Human Resource Management, Global Edition, 15E Gary Dessler Solution Manual

Type:

Solution Manual

Resource:

Human Resource Management

Edition:

15th Edition

Author(s):

Gary Dessler

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Instructor Manual to Accompany Human Resource Management 15th Edition, Global Edition

By Gary Dessler Florida International University

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Human Resource Management 15th Edition, Global Edition Instructor Manual TABLE OF CONTENTS INTRODUCTION

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TITLE PAGE TABLE OF CONTENTS PREFACE SAMPLE SYLLABUS

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CHAPTER 1: INTRODUCTION TO HUMAN RESOURCE MANAGEMENT

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LECTURE OUTLINE

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WHERE WE ARE NOW INTERESTING ISSUES LEARNING OBJECTIVES ANNOTATED OUTLINE

CHAPTER REVIEW CHAPTER SECTION SUMMARIES

DISCUSSION QUESTIONS INDIVIDUAL AND GROUP ACTIVITIES EXPERIENTIAL EXERCISE APPLICATION CASE CONTINUING CASE MY MANAGEMENT LAB KEY TERMS

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CHAPTER 2: EQUAL OPPORTUNITY AND THE LAW

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DISCUSSION QUESTIONS

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INDIVIDUAL AND GROUP ACTIVITIES EXPERIENTIAL EXERCISE APPLICATION CASE CONTINUING CASE

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MY MANAGEMENT LAB KEY TERMS

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CHAPTER 3: HUMAN RESOURCE MANAGEMENT STRATAGY AND ANALYSIS 3-1 LECTURE OUTLINE

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CHAPTER REVIEW CHAPTER SECTION SUMMARIES

DISCUSSION QUESTIONS INDIVIDUAL AND GROUP ACTIVITIES EXPERIENTIAL EXERCISE APPLICATION CASE CONTINUING CASE HOTEL PARIS MY MANAGEMENT LAB KEY TERMS

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CHAPTER 4: JOB ANALYSIS AND THE TALENT MANAGEMENT PROCESS

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CHAPTER 5: PERSONNEL PLANNING AND RECRUITING

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DISCUSSION QUESTIONS INDIVIDUAL AND GROUP ACTIVITIES EXPERIENTIAL EXERCISE APPLICATION CASE CONTINUING CASE HOTEL PARIS MY MANAGEMENT LAB KEY TERMS

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CHAPTER 6: EMPLOYEE TESTING AND SELECTION

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CHAPTER 7: INTERVIEWING CANDIDATES

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DISCUSSION QUESTIONS INDIVIDUAL AND GROUP ACTIVITIES EXPERIENTIAL EXERCISE APPLICATION CASE CONTINUING CASE HOTEL PARIS MY MANAGEMENT LAB KEY TERMS

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CHAPTER 8: TRAINING AND DEVELOPING EMPLOYEES

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DISCUSSION QUESTIONS INDIVIDUAL AND GROUP ACTIVITIES EXPERIENTIAL EXERCISE APPLICATION CASE CONTINUING CASE HOTEL PARIS MY MANAGEMENT LAB KEY TERMS

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CHAPTER 9: PERFORMANCE MANAGEMENT AND APPRAISAL

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CHAPTER 10: MANAGING CAREERS AND RETENTION

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CHAPTER 11: ESTABLISHING STRATEGIC PAY PLANS

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CHAPTER 12: PAY FOR PERFORMANCE AND FINANCIAL INCENTIVES

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DISCUSSION QUESTIONS INDIVIDUAL AND GROUP ACTIVITIES EXPERIENTIAL EXERCISE APPLICATION CASE CONTINUING CASE

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HOTEL PARIS MY MANAGEMENT LAB KEY TERMS

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CHAPTER 13: BENEFITS AND SERVICES

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CHAPTER 14: BUILDING POSITIVE EMPLOYEE RELATIONS

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CHAPTER 15: LABOR RELATIONS AND COLLECTIVE BARGAINING

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CHAPTER 16: SAFETY, HEALTH, AND RISK MANAGEMENT

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CHAPTER 17: MANAGING GLOBAL HUMAN RESOURCES

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INDIVIDUAL AND GROUP ACTIVITIES EXPERIENTIAL EXERCISE APPLICATION CASE CONTINUING CASE

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CHAPTER 18: MANAGING HUMAN RESOURCES IN SMALL AND ENTREPRENEURIAL FIRMS LECTURE OUTLINE

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Human Resource Management 15th Edition, Global Edition Instructor Manual Edition 15 PREFACE Human Resource Management, 15th edition, Global edition, Instructor Manual provides you, the professor with a thorough supplement tool to utilize alongside the textbook. The Instructor Manual has been integrated with Pearson’s MyManagementLab. Each chapter section features the following: Lecture Outline, Where Are We Now, Interesting Issues, Annotated Outline, Chapter Review, Chapter Section Summaries, Discussion Questions, Individual and Group Activities, Experiential Exercises, Application Case, Continuing Case, MyManagementLab, and Key Terms.

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Human Resource Management Sample Syllabus Professor: Professor Name Telephone: Professor Telephone Email: Professor@univesity.edu

Prerequisite: If Applicable Credit Hours: 3 hours Term: Semester

Course Description: This course is an introduction to the human resource management (HRM) function and related elements and activities to examine the role of the human resource professional as a strategic partner in managing today’s organizations. Key functions such as recruitment, selection, development, performance management, appraisal, retention, compensation, and labor relations are examined. Implications of the legal and global environments are examined and current issues such as employee engagement and employee health and safety are analyzed. Emphasis is placed on the modern day importance of HRM at the corporate level as well as the importance of HRM in small businesses and entrepreneurial firms.

Learning Objectives:

Upon satisfactory completion of this course, students will be able to: 1. Define the roles and activities of a company's human resource management function.

2. Discuss how to strategically plan for the human resources needed to meet organizational goals and objectives.

3. Define the process of job analysis and discuss its importance as a foundation for human resource management practice.

4. Compare and contrast methods used for selection and placement of human resources.

5. Describe the steps required to analyze, develop, implement, and evaluate an employee training program.

6. Identify and explain the issues involved in establishing compensation systems.

7. Identify how new technology, such as digital and social media, is influencing human resource management.

8. Discuss what companies should do to compete in the global marketplace.

9. Identify the importance of the process of human resource management functions in small businesses and entrepreneurial firms.

Instructional Materials: Dessler, G., (2017). Human Resource Management. (Ed. 15.) Hoboken, NJ: Pearson Education, Inc.

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Methodology: The method of study for this course will include any combination of lecture and discussion, problemsolving, small groups, case studies, outside research, roleplaying, and digital and social media presentations as well as assignments from My Lab. Assessment Criteria: The following criteria are applied in determining grades for assignments: A (90-100%): Superior achievement—exemplary work which shows exceptionally high quality and careful attention to the objectives and expectations of the assignment.

B (80-89%): Commendable achievement—work which demonstrates a clear understanding to the objectives and expectations of the assignment. Though not superior in quality, the weaknesses of the achievement do not seriously impair the otherwise high quality of the work.

C (70-79%): Satisfactory achievement—work which demonstrates consistent competence in meeting the requirements of the assignment. Though obvious weaknesses are present, the work provides clear evidence of a satisfactory level of competence.

D (60-69%): Marginal achievement—work which shows persistent difficulty in meeting the requirements of the assignment. Though the work does not thoroughly fail to meet these requirements, it is seriously impaired by carelessness, disorganization, and/or inadequate content.

F (below 60%): Unsatisfactory achievement—work which is unacceptable as evidence of minimal accomplishment.

Attendance Policy:

Student learning is improved by regular attendance and participation in all classes. As part of their preparation for a career, students are expected to maintain good attendance.

In a professional environment, employees are expected to be regular and punctual in attendance and to report to their employer if they will be absent.

Make-Up Policy: The eligibility of a student to make up class work, assignments, and tests missed due to absences is at the discretion of the Professor. Students are expected to understand each instructor’s policy on make-up work as this is presented in the instructor’s syllabus. Some programs have policies regulating make-up work in specific courses. If a final examination is canceled because of a weather emergency or other unavoidable circumstance, the examination will be administered during the following week on the same day of the week and at the same time as originally scheduled or at a time agreed upon by the students and the instructor, provided that no other properly scheduled class or examination is affected.

Academic Integrity:

As an institution which values learning through academic inquiry, and must ensure that its students clearly understand the value, process, and use of research, as well as the consequences of misconduct in presenting or otherwise employing the results of research, students must accurately represent and attribute ideas and expressions belonging to others, and completely and accurately document all resources in which those ideas or ..

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expressions are found. Whether quoted, paraphrased, summarized, or otherwise represented, every idea or expression beyond the realm of common knowledge or the student’s own invention must be appropriately attributed and its source carefully documented.

Method for Evaluating Students: Weekly Quizzes My Lab Assignments Individual, Group and Case Assignments Chapter Discussion Questions Hotel Paris Case Midterm Examination Final Examination

10% 15% 15% 15% 15% 15% 15%

MY LAB: We will be using MyLab assignments in this class. Go to mymanagementlab.com for Auto-graded writing questions as well as noted discussion questions and all other assignments as indicated in the course outline.

Course Outline Week Week 1

Chapter Chapter 1: Introduction to Human Resource Management

Chapter 2: Equal Opportunity and the Law

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Week 2

Week 3

Week 4

Chapter 3: Human Resource Management Strategy and Analysis

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Chapter 4: Job Analysis and the Talent Management Process

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Chapter 5: Personnel Planning and Recruiting

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Assignment Complete the Discussion Questions at the End of the Chapter* Complete the Experiential Exercise: HR and “The Profit”

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MyLab Assignment Continuing Case: Carter Cleaning Company – (Introduction)

Complete the Discussion Questions at the End of the Chapter* Complete the Application Case: An Accusation of Sexual Harassment in Pro Sports

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Continuing Case: Carter Cleaning Company – A Question of Discrimination

Complete the Discussion Questions at the End of the Chapter* Complete the Experiential Exercise: Developing an HR Strategy for Starbucks

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Complete the Discussion Questions at the End of the Chapter* Complete the Application Case: Talent Management at Dubai Airport

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Continuing Case: Carter Cleaning Company – The High-Performance Work System Improving Performance at The Hotel Paris: The Hotel Paris International Continuing Case: Carter Cleaning Company – The Job Description Improving Performance at The Hotel Paris: The New Job Descriptions

Complete the Discussion Questions at the End if the Chapter*

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Continuing Case: Carter Cleaning Company – Getting Better Applicants

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Week

Chapter •

Week 5

Chapter 6: Employment Testing and Selection

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Chapter 7: Interviewing Candidates

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Week 6

Chapter 8: Training and Developing Employees

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Week 7

Week 8 Week 9

Chapter 9: Performance Management and Appraisal

Midterm Exam Chapters 1-9 Chapter 10: Managing Careers and Retention

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Week 10

Chapter 11: Establishing Strategic Pay Plans

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Week 11

Chapter 12: Pay for Performance and Financial Incentives

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Assignment Complete the Application Case: Ya Kun Kaya International

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Complete the Discussion Questions at the End of the Chapter* Complete the Experiential Exercise: A Test for a Reservations Clerk

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Complete the Discussion Questions at the End of the Chapter* Complete the Applications Case: Job Interview Challenges or Oddest Job Interview Questions

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Complete the Discussion Questions at the End of the Chapter* Complete the Applications Case: The Mentorship Program at TVH

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Complete the Discussion Questions at the End of the Chapter* Complete the Experiential Exercise: Grading the Professor

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Complete the Discussion Questions at the End of the Chapter* Complete the Application Case: Malaysia’s War On Talent

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Complete the Discussion Questions at the End of the Chapter* Complete the Application Case: Eighty-one Years to Close the Gender Gap Complete the Discussion Questions at the End of the Chapter* Complete the Experiential

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MyLab Assignment Improving Performance at The Hotel Paris: The New Recruitment Process Continuing Case: Carter Cleaning Company – Honesty Testing Improving Performance at the Hotel Paris: New Employee Testing Program Continuing Case: Carter Cleaning Company – The Better Interview Improving Performance at The Hotel Paris: The New Interviewing Program

Continuing Case: Carter Cleaning Company – The New Training Program Improving Performance at The Hotel Paris: The New Training Program Continuing Case: Carter Cleaning Company – The Performance Appraisal Improving Performance at The Hotel Paris: The New Performance Management System

Continuing Case: Carter Cleaning Company – The Career Planning Program Improving Performance at The Hotel Paris: The New Career Management System Continuing Case: Carter Cleaning Company – The New Pay Plan Improving Performance at The Hotel Paris: The New Compensation Plan Continuing Case: Carter Cleaning Company – The Incentive Plan Improving Performance at

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Week

Chapter

Week 12

Chapter 13: Benefits and Service

• •

Chapter 14: Building Positive Employee Relations

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Week 13

Chapter 15: Labor Relations and Collective Bargaining

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Week 14

Chapter 16: Employee Safety and Health

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Week 15

Chapter 17: Managing Global Human Resources

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Week 16

Chapter 18: Managing Human Resources in Small and Entrepreneurial Firms Accumulative Final Exam Chapters 1-18

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Assignment Exercise: Motivating the Sales Force at Express Auto Complete the Discussion Questions at the End of the Chapter* Complete the Application Case: $5 Billion Industry under Threat Complete the Discussion Questions at the End of the Chapter* Complete the Application Case: Enron, Ethics, and Organizational Culture

Complete the Discussion Questions at the End of the Chapter* Complete the Experiential Exercise: The Organizing Campaign at Sam’s Cupcake Shop Complete the Discussion Questions at the End of the Chapter* Complete the Application Case: A Safe and Healthy Kitchen at Edmund Café Complete the Discussion Questions at the End of the Chapter* Complete the Experiential Case: Europe—It’s All About Perspectives Complete the Discussion Questions at the End of the Chapter* Complete the Application Case: Netflix Breaks the Rules

MyLab Assignment The Hotel Paris: The New Incentive Plan • Continuing Case: Carter Cleaning Company – The New Benefit Plan • Improving Performance at The Hotel Paris: The New Benefits Plan • Continuing Case: Carter Cleaning Company – Guaranteeing Fair Treatment • Improving Performance at The Hotel Paris: The Hotel Paris’s New Ethics, Justice, and Fair Treatment Process • Continuing Case: Carter Cleaning Company – The Grievance • Improving Performance at The Hotel Paris: New Labor Relations Practices • •

• • • •

Continuing Case: Carter Cleaning Company – The New Safety Program Improving Performance at The Hotel Paris: The New Safety and Health Program Continuing Case: Carter Cleaning Company – Going Abroad Improving Performance at the Hotel Paris: Managing Global Human Resources Continuing Case: Carter Cleaning Company Improving Performance at The Hotel Paris: The New HRIS

* Questions associated with the following section will have varying student answers: Experiential Exercises.

