MBA People Management Course Guide Template

Course Guide: People Management and Human Capital, [Course name and term]

A course guide for the human resources and talent elective of a leading MBA programme, written for future general managers rather than HR specialists: strategic human resource management, workforce planning, job design, recruiting and selection, onboarding, pay and rewards, performance management, development and careers, retention and turnover, employee voice and relations, people analytics and human capital reporting. It gives a 13-session roadmap, a key-concepts table, the formulas a general manager needs (workforce flows, turnover cost, selection utility, adverse impact, compa-ratio), an original mini-case at Northfield Outdoor Co. with exhibits, discussion questions and a teaching note, grading rubrics, an exam plan and a self-test. Source basis: the original works of the field (for example Huselid 1995; Pfeffer 1998; Schmidt and Hunter 1998; Sackett and colleagues 2022; Lazear 2000; DeNisi and Murphy 2017), written up in original words. Dated legal and reporting facts use EU, UK and US examples checked on 2026-10-30, and ISO 30414:2025 is cited by name only. Every person, organisation and number in the mini-case is fictional and was computed in Python. Replace every [bracketed] value and every row marked Example. This is a learning aid, not legal or employment advice.

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Contents

• What the course is for
• Prerequisites
• Session roadmap
• Key concepts
• Core ideas by topic
• Formulas and notation
• Employment law and reporting: dated examples
• Mini-case: the store workforce at Northfield Outdoor Co.
• Typical assignments and how they are graded
• Exam preparation plan
• Common struggles
• Reading list
• Self-test
• Answer key
• Teaching note for the mini-case

What the course is for

In most firms, people are the largest controllable cost and the main source of capability. General managers make the decisions that matter most for people: how many to hire and where, whom to select, how to pay, how to judge performance, whom to promote and how to respond when good people leave. HR professionals design the systems, but line managers run them every day. This course gives a manager the economics and the evidence behind those decisions, and the habit of treating them with the same rigour as a capital investment: state the objective, estimate the costs and benefits, check fairness and legality, and measure the result.

Three ideas run through the course. First, fit: people practices create value when they fit the strategy and reinforce each other as a system (Huselid 1995; Pfeffer 1998), not when they copy a famous company. Second, evidence: many common practices (unstructured interviews, forced ranking, annual ratings tied mechanically to pay) have weaker support than managers assume, while some unglamorous ones (structured interviews, realistic job previews, regular conversations about work) have strong support. Third, fairness and law: every people decision is also a decision about fairness, and in many jurisdictions about legal compliance and disclosure.

Prerequisites

Session roadmap

Key concepts

Core ideas by topic

Strategic HRM

People practices create value when they support the firm's way of competing and reinforce each other. Huselid (1995) found that firms using more high-performance work practices had lower turnover, higher productivity and better financial performance. Ichniowski, Shaw and Prennushi (1997) found, on steel finishing lines, that bundles of complementary practices raised productivity while single practices adopted alone did little. Pfeffer (1998) argued for seven practices that recur in successful organisations. A useful lens is ability, motivation and opportunity: practices that raise ability (selection, training), motivation (pay, recognition, careers) and the opportunity to contribute (job design, teams, voice). Fit runs two ways: with strategy (a cost leader and an innovator need different systems) and between practices (hiring for judgement and then scripting every task wastes the hire).

Workforce planning

Workforce planning compares the demand for people (from the business plan: stores, volume, productivity) with the internal supply (current staff who stay, plus promotions in, minus promotions out) and fills the gap with hiring, internal development, contractors or redesign. A Markov model uses historical transition probabilities between levels to project internal supply; it makes promotion bottlenecks and exit hot spots visible. The model assumes stable transition rates, so update it after policy changes. The plan should also ask which roles are pivotal: where a change in performance changes results most, so that investment goes there first.

