Understanding HRM Models: Ulrich Model, Expectancy Theory, and Equity Theory

In this document we will discuss about Understanding HRM Models and below are the summary points of this document:- Ulrich Model of HRM: Categorizing HR functions into business partners, shared services, and centers of excellence. Expectancy Theory: Motivational theory based on individuals' expectations of outcomes. Equity Theory: Focuses on fairness in the distribution of resources and benefits in relationships.  

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Human Resource Management

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Answer 1
HRM Models
Ulrich Model of HRM
Ulrich Model of HRM was proposed by David Ulrich, it is necessary for the HR manager to
categorize the function into three forms such as HR business partners, shared services and
centers of excellence (Noe, Hollenbeck, Gerhart & Wright, 2017). This model is helpful in
providing the shape of international organization in core areas like training and development,
recruitment and compensation and benefits. The use of this model is being done on the basis for
transforming the functions of HR, relied on the idea of separating the HR policy making,
business partner roles. This model is helpful for the company to plan future success according to
the company’s position.
Figure : Three-Legged Stool
Source: (Theotokas and Kapantais, 2017).
When the situation of the company is low in hiring skilled people, this model can be applied for
recruitment because HR business partners pay attention to this need for the company and

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communicate with each to resolve the conflicts. In case of not getting better understanding
regarding the different culture, this model can be applied for training and development because
the aspect of this model of shared services include cross-organizational synergies, dissemination
of good practices and recognition of administrative activities that facilitate in training and
development program (Mamman & Al Kulaiby, 2014). On the other hand, the situation of the
company is critical in making decision regarding compensation and benefits; the aspect of the
model of center of excellence is focused on same concern in order to increase productivity.
Expectancy theory
As stated by Kelechi et al (2016), Expectancy theory serves as motivational theory that deems
individuals to be motivated to do certain action with expected outcome that it would obtain upon
the completing the task. It is the theory that proposes that an individual will behave or act in a
definite manner in a certain manner as they are encouraged to choose a specific behaviour over
others because of what they expect the outcome of that chosen behaviour will be. This model can
be applied for recruitment because it is the theory of the management that entails valence,
expectancy and instrumentality. The expectancy theory is applicable to recruitment because it
will be helpful in motivating to the employees as issue can be seen in the case study of less
motivation among employees towards accomplishment of the task.
Valence refers to the emotional orientation in the context of outcomes. The expectations of
employee are different in the organization about their capability (Trautwein, et. al., 2012).
Management is fully involved in the commitment of fulfilling the expectations of the employees.
It is the theory that is helpful in providing training and development to the employee so that they
can perform as per the expectations of the employer. Expectancy theory is helpful in getting

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attention of employers towards compensation and benefits through which employees will be
motivated in performing the task.
Source: (Parijat & Bagga, 2014).
Equity Theory
The main focus of equity theory is on deciding whether the distribution of resources is to fair to
both partners of relational. Equity is evaluated by measuring upto the ration of contribution and
advantages for each person. This model can be applied for recruitment within the business
because Adam’s equity theory is categorized employment benefits and rewards by taking
consideration of employee work’s effort as inputs and rewards as outputs. It employs HRM to
recruit skilled employees by attracting the benefits of the company for the employees and pay
attention to the fair treatment (Jamali, El Dirani & Harwood, 2015). According to this theory, to
increase the input factors within the organization, the company provides training and
development program so that they can perform in a well efficient manner. By focusing on input
factors, the company can get an upper level of output factors within the organization (Caldwell,
2010). This theory is applicable to the compensation and benefits area because this theory

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highlights equity in the structure of the pay of remuneration of the employees (Morand &
Merriman, 2012).
Internationalization HRM strategy carried out by Kiwi Furniture
In the context of the case study of Kiwi Furniture, HR manager has decided to go beyond the
traditional method and take initiative to keep the focus on the global performance-based pay
system, which would be helpful in increasing the motivation of people. Below mentioned two
theories are helpful in taking attention of employer towards the area of training and development,
compensation and benefits and recruitment.
Expectancy theory
It is the theory of HRM that can be applied in the case study of Kiwi Furniture because it
contains three aspects such as valence that lead employees from efforts to performance that
helpful in giving outcome to them so that their personal goals can be achieved (Renko, Kroeck &
Bullough, 2012). In earlier, the employees of the company were not aware about the personal
goals but, with the help of this theory they will be aware of it. The company would be employed
through this theory to provide salary and employee benefits at international level so that the
employees of New Zealand, China and Germany can get enough reasons to stay in the company
for a long period. With the help of this theory, the company can recruit skilled employees and
begin training and development program so that they can perform in a well-effective manner
(Wigfield & Cambria, 2010).
Equity Theory