For MyManagementLab: go to mymanagementlab.com to complete the problems marked with this icon in the book.

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Part One Introduction Chapter 1 Introduction to Human Resource Management Lecture Outline: What Is Human Resource Management?

Why Is HR Management Important to All Managers?

Line and Staff Aspects of Human Resource Management Line Managers’ Human Resource Management Responsibilities The Human Resource Department The Trends Shaping Human Resource Management Workforce Demographics and Diversity Trends Trends in How People Work Improving Performance: At Work: HR as a Profit Center Globalization Trends Economic Trends Technology Trends Today’s New Human Resource Management A Brief History of Personnel/Human Resource Management Distributed HR and the New Human Resource Management Trends Shaping HR: Digital and Social Media A Quick Summary HR and Strategy Improving Performance: The Strategic Context HR and Performance HR and Performance and Sustainability HR and Employee Engagement The New Human Resource Manager HR and the Manager’s Skills HR and Ethics HR Manager Certification HR and the Manager’s Human Resource Philosophy The Plan of This Book The Basic Themes and Features Practical Tools for Every Manager Chapter Contents Overview Part 1: Introduction Part 2: Recruitment, Placement, and Talent Management Part 3: Training and Development Part 4: Compensation Part 5: Enrichment Topics in Human Resource Management The Topics Are Interrelated Chapter Review ..

Chapter 1: Introduction to Human Resource Management

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Where Are We Now… The purpose of this chapter explains what Human Resource Management is, and why it’s important to all managers. We’ll see that human resource management activities such as hiring, training, appraising, compensation, and developing employees are part of every manager’s job.

We’ll see that human resource management is also a separate function. The main topics we’ll cover will include what is human resource management, the trends shaping human resource management, human resource management today, the new human resource manager, and the plan of the book.

Interesting Issues: For many people today Elance (www.elance.com) symbolizes much of what’s new in human resource management. Millions of freelancers from graphic designers to translators, accountants, and lawyers register on this site. Employers then use Elance to find, screen, hire, and pay the talent they need in more than 180 countries.

Learning Objectives: 1-1.

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Explain what human resource management is and how it relates to the management process.

Briefly discuss and illustrate each of the important trends influencing human resource management.

List and briefly describe “distributed HR” and other important aspects of human management today.

List at least four important human resource manager competencies.

Outline the plan of this book.

Annotated Outline: I. What Is Human Resource Management? – to understand what human resource management is, it’s useful to start with what managers do. Most writers agree that managing involves performing five basic functions: planning, organizing, staffing, leading, and controlling. These functions in total represent the management process.

A. Why Is HR Management Important to All Managers?

1. Avoid Personnel Mistakes – managers don’t want to make personnel mistakes, like not having employees doing their best, hiring the wrong person for the job, experiencing high turnover, having to be in court due to discriminatory actions, being cited for unsafe practices, letting a lack of training undermine department effectiveness, or committing any unfair labor practices.

2. Improving Profits and Performance – to help ensure that you get results – through people.

3. You May Spend Some Time as an HR Manager 4. HR for Small Business

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B. Line and Staff Aspects of Human Resource Management – in organizations, line authority traditionally gives managers the right to issue orders to other managers or employees. Line authortiy creates a superior (order giver) – subordinate (order receiver) relationship. Staff authority gives a manager the right to advise other managers or employees. It creates an advisory relationship.

C. Line Managers’ Human Resource Management Responsibilities – line managers do have many human resources duties such as the following: a. Placing the right person in the right job b. Starting new employees in the organization (orientation) c. Training employees for jobs that are new to them d. Improving the job performance of each person e. Gaining creative cooperation and developing smooth working relationships f. Interpreting the company’s policies and procedures g. Controlling labor costs h. Developing the abilities of each person i. Creating and maintaining departmental morale j. Protecting employees’ health and physical conditions D. The Human Resource Department – provides specialized assistance and knowledge.

1. New Approaches to Organizing HR a. Centralized HR – units whose employees are shared by all the companies departments to obtain advice on matters b. Shared Services HR – teams that offer services through intranets or centralized call centers c. Corporate HR – teams within a company that assist top management in top-level issues d. Embedded HR – teams that have a HR generalist (also known as “relationship managers” or “HR business partners”) assigned to functional department e. Centers of expertise – specialized HR consulting firms within the company II. The Trends Shaping Human Resource Management – trends are occurring in the environment of human resource management that are changing how employers get their human resource management task done. These trends include workforce trends, trends in how people work, technological trends, and globalization and economic trends.

A. Workforce Demographics and Diversity Trends – the composition of the workforce will continue to change over the next few years; specifically it will continue to become more diverse with more women, minority group members, and older workers in the workforce.

B. Trend in How People Work – work has shifted from manufacturing jobs to service jobs in North America and Western Europe. Today, over twothirds of the U.S. workforce is employed in producing and delivering services, not products.

1. On-Demand Workers

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2. Human Capital C. Globalization Trends – refers to companies extending their sales, ownership, and/or manufacturing to new markets abroad.

D. Economic Trends – Figure 1-2 shows the gross national product (GNP), a measure of the United States of America’s total output. Figure 1-3 shows that during this period, home prices leaped as much as 20% per year.

Unemployment remained docile at about 4.7%. Then around 2007-2008, all these measures fell off the cliff. GNP fell, home prices dropped by 10% or more, and unemployment nation-wide soon rose to more than 10%.

1. Labor Force Trends – the labor force in America is growing more slowly than expected. Mostly because with baby boomers aging, the “labor force participation rate” is declining—in other words, the percent of the population that wants to work is declining.

2. The Unbalanced Labor Force –although unemployment rate is dropping, it’s doing so in part because fewer people are looking for jobs (remember the shrinking labor participation rate). Demands for workers is unbalanced.

E. Technology Trends – it may be techology that most characterizes the trends shaping human resources management today. Five main types of digital technologies are driving this transfer of functionality from HR professionals to automation.

1. Social Media – employers increasingly use tools such as Twitter, Facebook, and LinkedIn to recruit new employees.

2. Mobile Applications – used by employers, for instance, to monitor employee location and to provide digital photos at the facility clock-in location to identify workers.

3. Gaming – enables employers to inject features such as feedback, fun, and objectives into training, performance appraisal, and recruiting.

4. Cloud Computing – a more intutive user interface that enables employers to monitor and report on things like a team’s goal attainment and to provide real-time evaluative feedback.

5. Data Analytics – uses statistical techniques, algorithms, and problemsolving to identify relationships among data for the purpose of solving particular problems; it is also called talent analytics.

III. Today’s New Human Resource Manager A. A Brief History of Personnel/Human Resource Management – “Personnel management” is not new. Ancient armies and organized efforts always required attracting, selecting, training, and motivating workers. But tasks like these were mostly just part of every manager’s job, something that lasted in most countries until the late 1800s. By 1900, employers set up the first “hiring offices.” New union laws in the 1930s added “Helping the employer deal with unions” to personnel’s tasks.

New equal employment laws in the 1960s made employers more reliant on personnel management to avoid discrimination claims. By the 1970s, globalization made gaining a competitive edge through engaged employees and therefore, personnel management important. Today, economic, demographic, and technological trends including mobile and social media are changing how employers recruit, select, train,

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appraise, and motivate employees. In a sense, a new human resource manager is emerging.

B. Distributed HR and the New Human Resource Management – more and more human resources management tasks are being redistributed from a central HR department to the company’s employees and line managers.

C. Trends Shaping HR: Digital and Social Media –the new human resource management tools that are changing how people look for jobs, and how companies recruit, retain, pay, and train employees. Examples are career sites, recruitment sites, and talent analytics tools.

D. A Quick Summary – Figure 1-4 illustrates a summary of what trends mean for human resource management.

E. HR and Strategy – today’s human resources managers are more involved in longer-term, strategic “big picture” issues.

F. Improving Performance: The Strategic Context – illustrates building L.L.Bean.

Today’s employers want their HR managers to put in place practices that will produce the employee behaviors that help the company achieve its strategic aims.

G. HR and Performance – employers expect their human resources manager/”people experts” to spearhead employee performance-improvement efforts. There are three levers that can be applied: HR department lever, employee cost lever, and strategic results lever.

1. HR and Performance Measurement – metrics are used to validate.

2. HR and Evidence-Based Management – the use of data, facts, analytics, scientific rigor, critical evaluation, and critically evaluated research/case studies to support human resource management proposals, decisions, practices, and conclusions. It’s using the best-available evidence in making decisions about the human resources practices being focused on. a. Actual measurements b. Existing data c. Research studies d. High-performance work systems 3. HR and Adding Value – boosting profits and performance.

H. HR and Performance and Sustainablitiy – company’s efforts being measured not only by performance but also “substainable” by which they mean judged not just on profits, but on their environmental and social performance as well.

IV. The New Human Resource Manager – it’s more complicated being a human resource manager today. It requires new competencies and skills. The Society of Human Resources Management (SHRM) has itemized the behaviors and competencies (with definitions) that today’s HR manager should be able to exhibit: 1. Leadership & Navigation – the ability to direct and contribute to initiatives and processes within the organization.

2. Ethical Practice – the ability to integrate core values, integrity, and accountability throughout all organizational and business practices.

3. Business Acumen – the ability to understand and apply information with which to contribute to the organization’s strategic plan.

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4. Relationship Management – the ability to manage interactions to provide service and to support the organization.

5. Consultation – the ability to provide guidance to organizational stakeholders.

6. Critical Evaluation – the ability to interpret information with which to make business decisions and recommendations.

7. Global & Cultural Effectiveness – the ability to value and consider the perspective and backgrounds for all parties.

8. Communication – the ability to effectively exchange information with stakeholders.

9. SHRM also says HR Managers are to have command of the basic functional areas of HR such as the following: a. Functional Area #1: Talent Acquisition & Retention b. Functional Area #2: Employee Engagement c. Functional Area #3: Learning & Development d. Functional Area #4: Total Rewards e. Functional Area #5: Structure of the HR Function f. Functional Area #6: Organizational Effectiveness & Development g. Functional Area #7: Workforce Management h. Functional Area #8: Employee Relations i. Functional Area #9: Technology & Data j. Functional Area #10: HR in the Global Context k. Functional Area #11: Diversity & Inclusion l. Functional Area #12: Risk Management m. Functional Area #13: Corporate Social Responsibility n. Functional Area #14: U.S. Employment Laws & Regulations o. Functional Area #15: Business & HR Strategy A. HR and the Manager’s Skills B. HR and Ethics C. HR Manager Certification – certifications are used to demonstrate mastery of contemporary human resource management knowledge and competencies. HR Certification Institute (HRCI) is an independent certifying organization for human resource professionals. HRCI awards several credentials: 1. Professional in Human Resources (PHR) 2. Senior Professional in Human Resources (SPHR) D. HR and the Manager’s Human Resources Philosophy – the basic assumptions you make about people are – Can they be trusted? Do they like their work? And other assumptions together comprise the philosophy of human resources. Another way the philosophy is created is it should evolve as knowledge and experience is accumulated. Also the organization’s top management molds the philosophy.

V. The Plan of This Book A. The Basic Themes and Features B. Practical Tools for Every Manager 1. Responsibility of every manager 2. Use human resource management techniques to improve performance, productivity, and profitability.

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a. Improving Performance: HR Tools for Line Managers and Small Businesses b. Improving Performance: HR as Profit Center c. Improving Performance: HR Practices Around the Globe d. Improving Performance Through HRIS e. Diversity Counts 3. How digital and high-tech trends are shaping human resource management 4. Understand how the employer’s human resource management policies and practices produce the employee skills and performance the company needs to achieve its strategic aims.

C. HR is the responsibility of every manager. a. HR managers must defend plans and contributions in measurable terms. b. HR systems must be designed to achieve the company’s strategic aims.

VI. Chapter Contents Overview Part 1: Introduction Chapter 1: Introduction to Human Resource Management Chapter 2: Equal Opportunity and the Law Chapter 3: Human Resource Management Strategy and Analysis Part 2: Recruitment, Placement, and Talent Management Chapter 4: Job Analysis and Talent Management Chapter 5: Personnel Planning and Recruiting Chapter 6: Employee Testing and Selection Chapter 7: Interviewing Candidates Part 3: Training and Development Chapter 8: Training and Developing Employees Chapter 9: Performance Management and Appraisal Chapter 10: Managing Careers Part 4: Compensation Chapter 11: Establishing Strategic Pay Plans Chapter 12: Pay for Performance and Financial Incentives Chapter 13: Benefits and Services Part 5: Enrichment Topics in Human Resource Management Chapter 14: Build Positive Employee Relations Chapter 15: Labor Relations and Collective Bargaining Chapter 16: Employee Safety and Health Chapter 17: Managing Global Human Resources Chapter 18: Managing Human Resources in Small and Entrepreneurial Firms The Topics Are Interrelated

Chapter Review Chapter Section Summaries:

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All managers should be able to answer, What is human resources management, and why it’s important.

