HRM3704 OCTOBER/
NOVEMBER
EXAM PACK 2022/2023
,EXAM PAPERS
SECTION A – CASE STUDY
QUESTION 1
Read the following case study and then answer the questions that follow.
Happy Sky Company: Aligning human resource functions with strategic objectives.
Happy Sky Company is a company that produces anything from cutlery to toiletries for all South African Airlines. Although
Happy Sky has been profitable over the decade of its existence, its productivity has recently declined. In the past several
years, their employees have displayed diminished innovativeness, a higher turnover and absenteeism, and an overall
sluggish performance.
Based on these trends, Paul (the founder of the company) calls a meeting of all the managers to discuss potential courses of
action to correct the problems. After a lengthy meeting, they agree to hire a full-time HR manager to assume sole
responsibility for the employees. Previously, the line manager had assumed basic responsibility for managing their
employees.
After careful consideration, Paul decides to hire Kgomotso Molotsi, in line with the company’s new employment equity
policy, to assume the primary responsibilities of developing a systematic HRM function for Happy Sky.
When Kgomotso arrives at Happy Sky, she meets with Paul to discuss the strategic objectives of the company. Paul indicates
that the two primary objectives of Happy Sky are, firstly, to continue its growth strategy to respond to growing demands for
its services, and, secondly, to enhance the innovative nature of the workforce, in order to ensure that it remains
competitive and up to date with market changes. Paul gives Kgomotso the task of developing and HRM function that will
tackle the absenteeism and turnover problems while helping Happy Sky attain its two primary goals.
As a first step, Kgomotso begins by reviewing the HR practices used at Happy Sky. It becomes clear that the company relies
primarily upon two practices to meet its employee needs. Firstly, it recruits at the local university just 10 kilometers away. If
graduating students are not interested or are unsuitable candidates for a certain job, Happy Sky places advertisements in
regional newspapers to seek job candidates with the relevant skills who are willing to relocate. Although this hiring process
is not comprehensive, Happy Sky has not experienced much difficulty in recruiting employees, thanks to the growth
opportunities it offers.
Secondly, Happy Sky has relied upon an established compensation system that applies to all employees throughout the
company. Employees are paid salaries, the compensation level being based on the going market rate for similar positions.
Annual salary increases are calculated according to inflation and individual performance. The average salary increase is
between 3 and 7 percent of an employee’s basic salary.
Kgomotso realises that, besides these recruitment and compensation practices, no other HR practices are consistently
applied at Happy Sky. Instead, managers use different methods of managing the employees in their respective
departments. For example, no uniform performance appraisal standards are applied throughout the organisation. Criteria
used to evaluate employees range from counting days absent to measuring innovation and creativity. Similarly, each
manager uses somewhat different tactics for training employees. Some units assign new employees to shadow more
experienced employees, who serve as the new employees; mentors. Other managers do not offer any training and assume
that the employees come to the job with all the knowledge they need to succeed.
In the light of the organisation’s goals of growth and innovation, Kgomotso realises that significant changes need to be
made at Happy Sky. The productivity of employees and the success of the company depend on effectively realigning the HR
function.
1.1 Suggest specific HRM practices that could facilitate Happy Sky’s strategic objectives of growth and innovation.
1.2 Happy Sky employs 10 sales representatives to sell its software products. Name and describe various criteria which
can be used to evaluate the performance of these sales representatives.
QUESTION 2
Read through the following case study and then answer the questions that follow.
Global HR at McDonald’s
One of the best-known companies worldwide is the McDonald’s Corporation. This fast-food chain, with its symbol of golden
arches, has spread from the United States (US) into 91 countries. With more than 18 000 restaurants worldwide,
McDonald’s serves 33 million people each day. International sales represent an important part of McDonald’s business and
more than 50% of the company’s operating income comes from sales outside the United States.