Recruiting

Recruiting is a funnel: sources, applicants, screened, interviewed, offered, accepted, still employed after 90 days. Track yield at each stage by source; the cheapest source per applicant is often not the cheapest per retained hire. Realistic job previews (an honest description of the hard parts of the job) reduce early turnover by helping applicants select themselves out. In the EU, Directive (EU) 2023/970 gives applicants the right to information about the initial pay or its range before the interview and bars questions about pay history (Article 5); several US states and cities require pay ranges in job postings.

Selection

The validity of a selection method is its correlation with later job performance. Schmidt and Hunter (1998) summarised 85 years of research and ranked general mental ability tests, work samples and structured interviews high. Sackett, Zhang, Berry and Lievens (2022) showed that earlier corrections for range restriction overstated validities, revised many estimates downward, some substantially, and found structured interviews to be the top-ranked procedure; check the paper's tables for the current estimates by method. Validity is only half the decision: a method can also produce large differences between demographic groups (adverse impact), which raises fairness and legal issues. Structured interviews (Campion, Palmer and Campion 1997) combine relatively high validity with smaller group differences, which is why they are a default for most roles. Utility analysis turns validity into money: the value of a better method depends on how many people are hired, how long they stay, how much performance varies in money terms and how selective the firm can be. Algorithmic screening tools are selection procedures too: validate them, test them for adverse impact and check the rules on automated decisions where you operate.

Onboarding

Onboarding moves a new hire from outsider to productive member: clarity about the role, confidence in doing it, connection with colleagues and knowledge of the culture. Early turnover (within 90 days) is mostly a recruiting and onboarding failure, not a pay problem. Track 90-day attrition by hiring source, store and manager.

Pay and rewards

Pay decisions have three layers. Pay level against the market (lead, match or lag) affects attraction and retention. Pay structure (grades and ranges, with a minimum, midpoint and maximum) keeps internal relationships coherent; the compa-ratio (pay divided by the range midpoint) and range penetration locate each person in the range. Pay for performance (merit increases, bonuses, commissions, equity) adds incentive and sorting effects: Lazear (2000) found that a move to piece rates raised output both because workers worked harder and because the firm attracted more productive workers. Gerhart, Rynes and Fulmer (2009) review the evidence and the side effects (gaming, narrow focus, crowding out of cooperation). A merit matrix sets increases by performance and position in range so that the budget is spent where it matters. Pay equity analysis checks that pay differences are explained by legitimate factors; in the EU, Directive (EU) 2023/970 adds pay gap reporting and joint pay assessments (see the dated table). Detailed incentive design belongs in mba/mba-compensation-design-card.

Performance management

Annual ratings are noisy measures of performance: they reflect the rater as much as the person rated. DeNisi and Murphy (2017) reviewed a century of research and concluded that more accurate ratings had not made organisations more effective, and that the focus should move to performance management as a whole: goals, frequent feedback, coaching and development. Cappelli and Tavis (2016) describe firms that dropped annual ratings for regular conversations. Forced distributions create competition inside teams and penalise good teams. Whatever the system, keep a record of goals and evidence, separate the development conversation from the pay decision in time, and give managers calibration and training. For individual underperformance, see hr/performance-improvement-plan.

Development and careers

Firms can make talent (develop internally) or buy it (hire externally). Cappelli (2008) argues for treating talent supply like a supply chain under uncertainty: develop for the predictable part of demand and buy for the uncertain part. Succession planning identifies ready-now and ready-later candidates for pivotal roles. A nine-box grid (performance against potential) is a conversation tool; potential ratings are especially noisy, so pair them with evidence and development actions.

Retention and turnover

Turnover has direct costs (separation, recruiting, training) and indirect costs (lost productivity, customer service, team disruption). Hausknecht and Trevor (2011) review evidence that collective turnover hurts unit performance, more so when leavers are experienced or high performers. Not all turnover is bad: the departure of low performers can help. Retention work starts with diagnosis: who leaves, when, from which managers and for what reasons (exit interviews, stay interviews, survival curves). The psychological contract (Rousseau 1989) explains why broken implicit promises drive exits more than pay alone.

