporate gaming will become the next lucrative online frontier.

Questions

1. Analyse the case 2. In an organization that wants to use Innov8 for management or sales training, how could you assess readiness for training?

MIT SCHOOL OF BUSINESS

PGDM – Case 9 Semester - I
Subject Name: Human Dynamics
The Politics of Performance Appraisal

Every Friday, Max Steadman, Jim Coburn, Lynne Sims, and Tom Hamilton meet at Charley's after work for drinks. The four friends work as managers at Eckel Industries, a manufacturer of arc-welding equipment in Minneapolis. The one-plant company employs about 2,000 people. The four managers work in the manufacturing division. Max, 35, manages the company's 25 quality-control inspectors. Lynne, 33, works as a supervisor in inventory management. Jim, 34, is a first-line supervisor in the metal coating department. Tom, 28, supervises a learn of assemblers. The four managers' tenure at Eckel Industries ranges from 1 year (Tom) to 12 years (Max).

The group is close-knit; Lynne, Jim, and Max's friendship stems from their years as undergraduate business students at the University of Minnesota. Tom, the newcomer, joined the group after meeting the three at an Eckel management seminar last year. Weekly get-togethers at Charley's have become a comfortable habit for the group and provide an opportunity to relax, exchange the latest gossip heard around the plant, and give and receive advice about problems encountered on the job.
This week's topic of discussion: performance appraisal, specifically the company's annual review process, which the plant's management conducted in the last week. Each of the four managers completed evaluation forms (graphic rating scales) on all of his or her subordinates and met with each subordinate to discuss the appraisal.

Tom: This was the first time I've appraised my people, and 1 dreaded it. For me, it's been the worst week of the year. Evaluating is difficult; it's highly subjective and inexact. Your emotions creep into the process. 1 got angry at one of my assembly workers last week, and 1 still felt the anger when 1 was filling out the evaluation forms. Don't tell me that my frustration with the guy didn't bias my appraisal. 1 think it did. And I think the technique is flawed. Tell me—what's the difference between a five and a six on "cooperation"?

Jim: The scales are a problem. So is memory. Remember our course in human resources in college? Dr. Philips said that, according to research, when we sit down to evaluate someone's performance in the past year, we will only be able to actively recall and use 15 percent of the performance we actually observed.
Lynne: 1 think political considerations arc always a part of the process. I know I consider many other factors besides a person's actual performance when 1 appraise him.
Tom: Like what?

Lynne: Like the appraisal will become part of his permanent written record that affects his career. Like the person I evaluate today, I have to work with tomorrow. Given that, the difference between a five and a six on cooperation isn't that relevant, because frankly, if a five makes him mad and he's happy with a six ...

Max: Then you give him the six. Accuracy is important, but I'll admit it—accuracy isn't my primary objective when I evaluate my workers. My objective is to motivate and reward them so they'll perform better. I use the review process to do what's best for my people and my department. If that means fine-tuning the evaluations to do that, I will.

Tom: What's an example of fine-tuning?

Max: Jim, do you remember three years ago when the company lowered the ceiling on merit raises? The top merit increase that any employee could get was 4 percent. I boosted the ratings of my folks to get the best merit increases for them. The year before that, the ceiling was 8 percent. The best they could get was less than what most of them received the year before, I felt they deserved the 4 percent, so 1 gave the marks that got them what 1 felt they deserved.

Lynne: I've inflated ratings to encourage someone who is having personal problems but is normally a good employee. A couple of years ago, one of my better people was going through a painful divorce, and it was showing in her work. I don't think it's fair to kick someone when they're down, even if their work is poor, I fell a good rating would speed her recovery.

Tom: Or make her complacent.

Lynne: No. I don't think so. I felt she realized her work was suffering. 1 wanted to give her encouragement; it was my way of telling her she had some support and that she wasn't in danger of losing her job.

Jim: There's another situation where I think fine-tuning is merited—when someone's work has been mediocre or even poor for most of the year, but it improves substantially in the last two, three months or so. If I think the guy is really trying and is doing much better, I'd give him a rating that's higher than his work over the whole year deserves. It encourages him to keep improving. If I give him a mediocre rating, what does that tell him?

Tom: What if he's really working hardy, but not doing so great?

Jim: If I think he has what it takes, I'd boost the rating to motivate him to keep trying until he gets there.

Max: I know of one or two managers who've inflated ratings to get rid of a pain in the neck, some young guy who's transferred in and thinks he'll be there a short time. He's not good, but thinks he is and creates all sorts of problems. Or his performance is OK, but he just doesn't fit in with the rest of the department. A year or two of good ratings is a sure trick for getting rid of him.

Tom: Yes, but you're passing the problem on to someone else.

Max: True, but it's no longer my problem.

Tom: All the examples you've talked about involve inflating evaluations. What about deflating them, giving someone less than you really think he deserves? Is that justified?

Lynne: I'd hesitate to do that, because it can create problems. It can backfire.