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Adam’s equity theory can be applied in Kiwi furniture case study because there is a lack of
motivation in the work of the employees. Due to the lack of concrete information and lack of
involvement of managers in the new strategy has become the major issue for the company to
cope up with the issues (Ryan, 2016). For which, this theory is suitable as it entails two major
factors such as input and output because it is stated by Adam that it is required by the
organization make the employee feel that their work outputs will give them the opportunity to
get promoted in the organization. Kiwi furniture manager should do the same with the employees
of the company so that they can work in a well-efficient manner without getting discouraged (Al-
Zawahreh & Al-Madi, 2012). The internationalization strategy of the company would be
successful by taking consideration of this theory because it facilitates to provide them effective
knowledge regarding the current situation and future concern so that they can perform
accordingly and involve in the decision-making approach (Du Plessis, 2009).

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Answer 2
Performance Management
Performance management is considered as the set of activities that make sure to the organization,
regarding meeting the desired goals in an effective manner. It keeps focussing on the
performance of the organization, employees and management in place to handle specific tasks. In
the context of the case study, the performance management system of Kiwi Furniture is not
approachable due to lack of integration. There is a concern with employees not being willing to
say enough or set individuals as well as team goals.
Figure: Framework to understand role performance
Source: http://www.pondiuni.edu.in/storage/dde/downloads/hrmiii_pm.pdf
Two core strategies of performance management system are mentioned below from which Kiwi
Furniture can improve their performance.
Two core strategies of the performance management system

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Comparative Approach
A comparative approach is one of an effective approach that includes ranking the performance of
an employee with respect to others’ in the group. The rank of individuals are based on their
performance as there are many techniques for a comparative approach like paired technique,
forced distribution technique and graphic rating scale (Festing & Barzantny, 2008).
Forced distribution technique includes ranking employees in group. It makes sure rewards for the
top performers. The employees can get higher position at their workplace by getting proper
training and guidance (Pulakos, Hanson, Arad & Moye, 2015). On the other hand, poor
performers are provided a chance for further creativeness or dismissed, in case of not meeting
their performance with the standards requirements. This will be helpful in turning reasons new
talent hire. Along with that, it is the system that ranks the employees by taking consideration of
categorisation rules instead of focusing on their performance. In such a scenario, employees with
good pay would get an effective pat in comparison of those with lower rankings although they
cannot deserve it (Dewettinck & Remue, 2011).
In the context of paired comparison technique, the organization evaluates the performance of the
performer with other and allocates a score of 1 for the superior performer. The final performance
score is the abstract of all the winning points. Comparative approach is assumed in term of
organizations with a tiny group of employees with same kind of job profiles (Boiral & Henri,
2012). Consequently, the difficulty is that it is in appropriate in term of organizations with a huge
number of employees in the company with different job profiles.
The comparative approach can be applied in the case of Kiwi Furniture in order to increase the
performance of the employees. The top performers of the company would get an effective