Operating in so many different countries means that McDonald’s has had to adapt its products, service and HR practices to
legal, political, economic and cultural factors in each of these countries. A few examples illustrate what kind of adaption
had to be made in some countries, such as India, beef is not acceptable as a major part of the population, so McDonald’s
uses lamb or mutton. To appeal to Japanese customers, McDonald’s has developed teriyaki burgers. Separate dining rooms
for men and women have been constructed in McDonald’s restaurants in some Middle Eastern countries. HR practices must
adapt to different cultures. Before beginning operations in a different country, HR professionals at McDonald’s do research
on the country and determine how HR activities must be adjusted.
One method of obtaining information is to contact HR professionals from other US firm operating in the country and ask
them questions about legislation, political factors and cultural issues. In addition, the firm conducts a detailed analysis to
ensure that all relevant information will be gathered. Data gathered might include what employment restrictions there are
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,on the age of employees and hours of work, what benefits must be offered to full-time and part-time employees (if part-
time work is allowed) and information on other operational requirements. For instance, in some of the former communist
countries in Eastern Europe, employees provide locker rooms and showers for their employees. These facilities are
necessary because shower facilities and even consistent water supplies are unavailable at many homes, particularly in more
rural areas around major cities.
It is also important to check public transport to ensure that employees have adequate means to travel to work. Once a
decision has been made to begin operations in a new country, the employment process must begin. Often, McDonald’s is
seen as a desirable employer, particularly when its first restaurant is being opened in a country. For instance, in Russia,
27 000 people initially applied to work at the first McDonald’s in Moscow. Because customer service is so important to
McDonald’s, recruitment and selection activities focus on obtaining employees with customer service skills. For positions
such as those of counter representative and cashier, the focus is on identifying who will be friendly, customer service-
orientated employees. A “trial” process whereby some applicants work for a few days on a probational basis may be used
to ensure that these individuals will represent McDonald’s appropriately and work well with other employees.
For store managers, the company uses a selection profile emphasising leadership skills, high work expectations and
management abilities appropriate to a fast-paced restaurant environment. Once applicant screening and interviews have
been completed, individuals are asked to work for up to a week in a restaurant. During that time, the applicants and the
company representatives evaluate one another to see if the job “fit” is appropriate. After the first group of store managers
and assistant managers have been selected, future managers and assistant managers are chosen using internal promotions
based on performance.
Once the restaurant has been staffed, training becomes crucial to acquaint new employees with their jobs and the
McDonald’s philosophy of customer service and quality. McDonald’s has taken its hamburger university curriculum from the
United States and translated into 22 different languages to use in training centres throughout the world. After trainers and
managers have completed their training, they conduct training for all employees to work at McDonald’s locations in foreign
countries.
2.1 Identify and discuss cultural factors that might be important in a training programme for food handlers at
McDonald’s in Saudi Arabia.
2.2 Rather than focusing on differences, indicate the similarities that you expect will exist between McDonald’s
customers and employees in the United States and those abroad.
2.3 Any business (whether it is a fast food franchise such as McDonald’s or a big corporate company such as Deloitte
and Touche), has a management team. However, differences exist between a leader and a manager. Briefly define
the concept of leadership and explain the difference between leadership and management.
MANAGEMENT LEADERSHIP
- Means creative problem solving - Means alertness to opportunities
- Works within the paradigm - Imagination and vision to capitalise on them
- Works within a system - Creates a new paradigm
- Sets people and “things” in motion by means of - Works on the system
methods and techniques - Is a natural unforced ability to inspire people
- Uses people as means - Requires respect and a genuine interest in people
- Means an attitude of doing - Means attitude of serving
SECTION B – ESSAY QUESTIONS
QUESTION 3
3.1 Briefly discuss the four questions which determine a resource’s value.
The question of value – The first question to ask is: do a company’s resources add value by enabling it to exploit the
opportunities and/or neutralise the threats in the company’s environment? By answering this question, managers link
the analysis of internal resources with the analysis of environmental opportunities and threats. This is important as the
resources of a company cannot be valuable in a vacuum; the company must be able to exploit opportunities and/or
neutralise threats.
The question of rarity – The second question to ask is: How many other companies already possesses the valuable
resources? The valuable resources must be rare among the competing companies in order to be a source of
competitive advantage. However, this does not mean that a common but valuable resource is not important, it might
be essential for a company’s survival.