The trends shaping human resource management.

New digital technologies such as mobile and social media will make human resource management today more distributed.

To do so, the human resource managers need new competencies.

Understanding the overall plan of this book.

Discussion Questions: 1-1: Explain what HR management is and how it relates to the management process.

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

1-2: Give examples of how HR management concepts and techniques can be of use to all managers.

HR management concepts and techniques can help all managers to ensure that they get results – through others. These concepts and techniques also help managers avoid common personnel mistakes such as: hiring the wrong person; experiencing high turnover; finding your people not doing their best; wasting time with useless interviews; facing lawsuits because of discriminatory actions; receiving citations under federal occupational safety laws for unsafe practices; having some employees think their salaries are unfair and inequitable relative to others in the organization; allowing a lack of training to undermine a department’s effectiveness, and committing any unfair labor practices.

1-3: Explain the different types of trends that have impacted HR management. Give an example of each.

The various external and internal trends that impacted HRM would include technological advances such as the adoption of IT systems in improving work processes by having efficient and effective communications and the implementation of Human Resources Information Systems (HRIS); trends in the nature of work such as changes in work arrangements i.e. flexi-hours, contract workers, part-time, temporary, etc. usually caused by the advancement of communication tools and the changes in the structure of organization due to efficient communication channels; demographic and workforce trends like increase in young graduates with different opinions, values, and work ethics entering the workforce raising the chances of a lack of consensus; indebtedness and deregulation such as focusing of resources on other facets of the company due to reduced cost of running a company facilitated by flexi-hours; and economic challenges and trends such as changes in government policies, inflation, rising costs, and weakened currency globally affecting decisions made by organizations.

1-4: Compare the authority of line and staff managers. Give examples of each.

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This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

Individual and Group Activities: 1-5: Working individually or in groups, create an outline showing the different responsibilities expected of HR managers today. With the help of examples explain why you think these duties are considered important in organizations. Present your findings to the class.

These days HR managers have different responsibilities. Common responsibilities include placing the right person in the right job, providing an orientation for new employees in the organization, training employees according to their needs, improving the job performance of each person, gaining cooperation and developing smooth working relationships, communication and interpreting company’s policies and procedures, controlling labor costs, developing the abilities of each person, creating and maintaining department morale, and protecting employees’ health and physical condition.

For larger organizations, these responsibilities are carried out with assistance from other employees in the HR department. Typically, an HR executive is in charge of 100 employees. In small organizations, line managers may carry out all the personnel tasks unassisted. As the organization grows, they may need the assistance, specialized knowledge, and advice of a separate human resource staff. Because of all the challenges that may affect the company’s direction, human resource management has become a part of every manager’s job.

1-6: Working individually or in groups, describe how HR management activities may be different for small businesses. Visit a few local businesses and use them to illustrate your points. Back in class, discuss your observations.

The answers will vary according to what small businesses students have in their areas.

1-7: Consider the different roles and responsibilities you have in your life, and what each of them require of you. In this context, working individually or in groups, discuss the different roles, functions, and aims of HR management in an organization.

Human resource management activities may differ as they depend on organizations’ core competencies as well as the type of market the organization is a part. For small businesses, certain work processes are omitted as there are simply not enough resources or space available in the company. For this question, students may provide answers followed by various examples.

1-8: Working individually or in groups, compare and contrast the differences in the responsibilities of the HR departments of big and small organizations. What are the similarities in their responsibilities? Do you think HR management is integral to every manager’s job? ..

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Students’ answers may vary for this question. It really depends on whether the departments have a functional role or a support role. It also depends on the types of resources and plans the organization has.

1-9: Based on your personal experiences, list ten examples showing how you did use (or could have used) human resource management techniques at work or school.

Depending on the degree of their work experience, students will cite a wide range of examples, possibly including some of the following: 1) situations where they have improved the efficiency of their work through the use of technology made available to them through human resource systems; 2) employed the services of non-traditional workers (or been employed as a non-traditional worker); 3) developed metrics to measure how they have added value in terms of human resource contributions; 4) kept themselves abreast of employment laws in order to minimize risk to their company; 5) utilized selfservice HR technology; 6) employed high-performance work system concepts in their job/department.

1-10: Suppose you were hired by an IT company called Trix Ltd. as the director of human resources. Trix Ltd. began as a small business established by two brothers in a small town that dealt with repairing and customizing computers. While the business grew over the years, keeping in line with its expansion plans, it was unable to compete effectively in service delivery. Assessing the issue, you find that Trix employees didn’t receive a proper orientation on joining and weren’t trained in its processes. You also realize that the sales support department experienced the highest turnover. Similar frustrations were expressed by employees across departments, most employees citing overwork and stress as the biggest problems.

Thomas, co-founder of Trix, recently attended a talk on a computer system that would enable orders to be processed more efficiently. The long-term benefits of this system included cost reduction, quick deliveries, and an increase in overall responsiveness to customer requirements. The total investment for this system amounts to $1 million. Thomas felt that this system would fix some of the existing problems at Trix. He brought you in to help sort out the HR issues, and you began by forming a new management team. The business expansion caused changes in job functions, tasks, and coordination between departments. Thus, you established line managers to help with your HR duties.

Working individually or in groups, list the duties of line managers at Trix Ltd. Would creating a management team be the correct move? Explain the trends that impacted Trix Ltd.’s overall strategy The formation of a management team may be relevant especially when it comes to ensuring that there are sufficient resources to execute plans. It is like a checks and balance process. The trends that impact Trix Ltd’s overall strategy would include both internal and external environment.

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1-11: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

Experiential Exercise: HR and “The Profit” Purpose: The purpose of this exercise is to provide practice in identifying and applying the basic concepts of human resource management by illustrating how managers use these techniques in their day-to-day jobs.

Required Understanding: Be thoroughly familiar with the material in this chapter, and with at least one or two episodes of CNBC’s The Profit with Marcus Lemonis http://www.tv.com/shows/the-profit/watch/. (Access a library of past episodes at URLs as http://www.cnbc.com/live-tv/the-profit) How to Set Up the Exercise/Instructions: • Divide the class into teams of several students.

• Read this: As you may know by watching billionaire Marcus Lemonis, as he works with actual small businesses in which he’s taken an ownership share, human resource management often plays an important role in what he and the business owners and managers need to do to be successful. For example, at Grafton Furniture, a lack of clarity about who does what (a lack of up-to-date job descriptions) leads to inadequate supervision of some ongoing orders and to lower profit margins. Questions also arise at Gafton about, for instance, the effectiveness of the training that some managers (including the owner’s son) have received.

• Watch several of these shows (or reruns of the shows), and then meet with your team and answer the following questions: 1-12: List at least two HR examples featured on the shows. In your opinion, do these represent ideal practices? What lessons can be learned from the interactivity of HR functions on the shows?

Students may have differing views in this respect and may well perceive the approaches made in the shows to be inappropriate and inapplicable in some circumstances. Without doubt, the approaches are specific to the culture and to the situations. However, the importance of the connectivity and interactive nature of the HR functions is important to recognize. Each part of the HR function needs to align with the strategic objectives of the employer and this alignment is not a usual happening.

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1-13: Would you be more inclined, or not, to take the same HR approaches as those seen in the shows?

Student views will differ according to their understanding of the functions and the role of an HR in an organization. It is important for them to understand that it is not just the situation or the characters involved that determine how a situation should be handled.

There are regulations and guidelines that differ from country to country that may well determine the interaction and decision-making as well as the processes that will need to be followed.

1-14: To what extent do you think that the HR situations on the shows are representative of the realities of HR management? Consider your own country and employer– employee interactions in domestic businesses.

Legislation and regulation as well as traditions, cultures, and other factors will determine the way in which interactions are handled and whether the examples in the shows are directly relevant to the student. There will be some key differences as well as clear similarities. The students should be able to notice the main ones and comment on whether they are representative.

1-15: Present your conclusions to the class.

Students should be given the opportunity to present their conclusions to the rest of the class. Each group should be given a limited time to do this and then the class, as a whole, should be encouraged to discuss their conclusions and reach an agreed view on the shows and the questions.

Application Case: Jack Nelson’s Problem 1-16: What do you think was causing some of the problems in the bank home office and branches?

There is clearly a problem with communication, and the effects are felt in the area of employee commitment. Additional contributing factors include the lack of consistency in the policies and procedures of various locations. There is no cohesiveness to the staffing activities of this organization.

1-17: Do you think setting up an HR unit in the main office would help?

Of course it would! Since there are HR-related problems both in the home office and in the branches, it is clear that an HR unit in the main office would help to coordinate HR activities in the branches.

1-18: What specific functions should an HR unit carry out? What HR functions would then be carried out by supervisors and other line managers? What role should the Internet play in the new HR organization?

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There is room for quite a bit of variation in the answers to this question. Our suggested organization would include: HR Unit: conducting job analyses, planning labor needs, recruiting, providing advice and training in the selection process, handling orientation of new employees, managing wage and salary administration, managing incentives and benefits, providing and managing the performance appraisal process, facilitating organization-wide communications, and providing training and development services.

Supervisors and Other Line Managers: interviewing and selecting job candidates, training new employees, appraising performance, ensuring departmental and personal communications, and providing training and development. Internet and HR: shift some activities to specialized online service portals and/or providers.

Continuing Case: Carter Cleaning Company – Introduction 1-19: Make a list of 5 specific HR problems you think Carter Cleaning will have to grapple with.

Potential answers could include the following: 1) Staffing the company with the right human capital by identifying the skills and competencies that are required to perform the jobs and the type of people that should be hired. Sourcing candidates and establishing an efficient and effective recruiting and selection process will be an important first step.

2) Planning and establishing operational goals and standards and developing rules and procedures to support business goals and strategies. Failure to do so will result in a lack of clarity around performance expectations down the line as each store becomes operational.

3) Implementing effective performance management by setting performance standards, offering high-quality appraisal of performance, and providing ongoing performance coaching and feedback to develop the abilities of each person and support positive employee relations.

4) Designing an effective compensation system that will give the company the ability to attract, retain, and motivate a high-quality workforce, and providing appropriate wages, salaries, incentives and benefits. A poorly designed system will result in recruiting problems, high turnover rates, and low employee morale.

5) Training and developing employees both at the management and employee level to be able to perform the job to meet the performance expectations. This should include a new hire orientation program as well as a program for ongoing training and development.

Lack of attention to this component may result in errors, increased operational costs, high turnover, and morale problems.

1-20: What would you do first if you were Jennifer?

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Answers will vary. However, probably the most important first step is to ensure that the staffing process is well designed and targeting the right mix of skills and abilities needed among candidates. Thoroughness is necessary when analyzing the requirements of each job, developing a complete job description for each role, and sourcing candidates that meet those requirements. Significant time should be invested in the hiring process to ensure that potential employees meet the requirements and possess the skills and abilities to do the job.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 1-21: From a practical point of view, why is it important for all managers and future managers to have a good command of human resource management concepts and techniques?

1-22: Think of some companies that you are familiar with or that you’ve read about where you think the human resource managers have been successful in “adding value.” What do the HR managers do to lead you to your conclusion?

Key Terms: Organization – A group consisting of people with formally assigned roles who work together to achieve the organization’s goals.

Manager – Someone who is responsible for accomplishing the organization’s goals, and who does so by managing the efforts of the organization’s people.

Managing – To perform five basic functions: planning, organizing, staffing, leading, and controlling.

Management Process – To perform the five basic functions: planning, organizing, staffing, leading, and controlling.

Human Resource Management (HRM) – The process of acquiring, training, appraising, and compensating employees, and of attending to their labor relations, health and safety, and fairness concerns.

Authority – The right to make decisions, to direct the work of others, and to give orders.

Line Authority – Traditionally gives managers the right to issue orders to other managers or employees.

Staff Authority – Gives a manager the right to advise other managers or employees.

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Line Manager – A manager who is authorized to direct the work of subordinates and is responsible for accomplishing the organization’s tasks.

Staff Manager – A manager who assists and advises line managers.

Strategic Human Resource Management – Formulating and executing human resource policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic aims.

Employment Engagement – The extent to which an organization’s employees are psychologically involved in, connected to, and committed to getting their jobs done.

Ethics – The principles of conduct governing an individual or a group; specifically, the standards you use to decide what your conduct should be.

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Part One Introduction Chapter 2 Equal Opportunity and the Law Lecture Outline: Equal Opportunity Laws Enacted From 1964 to 1991 Title VII of the 1964 Civil Rights Act Executive Orders Equal Pay Act of 1963 Age Discrimination in Employment Act of 1967 Vocational Rehabilitation Act of 1973 Pregnancy Discrimination Act of 1978 Federal Agency Guidelines Early Court Decisions Regarding Equal Employment Opportunity The Laws Enacted from 1991 to the Present The Civil Rights Act of 1991 The Americans with Disabilities Act Uniformed Services Employment and Reemployment Rights Act Genetic Information Nondiscrimination Act of 2008 (GINA) State and Local Equal Employment Opportunity Laws In Summary: Religious and Other Types of Discrimination Recent Trends in Discrimination Law Sexual Harassment Trends Shaping HR: Digital and Social Media Defenses Against Discrimination Allegations The Central Role of Adverse Impact Bona Fide Occupational Qualification Business Necessity Know Your Employment Law The EEOC Enforcement Process Voluntary Mediation Mandatory Arbitration of Discrimination Claims Improving Performance: HR Tools for Line Managers and Small Businesses Diversity Management Potential Threats to Diversity Improving Performance: HR as a Profit Center Managing Diversity Improving Performance: HR as a Profit Center Implementing the Affirmative Action Program Reverse Discrimination Chapter Review

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Where Are We Now… The purpose of this chapter is to provide you with the knowledge to deal effectively with equal employment questions on the job. The main topics we cover are equal opportunity laws enacted from 1964 to 1991, the laws enacted from 1991 to the present, defenses against discrimination allegations, illustrative discriminatory employment practices, the EEOC enforcement process, and diversity management.