Voice and employee relations

Employees need channels to raise concerns and ideas: managers, surveys, councils, unions and grievance procedures. In the EU and UK many decisions (collective redundancies, transfers, some workplace changes) require information and consultation with employee representatives; in the US, the National Labor Relations Act protects concerted activity. A restructuring plan therefore includes a consultation plan, not just a communication plan. See hr/disciplinary-grievance-procedure.

People analytics

People analytics applies data analysis to people decisions: turnover drivers, hiring yields, pay equity, engagement. Three disciplines keep it useful. Start with a decision, not a dataset. Separate correlation from causation (managers with low turnover may simply manage easier stores). Protect privacy: collect the minimum data, explain the purpose, aggregate small groups and follow data protection law. Predictive models of who will leave raise ethical issues if used to treat individuals differently without their knowledge.

Human capital reporting

Investors and regulators increasingly ask for workforce information. ISO 30414:2025 (second edition, published August 2025 according to ISO technical committee TC 260 and the ISO catalogue) sets requirements and recommendations for internal and external human capital reporting and disclosure. ISO's committee describes the edition as adding auditable requirements alongside recommendations, a core set of mandatory metrics for all organisations, refined human capital areas, and guidance on materiality, data governance and AI. This guide does not reproduce the standard. Official text: ISO, purchase or licensed access: https://www.iso.org/standard/86106.html (also through national standards bodies). For a working report, use hr/human-capital-report.

Formulas and notation

Markov projection of internal supply, with headcount $n_i$ at level $i$ and annual transition probability $p_{ij}$ from level $i$ to level $j$ (the rest, $1 - \sum_j p_{ij}$, leave):

Turnover rate and annual turnover cost, with $X$ leavers, average headcount $\bar{N}$ and cost per leaver $c$:

Selection utility (Brogden, Cronbach and Gleser form), with $N_s$ hires a year, $T$ average tenure in years, $\Delta r$ the gain in validity, $SD_y$ the standard deviation of performance in money a year, $\bar{z}_x$ the mean standardised predictor score of those hired and $C$ the extra cost:

where $SR$ is the selection ratio (hires divided by applicants), $z_c$ the cut-off with $1 - \Phi(z_c) = SR$, and $\phi$, $\Phi$ the standard normal density and distribution.

Adverse impact ratio between the selection rate $SR_g$ of a group and the highest group's rate $SR_{\max}$:

Compa-ratio and range penetration for pay $P$ in a range with minimum $m$, midpoint $M$ and maximum $X_{\max}$:

Employment law and reporting: dated examples

Sources: Directive (EU) 2023/970, OJ L 132, 17.5.2023, https://eur-lex.europa.eu/eli/dir/2023/970/oj (text read from the Publications Office copy); GOV.UK gender pay gap reporting, https://www.gov.uk/government/collections/gender-pay-gap-reporting; 29 CFR 1607.4, https://www.law.cornell.edu/cfr/text/29/1607.4; ISO TC 260 news on ISO 30414:2025, https://committee.iso.org/sites/tc260/home/news/content-left-area/news-and-updates/iso-30414-2025-strengthening-hum.html. This table is not legal advice; check the current official text and a qualified professional.

Mini-case: the store workforce at Northfield Outdoor Co.

Situation

Northfield Outdoor Co. sells outdoor clothing and equipment through 24 stores. Each store has about 25 associates, four keyholders (shift supervisors), an assistant manager and a store manager: 744 people in stores. Next year the company opens two stores, so demand rises to 26 stores. Associate pay is USD 15.00 an hour (USD 31,200 a year at full time), and the loaded cost of an hour, including employer taxes and benefits, is USD 18.00.

Maren Lisk, the new Vice President of People, has three months to present a store workforce plan to the executive team. The CFO, Tomas Reyes, sees the people budget as a cost line: "Our turnover is normal for retail. Hire faster and cheaper." The Vice President of Stores, Ingrid Osei, says the problem is quality: "Half the new associates do not know a tent from a tarp, and customers notice." Store managers interview candidates their own way, usually in fifteen minutes. Last quarter 31 of 120 new associates left within 90 days.