The question of reproducibility – The third question to ask is do companies without a resource face a prohibitive cost
disadvantage in obtaining the resources other companies already possess? Having a valuable and rare resource can at
least provide a company with a temporary competitive advantage. However, if a competing company does not find it
too expensive to imitate this resource, the competitive edge will soon disappear. If imitation is too expensive, the fist
company will retain its competitive advantage. According to Barney, imitation can occur in at least two ways: by
duplication or by substitution. Duplication occurs when an imitating company builds the same kind of resources it
knows the competitor possesses, with substitution an imitating company may find a similar resource that provides the
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, same result. It is important to note that some competing companies might find the imitation of a company’s resources
difficult as a result of historical reasons. For example, many resources are built up over years through trial and error
within companies, making them unique reflections of personalities, experiences, and relationships that can exist only
in one company. Another obstacle might be the social integration of resources through trust, friendship, teamwork,
and culture, which will make them virtually impossible to imitate.
The question of organisation – The fourth question that can be asked is: is a company organised to exploit the full
competitive potential of its resources? As indicated thus far in this chapter, a company’s competitive advantage
potential depends on the value, rarity, and reproducibility of its resources. However, to fully realise what it has, a
company needs a proper organisational structure. Issues that are important in this regard are a formal reporting
structure, explicit management-control systems, and compensation policies. These components are also referred to in
the literature as complementary resources, as they have – in isolation = only a limited ability to generate a competitive
advantage. In combination with other resources, however, they are capable or releasing a company’s full competitive
advantage.
3.2 Explain the major differences between numerical flexibility and functional flexibility.
Numerical Flexibility:
- Is a quantitative approach to the utilization of the workforce
- Based on the principle of relating the size of the workforce to the levels of economic activity easily and at short
notice
- As the workload fluctuates, management has the option to adjust or redeploy its human resources accordingly.
- The use of seasonal, casual, part-time and subcontracted workers typically provides this form of flexibility.
- The pressures of unpredictable short term fluctuations in demand, combined with increased competitiveness, make
these work patterns efficient and effective to sustain, as organisations are relieved of the cost of a fixed labour force
- While these patterns of work organisation have been traditional aspects of some segments of the labour market (e.g.
the service and retail sectors), the use of these work practices to externalize traditional core organisational activities is
the major factor in increasing enterprise efficiency through numerical flexibility
Functional Flexibility:
- Functional flexibility refers to management's ability to deploy and redeploy particular sections of the workforce on a
wide range of tasks, in response to market demand, as and when required
- To ensure that this can be achieved efficiently, employees are trained in a wide range of skills
- The volatility of product markets and the blurring of skill boundaries through technological change provide the
environment for the development of this form of flexibility
- Central to the development of functional flexibility is the reversal of the Taylorist practices of frag-mentation and de-
skilling
- Working practices which incorporate elements of functional flexibility include team working, empowerment, multi-
skilling, re-skilling, and project-working
3.3 Explain the major difference between financial flexibility and procedural flexibility.
Financial flexibility
- Is sought after two reasons: 1- pay and other employment cost reflect the state of supply and demand in the labour
market. 2- and properly of greater importance in the long term, pay flexibility means shift to a new pay and
remuneration that facilitate functional and numerical flexibility, such as assessment-based pay system in place for rate-
for-the-job system
- Provides the durability of 1- allowing market forces to dictate relative wage rates, providing effective numerical
flexibility to the organisation, 2- providing incentives to increase skills based by relating pay to the skills level
Procedural flexibility
- At the level of the organisation the process can range from directive through a particular framework of negotiation
- Central to procedural flexibility is the acceptance and the role of managing the new relationship for the employees
and their representatives
- Such procedures are indicative of commitment to join administrative labour flexibility in the workplace
3.4 Briefly discuss why it is important to develop and manage flexible patterns of work.
The most important factor for management in the adoption of flexible patterns of work is the ability to respond quickly
to market demands with the minimum disruption.
QUESTION 4
4.1 Discuss how the psychological contract between employees and employers have been affected by the new era of
HRM.
4.2 Why has the role of HRM changed so dramatically over the past few years? Discuss briefly.
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