Interesting Issues: A university recently fired its career services director after years of good evaluations. This happened about a year after his new boss gave him his first poor evaluation while peppering him with questions like “When are you going to retire?” The dismissed employee soon sued for age discrimination. We will see how to avoid such problems.

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Explain the importance of and list the basic features of Title VII of the 1964 Civil Rights Act and at least five other equal employment laws.

Describe post-1990 employment laws including Americans with Disabilities Act and how to avoid accusations of sexual harassment at work.

Illustrate two defenses you can use in the event of discriminatory practice allegations, and cite specific discriminatory personnel management practices in recruitment, selection, promotion, transfer, layoffs, and benefits.

List the steps in the EEOC enforcement process.

Discuss why diversity management is important and how to install a diversity management program.

Annotated Outline: I. Equal Opportunity Laws Enacted from 1964 – 1991 The Fifth Amendment to the U.S. Constitution (ratified in 1791) states that, “no person shall be deprived of life, liberty, or property, without due process of the law.” The Thirteenth Amendment (1865) outlawed slavery, and courts have held that it bars racial discrimination. The Civil Rights Act of 1866 gives all persons the same right to make and enforce contracts and to benefit from U.S. laws.

A. Title VII of the 1964 Civil Rights Act – was one of the first of these laws. Title VII bars discrimination on the part of most employers, including all public or private employers of 15 or more persons and most labor unions. Title VII also established the Equal Employment Opportunity Commission (EEOC) to administer and enforce the Civil Rights Act at work. The EEOC consists of five members appointed by the president with the advice and consent of the Senate.

1. The act says it is unlawful to fail or refuse to hire or to discharge an individual or otherwise discriminate against any individual with respect to

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his/her compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin.

2. The act says it is unlawful to limit, segregate, or classify employees or applicants for employment in any way that would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his/her status as an employee, because of such individual's race, color, religion, sex, or national origin.

B. Executive Orders – various presidents have signed executive orders expanding equal employment laws in federal agencies. The Office of Federal Contract Compliance Programs was established to implement orders and ensure compliance.

C. Equal Pay Act of 1963 – the Equal Pay Act of 1963 (amended in 1972) made it unlawful to discriminate in pay on the basis of sex when jobs involve equal work, equivalent skills, effort and responsibility, and are performed under similar working conditions.

D. Age Discrimination in Employment Act of 1967 – the Age Discrimination in Employment Act of 1967 (ADEA) made it unlawful to discriminate against employees or applicants for employment who are between 40 and 65 years of age.

E. Vocational Rehabilitation Act of 1973 – the Vocational Rehabilitation Act of 1973 requires employers with federal contracts over $2500 to take affirmative action for the employment of handicapped persons.

F. Pregnancy Discrimination Act of 1978 – prohibits using pregnancy, childbirth, or related medical conditions to discriminate in hiring, promotion, suspension, or discharge, or in any term or condition of employment.

G. Federal Agency Guidelines – the EEOC, Civil Service Commission, Department of Labor, and Department of Justice together set forth “highly recommended” employer procedures regarding matters like employee selection, record keeping, preemployment inquiries, and affirmative action programs.

H. Early Court Decisions Regarding Equal Employment Opportunity 1. Griggs v. Duke Power Company was a case heard by the Supreme Court in which the plaintiff argued that his employer's requirement that coal handlers be high school graduates was unfairly discriminatory. In finding for the plaintiff, the Court ruled that discrimination need not be overt to be illegal, that employment practices must be related to job performance, and that the burden of proof is on the employer to show that hiring standards are job related if they have an unequal impact on members of a protected class.

2. Albemarle Paper Company v. Moody was a Supreme Court case in which it was ruled that the validity of job tests must be documented, and that employee performance standards must be unambiguous.

II. The Laws Enacted from 1991 to the Present A. The Civil Rights Act of 1991 (CRA 1991) – was signed into law to roll back equal employment law to where it stood before the 1980s. It also permits compensatory and punitive damages.

1. Burden of Proof – what the plaintiff must show to establish possible illegal discrimination, and what the employer must show to defend its actions.

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2. Money Damages – CRA 1991 provides that an employee who is claiming intentional discrimination (disparate treatment) can ask for 1) compensatory damages and 2) punitive damages, if it can be shown the employer engaged in discrimination “with malice or reckless indifference to the federally protected rights of an aggrieved individual.”

3. Mixed Motives – under CRA 1991, an employer cannot avoid liability by proving they would have taken the same action—such as terminating someone—even without the discriminatory motive.

B. The Americans with Disabilities Act 1. The American with Disabilities Act (ADA) of 1990 – prohibits discrimination against qualified disabled individual with disabilities, with regard to applications, hiring, discharge, compensation, advancement, training, or other terms, conditions, or privileges of employment. ADA also says employers must make “reasonable accommodations” for physical or mental limitations unless doing so imposes an “undue hardship” on the business.

2. Qualified Individual – the ADA prohibits discrimination against those who, with or without a reasonable accommodation, can carry out the essential functions of the job. The individual must have the requisite skills, educational background, and experience. A job function is essential when, for instance, it is the reason the position exists or it is so highly specialized that the employer hires the person for his or her expertise or ability to perform that particular function.

3. Reasonable Accommodation – if the individual cannot perform the job as currently structured, the employer is required to make a “reasonable accommodation,” unless doing so would present an “undue hardship.”

4. The ADA Amendments Act of 2008 (ADAAA) – employers traditionally prevailed in almost all—96%—federal circuit court ADA decisions.

5. The “New” ADA – in 2008 amendments were made to the ADA. These changes will make it easier for employees to show their disabilities are limiting.

C. Uniformed Service Employment and Reemployment Rights Act – employers are generally required, among other things, to reinstate employees returning from military leave to positions comparable to those they had before leaving.

D. Genetic Information Nondiscrimination Act of 2008 (GINA) – the law prohibits discrimination by health insurers and employers based on people’s genetic information. Specifically, it prohibits the intentional acquisition of genetic information about applicants and employees, and imposes strict confidentiality requirements.

E. State and Local Equal Employment Opportunity Laws – usually cover employers (like those with less than 15 employees) not covered by federal legislation. State and local equal employment opportunity agencies (often called Human Resources Commission or Fair Employment Commissions) also pay a role in equal employment compliance.

F. In Summary: Religious and Other Types of Discrimination – religious discrimination involves treating someone unfavorably because of his or her religious beliefs. The law protects not only people who belong to traditional organized religions such as

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Chapter 2: Equal Opportunity and the Law Buddhism, Christianity, Hinduism, Islam, and Judaism, but also others who have sincerely held religious, ethical, or moral beliefs.

G. Recent Trends in Discrimination Law H. Sexual Harassment – under EEOC guidelines, employers have an affirmative duty to maintain workplaces free of sexual harassment and intimidation.

1. What is sexual harassment? EEOC guidelines define sexual harassment as unwelcome sexual advances, requests for sexual favors, and any other verbal or physical conduct of a sexual nature that takes place under any of the following conditions: a. Submission to such conduct is made either explicitly or implicitly a term or condition of an individual's employment. b. Submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting the individual. c. Such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive work environment.

2. Proving Sexual Harassment – There are 3 main ways someone can prove sexual harassment. a. Quid Pro Quo – proves that rejecting a supervisor’s advances adversely affected what the EEOC calls a “tangible employment action,” such as hiring, firing, promotion, demotion, and/or work assignment. b. Hostile Environment Created by Supervisors – shows that even though there were no direct threats or promises in exchange for sexual advances, advances interfered with performance and created an offensive work environment. c. Hostile Environment Created by Coworkers or Non-employees – an employer is liable for the sexually harassing acts of its employees and in some cases, customers, if the employer knew or should have known of the harassing conduct.

3. When is the Environment “Hostile”? – generally means when the intimidation, insults, and ridicule were sufficiently sever to alter the employee’s working conditions.

4. Supreme Court Decisions – the case called Meritor Savings Bank, FSB v. Vinson to endorse broadly the EEOC’s guidelines on sexual harassment. Two other Supreme Court decisions further clarified sexual harassment law. a. Burlington Industries v. Ellerth – the employee accused her supervisor of quid pro quo harassment. b. Faragher v. City of Boca Raton – the employee accused the employer of condoning a hostile work environment.

6. Implications for Employers and Managers 7. When The Law Isn’t Enough – two practical considerations often trump the legal requirements. First, “Women perceive a broader range of soci-sexual behaviors (touching, for instance) as harassing. A second problem is that employees often won’t complain.”

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a. File a verbal contemporaneous complaint with the harasser and the harasser’s boss, stating that the unwanted overtures should cease because the conduct is unwelcome. b. If the unwelcome conduct does not cease, file verbal and written reports regarding the unwelcome conduct and unsuccessful efforts to get it to stop with the harasser’s manager and/or the human resource director. c. If the letters and appeals to the employer do not suffice, contact the local office of the EEOC to file the necessary claim. In very serious cases, the employee can also consult an attorney about suing the harasser for assault and battery, intentional infliction of emotional distress, injunctive relief, and to recover compensatory and punitive damages.

8. Trends Shaping HR: Digital and Social Media III. Defenses Against Discrimination Allegations – discrimination laws that distinguish between disparate treatment and disparate impact. Disparate treatment means intentional discrimination. Disparate impact means that “an employer engages in an employment practice or policy that has a greater adverse impact (effect) on the members of a protected group under Title VII than on other employees regardless of intent.”

A. The Central Role of Adverse Impact – an applicant or employee can use one of the following five methods to show that one of an employer’s procedures (such as a selection test) has an adverse impact on a protected group: 1. Disparate Rejection Rates – this method compares the rejection rates for a minority group and another group (usually the remaining non-minority applicants). Federal agencies uses a “4/5ths rule” to assess disparate rejection rates.

2. The Standard Deviation Rule – is a statistically measure of variability. It is a measure of the dispersion of a set of data from its mean.

3. Restricted Policy – is an approach that means demonstrating that the employer’s policy intentionally or unintentionally excluded members of a protected group.

4. Population Comparisons – is an approach that compares 1) the percentage of the protected group and white workers in the organization with 2) the percentage of the corresponding groups in the labor market, where the labor market is usually defined as the U.S. Census data for the Standard Metropolitan Statistical Area.

5. McDonnell-Douglas Test – when an applicant is qualified but rejected, and the employer continues seeking applicants, the Court has determined that a prima facie case of disparate treatment has been established under these conditions. The U.S. Supreme Court set four rules for applying the McDonnell-Douglas test: a. the person belongs to a protected class; b. that he or she applied and was qualified for the job for which the employer was seeking applicants; c. that despite the qualification, the person was rejected; and

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d. that after his or her rejection, the position remained open and the employer continued to seek applications from persons with the individual complainant’s qualifications.

6. Adverse Impact Example B. Bona Fide Occupational Qualification (BFOQ) is usually a defense to a disparate treatment case based upon direct evidence of intentional discrimination, rather than to disparate impact (unintentional) cases.

1. Age as a BFOQ – ADEA does permit disparate treatment in those instances when age is a BFOQ. 2. Religion as a BFOQ is justified in the case of religious organizations or societies that require employees to share their particular religion.

3. Gender as a BFOQ is allowed for positions requiring specific physical characteristics necessarily possessed by one sex.

4. National Origin as a BFOQ – a person’s national origin may be a BFOQ. C. Business Necessity – business necessity is a defense created by the courts that requires an employer to show an overriding business purpose for the discriminatory practice and that the practice is therefore acceptable.

D. Know Your Employment Law 1. Examples of What You Can and Cannot Do 2. Recruitment a. Word of Mouth – you cannot rely upon word-of-mouth dissemination of information about job opportunities when your workforce is all white or all members of some other class. b. Misleading Information – it is unlawful to give false or misleading information to members of any group. c. Help Wanted Ads – help wanted ‘male’ or help wanted ‘female’ ads are violations unless gender is a bona fide occupational qualification for the job.

3. Selection Standards a. Educational Requirements – courts have found education qualifications to be illegal when minority groups are less likely to possess the education qualifications or qualifications are not job related. b. Test – courts deem tests unlawful if they disproportionately screen out minorities or women and they are not job related. c. Preference to Relatives – do not give preference to relatives of current employees with respect to employment opportunities. d. Height, Weight, and Physical Characteristics – physical requirements such as minimum height are unlawful unless the employee can show they are job related. e. Arrest Records – unless a job requires security clearance, do not ask an applicant whether he or she has been arrested or spent time in jail or use an arrest record to disqualify a person automatically. f. Application Forms – employment applications generally shouldn't contain questions about applicant’s disabilities, workers’ compensation history, age, arrest record, or U.S. citizenship.

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g. Discharge Due to Garnishment – firing a minority member whose salary is garnished is illegal unless you can show some overriding business necessity.

4. Sample Discriminatory Promotion, Transfer, & Layoff Practices a. Personal Appearance Regulations and Title VII – employees sometimes file suits against employers’ dress and appearance codes under Title VII. They usually claim sexual discrimination, but sometimes claim racial or even religious discrimination. The chapter describes court rulings regarding dress, hair, uniforms, tattoos, and body piercings.

IV. The EEOC Enforcement Process – even careful employers eventually face employment discrimination claims and have to deal with the EEOC. 1. File Charge – the process begins when someone files a claim with the EEOC. 2. Charge Acceptance – the EEOC’s common practice is to accept a charge and orally refer it to the state or local agency on behalf of the charging party.

3. Serve Notice – the EEOC has 10 days to serve notice on the employer.

4. Investigation/Fact-Finding Conference – the EEOC has 120 days to decide whether there is reasonable cause to believe the charge. Early in the investigation, the EEOC holds a fact-finding conference to find weak spots in each party’s position. It uses these to push for a settlement.