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training program to learn more about the expansion of the business by providing good quality
services to the customer. This activity will motivate them to do work by keeping in mind the
tendency of common goal.
Behavioural Approach
Behavioural approach is one of the oldest performance measurement techniques. Vertical scales
of various dimensions of the job consist under behavioral approach. This can be done by using
BARS technique or BOS technique. The Behaviourally Anchored Rating Scale (BARS)
technique entails five to ten vertical scales. These scales rely on different parameters which are
determined consensually from all employees (Albrecht, et. al., 2015). As per this approach,
employees are allowed to rank on each of the anchors as per their performance.
Conversely, Behavioural Observation Scale (BOS) is a new version of BARS. It gives a more
precise elaboration along with occurrence in the context of employee behaviour for effective
performance. In general, the score is the standard of all these frequencies. The behavioural
approach is effective for the accuracy and reliability, the major disadvantage in this approach is
the huge data that the managers have to remind (Snape & Redman, 2010).
Behavioural approach of the performance management can be applied to the case study of Kiwi
Furniture because it is good enough in linking employee behaviour to company strategy. By this
approach, the HR manager of Kiwi Furniture can encourage employee to accomplish the task
with good behaviour. This approach automatically connects with performance with the
attainment of goals, conflict of interest, and reward (De Waal, 2013). Hence, it facilitates
management to make decisions and evaluate organizational goals so that employee satisfaction
can be increased due to proper performance appraisal.

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Three recommendations to improve Kiwi Furniture
It has been analyzed through a case study that employees do not want to share a positive and
negative critique of them. The employees of the organization prefer old numerical performance
management scale where they are allowed to rate them as per their satisfaction level. From the
case study, it has come to know that there is a lack of concrete information and evaluation in the
implementation of performance management that being the main cause of disappointment of
Kiwi Managers and the managers think that the subsidiary staff is not making any efforts to
adopt new performance management strategies. There are three recommendations mentioned
below to improve Kiwi Furniture.
360-degree feedback
It is vital for the company to keep the focus on 360-degree appraisal in the company as it entails
many advantages that can increase the productivity of Kiwi Furniture. It is helpful in increasing
self-awareness, balanced view, leverage strengths, cover blind spots and development of skills
(Espinilla, de Andrés, Martínez & Martínez, 2013). It is the level to which the performance
management system extracts job performance that is consistent with the strategy and goals of the
organization (Bititci, Cocca & Ates, 2016). It is recommended to Kiwi Furniture’s HR Manager
to highlights the need for the performance management system to escort employees in keeping
efforts to achieve a common goal.
Balanced Score Card
The company should focus on balance score card in order to analyze the used resources in the
organization. It involves customer perspective, financial perspective and internal process

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perspective so that the company can track financial performance and customer satisfaction and
cover internal operational goals (Sharma, 2009).

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Answer 3
Kiwi Furniture has been decided to take new initiative of global performance based pay system
in future under the HR function compensation & benefits. The cultural and institutional aspects
of three countries New Zealand, Germany and China will be considered by Kiwi Furniture
before implementation of global performance based pay system in future. It will be done with the
help of Greet Hofstede’s cultural dimension
Cultural Aspects of Countries
New Zealand
Individualism
New-Zealand has 79 scores on this dimension that represents employees are anticipated to be
display initiative and self-reliant. It is necessary for Kiwi Furniture to take consideration of this
aspect before implementing global performance pay system because individualism refers to the
extent to which societies value individual rights and opportunities to the employees.
Indulgence
It is the aspect in which New Zealand has 75 scores that indicate the indulgence culture. People
in societies distinguished by a high score in luxury commonly demonstrate a willingness to
comprehend their impulses and wants in the context of enjoying life (MSPB, 2006). Employees
of New Zealand possess a positive attitude (Van der Werf, 2012). This aspect should be
considered by Kiwi and provide them a chance of learning in order to be up to date with new
trends, designs and coming products

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Germany
Masculinity
On this aspect, Germany scored 66 that depict high value of performance of the employees.
Managers should be assertive and decisive in which the status of employees is frequently shown
by their watches, cars and technical devices. Kiwi should take consideration of their values and
implement new system accordingly. It impacts on performance pay system because issue comes
on surface because of the emotional differences between two genders. The masculinity index of
Germany is based on high gender roles.
Long term orientation
In this context, Germany scores 83 that show the pragmatic orientation, people of Germany are
very practical and they have trust in the situation and time. They demonstrate the ability to adapt
traditions in an easy manner in order to change the conditions, a firm tendency to invest and
determination in attaining outcomes. The performance pay system will be impacted through this
dimension because the long term orientation of Germany is high which depicts that people like to
be with the company for a long period.
China
Power Distance
China scored high at 80 on this aspect that believes that inequality amongst people is acceptable.
According to this, there is no defense against power abuse by superiors. Individuals’ area
affected by formal authority and it is necessary for Kiwi to keep consideration of this aspect

