BUS 532
Professor Allen
Fall 1997  



  1. Write your name in the space above. 
  2. You have been given four blank sheets of paper, one for each question that you will answer. Write the number on this sheet on each of the blank sheets. DO NOT WRITE YOUR NAME ON THE SHEETS WITH YOUR ANSWERS. Anonymity will eliminate one potential source of rater error when I grade your exams.  
  3. Answer four of the following five questions on a separate sheet of paper. Feel free to use more than one sheet of paper per question, but start each question on a fresh sheet. 
  4. When you are finished, return this sheet and your answers to me.  
  5. All four answers receive equal weight.  
  6. Your grade on each question will be based upon (1) the accuracy and appropriateness of your answer and (2) the quality of your explanation. The highest marks will go to answers that identify key issues and apply lessons from the course to those issues.  
  7. Do not expect to get much credit for mentioning a key concept without putting it into the context of the question and explaining how that concept applies in that case.  

    I sometimes run into "scavenger hunt" answers in this course, i.e., a long paragraph or list containing many concepts -- a few of which are appropriate for the question at hand, but many of which are not. These answers waste a lot of time (yours and mine) and indicate that you are not sure you know what the right answer is. Scavenger hunts will not get you much credit either. 

  8. You have 2 hours to take the exam.



  1. Explain how the human resource (HR) policies of Lincoln Electric are linked to its overall corporate strategy. Would you say that HR is a source of competitive advantage at Lincoln Electric?  
  2. (a) At the time the case was written, what problems was Lincoln Electric’s system creating? In what kinds of situations would a firm following Lincoln’s policies have difficulty?  (b) Based upon the information you were given about Lincoln Electric’s situation in the 1990s, should it be considering any changes in its HR policies? If so, identify one significant policy that should be changed and explain what change you would recommend and why the change is necessary. Otherwise, explain why it would be unwise for Lincoln Electric to make any changes in its HR policies at this time. 
  3. Pack Consulting has a system for doing performance evaluations (which it borrowed from Intel) that results in the following summary assessments: 

Pack leaders: Limited to top 10 percent 
Meets Pack standards: No limits
Falling behind the Pack: Limited to bottom 10 percent

Why might Intel and Pack Consulting want to have a system that focuses mainly on the very top and very bottom groups of workers? What objectives of performance evaluations are likely to be well served by such an approach? What objectives are likely to be compromised? 

4. Many companies today prefer to give pay increases in the form of a bonus rather than an increase in base salary or hourly wages.  

a) Explain the business and HR logic behind this practice.

b) Give an example of a situation where an increase in base pay would be more appropriate than a bonus for a particular employee.  

5. You are the HR manager for a microchip manufacturing plant and have plans to hire significant numbers of production workers in the coming year. The plant manager is worried that rising drug use in the community will eventually lead to problems in the plant. To date only a handful of employees have ever sought drug abuse counseling through the company medical plan and there have never been any incidents of drug use on the job. However, given the large amount of hiring activity that is likely to take place over the next year, there are concerns about drug use among new employees. 

You must make a recommendation on mandatory drug testing of all new hires as part of their pre-employment physical. Your attorney has certified that you have the right to do this. What questions will you need to address as you make your decision? What information will you need? How will that information be used?