Maren has proposed a standard selection process for associates: a structured interview with anchored scales and a short product-advice work sample. The work sample was piloted in six stores. A store manager pay review is also due: several managers are paid below the range midpoint, and two experienced managers left for a competitor last year.

Exhibit 1: Store workforce and annual transitions (fictional)

Associate turnover 54.0% (=324/600); total store turnover 48.7% (=362.4/744).

Exhibit 2: Next year's demand and internal supply (fictional)

Promotions a year: 36.00 associates to keyholder (=600*0.06), 7.68 keyholders to assistant manager, 2.88 assistant managers to store manager.

Exhibit 3: Cost of one associate leaver (fictional estimates by Finance and People)

Exhibit 4: Selection redesign for associates (fictional)

Current method: unstructured interviews (validity assumed 0.19). Proposed: structured interview plus work sample (combined validity assumed 0.42, a planning assumption the People team will test). Selection ratio 0.30 (hire 3 of every 10 applicants). Average tenure of hires 1.5 years. $SD_y$ set at 40% of annual pay, USD 12,480 (=0.4*31200). Extra cost: USD 45 per applicant for the work sample and interviewer time, plus USD 60,000 to design the questions, scales and training.

Pilot results of the work sample (six stores):

Of those who passed, structured interview offers: Group 1, 128 of 231 (55.41%); Group 2, 57 of 111 (51.35%).

Exhibit 5: Store manager pay (fictional, five managers shown; range USD 52,000 to 72,000, midpoint 62,000)

Merit matrix (increase in %, by rating and compa-ratio band: below 0.95, 0.95 to 1.05, above 1.05):

Pay above the range maximum is paid as a one-off lump sum, not added to base pay. The merit budget is 3.0% of base pay.

Exhibit 6: Early attrition (fictional)

Last quarter: 120 associates hired, 31 left within 90 days, a 90-day attrition rate of 25.8% (=31/120). Exit interviews of the early leavers most often cited "the job was not what I expected" and "irregular schedules".

Discussion questions

1. Use Exhibits 1 and 2 to explain why Northfield must hire about 410 associates next year to grow headcount by 50. Where are the bottlenecks in the internal pipeline?
2. Estimate the annual cost of associate turnover and the saving if associate turnover fell from 54% to 45%. How would you answer Tomas's view that turnover is "normal for retail"?
3. Compute the utility of the selection redesign. Which assumption drives the answer, and how would you test it?
4. Compute the adverse impact ratio at the work sample stage and at the interview stage. What should Maren do before rolling out the work sample?
5. Apply the merit matrix to Exhibit 5. Does the result fit the 3.0% budget, and does it address the store manager retention problem?
6. Draft Maren's recommendations for the executive team: three actions, each with an owner, a cost and a measure.

Typical assignments and how they are graded

Rubric for a case write-up (Example).

Exam preparation plan

Exam technique: state the business problem first (cost, quality, growth), then the people mechanism, then compute two or three numbers that size it, then test fairness, then recommend with measures.

Common struggles

1. Treating people as a cost line only. Turnover and poor selection have costs that do not appear in the people budget; size them.
2. Copying best practice. Practices work as a system that fits the strategy; one famous practice alone rarely helps.
3. Believing in the unstructured interview. It feels informative but predicts less than structured methods.
4. Forgetting fairness checks. A valid method with large adverse impact may be unlawful and is often avoidable.
5. Mechanical pay for performance. Ratings are noisy; tie large sums to noisy ratings and you reward noise.
6. Reading correlation as cause in people analytics. Store context explains much of manager-level variation.
7. Ignoring privacy. People data are personal data; minimise, aggregate and explain.
8. Generic recommendations. "Improve onboarding" earns little; "realistic job preview video and fixed schedules for the first four weeks in all stores from March, measured by 90-day attrition" earns a lot.