Max: But it does happen. You can lower a guy's ratings to shock him, to jolt him into performing belter. Sometimes, you can work with someone, coach him, try to help him improve, and it just doesn't work. A basement-level rating can tell him you mean business. You can say that isn't fair, and for the time being, it isn't. But what if you feel that if the guy doesn't shape up, he faces being fired in a year or two, and putting him in the cellar, ratings-wise, will solve his problem? It's fair in the long run if the effect is that he improves his work and keeps his job.

Jim: Sometimes, you get someone who's a real rebel, who always questions you, sometimes even oversteps his bounds. I think deflating his evaluation is merited just to remind him who's the boss.

Lynne: I'd consider towering someone's true rating if they've had a long record of rather questionable performance, and 1 think the best alternative for the person is to consider another job with another company. A low appraisal sends him a message to consider quitting and start looking for another job.

Max: What if you believe the situation is hopeless, and you've made up your mind that you're going to fire the guy as soon as you've found a suitable replacement? The courts have chipped away at management's right to fire. Today, when you fire someone, you'd better have a strong case. I think once a manager decides lo fire, appraisals become very negative. Anything good that you say about the subordinate can be used later against you. Deflating the ratings protects you from being sued and sometimes speeds up the termination process.

Tom: I understand your points, but I still believe that accuracy is the top priority in performance appraisal. Let me play devil's advocate for a minute. First, Jim, you complained about our memory limitations introducing a bias into appraisal. Doesn't introducing politics into the process further distort the truth by introducing yet another bias? Even more important, most would agree that one key lo motivating people is providing true feedback—the facts about how they're doing so they know where they stand. Then you talk with them about how to improve their performance. When you distort an evaluation- -however slightly—are you providing this kind of feedback?

Max: I think you're overstating the degree of fine-tuning.

Tom: Distortion, you mean.

Max: No, fine-tuning. I'm not talking about giving a guy a seven when he deserves a two, or vice versa. It's not that extreme. I'm talking about making slight changes in the ratings when you think that the change can make a big difference in terms of achieving what you think is best for the person and for your department.

Tom: But when you fine-tune, you're manipulating your people. Why not give them the most accurate evaluation and let the chips fall where they may? Give them the facts and let them decide.

Max: Because most of good managing is psychology. Understanding people, their strengths and shortcomings. Knowing how to motivate, reward, and act to do what's in their and your department's best interest. And sometimes, total accuracy is not the best path. Sometimes, it's not in anybody's best interest.

Jim: All this discussion raises a question. What's the difference between fine-tuning and significant distortion? Where do you draw the line?

Lynne: Thai's about as easy a question as what's the difference between a five and a six. On the form, I mean.

Questions
1. Analyse the case. 2. Assume you are the vice president of human resources at Eckel Industries and that you are aware that fine-tuning evaluations is a prevalent practice among Eckel managers. If you disagree with this perspective, what steps would you take to reduce the practice?

MIT SCHOOL OF BUSINESS

PGDM – Case 10 Semester - I
Subject Name: Human Dynamics

Reward System and its impact

Hate to interrupt you, boss, but the meeting starts in another 10 minutes/' said a male voice over the intercom.
"I am almost through," replied the man inside the big corner room. On any other day, Abhinav Kumar - CEO of the diversified Total Industries - wouldn't have needed a reminder. But today, he had been on a half-an-hour long conference call with one of Total's global customers. And having just finished the call, Kumar was making notes to circulate to his A-team.

The note finished, Kumar poured himself a cup of coffee and darted off to the conference room. It was Vinod Rao, head of hr, who got the ball rolling. "One of the biggest benefits of the ongoing change initiatives at Total is the sharpening of the company's focus. In each of the four divisions-consumer durables, soaps, switchgears, and batteries-there have been both top line and profitability gains. Besides, programs like Total Quality Management (TQM) have been great levelers."

"I agree," quipped Manoj Kohli, president of the switchgears business. "Special Group Activities (SGAs), which we have introduced as part of TQM, have dismantled hierarchical barriers." Kohli was right. Cross-functional in composition and aimed at solving specific problems, the SGAs were all headed by individuals who were chosen for their expertise rather than rank. Other initiatives like supply-chain management and Activity Based Costing (ABC) had also helped foster an integrated view of business among employees at Total.

"I believe," Rao continued, "this is the right time to tie our reward system to team performance. Identifying new measures of collective contribution and linking them with a system of team rewards is not only a logical step forward, but also the best way to sustain the change momentum."

What Rao was suggesting was relatively a new concept at Total. Traditionally, the family- -managed company had Encouraged individual excellence. The individual had been central to its appraisal, reward, and compensation systems, even as the appraisal system underwent changes. For instance, Total once had a trait-based appraisal system, where everyone above the level of a supervisor was evaluated on five traits: commitment, communication, responsibility, integrity, and intelligence. Carried out by the immediate boss, personal evaluation was the basis for deciding the quantum of individual increments and promotions.

Total, then, moved from traits to goals. The individual goals, which were meant to be specific, measurable, achievable, realistic, and time-bound (smart), became the basis of performance evaluation. Currently, Total was using the 360-degree appraisal system, which enabled every manager to be appraised by his subordinates and peers.

But the individual," Rao pointed out, "is the axis around which our assessment and reward systems revolve."