5. Cause/No Cause – if no reasonable cause is found, the EEOC must dismiss the charge. A Notice of Right to Sue is issued to the charging party who then has 90 days to file a suit on his or her own behalf.

6. Conciliation – if cause is found, the EEOC has 30 days to work out a conciliation agreement.

7. Notice to Sue – if conciliation is not satisfactory, the EEOC may bring a civil suit in federal district court, or issue a Notice of Right to Sue to the person who filed the charge.

A. Voluntary Mediation – the EEOC refers about 10% of its charges to voluntary mediation mechanism, an informal process in which a neutral third party assists the opposing parties to reach a voluntary negotiated resolution of a charge of discrimination.

B. Mandatory Arbitration of Discrimination Claims – many employers, to avoid EEO litigation, require applicants and employees to agree to arbitrate such claims. The EEO does not favor mandatory arbitration. However, the U.S. Supreme Court’s decisions make it clear that employment discrimination plaintiffs may be compelled to arbitrate their claims under some circumstances.

C. Improving Performance: HR Tools for Line Managers and Small Businesses V. Diversity Management A. Potential Threats to Diversity – workforce diversity produces both benefits and problems for employers. Unmanaged, it can produce big behavioral behaviors that reduce cooperation. Potential problems include: stereotyping, discrimination, tokenism, and ethnocentrism.

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B. Managing Diversity – managing diversity means maximizing diversity’s potential benefits while minimizing the potential problems. Activities that constitute managing diversity include: 1. Providing strong leadership – companies with exemplary reputations in managing diversity typically have CEOs who champion the cause of diversity.

2. Assess the situation – assessing a company's diversity includes equal employment hiring and retention metrics, employee attitude surveys, management employee evaluations, and focus groups.

3. Change culture and management systems.

4. Evaluate the diversity management program.

C. Improving Performance: HR as a Profit Center D. Implementing the Affirmative Action Program – affirmative action is still a significant workplace issue today. Affirmative action means taking action in recruitment, hiring, promotion, and compensation to eliminate the current effects of past discrimination.

1. Employee resistance – avoiding employee resistance to affirmative action programs is important to show that the program doesn't involve preferential selection standards by providing details on the qualifications of all new hires.

2. Program Evaluation – how can you tell if the diversity initiatives are effective?

Some common sense questions can be asked: a. Are the women and minorities reporting directly to senior managers? b. Do women and minorities have a fair share of jobs that are traditionally steppingstones to successful careers in the company? c. Do women and minorities have equal access to international assignments? d. Is the employer taking steps to ensure that female and minority candidates will be in the company's career development pipeline? e. Are turnover rates for female and minority managers the same or lower than those for white males? f. Do employees report that they perceive positive behavior changes as a result of diversity efforts?

E. Reverse Discrimination

Chapter Review Chapter Section Summaries: 2-1: Several of the most important equal employment opportunity laws became law in the period from 1964 to 1991.

2-2: Equal employment law continues to evolve, with important new legislation being enacted since 1990-1991.

2-3: Employers use various defenses against discrimination allegations.

2-4: All managers play an important role in the EEOC enforcement process.

2-5: With the increasingly diverse workforce, diversity management is a key managerial skill.

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Discussion Questions: 2-1: What important precedents were set by the Griggs v. Duke Power Company case?

The Albemarle Paper Co. v. Moody?

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

2-2: Explain each of the four examples of a bona fide occupational qualification.

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

2-3: What is sexual harassment? How can an employee prove sexual harassment?

Sexual harassment is harassment on the basis of sex that has the purpose or effect of substantially interfering with a person’s work performance or creating an intimidating, hostile, or offensive work environment. An employee can prove sexual harassment in three main ways: 1) quid pro quo – prove that rejecting a supervisor’s advances adversely affected tangible benefits; 2) hostile environment created by supervisors; and 3) hostile environment created by co-workers or nonemployees.

2-4: What is affirmative action? Why do some employees consider affirmative action to be unfair?

Affirmative action means taking actions (in recruitment, hiring, promotions, and compensation) to eliminate the current effects of past discrimination.

They may think it discriminates against nonminority groups and may damage their own promotion chances. To increase transparency, companies should provide details on the qualifications of all new employees, both minority and nonminority. Affirmative action programs should emphasize redressing past discrimination and the practical value of diversity.

Individual and Group Activities: 2-5: Assume you are an HR manager in a global firm with a diverse workforce. The company has offices in developed countries, emerging economies, and developing nations. Working individually or in groups, discuss whether you think it would be possible to implement the same anti-discrimination policy in all countries. Briefly explain the reasons why it may or may not be possible to achieve this aim.

It may not be possible to achieve this aim because cultures and values vary from country to country. For example, many emerging and third-world countries emphasize the value of seniority in promotion decisions whereas, developed economies often recruit on merit which involves the assessment of competences.

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2-6: Working individually or in groups, discuss the reasons why equal opportunity does not result in fair treatment of all employees.

Laws by themselves will not change the attitudes of employees towards minorities. The effects can vary widely among different companies. Cultural and diversity awareness training may help in this respect.

2-7: Working individually or in groups, create a list of threats to diversity facing local businesses. Suggest ways of overcoming potential threats to diversity.

The overall culture of the workplace would need to change so a diversity management program would be needed. The key features should include a CEO who acts as a role model and champions the cause of diversity; diversity training and education; and an attempt to change the organization’s culture and management systems. These, in addition to fair implementation of the laws, will help overcome potential threats to diversity.

2-8: Working individually or in groups, write a one-page paper entitled “What the Manager Should Know About How the EEOC Handles a Person’s Discrimination Charge.”

The students should include the following information in their paper. The EEOC can either accept the charge or refer it to the state or local agency. After it has been filed, the EEOC has 10 days to serve notice on the employer, and then investigate the charge to determine whether there is reasonable cause to believe it is true within 120 days. If charges are dismissed, the EEOC must issue the charging party a Notice of Right to Sue. The person then has 90 days to file suit on his/her own behalf. If the EEOC finds reasonable cause for the charge, it must attempt conciliation. If conciliation is not satisfactory, the EEOC can bring a civil suit in federal district court, or issue a Notice of Right to Sue to the person who filed the charge. Under Title VII, the EEOC has 30 days to work out a conciliation agreement between the parties before bringing suit. If the EEOC is unable to obtain an acceptable conciliation agreement, it may sue the employer in federal district court.

2-9: Working individually or in groups, suggest ways in which an organization can prove its compliance with antidiscrimination laws.

Organizations could monitor the equal opportunities’ processes by keeping confidential records of ethnic origin, gender, and disabilities of their employees and record the success rate of different groups when applying for jobs at the company or for an internal promotion.

2-10: Assume you are the manager in a small restaurant; you are responsible for hiring employees, supervising them, and recommending them for promotion. Working individually or in groups, compile a list of potentially discriminatory management practices you should avoid.

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Ensure that recruitment practices are non-discriminatory, and avoid word-of-mouth dissemination of information about job opportunities when the workforce is substantially white, or all members of some other class. Avoid giving false or misleading information to members of any group or failing to advise them of work opportunities. Avoid advertising classifications that specify gender or age unless it is a bona fide occupational qualification for the job.

Avoid asking pre-employment questions about an applicant’s race, color, religion, sex, or national origin.

Do not deny a job to a disabled individual if the person is qualified and able to perform the essential functions of the job. Make reasonable accommodations for candidates that are otherwise qualified but unable to perform an essential function unless doing so would result in a hardship.

Apply tests and performance standards uniformly to all employees and job candidates.

Avoid tests if they disproportionately screen out minorities or women and are not job related.

Do not give preference to relatives of current employees if your current employees are substantially non-minority.

Do not establish requirements for physical characteristics unless you can show they are job related.

Do not make pre-employment inquiries about a person’s disability, but do ask questions about the person’s ability to perform specific essential job functions.

Review job application forms, interview procedures, and job descriptions for illegal questions and statements. Check for questions about health, disabilities, medical histories, or previous workers’ compensation claims.

Do not ask applicants whether they have ever been arrested or spent time in jail. However, you can ask about conviction records.

2-11: Appendix A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resources management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam and/or the SHRM exam; and (4) if time permits, have someone from your team post your team's questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

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Experiential Exercise: “Space Cadet” or Victim?

Purpose: The purpose of this exercise is to provide practice in analyzing and applying knowledge of equal opportunity legislation to a real problem.

Required Understanding: Be thoroughly familiar with the material presented in this chapter. In addition, read the preceding “space cadet” case on which this experiential exercise is based.

How to Set Up the Exercise/Instructions: ● Divide the class into groups. ● Each group should develop answers to the following questions: 2-12: Based on what you have read in this chapter, but focusing on your country’s legal system, on what basis might a similar individual claim they were victims of discrimination?

Students’ answers may vary depending on their country. Most will have clear guidelines similar to the United States as covered in the chapter. The legal system may not be as complete or as clear and may be based on very different foundations. It would be helpful to provide a briefing sheet that outlines the key legislation.

2-13: In your country, on what laws or legal concepts do you think an employer might base their decision to terminate an individual’s contract in a similar situation?

Again, with the focus on the student’s home country, the laws and legal concepts may differ from the chapter contents. The chapter will provide a good guide as to the areas that might have to be considered and the likely types of legislation and coverage in question.

2-14: Research and discuss legal decisions in your country that allow an employer to terminate a contract on the grounds of poor performance despite there being evidence of discrimination. (This does not infer that this case is discriminatory).

This will probably need some direction and guidance as the purpose is not for the students to have in-depth knowledge of employment law at this stage. There may well have been cases in the past that have touched on this as a problem and might have been documented as such. Indeed, they may be parts of case law upon which decisions, since then, have been considered.

2-15: If you were the judge called on to make a decision on this case, what would your decision be, and why?

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With an understanding of the possible judgment from the previous question, the student may be in a good position to make such a consideration. There is likely to be a clear case here depending on the legal system and past cases.

The court’s decision follows, so please do not read this until you’ve completed the exercise. In this case, the California State Appeals court held that “the only reasonable inference that can be drawn from the evidence is that [plaintiff] was terminated because he failed to competently perform his job of providing thorough, accurate, and courteous legal advice to hotline callers.”

Application Case: An Accusation of Sexual Harassment in Pro Sports 2-16: Do you think Ms. Browne Sanders had the basis for a sexual harassment suit? Why? It does appear that Ms. Browne Sanders had the basis for a sexual harassment suit. The timing of her termination should raise serious concerns because Madison Square Garden terminated her employment only one month after she complained to top management about the harassment. Also, the reason for her termination that she had “failed to fulfill professional responsibilities” seems vague and generalized. The Garden also did not present credible witnesses to corroborate the reason for the decision.

2-17: From what you know of this case, do you think the jury arrived at the correct decision? If not, why not? If so, why?

The jury did arrive at the appropriate decision given the facts that were presented in this case. The Garden had a responsibility to demonstrate concrete reasons for their termination decision. It does not appear that any specific reasons were shared with the jury.

2-18: Based on the few facts that you have, what steps could Garden management have taken to protect the organization from liability in this matter?

A number of steps could be taken. First, the Garden should have conducted a thorough investigation and documented the results in a written report. Second, the Garden supplied a very generalized response for the termination. Before terminating an employee for performance, an organization should demonstrate that a number of actions were taken to coach and counsel the employee before termination. Finally, the Garden should have a policy/program in place to show how claims of sexual harassment are addressed including a clause that prohibits any type of retaliation.

2-19: Aside from the appeal, what would you do now if you were the Garden’s top management?

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Student answers will vary but look for answers that incorporate concepts from the chapter and take into account the seriousness of addressing this issue in the future.

2-20: “The allegations against Madison Square Garden in this case raise ethical questions with regard to employer’s actions.” Explain whether you agree or disagree with this statement, and why.

Opinions will vary but make sure students understand the bigger issues.

Continuing Case: Carter Cleaning Company – A Question of Discrimination 2-21: Is it true, as Jack Carter claims, that “virtually all of our workers are women or minorities anyway, so no one can come in here and accuse us of being discriminatory”?

This is not true at all. Employers can be accused of discriminatory practices at any time.

In this case, female applicants were being asked questions about childcare that males were not being asked; minority applicants were being asked questions about arrest records and credit histories that non-minorities were not. In addition, the reports of sexual advances towards women by a store manager and an older employee’s complaint that he is paid less than younger employees for performing the same job all raise serious issues in terms of discriminatory employment practices. Potential charges include Title VII violations, Equal Pay Act violations, age discrimination, sexual harassment, and disparate treatment.

2-22: How should Jennifer and her company address the sexual harassment charges and problems?

The first step would be to document the complaint and initiate an investigation. If the investigation finds that sexual harassment occurred, then take the appropriate corrective action which could include discipline up to and including discharge. In addition, the company should develop a strong policy statement and conduct training with all managers.

2-23: How should she and her company address the possible problems of age discrimination?

The company should review the compensation structure and pay rates to determine whether there is discrimination in their pay system with regard to older workers being paid less than younger workers for performing the same work. If there are significant differences, then adjustments should be made to the pay system in order to rectify the problem.

2-24: Given the fact that each of its stores has only a handful of employees, is her company in fact covered by equal rights legislation?

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Yes – the EEOC enforces equal employment compliance against all but the very smallest of employers. All employees including part-time and temporary workers are counted for purposes of determining whether an employer has a sufficient number of employees. State and local laws prohibit discrimination in most cases where federal legislation does not apply.

2-25: And finally, aside from the specific problems, what other personnel management matters (application forms, training, and so on) have to be reviewed given the need to bring them into compliance with equal rights laws?

The company should do several things: 1. Develop an employee handbook that contains policy statements about equal employment opportunity, sexual harassment, and other issues.

2. Develop an employment application that is free from discriminatory questions, as well as a standard interview guide to ensure consistency of “legal” questions from candidate to candidate.

3. Conduct supervisory/management training to ensure that all managers are educated and aware of their responsibilities under EEO laws and regulations.