Reading list

• Huselid, M. A. (1995). The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38(3), 635-672. https://doi.org/10.2307/256741
• Ichniowski, C., Shaw, K., and Prennushi, G. (1997). The effects of human resource management practices on productivity: a study of steel finishing lines. American Economic Review, 87(3), 291-313.
• Pfeffer, J. (1998). Seven practices of successful organizations. California Management Review, 40(2), 96-124.
• Schmidt, F. L., and Hunter, J. E. (1998). The validity and utility of selection methods in personnel psychology: practical and theoretical implications of 85 years of research findings. Psychological Bulletin, 124(2), 262-274. https://doi.org/10.1037/0033-2909.124.2.262
• Sackett, P. R., Zhang, C., Berry, C. M., and Lievens, F. (2022). Revisiting meta-analytic estimates of validity in personnel selection: addressing systematic overcorrection for restriction of range. Journal of Applied Psychology, 107(11), 2040-2068. https://doi.org/10.1037/apl0000994
• Campion, M. A., Palmer, D. K., and Campion, J. E. (1997). A review of structure in the selection interview. Personnel Psychology, 50(3), 655-702. https://doi.org/10.1111/j.1744-6570.1997.tb00709.x
• Boudreau, J. W. (1983). Economic considerations in estimating the utility of human resource productivity improvement programs. Personnel Psychology, 36(3), 551-576. https://doi.org/10.1111/j.1744-6570.1983.tb02235.x
• Lazear, E. P. (2000). Performance pay and productivity. American Economic Review, 90(5), 1346-1361. https://doi.org/10.1257/aer.90.5.1346
• Gerhart, B., Rynes, S. L., and Fulmer, I. S. (2009). Pay and performance: individuals, groups, and executives. Academy of Management Annals, 3(1), 251-315. https://doi.org/10.5465/19416520903047269
• DeNisi, A. S., and Murphy, K. R. (2017). Performance appraisal and performance management: 100 years of progress? Journal of Applied Psychology, 102(3), 421-433. https://doi.org/10.1037/apl0000085
• Cappelli, P., and Tavis, A. (2016). The performance management revolution. Harvard Business Review, October 2016.
• Cappelli, P. (2008). Talent management for the twenty-first century. Harvard Business Review, March 2008.
• Rousseau, D. M. (1989). Psychological and implied contracts in organizations. Employee Responsibilities and Rights Journal, 2(2), 121-139. https://doi.org/10.1007/BF01384942
• Hausknecht, J. P., and Trevor, C. O. (2011). Collective turnover at the group, unit, and organizational levels: evidence, issues, and implications. Journal of Management, 37(1), 352-388. https://doi.org/10.1177/0149206310383910
• Bartel, A. P. (2004). Human resource management and organizational performance: evidence from retail banking. ILR Review, 57(2), 181-203. https://doi.org/10.1177/001979390405700202
• Textbooks, by name only: Baron, J. N., and Kreps, D. M., Strategic Human Resources: Frameworks for General Managers (Wiley); Lazear, E. P., and Gibbs, M., Personnel Economics in Practice (Wiley); Cascio, W. F., and Boudreau, J. W., Investing in People (Pearson).
• Standard, by name only: ISO 30414:2025, Human resource management: Requirements and recommendations for human capital reporting and disclosure. Official text: ISO, purchase or licensed access: https://www.iso.org/standard/86106.html