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because the performance evaluation criteria in this country would be different from others and it
shows the large gap between the management and employee in making communication.
Long term orientation
On this aspect, the score of China is 87 that depict the pragmatic culture. The trust of people is
developed as per the situation. This aspect of culture should be considered by the Kiwi Furniture
to gain trust of employees so that they can perform in a significant manner. The company need to
follow many rules and regulations to follow the social condition in the nation in order to make
decision in the context of global performance system.
Institutional Aspects of Countries
New Zealand
In New Zealand, performance pay is given on the basis of the amount of work being done by the
people. There is use of performance evaluation system that enables the company to measure the
performance of each and every employee. On the basis of this measurement, all the employees
are given performance pay rewards.
Germany
In Germany, performance pay is affected by the institutional aspects such as seniority. This is
evident from the fact that performance pay is provided on the basis of seniority. The bonuses are
given in terms of 6-10% of the base salary. The bonuses are being described according to the
framework decided by federal government.
China

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Incentive plans are the major institutional aspect that is affecting the performance pay system in
China. Most of the non-governmental companies are giving incentives by calculating the
individual’s performance while comparing it with performance that is demanded by the
company. Greater the individual’s performance, greater is their chance to gain incentives in the
organisation. It is seen that all the companies have their own incentive policies so as to pay for
the performance.

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Answer 4
Change management model to implement the global performance based pay system
The realities of work have undergone a sea-change. The work has expanded in which team is
divided into many forms and they work on one project at any given point of time. Performance
pays system tie compensation directly to major business goals and management aims.
Performance based pay system will motivate employee of Kiwi in New Zealand, Germany and
China to work hard in the context of achieving the goals (Dzansi & Dzansi, 2010). Lewin’s
change model is described below in order to bring a better understanding regarding how to
implement global performance based pay system in the future. It is the model through which the
performance of the organization would not be influenced. This model entails three processes for
making changes in the organization activities that are unfreeze, change and freeze. This model is
helpful for New Zealand because the culture of this country is sophisticated and people believe
their own capabilities. It would be hard for the company to change the process of the company in
sudden manner. Three steps of this model will be helpful in changing the mind of employees.
Change management model and barriers in New Zealand
Lewin’s Change Model
Unfreeze
Performance based pay system is implemented by the company in order to bring change in the
management in productive manner based on which the management should prepare its members
for this change. The company should start at the core to bring these changes effectively by
making everyone aware regarding these changes and incorporating them into their values,

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attitudes, behaviours and beliefs. Unless everyone are prepared for these changes, the
performance based pay system could fail. The company should let everyone know the
importance and benefit of this system as it will help them expand their market share and improve
productivity of employees (Cummings, Bridgman & Brown, 2016). Kiwi furniture is already
facing issues due to lack of performance and changes in the pay system can bring issue within
the operation. The manager will involve employees to take a constructive approach to the change
process (Gerpott, 2015). The employees will get session from HR manager in the context of
elaborating the importance of the global performance based pay system so that they can get
effective knowledge regarding the same.
Change
This stage is referred to as “move stage” as it causes an undulation effect in the company (Cloud
pay, 2017). While implementing the performance based pay system, the company should focus
on changing its policies to consideration factors such as employee satisfaction, organisational
culture that supports pay for performance, fairness among employees and adequate training
facilities.
Freeze
After the performance evaluation crisis at Kiwi Furniture, the company is planning to become
well-known company to get a more competent and efficient workforce (Dohmen & Falk, 2011).
Corporate HR will hold the meeting with management of New Zealand Company so that the
possible changes can be done within the company without compromising (Cummings, Bridgman
& Brown, 2016). The corporation should make sure that people have embraced the new ways of