4. Develop and implement a complaint procedure and establish a management response system that includes an immediate reaction and investigation by senior management.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 2-26: Explain the main features of Title VII, the Equal Pay Act, the Pregnancy Discrimination Act, the Americans with Disabilities Act, and the Civil Rights Act of 1991.

2-27: What are the two main defenses you can use in the event of a discriminatory practice allegation, and what exactly do they involve?

Key Terms: Title VII of the 1964 Civil Rights Act – The section of the act that says an employer cannot discriminate on the basis of race, religion, sex, or national origin with respect to employment.

Equal Employment Opportunity Commission (EEOC) – The commission, created by Title VII, empowered to investigate job discrimination complaints and sue on behalf of complainants.

Affirmative Action – Steps that are taken for the purpose of eliminating the present effects of past discrimination.

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Office of Federal Contract Compliance Programs (OFCCP) – This office is responsible for implementing the executive orders and ensuring compliance of federal contractors.

Equal Pay Act of 1963 – The act requiring equal pay for equal work, regardless of sex.

Age Discrimination in Employment Act of 1967 (ADEA) – The act prohibiting arbitrary age discrimination and specifically protecting individuals over 40 years old.

Vocational Rehabilitation Act of 1973 – The act requiring certain federal contractors to take affirmative action for disabled persons.

Pregnancy Discrimination Act – An amendment to Title VII of the Civil Rights Act that prohibits sex discrimination based on "pregnancy, childbirth, or related medical conditions."

Uniform Guidelines – Guidelines issued by federal agencies charged with ensuring compliance with equal employment federal legislation explaining recommended employer procedures in detail.

Protected Class – Persons, such as minorities and women protected by equal opportunity laws, including Title VII. Civil Rights Act of 1991 (CRA 1991) – The act that places the burden of proof back on employers and permits compensatory and punitive damages.

“Mixed Motive” Case – A discrimination allegation case in which the employer argues that the employment action taken was motivated not by discrimination, but by some non-discriminatory reason such as ineffective performance.

Americans with Disabilities Act (ADA) – The act requiring employers to make reasonable accommodation for disabled employees; it prohibits discrimination against disabled persons.

Qualified Individuals – Under ADA, those who can carry out the essential functions of the job.

Sexual Harassment – Harassment on the basis of sex that has the purpose or effect of substantially interfering with a person's work performance or creating an intimidating, hostile, or offensive work environment.

Federal Violence Against Women Act of 1994 – The act provides that a person who commits a crime of violence motivated by gender shall be liable to the party injured.

Adverse Impact – The overall impact of employer practices that result in significantly higher percentages of members of minorities and other protected groups being rejected for employment, placement, or promotion.

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Disparate Rejection Rates – A test for adverse impact in which it can be demonstrated that there is a discrepancy between rates of rejection of members of a protected group and of others.

4/5ths Rule – Federal agency rule that a minority selection rate less than 80% (4/5ths) of that for the group with the highest rate is evidence of adverse impact.

Restricted Policy – Another test for adverse impact, involving demonstration that an employer's hiring practices exclude a protected group, whether intentionally or not.

Bona Fide Occupational Qualification (BFOQ) – Requirements that an employee be of a certain religion, sex, or national origin where that is reasonably necessary to the organization's normal operation. Specified by the 1964 Civil Rights Act. Alternative Dispute Resolution or ADR Program – Grievance procedure that provides for binding arbitration as the last step.

Diversity – The variety or multiplicity of demographic features that characterize a company’s workforce, particularly in terms of race, sex, culture, national origin, handicap, age, and religion.

Sterotyping – Ascribing specific behavioral traits to individuals based on their apparent membership in a group.

Discrimination – Taking specific actions toward or against a person based on the person’s group.

Tokenism – When a company appoints a small group of women or minorities to high profile positions, rather than more aggressively seeking full representation for that group.

Ethnocentrism – A tendency to view members of other social groups less favorable than members of one's own group.

Gender-Role Stereotypes – The tendency to associate women with certain (frequently nonmanagerial) jobs.

Managing Diversity – Maximizing diversity’s potential benefits while minimizing its potential barriers.

Good Faith Effort Strategy – An affirmative action strategy that emphasizes identifying and eliminating the obstacles to hiring and promoting women and minorities, and increasing the minority or female applicant flow.

Reverse Discrimination – Claim that, due to affirmative action quota systems, white males are discriminated against.

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Part One Introduction Chapter 3 Human Resource Management Strategy and Analysis Lecture Outline: The Strategic Management Process The Management Planning Process What Is Strategic Planning?

The Strategic Management Process Types of Strategies Corporate Strategy Competitive Strategy Functional Strategy Manager’s Roles in Strategic Planning Strategic Human Resource Management What Is Strategic Human Resource Management?

Improving Performance: The Strategic Context Improving Performance: HR As a Profit Center Sustainability and Strategic Human Resource Management Strategic Human Management Tools HR Metrics, and Benchmarking, and Data Analytics Improving Performance Through HRIS Benchmarking Strategy and Strategy-Based Metrics What Are HR Audits?

Trends Shaping HR: Digital and Social Media Trends Shaping HR: Science In Talent Management Evidence-Based HR and the Scientific Way of Doing Things High-Performance Work Systems Employee Engagement Guide for Managers: Employee Engagement and Performance The Employee Engagement Problem What Can Managers Do to Improve Employee Engagement How to Measure Employee Engagement How Kia Motors (UK) Improved Performance with an HR Strategy Aimed at Boosting Employee Engagement Chapter Review

Where Are We Now… The main purpose of this chapter is to explain how managers formulate human resource strategies for their companies. We’ll address the strategic management process, types of Copyright© 2017 Pearson Education, Ltd.

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strategies, strategic human resources management, HR metrics and benchmarking, highperformance work systems, and employee engagement.

Interesting Issues: When the Ritz-Carlton Company took over managing the Portman Hotel in Shanghai, China, the hotel already had a good reputation among business travelers. However, many luxury hotels were opening there. To stay competitive, the Portman’s new managers decided to reposition the hotel with a new strategy, one that emphasized outstanding customer service. But they knew that improving the service would require new employee behaviors, and therefore new selection, training, and pay policies and practices. We will see what they did.

Learning Objectives: 3-1.

3-2.

3-3.

3-4.

3-5.

3-6.

Explain with examples each of the eight steps in the strategic management process.

List with examples the main types of strategies.

Define strategic human resource management and give an example of strategic human resource management in practice.

Give at least five examples of HR metrics.

Give five examples of what employers can do to have high-performance systems.

Describe how you would execute a program to improve employee engagement.

Annotated Outline: I.

The Strategic Management Process A. The Management Planning Process – the basic management planning process consists of five steps: setting objectives, making basic planning forecasts, reviewing alternative courses of action, evaluating which options are best, and then choosing and implementing your plan.

B. What is Strategic Planning? – a strategic plan is the company’s plan for how it will match its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage.

C. The Strategic Management Process – Figure 3-2 sums up the strategic management process. It has seven steps: Step 1. Ask where are we now?

Step 2. Size up the situation: perform external and internal audits Step 3. Formulate a new direction Step 4. Translate the mission into strategic goals Step 5. Formulate strategies to achieve the strategic goals Step 6. Implement the strategies Step 7. Evaluate performance

II.

Types of Strategies A. Corporate Strategy – identifies the portfolio of businesses that, in total, comprise the company and how these businesses are related to each other.

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Concentration, diversification, vertical integration, consolidation, and geographic expansion are all examples of corporate-level strategies.

B. Competitive Strategy – identifies how to build and strengthen the business unit’s long-term competitive position in the marketplace. Examples of competitive strategies include cost leadership, differentiation, and focusers.

C. Functional Strategy – these strategies identify what each department must do to help the business accomplish its strategic goals.

D. Manager’s Roles in Strategic Planning – devising a strategic plan is top management’s responsibility. However, few top executives formulate strategic plans without lower-level manager’s input.

III.

Strategic Human Resource Management A. What Is Strategic Human Resource Management?

1. Strategic HRM means formulating and executing human resource policies and practices that produce the employee competencies and behaviors that companies need to achieve their strategic aims.

B. Improving Performance: The Strategic Context C. Improving Performance: HR As a Profit Center D. Sustainability and Strategic Human Resource Management – today’s emphasis on sustainability has important consequences for human resource management. HR policies and practices can support a firm’s sustainability strategy and goals.

E. Strategic Human Management Tools 1. Strategy Map – summarizes how each department's performance contributes to achieving the company’s overall strategic goal.

2. HR scorecard – a process for assigning financial and nonfinancial goals or metrics to human resource management-related strategy map chain of activities required for achieving the company’s strategic aims.

3. Digital Dashboards – presents the manager with the desktop graphics and charts, showing a computerized picture of how the company is doing on all metrics from the HR scorecard process.

IV.

HR Metrics, Benchmarking, and Data Analytics A. Improving Performance: Through HRIS: Tracking Applicant Metrics for Improved Talent Management B. Benchmarking – occurs when an organization compares the practices of high performing companies’ results to your own, to understand what makes them better.

C. Strategy and Strategy-Based Metrics – benchmarking is only part of the process. To reveal the extent to which your firm’s HR practices are supporting its strategic goals, strategy-based metrics are used to measure the activities that contribute to achieving the company’s strategic aims.

D. What Are HR Audits? – these audits are a way for an organization to measure where it currently stands and determines what it has to accomplish to improve its HR functions.

E. Evidence-Based HR and the Scientific Way of Doing Things – evidencebased HR is the use of data, facts, etc. to support HR proposals, decisions,

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Chapter 3: Human Resource Management Strategy and Analysis practices, and conclusions. This requires managers to be more scientific in making organizational decisions. This approach requires objectivity, experimentation, quantification, explanation, prediction, and replication.

F. Trends Shaping HR: Digital and Social Media 1. Talent Analytics – tools that enable employers to analyze, in new ways, employee data both on obvious things (like employee demographics, training, and performance ratings), but also data from new sources (like company internal social media sites, GPS tracking, and email activity).

G. Trends Shaping HR: Science In Talent Management V.

High-Performance Work Systems –a set of human resource management policies and practices that together produce superior employee performance.

VI.

Employee Engagement Guide for Managers: Employee Engagement and Performance A. The Employee Engagement Problem – Gallup distinguishes among engaged employees “who work with passion and feel a profound connection to their company,” and not engaged employees who are essentially “checked out,” and actively disengaged employees.

B. What Can Managers Do to Improve Employee Engagement? – managers improve employee engagement by taking concrete steps to do so, such as: providing supportive supervision, making sure employees understand how their departments contribute to the company’s success, see how their efforts contribute to achieving the company’s goals, get a sense of accomplishment from working at the firm, and are highly involved – as when working in self-managing teams.

C. How to Measure Employee Engagement – firms like Gallup (www.gallup.com) and Tower Watson (www.towerswatson.com/en-US) offer comprehensive employee engagement survey services.

D. How Kia Motors (UK) Improved Performance with an HR Strategy Aimed at Boosting Employee Engagement 1. The Challenges 2. The New Human Resources Management Strategy 3. How to Execute an Employee Engagement Strategy – executing Kia UK’s employee engagement HR strategy involved six steps: Step 1. Set measurable objectives.

Step 2. Held an extensive leadership development program.

Step 3. Instituted new employee recognition programs.

Step 4. Improved internal communications.

Step 5. Instituted a new employee development program.

Step 6. Made a number of changes to its compensation and other polices.

4. The Results

Chapter Review

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Chapter Section Summaries: 3-1: Strategic planning is important to all managers.

3-2: Each function or department in the business needs its own functional strategy, and strategic human resource management means formulating and executing human resource policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic aims.

3-3: The manager will want to gather and analyze data prior to making decisions.

3-4: A high-performance work system is a set of human resource management policies and practices that together produce superior employee performance.

3-5: Employment engagement is important because it drives performance and productivity.

3-6: Actually executing Kia UK’s employee engagement HR strategy involved six steps.

Discussion Questions: 3-1: What is the main purpose of the HR scorecard?

The HR scorecard refers to a process for assigning financial and nonfinancial goals or metrics to the human resource management-related strategy-map chain of activities required for achieving the company’s strategic aims. More specifically, the main purpose of the computerized HR scorecard is to help managers quantify the relationships between (1) the HR activities (amount of testing, training, and so forth), (2) the resulting employee behaviors (customer service, for instance), and (3) the resulting firm-wide strategic outcomes and performance (such as customer satisfaction and profitability).

3-2: What is the difference between a corporate strategy and a competitive strategy? Give one example of each.

This item can be assigned as a discussion question in MyManagementLab. Student responses will vary.

3-3: What is the difference between a company's strategy, vision, and mission?

A company’s strategy is the course of action it pursues to achieve its strategic aims. Its vision is what it conceives before the strategy. The manager will often sum up the essence of his or her business with a mission statement which sums up the essence of what the company must do to compete in the marketplace, providing the guiding framework for managers and employees on a regular basis. A company’s mission statement helps it decide, for instance, “Should we expand into this new business or not?”

3-4: Explain with examples each of the seven steps in the strategic management process.

Step 1. Ask, Where Are We Now? The logical place to start is by asking, “Where are we now as a business?” Here the manager defines the company’s current business and mission.

Specifically, “What products do we sell, where do we sell them, and how do our products or services differ from our competitors’?” The manager will traditionally focus on four aspects of the current business.

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Step 2. Size up the Situation: Perform External and Internal Audits. The next step is to ask, “Are we heading in the right direction given the challenges that we face?” To answer this, managers need to study or “audit” the firm’s environment, and its internal strengths and weaknesses. Managers use a SWOT chart to compile and organize the company’s strengths, weaknesses, opportunities, and threats.

Step 3. Formulate a New Direction. The situation may require that management consider strategic options for the company. Several years ago, for instance, Microsoft, facing a surging product lineup from Apple and competition from Google’s cloud-based office programs, had to decide whether to change its mission and, if so, how.