Self-test

1. What did Huselid (1995) and Ichniowski, Shaw and Prennushi (1997) find, and why does the second matter for managers who copy one practice?
2. A level has 50 people; 70% stay, 10% are promoted, the rest leave. The level below has 200 people with 5% promoted up. Demand next year is 55. Compute internal supply and hires needed, with the Excel formula.
3. What did Sackett and colleagues (2022) change about the validity estimates of Schmidt and Hunter (1998), and which method ranked top?
4. Compute $\bar{z}_x$ for a selection ratio of 0.50 and explain why it is lower than at 0.30.
5. State the four-fifths rule and its source. Does a ratio above 0.80 mean there is no adverse impact?
6. Define compa-ratio and range penetration. A person earns 48,000 in a range of 40,000 to 60,000. Compute both.
7. Why can tying large pay increases to annual ratings reward noise (DeNisi and Murphy 2017)?
8. What is a realistic job preview and which outcome does it target?
9. Name two reasons a manager-level turnover comparison may mislead.
10. Which EU employers must report gender pay gaps by 7 June 2027, and what triggers a joint pay assessment?
11. What does Lazear (2000) say about the two channels through which performance pay raised output?
12. What is ISO 30414:2025, and how should a template refer to it?

Answer key

Mini-case numbers (details in the teaching note): internal supply 381.60, external hires 424.40 (associates 410.00); annual associate turnover cost USD 914,976 and saving USD 152,496 at 45% turnover; selection utility USD 1,924,434.60 a year of hires; adverse impact ratio 0.776 at the work sample and 0.927 at the interview; merit spend 2.75% of base pay including a USD 268 lump sum.

Self-test.

1. Firms with more high-performance practices had lower turnover and better productivity and financial results; practices raised productivity as complementary bundles, not alone. Copying one practice rarely works.
2. Internal supply = 50 x 0.70 + 200 x 0.05 = 45 (=50*0.7+200*0.05); hires = 55 - 45 = 10.
3. They showed that range restriction corrections had been too large, lowered many validity estimates (for some methods by about 0.2), and found structured interviews ranked top.
4. $z_c = 0$, $\phi(0) = 0.3989$, $\bar{z}_x = 0.3989 / 0.50 = 0.798$ (=NORM.S.DIST(NORM.S.INV(0.5),FALSE)/0.5). Less selective hiring means the average hire is closer to the applicant mean.
5. A group's selection rate below four-fifths of the highest group's rate is generally regarded as evidence of adverse impact (29 CFR 1607.4(D)). No: smaller differences can still be adverse impact if statistically and practically significant, and large ones on small numbers may not be.
6. Compa-ratio = pay / midpoint = 48,000 / 50,000 = 0.96; penetration = (48,000 - 40,000) / (60,000 - 40,000) = 40%.
7. Ratings reflect rater effects and context as much as performance, so large sums follow measurement error; and the link damages the development conversation.
8. An honest description of the job's hard parts given before the offer; it targets early turnover through self-selection and accurate expectations.
9. Any two: stores differ in labour markets and workload; small numbers make rates volatile; managers may be assigned to difficult stores; different hiring sources and seasons.
10. Employers with 250 or more workers (annual reporting) and 150 to 249 workers (every three years) (Article 9). A joint assessment follows a gap of at least 5% in a category of workers that is not justified by objective, gender-neutral criteria and not remedied within six months (Article 10).
11. An incentive effect (workers produced more) and a sorting effect (more productive workers were attracted and stayed).
12. The international standard for human capital reporting and disclosure, second edition 2025. A template cites its name, edition and public structure in original words and points to the official text for purchase; it does not reproduce the text.

Teaching note for the mini-case

Teaching objectives. Build a workforce plan from a transition matrix; size the cost of turnover; turn selection validity into money and test it for fairness; apply a merit matrix and see its limits; write recommendations that a CFO and a store operations leader both accept.

Question 1: the pipeline. Of 600 associates, only 240 stay at level and 36 are promoted; 324 leave. Demand of 650 associates therefore needs 410 external hires (=650-240) for net growth of 50. The pipeline above is thin: 36 promotions feed 104 keyholder roles, and only 2.88 assistant managers a year become store managers while two new stores and 4.32 leavers create demand for more, so the company must hire 3.44 store managers externally. The bottleneck is not hiring speed but associate retention, which starves every level above.