"The focus on the individual should remain," said Guneen Roy, head honcho of the soaps business. "After all, in any group situation, there are only a few individuals who perform. High-fliers must be rewarded more than the others. We need role models."

"I see it a little differently," said Srikant Suresh, the chief of consumer's durables. "There is no place for prima donnas in the current context, simply because our basic purpose as an organization is to serve our customers. And teams are the basic platforms on which customer focus can be built."

"Srikant has a point/' said Ratika Sahai, the young division head of batteries. "What gets measured and rewarded is what gets done. It is the undue emphasis oti individual performance that generates a feeling that an organization is run by a few heroes. That is why we should take a fresh look at our compensation plan. Look at our limited experience with SGAs. They have enabled individuals develop under peer pressure."

"What I meant," Roy clarified, "was that we should look at team compensation as an add-on to the existing system of individual rewards. Otherwise, you would have a number of freeloaders whose contribution to the team may be marginal, but get rewarded anyway because the team would have delivered. We need to strike the right balance between the individual reward and the team reward."

"I think Roy has a point," said Kumar. "But I am curious. Tell me how our competitors like CPL manage performance rewards?"

"I have a fair idea how it works at CPL," replied Rao. "CPL is working out a system of what it calls Pride Money. Meant to replace existing bonuses and commissions for everyone above the supervisor level, it is linked to three factors: individual performance, performance of the CTV division, and the overall performance of the company."

"Sounds interesting," replied Kumar.
"It is," agreed Rao. "Paid twice a year. Pride Money is an add-on to the regular monthly salary. The idea is to make the monetary equivalent of each measure of performance so transparent that anyone can ascertain his Pride Money well before he or she receives the cheque."

"From what I know," Suresh pointed out, "there could be a problem with this kind of a system. For one, it breaks up comper\sation into fixed and variable, and further links the variable component to the unit's capacity utilizations."

"Explain," said Kumar.

"If the monthly salary of a manager is, say, Rs 40,000, the figure is split up into a fixed base of Rs 25,000 and the rest variable, linked to a lOO-per cent efficiency. If the efficiency falls below that level, there would be a proportionate fail in earnings. But if it exceeds 100 per cent, the gains would be geometric. That is how CPL will reward both individual and team performance, and also establish the right link between productivity and reward. The variable pay is called the Pride Money, which is basically a team reward."

"So, what's the problem?" queried Kumar.

"What if the efficiency falls due to external factors; say, a slowdown in consumption, higher interest rates, or change in product technology. Will our managers accept blame for that? If not, we will continuously need to redefine what we mean by efficiency."

"Besides," added Rao, "managers long used to fixed salaries will need a lot of convincing before they agree to anything like this. The implications of variable elements on net earnings will need to be properly conveyed and understood. What might be acceptable in the short run is a system that protects current earnings and looks at team reward, as Roy said, as an addon."

"That will straightaway increase the costs of operations," said CFO Vikas Singh. "And unless the gains in productivity make up for the new expense, we will end up with lower earnings."

"It simply means," Kumar pointed out, "that we design the measures and rewards in such a way that they automatically lead to high performance levels. This also means that the weightage for intangibles-like quality, customer orientation, and on-time delivery-should be higher in a team reward system."

"I agree," said Suresh. "Continued customer satisfaction is crucial to our success. And building multi-disciplinary teams around customer groups is one way of getting close to the customer. This necessarily entails making team performance a crucial element of our appraisal system."

"That's why, when the meeting began, I said that the time was ripe for a change in the appraisal system," said Rao. "Frankly, an excessive reliance on individual performance is forcing everyone to work towards short-term individual objectives at the cost of long-term corporate goals. It discourages risk-taking, pits people against one another in pursuit of individual incentives, and prompts them to work in their own self-interest rather than in the interest of the company."

Kohli was not convinced. "No doubt, working as a team enriches job content, but it also dilutes rank. And when we delink appraisal from individual reward as an integral part of fostering team spirit, promotion prospects are automatically cut. This will impact employee morale and retention. Why don't we opt for an informal system for team rewards."

Rao was horrified. "An informal system will lead to all kinds of complications.. The hr Department won't have any hard data to work with. The subjective element will increase, as will employee complaints."

Kohli offered a different tack. "I feel that what ABC, our competitor in switchgears, has done makes more sense. They have something called the Development Appraisal. It has two components: the first is a uniform increment for all managers in each of its seven grades based on a flat percentage of the basic pay plus the grade-specific dearness allowance. The percentage, which could vary from 1 to 10, is determined by the financial performance of the company as a whole. Three other variants are also added to the first component. The first rewards the individual's performance on pre-determined parameters; the second factors in the annual rate of inflation, and the third bridges the gap between the company's pay-scale and the compensation trends in the rest of the industry."

"What about the second component?" asked Rao?

"That is a function of the performance of the business division of which an individual is part. This is basically a team reward and each member gets it as a lump sum payment every year."

"Obviously, ABC's appraisal system has been built to its unique requirements," noted Kumar. "I feel our reward system should also be built to our specific requirements. The question is how?"

Questions

1. Analyse the case. 2. How can Total best tie up its reward system to performance?