# Human Resource Management

Business I · Business Administration · https://tryals.app/learn/business-i/human-resource-management

## The People Pipeline

HRM manages the full arc of a person's relationship with the firm. In knowledge businesses, the people pipeline **is** the production line.

**Planning** forecasts the headcount, skills, and timing the strategy needs against attrition. **Recruitment** fills the funnel's top. **Internal** recruitment is cheap, fast, and motivating, but recycles the same DNA. **External** recruitment imports fresh perspectives at high cost and risk. 

**Selection** narrows the funnel using tools measured by **validity** (how well they predict performance). The pipeline is multiplicative:

$$\text{hires} = \text{applicants} \times p_{\text{screen}} \times p_{\text{interview}} \times p_{\text{accept}}$$

If 200 applicants face 30% screen, 25% interview, and 40% acceptance rates, you get 6 hires. Improve any rate and the whole pipeline widens.

## Selection and Appraisal

| Tool | Validity | Risk | Pitfall |
|---|---|---|---|
| **Unstructured** | Low | High | Measures rapport |
| **Work Sample** | High | Low | Hard to design |
| **360 Feedback** | Varies | Med | Halo effect |

Structured interviews and work samples predict performance well. Unstructured 'chat' interviews predict little beyond interviewer confidence.

**Performance appraisal** closes the loop via goals, scales, and **360-degree feedback** (boss, peers, reports, self). Watch for raters' diseases like halo, leniency, and recency. **Compensation** balances **internal equity** against **external competitiveness**.

## Practice questions

8 of this lesson's 14 practice questions, with answers. The full set is in the app.

### 1. Order the stages of the HR pipeline for a growing firm.

**Answer:**

1. Workforce planning: forecast needed roles and skills
2. Recruitment: fill the top of the funnel
3. Selection: narrow with valid predictors
4. Training: convert potential into capability
5. Appraisal and compensation: measure and reward

**Why:** Plan, attract, filter, build, reward, a cycle, since appraisal data feeds the next round of planning.

Page: https://tryals.app/practice/business-i/human-resource-management/order-the-stages-of-the-hr-pipeline-for-a-growing-firm

### 2. A selection funnel’s output is multiplicative, so doubling the pass rate at any single stage roughly doubles total hires.

**Answer:** True

**Why:** With $hires = A \times p_1 \times p_2 \times p_3$, any factor doubling doubles the product. The practical corollary: find the cheapest stage to improve, usually offer acceptance, the stage firms ignore while buying more applicants.

Page: https://tryals.app/practice/business-i/human-resource-management/a-selection-funnels-output-is-multiplicative-so-doubling-the-pass

### 3. Internal or external recruitment? Sort each advantage.

**Answer:**

- Internal recruitment: The candidate’s performance is already known, A visible promotion path motivates the whole team, Lower cost and faster onboarding
- External recruitment: Fresh skills the firm never had, New perspectives that challenge the house consensus

**Why:** Inside: validated, cheap, motivating, and inbred. Outside: fresh and risky. Healthy firms run both channels deliberately, not by default.

Page: https://tryals.app/practice/business-i/human-resource-management/internal-or-external-recruitment-sort-each-advantage

### 4. Central tendency and leniency both compress appraisal scores, yet they are treated as different errors. What separates them?

A. Leniency affects individual raters and central tendency affects whole organisations
B. Direction: leniency shifts up, central tendency pulls to the middle
C. Leniency is deliberate while central tendency is unconscious
D. They are the same error under two names

**Answer:** B. Direction: leniency shifts up, central tendency pulls to the middle

**Why:** Both make appraisals useless, for different reasons. Leniency loses the top of the scale; central tendency loses the ability to distinguish anyone from anyone.

Page: https://tryals.app/practice/business-i/human-resource-management/central-tendency-and-leniency-both-compress-appraisal-scores-yet

### 5. Research on selection validity finds that the _most widely used_ hiring tool is among the weakest predictors of job performance. Which tool?

A. Cognitive ability tests
B. Structured interviews with scored questions
C. The unstructured interview
D. Work-sample tests

**Answer:** C. The unstructured interview

**Why:** The unstructured chat measures rapport and confirms first impressions, anchoring and halo wearing a suit. Structure is the cheap upgrade: same questions, anchored scoring, and validity roughly doubles.

Page: https://tryals.app/practice/business-i/human-resource-management/research-on-selection-validity-finds-that-the-most-widely-used

### 6. Unstructured interviews predict job performance poorly and remain the most-used selection tool. What sustains the practice?

A. Unstructured interviews measure cultural fit, which structured ones cannot
B. Structured interviews are prohibitively expensive to design and run
C. Interviewers never observe the rejected candidates' performance
D. The research finding is contested and most practitioners disagree with it

**Answer:** C. Interviewers never observe the rejected candidates' performance

**Why:** You only ever see how the hires perform, so a bad selection rule generates no disconfirming evidence and confidence grows unchecked. Structured interviews cost little more and predict far better; the obstacle is that the unstructured version *feels* more informative, which is a different thing.

Page: https://tryals.app/practice/business-i/human-resource-management/unstructured-interviews-predict-job-performance-poorly-and-remain-the

### 7. Which raters contribute to a 360-degree feedback process?

A. Only the HR department
B. Peers and colleagues
C. Direct reports
D. The direct supervisor

**Answer:** B. Peers and colleagues; C. Direct reports; D. The direct supervisor

**Why:** The full circle, boss, peers, reports, plus self-assessment. Its value is triangulation: the manager who charms upward and bullies downward is invisible to any single rater, and obvious to the circle.

Page: https://tryals.app/practice/business-i/human-resource-management/which-raters-contribute-to-a-360-degree-feedback-process

### 8. Equity and options are said to align employees with long-term firm value in a way a quarterly bonus does not. How does that alignment actually work?

A. Options are worth more than an equivalent bonus on average
B. Equity is taxed more favourably than cash bonuses in most jurisdictions
C. The payoff depends on the firm's value at a future date
D. Equity cannot be sold, so employees are forced to stay

**Answer:** C. The payoff depends on the firm's value at a future date

**Why:** Aligning the horizon is the whole design. It also explains the failure mode: options that reward volatility rather than value can encourage exactly the risk-taking they were meant to discipline.

Page: https://tryals.app/practice/business-i/human-resource-management/equity-and-options-are-said-to-align-employees-with-long-term-firm