Step 4. Translate the Mission into Strategic Goals. Given the situation, which strategic option should we pursue? Here the manager compares his or her strategic options to see which are most consistent with the firm’s opportunities and threats, and its strengths and weaknesses. For P&G, management had to assess whether building up its Oil of Olay brand was a better option than simply buying (at great expense) a well-known high-tier cosmetics brand.

Step 6. Formulate Strategies to Achieve the Strategic Goals. Next, management translates the new desired direction into actionable strategic goals. At P&G, for instance, strategic goals might have included “generate 20% of corporate revenues from the Oil of Olay brand within 4 years,” and “capture 18% of the top-tier beauty care market within 3 years.” Ford breathed life into its “Quality Is Job One” mission by setting goals such as “no more than 1 initial defect per 10,000 cars.”

Step 7. Implement the Strategies. Strategy execution means translating the strategies into action. This means actually hiring (or firing) people, building (or closing) plants, and adding (or eliminating) products and product lines. To do this, management uses the firm’s new top-level strategic goals to formulate a hierarchy of goals, and policies and procedures.

These guide action down the chain of command at lower organizational levels, and in the firm’s various departments.

Step 8. Evaluate Performance. Things don’t always turn out as planned. P&G soon built its Oil of Olay line into a world-class brand. However, initially, at least, Microsoft’s new tablets were off to a slow start. Microsoft soon cut their prices.

3-5: Explain with examples how human resources management can be instrumental in helping a company create a competitive advantage.

Competitive advantage is any factors that allow an organization to differentiate its product or service from those of its competitors to increase market share. HR management can be instrumental in helping a company create a competitive advantage by identifying broad activities that it will pursue in order to help the business accomplish its competitive goals.

These activities include:

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Formulating and executing human resource policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic aims.

Implementing new training and communications programs aimed at ensuring all employees understand the importance of the business strategy, and what is required of all employees in terms of services, capitalizing on opportunities, and offering high quality services.

New job enrichment programs made employees more accountable for their results and more resilient in terms of moving from job to job.

New compensation and benefits programs to promote personal growth and encouraged searching for innovative solutions.

Improved selection, orientation, and dismissal procedures.

3-6: Outline how you would implement an employee engagement program This item can be assigned as a discussion question in MyManagementLab. Student responses will vary.

Individual and Group Activities: 3-7: Do you agree with the following statement: ‘It is important for a human resource manager to be a strategic partner in an organization.’ Discuss in groups and provide reasons for arguments.

As a strategic partner in an organization, the human resource manager is in a good position to supply intelligence on competitors’ activities. The types of information might include competitor’s incentive plans; employee opinion surveys about customer complaints; as well as information about pending legislation such as labor laws. HR managers also possess information about their own firms’ employees’ strengths and weaknesses. It is this type of information that management uses for coming up with strategic plans. Hence, it is important for a human resource manager to be a strategic partner in an organization.

3-8: Interview an HR manager of a multinational corporation (MNC) to find out about the role of HR in the company's strategy.

Students’ answers may vary.

3-9: The purpose of the HR scorecard is to help create HR systems that support a company’s strategic aims. Form two groups of three students and, with the help of the Internet and library resources, debate on whether all managers have a mutual understanding of the HR scorecard. Present your arguments for or against in class.

Students’ answers may vary. The HR scorecard has got many uses but it all depends on whether the HR department is able to fully utilise its functions. Usually, HR managers are

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not fully aware of their functions. Answers may vary because each company uses the HR scorecard in different ways.

3-10: One of the challenges that Western companies face while doing business in Malaysia is having to adjust to the Asian work culture. Failure in understanding this would result in problems of sustaining and retaining valuable workforce. Working individually or in groups, outline the cultural differences that would affect a company's process of selection, training, appraisal, and compensation of employees.

In order to acclimatize to the work culture of Malaysia, a foreign company must first understand the local culture. Relationships must be firmly established before business can commence. Do not underestimate the need to allocate time and resources to the relationshipbuilding aspect of a project. This is particularly true in establishing a good psychological contract with employees. The aim of most meetings should be to develop or enhance existing relationships. This is generally achieved by promoting a harmonious atmosphere. Do not destroy the harmony by being overly pushy when trying to reach a decision. Companies should strive to encourage teamwork in every aspect of human resources.

All of the major cultures you may encounter when doing business in Malaysia are basically group-oriented. It is important to take into account the needs of the whole group rather than any one individual. Singling out an individual for praise or specific reward could cause that individual embarrassment within the group. Politeness and diplomacy are prerequisites for doing business in Malaysia. Directness can be misconstrued as rudeness and is seen as the behavior of people who lack respect. It is difficult for people to say 'no' or to deliver bad news. Don't always take the word 'yes' to mean 'I agree'. It could be merely an affirmation of understanding. Be aware of the special requirements of the majority Muslim population with regard to such issues as prayer, diet, and fasting. This would be helpful when planning for training or other programs.

3-11: In teams of several students, choose a company for which you will develop an outline of a strategic HR plan. What seem to be this company’s main strategic aims? What is the firm’s competitive strategy? What would the strategic map for this company look like?

How would you summarize your recommended strategic HR policies for this company?

Students’ answers will vary.

3-12: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students do four things: (1) review Appendix A and/or B, (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists, (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam, and/or the SHRM exam; and (4) if time permits have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

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Material in this chapter that could be covered in the HRCI certification exam include: Under Strategic Management, the formulation of HR strategies to support the company’s overall strategic plan; HR’s role in helping companies to build a competitive advantage; strategic HR management, role in strategy execution and formulation; high performance work system concepts and supporting HR systems/practices; the HR Scorecard and all the steps involved in developing it.

Experiential Exercise: Developing an HR Strategy As organizations grow, human resources need to adapt and change in order to keep pace with the developments. This could mean coping with larger numbers of employees, an increasingly scattered and diverse workforce, new layers of management, and even having to run parallel HR operations in different countries while following radically different sets of legislation. The problem for any such organization is that the pace of growth and change can be a massive challenge in itself.

Purpose: The purpose of this exercise is to give you the opportunity to develop your own HR strategy. To complete the exercise choose an organization from your country.

Required Understanding: You should be thoroughly familiar with the material in this chapter.

How to Set up the Exercise/Instructions: Set up groups of three or four students for this exercise. Students should aim to select an organization that is already operating in more than one territory. It can be a global organization, but this will make the task more complex. The group will need to create an outline of the HR strategy of the organization. Assume that the organization will retain its size and scope of operations for this exercise. Your outline should include four basic elements: a business/competitive strategy for your chosen organization, the workforce requirements (in terms of employee competences and behaviors) this strategy requires, specific HR policies and activities necessary to produce these workforce requirements, and suggestions for metrics to measure the success of the HR strategy.

Students should use the chapter as the main area of guidance to gauge the range and elements of the outline needed. They will need to have access to or some understanding of the organization in order to create a feasible and realistic HR strategy for the organization.

In many cases, the HR strategy will be fairly clear from the website, press releases, and general policies regarding HR.

Application Case: Siemens Builds a Strategy-Oriented HR System 3-13: Based on the information in this case, provide examples for Siemens of at least four strategically required organizational outcomes and four required workforce competencies and behaviors.

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Strategically required organizational outcomes would be the following: 1) An employee selection and compensation system that attracts and retains the human talent necessary to support global diversification into high-tech products and services; 2) A “learning company” in which employees are able to learn on a continuing basis; 3) A culture of global teamwork which will develop and use all the potential of the firm’s human resources; 4) A climate of mutual respect in a global organization. Workforce competencies and behaviors could include: 1) openness to learning; 2) teamwork skills; 3) cross-cultural experience; 4) openness, respect, and appreciation for workforce diversity.

3-14: Identify at least four of the strategically relevant HR policies and activites that Siemens has instituted in order to help HR contribute to achieving Siemens’ strategic goals.

1) Training and development activities to support continuous learning through a system of combined classroom and hands-on apprenticeship training to support technical learning; 2) Continuing education and management development to develop skills necessary for global teamwork and appreciation for cultural diversity; 3) Enhanced internal selection process which includes pre-requisites of cross-border and cross-cultural experiences for career advancement; 4) Organizational development activities aimed at building openness, transparency, fairness, and diversity support.

3-15: Provide a brief illustrative oultine of a strategy map for Siemens.

Student answers will vary but the strategy map should answer the following questions: 1) What overall goals does Siemens want to achieve?; 2) What must Siemens do operationally to achieve its goals?; and 3) What employee attitudes and behaviors will produce these operational outcomes?

Continuing Case: The Carter Cleaning Company – The High-Performance Work System 3-16: Would you recommend that the Carters expand their quality program? If so, specifically what form should it take?

Most students will agree that there are opportunities to expand the quality program. The employee meeting approach is a good start in terms of utilizing high-involvement organizational practices. There are opportunities to maximize the overall quality of their human capital. For example, training seems to be an obvious area to improve in terms of educating and building awareness about basic standards and procedures.

3-17: Assume the Carters want to institute a high performance work system as a test program in one of their stores. Write a one-page outline summarizing important HR practices you think they should focus on.

Students should include some of the following ideas in their outline: The types of HR practices they would implement to improve quality, productivity, financial performance;

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methods for job enrichment; strategies for implementing and leveraging a team-based organization; ways to implement and facilitate high commitment work practices; employee development and skill building activities to foster increased competency and capability in the workforce; a compensation program which provides incentives (for example, profit sharing, pay for performance) for achieving major goals and financial targets.

Hotel Paris: Improving Performance at the Hotel Paris –The Hotel Paris International 3-18: Draw a more simplified and abbreviated strategy map for the Hotel Paris.

Specifically, summarize in your own words an example of the hierarchy of links among the hotel’s HR practices, necessary workforce competencies and behaviors, and required organizational outcomes.

• • •

What overall goals does the Hotel Paris want to achieve?

What does the Hotel Paris do operationally to achieve its goals?

What employee attitudes and behaviors will produce the desired operational outcomes?

The above strategy map for the Hotel Paris succinctly lays out the hierarchy of main activities required for the Hotel Paris to succeed. For example, the Hotel Paris could endeavor to improve workforce competencies and behaviors by instituting an improved recruitment process, and measure the latter in terms of the number of qualified applicants per position.

3-19: Using Table 3-1 and Figure 3-9, list at least 15 metrics the Hotel Paris could use to measure its HR practices.

• • • • • • • • • • • • • • •

Number of qualified applicants per position Percentage of jobs filled from within Number of hours of training for each employee Percentage of the workforce eligible for incentive pay Percentage of the workforce routinely working in a self-managed, cross functional, or project team HR to Employee Ratio HR Expenses HR Expenses to Operating Expense Ratio HR Expense to FTE Ratio Annual Salary Increase Maximum Reimbursement Allowed for Tuition/Education Expense per year Percentage of Employees Participating in Tuition/Education Reimbursement Programs Time-to-fill Cost-Per-Hire Annual Overall Turnover Rate Copyright© 2017 Pearson Education, Ltd.

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My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 3-20: Define and give at least two examples of the cost-leadership competitive strategy and the differentiation competitive strategy.

3-21: You own a small business and your friend, over lunch, just mentioned that “it sounds like you have an employee engagement problem.” What exactly would you do to improve employee engagement in your company now?

Key Terms: Strategic Plan – The company’s plan for how it will match its internal strengths and weaknesses with external opportunities and threats in order to maintain a competitive advantage.

Strategy – A courses of action the company pursues to achieve its strategic aims.

Strategic Management – The process of identifying and executing the organization’s mission by matching the company’s capabilities with the demands of its environment.

Vision Statement – A general statement of the firm’s intended direction; it shows, in broad terms, “what we want to become.”

Mission Statement – Summarizes the answer to the question, “What business are we in?”

Corporate-Level Strategy – Type of strategy that identifies the portfolio of businesses that, in total, comprise the company and the ways in which these businesses relate to each other.

Competitive Strategy – A strategy that identifies how to build and strengthen the business’s long-term competitive position in the marketplace.

Competitive Advantage – Any factors that allow an organization to differentiate its product or service from those of its competitors to increase market share.

Functional Strategy – A strategy that identifies the broad activities that each department will pursue in order to help the business accomplish its competitive goals.

Strategic Human Resource Management – Formulating and executing human resource policies and practices that produce the employee competencies and behaviors the company needs to achieve its strategic aims.

Strategy Map – A strategic planning tool that shows the “big picture” of how each department’s performance contributes to achieving the company’s overall strategic goal.

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HR Scorecard – A process for assigning financial and nonfinancial goals or metrics to the human resource management related chain of activities required for achieving the company’s strategic aims and for monitoring results.

Digital Dashboard – Presents the manager with desktop graphs and charts, and a computerized picture of where the company stands on all those metrics from the HR Scorecard process.

Human Resource Metric – The quantitative gauge of human resource management activities, such as employee turnover, hours of training per employees, or qualified applicants per position.

Strategy-Based Metrics – Metrics that specifically focus on measuring the activities that contribute to achieving a company’s strategic aims.

HR Audit – An analysis by which an organization measures where it currently stands and determines what it has to accomplish to improve its HR function.

High-Performance Work System (HPWS) – A set of human resource management policies and practices that promote organizational effectiveness.

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Part Two Recruitment, Placement, and Talent Management Chapter 4 Job Analysis and the Talent Management Process Lecture Outline: The Talent Management Process Improving Performance Through HRIS: Talent Management Software The Basics of Job Analysis What is Job Analysis?