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working and the management should help everyone to adopt as per the new organisational charts
that consists of job descriptions to avoid ambiguity in operations.
Barriers to implementing change
Employee resistance
The first barrier is that employees can deny accepting the change as they are getting a fixed
salary which can be addressed by the company while implement change policies to ensure that
employees understand the importance of this system and they understand how it benefits them as
well.
Lack of cooperation
The employees do not cooperate with another employee in certain performance indicators in
New Zealand as the culture of it is different from others (Pollack & Pollack, 2015). This would
increase issue in accepting global performance based pay system by the employees which can be
addressed by promoting fairness among employees and providing them adequate training.
Change management model and barriers in Germany
Germany has well in masculinity and long term orientation factor for which the company needs
to implement Kotter’s change model in order to focus on performance-based pay system
(Appelbaum, Habashy, Malo & Shafiq, 2012).
Kotter’s change model
Establishing a sense of urgency

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KiwiFurniture needs to change to the performance based pay system in order to addresses
increasing competition in the market and the growing demand of customers.
Forming a powerful guiding coalition
The company should create a taskforce in order to adopt the performance based pay system to
ensure that they have adequate resources and authority to implement the shift.
Creating a vision
Adoption to performance based system will assist KiwiFurniture in becoming more flexible in
the market and cater to the need of more customers which will result in achievement of the
company’s goals.
Communicating the vision
The adoption of performance based pay system will make the company’s production process
more reactive to sales demand which will enable the company to effectively communicate and
understand the demand of its customers. Communication with employees will reduce their
resistance towards the change as well.
Empowering employees for board based action
The management should remove any obstacles in between the implementation of the
performance based pay system and its goals to ensure its effectiveness. To achieve this, the
company should promote cooperation among employees to eliminate their resistance to change.
Generating short term wins

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The company should give rewards to employees who have already performed better than others
to make sure employees focus on short term wins and they are not resisting to the adopting of
this system.
Consolidating gains and producing more change
The company should gradually implement this plan to make sure that its performance is not
hindered during the process and employees continue to work at high productivity.
Anchoring new approaches in the culture
The company should implement the performance based pay system in its culture by making sure
that new and old employees are aware regarding its policies and they work towards supporting
others to comply with these policies.
Barriers to implement change
Credibility gap: The first barrier which the company might face is creditability gap since
employees might not believe on these policies which can be addressed by rewarding employees
who have already performed better than others.
Job dissatisfaction: Due to performance based pay system, employees of Kiwi Furniture can get
demotivate as they will work under high pressure which the company can eliminate by making
employees familiar with policies and rewarding their shorter wins.
Change management model and barriers in China
Bridges three step model

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This model can be considered for the employees of China as they are good enough in power
distance and long term orientation in which they are having believed in inequality among people.
The trust of people is developed as per situation in China. This model contains three steps that
are mentioned below:
Ending, Losing, Letting Go
It is the first stage which marked with resistance and emotional upheaval. People of China have
fear because there is no defence against power abuse by superiors (Bruno, Lonetti & Pascuzzo,
2016). Therefore, they might avoid accepting the performance based pay system since they
might believe that they ends up losing their salaries. KiwiFurniture should make sure that
employees are comfortable with this system and they understand its elements to assess how it
benefits them which will eliminate resistance.
The neutral zone
It is the stages that are affected by change in the organization and employees get confused and
impatient. People might experience low morale and low productivity due to a change in the
organization (Chen, Huang & Yu, 2013). During the neutral zone, the management should give
performance based rewards to employees to increase their faith in this model to make sure that
they did not resistance these policies and believe in its effectiveness.
The new beginning
It is the last stage of the change in which people began to embrace the initiatives of the change.
People are starting to experience openness to learning, high energy and interact with other people
in a positive manner (Li, Sun & Ning, 2014). In this step, the management should let people

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know how the performance based pay system is better and how they can generate more salary
through this method which will effective implement this system in the company.
Barriers to implement change
Potential Decrease in Intrinsic Drives
The performance based pay system can compel the employees to perform the needed work so
that they can attain outcome but this affects badly on the creativity of the employees since they
will prioritised quantity over quality. This can be addressed by adaptation of quality based
incentives in the performance based pay system.
Difficulties in measurement of performance
Another challenge is measurement the performance of the employees because this model
contains three steps which cannot be measured by the management in an effective manner. This
barrier can reduce effectiveness of the performance based pay method which can be improved by
the management if they collect feedback from employees to make necessary changes in the
system.

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