Question 2: the cost of turnover. USD 914,976 a year (=324*2824). At 45% turnover, leavers fall to 270 (=600*0.45) and the cost to USD 762,480 (=270*2824), a saving of USD 152,496 (=600*0.09*2824). "Normal for retail" is a benchmark, not a reason: Ingrid's quality complaint and Hausknecht and Trevor's evidence on collective turnover suggest an indirect cost in service and sales that the exhibit does not include. The saving is a lower bound.

Question 3: selection utility. Selection ratio 0.30 gives $z_c = 0.5244$, $\phi(z_c) = 0.3477$ and $\bar{z}_x = 1.159$ (=NORM.S.DIST(NORM.S.INV(0.7),FALSE)/0.3). Applicants 1,366.7 (=410/0.3); extra cost USD 121,500 (=410/0.3*45+60000). Gross gain USD 2,045,934.60 (=410*1.5*(0.42-0.19)*12480*NORM.S.DIST(NORM.S.INV(0.7),FALSE)/0.3); net utility USD 1,924,434.60, about USD 4,694 per hire. The answer is driven by $SD_y$ and the validity gain: with $SD_y$ at 20% of pay, utility falls to USD 901,467.30; with a validity gain of only 0.10, to USD 768,036.78. Both remain well above the cost, so the decision is robust even if the absolute figure is not. Test the assumption by tracking performance (sales per hour, customer ratings, 90-day retention) of hires under both methods in the pilot stores.

Question 4: adverse impact. Work sample: Group 2 pass rate 42.69% against Group 1's 55.00%, an AIR of 0.776 (=(111/260)/(231/420)), below 0.80; a two-proportion test gives z = 3.12, p = 0.0018, so the difference is unlikely to be chance. Interview stage: AIR 0.927 (=(57/111)/(128/231)), above 0.80. Maren should not roll out the work sample as designed. Steps: check that the work sample measures what the job requires (product advice in realistic conditions, not prior familiarity with outdoor brands), review the content with job experts and a diverse panel, consider giving candidates product materials beforehand so it tests advice skill rather than prior knowledge, re-pilot, and take advice from employment counsel on validation. The structured interview can go ahead.

Question 5: merit. Increases: SM-01 4.5% (USD 2,594.70), SM-02 1.5% (995.10), SM-03 1.5% (1,068.00, of which USD 800 to reach the maximum of 72,000 and USD 268 as a lump sum), SM-04 1.5% (818.40), SM-05 5.0% (3,100.00). Total USD 8,576.20 on base pay of USD 311,760, 2.75% (=8576.2/311760), within the 3.0% budget; base pay rises 2.66% and the rest is a lump sum. The matrix rewards SM-01, a strong performer below midpoint, but a merit cycle moves slowly: SM-01 reaches only 0.972 of midpoint. If store managers leave for a competitor, check the market rate of the range itself; the problem may be the range, not the merit matrix. Note SM-04: a 1.5% increase for a rating of 2 below midpoint is a choice the company should make on purpose, alongside a performance conversation (hr/performance-improvement-plan if needed).

Question 6: recommendations (Example).

What students often miss. That the hiring need of 410 comes from turnover, not growth; that utility is a range driven by assumptions; that the AIR test belongs before rollout, not after a complaint; and that a merit matrix cannot fix a range that is below the market.

Revision history

Standard and licence note

Based on the human resource management and personnel economics literature cited above, on Directive (EU) 2023/970 (Articles 5, 9, 10 and 34), the GOV.UK gender pay gap reporting page and 29 CFR 1607.4, checked on 2026-10-30. No proprietary structure is reproduced: ISO 30414:2025 is cited by name, edition and public description only, and no text of the standard is reproduced (official text: ISO, purchase or licensed access: https://www.iso.org/standard/86106.html). The text, mini-case, exhibits, exercises and questions are original; no textbook, published case or course material is copied or paraphrased, and Northfield Outdoor Co. and every person and number in it are fictional. This guide is independent and not affiliated with or endorsed by any business school, publisher, standards body or professional association. It is not legal or employment advice: check the current official text of any rule and consult a qualified professional before you act. Template licence: MIT.