Use of Job Analysis Information Conducting a Job Analysis Improving Performance: HR as a Profit Center Methods for Collecting Job Analysis Information The Interview Questionnaires Observation Participant Diary/Logs Quantitative Job Analysis Techniques Electronic Job Analysis Methods Writing Job Descriptions Diversity Counts Job Identification Job Summary Relationships Responsibilities and Duties Trends Shaping HR: Digital and Social Media Know Your Employment Law Standards of Performance and Working Conditions Improving Performance: HR Tools for Line Managers and Small Businesses O*Net Writing Job Specifications Specifications for Trained versus Untrained Personnel Specifications Based on Judgment Job Specifications Based on Statistical Analysis The Job Requirements Matrix Employee Engagement Guide for Managers Using Competencies Models Improving Performance: The Strategic Context How to Write Competencies Statements Chapter Review ..

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Where Are We Now… The main purpose of this chapter is to show you how to analyze jobs and write job descriptions.

We discuss several techniques for analyzing jobs, and explain how to write job descriptions and job specifications. The main topics we address include the talent management process, the basics of job analysis, methods of collecting job analysis information, writing job descriptions, writing job specifications, employee engagement and job analysis, and using models and profiles in talent management.

Interesting Issues: When Daimler opened its Mercedes-Benz assembly plant in Alabama, its managers had a dilemma. Their strategy was to create a high-performance plant, one Daimler could then extend to its other plants in America, South Africa, Brazil, and Germany. The dilemma was that plant managers could not hire, train, or pay their employees unless they knew what each employee was expected to do. But in this plant, self-managing teams would assemble the vehicles, so teammembers’ jobs might change every day. How do you hire-people when their job duties are always changing? We’ll see what they did.

Learning Objectives: 4-1.

4-2.

4-3.

4-4.

4-5.

4-6.

4-7.

Define talent management and explain why it is important.

Discuss the process of job analysis, including why it is important.

Explain how to use at least three methods of collecting job analysis information, including interviews, questionnaires, and observation.

Explain how you would write a job description.

Explain how to write a job specification.

List some human traits and behaviors you would want an employee to bring to a job if employee engagement is important to doing the job well.

Explain competency-based job analysis, including what it means and how it's done in practice.

Annotated Outline: I.

The Talent Management Process – a holistic, integrated, and results and goal-oriented process of planning recruiting, selecting, developing, managing, and compensating employees.

A. Improving Performance Through HRIS: Talent Management Software – because talent management is holistic and interdependent, many employers use talent management software systems to coordinate their talent-related activities.

II.

The Basics of Job Analysis A. What is Job Analysis? – it is the procedure through which you determine the duties of the company’s positions and the characteristics of the people to hire for them.

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B. The Use of Job Analysis Information 1. Recruitment and Selection – information about what duties the job entails and what human characteristics are required to perform these activities helps managers to decide what sort of people to recruit and hire.

2. EEO Compliance – job analysis is a crucial step in validating all major human resources practices.

3. Performance Appraisal – compares each employee’s actual performance with his or her duties and performance standard. Managers use job analysis to learn what these duties and standards are.

4. Compensation – (such as salary and bonus) usually depends on the job’s required skill and education level, safety hazards, degree of responsibility, and so on—all factors you assess through job analysis.

5. Training – the job description lists the job’s specific duties and requisite skills—thus pinpointing what training the job requires.

C. Conducting a Job Analysis – There are six steps in doing a job analysis: 1. Step One: Decide How You Will Use the Information 2. Step Two: Review Relevant Background Information About the Job, Such as Organizational Charts and Process Charts a. Workflow Analysis b. Improving Performance: HR as a Profit Center c. Business Process Reengineering d. Job Redesign 3. Step Three: Select Representative Positions 4. Step Four: Actually Analyze the Job 5. Step Five: Verify the Job Analysis Information with the Worker Performing the Job and with His or Her Immediate Supervisor 6. Step Six: Develop a Job Description and Job Specification III. Methods for Collecting Job Analysis Information – there are many ways (interviews or questionnaires, for instance) to collect job information. The basic rule is to use those that best fit your purpose.

A. The Interview – the three types of interviews managers use to collect job analysis data are: individual (to get the employee’s perspective on the job’s duties and responsibilities, group (when large numbers of employees perform the same job), and supervisor (to get his/her perspective on the job’s duties and responsibilities).

1. Typical Questions – “What is the job being performed?” “In what activities do you participate?” “What are the health and safety conditions?”

2. Structured Interviews – many managers use questionnaires to guide the interview. Figure 4-4 presents one example.

3. Pros and Cons – interviews are simple, quick, and more comprehensive because the interviewer can unearth activities that may never appear in written form. The main problem is distortion, which may arise from the jobholder’s need to impress the perceptions of others.

4. Interviewing Guidelines – several techniques to keep in mind when conducting interviews are discussed.

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B. Questionnaires – structured or unstructured questionnaires may be used to obtain job analysis information. Questionnaires can be a quick, efficient way of gathering information from a large number of employees. But, developing and testing a questionnaire can be expensive and time consuming.

C. Observation – direct observations are useful when jobs consist of mainly observable physical activity as opposed to mental activity. A potential problem with direct observations is reactivity, which is where workers change what they normally do because they are being watched. Managers often use direct observation and interviewing together.

D. Participant Diary/Logs – in a diary or log, the employee records every activity he/she engages in, along with the amount of time needed to perform each activity, in order to produce a complete picture of the job. Pocket dictating machines can help remind the worker to enter data at specific times and eliminate the challenge of trying to remember at a later time what was done.

E. Quantitative Job Analysis Techniques 1. Position Analysis Questionnaire (PAQ) –a questionnaire containing 194 items used to collect quantifiable data representing, five basic elements: 1) having decision-making/communication/social responsibilities, 2) performing skilled activities, 3) being physically active, 4) operating vehicles/equipment, and 5) processing information.

2. Department of Labor Procedure (DOL) –a standardized method for rating, classifying, and comparing virtually every kind of job based on data, people, and things. Table 4-1 shows the DOL method.

F. Electronic Job Analysis Methods – employers increasingly rely on electronic or Webbased job analysis methods. Then, rather than collecting information about the job though direct interviews and questionnaires, the analysts use online systems to send questionnaires to job experts in remote locations. Of course instruction should be clear and the process should be tested first.

IV. Writing Job Descriptions A. Diversity Counts – Figures 4-7 and 4-8 present two sample forms.

B. Job Identification – contains the job title, the Fair Labor Standards Act (FLSA) status, date, and possible space to indicate who approved the description, the location of the job, the immediate supervisor’s title, salary, and/or pay scale.

C. Job Summary – should summarize the essence of the job and include only its major functions or activities.

D. Relationships – occasionally a relationships statement is included. It shows the jobholders’ relationships with others inside and outside the organization.

E. Responsibilities and Duties – this is the heart of the job description. It should present a list of the job’s significant responsibilities and duties.

F. Trends Shaping HR: Digital and Social Media G. Know Your Employment Law 1. Writing Job Descriptions That Comply with the ADA

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H. Standards of Performance and Working Conditions – states the standards the employee is expected to achieve under each of the job description’s main duties and responsibilities.

I. Improving Performance: HR Tools for Line Managers and Small Businesses – the U.S. Department of Labor’s online occupational information network that is free to use is O*NET (http://online.onecenter.org ) The steps in using O*NET to facilitate writing a job description is: 1. Review your Plan.

2. Develop an Organization Chart.

3. Use a Job Analysis Questionnaire.

4. Obtain Job Duties from O*NET. 5. List the Job’s Human Requirements from O*NET. 6. Finalize the Job Description.

V. Writing Job Specifications – takes the job description and answers the question, “what human traits and experience are required to do this job effectively?”

A. Specifications for Trained versus Untrained Personnel – writing job specifications for trained employees is relatively straightforward because they are likely to focus on traits like length of previous service, quality of relevant training, and previous job performance. Writing job specifications for untrained employees is more complex because they are more likely to specify qualities such as physical traits, personality, interests, or sensory skills that imply some potential for performing or being trained to perform on the job.

B. Specifications Based on Judgment – job specifications may come from educated guesses or judgments, or from competencies listed in Web-based job descriptions like those listed at www.jobdescription.com or O*Net online (http://online.onetcenter.org).

C. Job Specifications Based on Statistical Analysis 1. Basing job specifications on statistical analysis is more defensible, but it is a more difficult approach than the judgmental approach.

2. The aim of the statistical approach is to determine statistically the relationship between 1) some predictor or human trait, such as height, intelligence, or finger dexterity, and 2) some indicator or criterion of job effectiveness.

3. The five steps in statistical analysis are: a) analyze the job and decide how to measure job performance; b) select personal traits like finger dexterity that you believe should predict successful performance; c) test candidates for these traits; d) measure these candidates’ subsequent job performance; and e) statistically analyze the relationship between the human trait and job performance.

D. The Job Requirements Matrix –a popular way to use job descriptions and specifications. The job matrix lists the information in five columns: main job duties, task statements, importance of each main job duty, time spent on each, and the knowledge skills and abilities and other human characteristics (KSAO) related to each main job duty.

VI.

Employee Engagement Guide for Managers

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Using Competencies Models – profiles giving the knowledge, skills, and experience someone needs to do the job. Such models or profiles (see Figure 4-10) list the competencies employees must be able to exhibit to get their jobs done.

A. Improving Performance: The Strategic Context B. How to Write Competency Statements – the idea competency statement will include three elements: the name of a brief description, description of the observable behaviors, and proficiency levels.

Chapter Review Chapter Section Summaries: 4-1: Employers today often view all the staff-train-reward activities as part of a single integrated talent management process.

4-2: All managers should be familiar with the basics of job analysis.

4-3: There are various methods for collecting job analysis information.

4-4: Managers should know how to write job descriptions.

4-5: In writing job specifications, it’s important to distinguish between specifications for trained verses untrained personnel.

4-6: There are human traits and behaviors that may predict the job candidate’s likelihood to be engaged and the manager might therefore want to include these in the job specification.

4-7: Employers are using competencies models and profiles in talent management.

Discussion Questions: 4-1: Why is it important for modern companies to use talent management as part of their organization’s direction?

It is important for today’s companies to use talent management because it is a goal-oriented and integrated process of planning, recruiting, developing, managing, and compensating employees to get them ready and able to play an important part in moving the company into the right direction.

4-2: What items are typically included in the job description?

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

4-3: Compare and contrast the three different methods of collecting job analysis information. Under what circumstances should each be used? Provide an example for each of these methods.

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The three different methods include interviews, questionnaires, and observation. Interviews help find out information from employees about their job functions, roles and ascertain their knowledge about certain processes. Questionnaires is a very a helpful method to collect information from a very large pool of employees. Observation is used to observe the worker on the job during the completely work cycle. This method is usually used handin-hand with interviewing.

4-4: Should every job description have a job summary? Why or why not? Is it an integral part of a job description?

A job summary describes the basic purpose of a job, which is performed. The job summary should therefore summarize the essence of the job, and include only its main functions and/or activities. It should give a brief description of what the tasks are, how they are performed, and why it is done. A typical job summary (as mentioned in the chapter) contains all the things the employee is expected to do in order to carry out his/her duties efficiently, attentively, and conscientiously.

4-5: Explain how you would conduct a job analysis.

There are six major steps in a well-conducted job analysis: 1) Determine how the job analysis information will be used and how to collect the necessary information; 2) Collect background information such as organization charts, process charts, and job descriptions; 3) Select representative positions to be analyzed; 4) Collect job analysis information; 5) Review the information with the participants; 6) Develop job descriptions and job specifications.

4-6: Discuss and highlight the main differences between job enlargement, job rotation, and job enrichment.

The following methods include different types of job redesign: Job enlargement Is about assigning workers additional same level duties.

Job rotation Job enrichment Is about systematically Is about redesigning jobs in moving workers from one job a way that increases the to another. opportunities for the worker to experience feelings or responsibility, achievement, growth, and recognition which would later lead to more motivation.

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Chapter 4: Job Analysis and the Talent Management Process Gives the worker a task that is equivalent to their own job. This could also mean that their job responsibilities have doubled.

Moves workers to various departments and expects them to play different roles there. This method is usually used as part of an orientation or training in order to familiarize workers to the different processes of the company.

4-8 Gives new tasks and training to workers that may improve their productivity. This could also mean that the worker has a more challenging role and this is usually supported by appropriate training.

4-7: Explain how you would create a job requirements matrix for a job.

The first step in creating the job requirements matrix is to write one task statement for each of the jobs tasks. Each task statement shows what the worker does on a particular job task, how the worker does the task, the knowledge skills and aptitudes required to do the task, and the purpose of the task. Each task should identify the knowledge skills and abilities and other characteristics needed to perform the job.

Second, the job analysis takes the resulting task statements for the jobs and groups them into four or five main job duties. Finally, the job analyst compiles all this information in a job requirements matrix for a particular job.

The job matrix lists the following information: each of the jobs’ main duties, task statements associated with each job or duty, the relative importance of each main job duty, the time spent on each main job duty, and the knowledge, skills, abilities, and other characteristics or competencies related to each main job duty. This type of job matrix provides a more complete picture of what a worker does on the job and how and why he or she does the job more completely than just a job description.

4-8: It has been stated that a ‘cop-out clause’ should never be included in a job description.

What is a cop-out clause? Do you agree with the statement? Why or why not?

According to some experts who state unequivocally that “one item frequently found that should never be included in a job description is a ‘cop-out clause’ like ‘other duties, as assigned,’” since this leaves open the nature of the job and competencies needed to complete such duties. Apparently HRM staff sometimes fails to conduct the preliminary research required to stipulate the exact duties and add such a ‘cop-out clause.’

Individual and Group Activities: 4-9: Working individually or in groups, prepare a job specification for a customer service representative at a bank. What sort of a job specification would you develop for a bank manager? To what extent do these job specifications differ from each other?

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Provide a detailed job description for each of the above-mentioned positions and create a job advertisement for each.

Students are required to discuss the differences between each of the above jobs. The differences may arise due to the types of customers each has or even their roles in the strategic planning of the company.

4-10: Working individually or in groups, use O*Net to develop a job description for your professor in this class. Based on that, use your judgement to develop a job specification. Compare your conclusions with those of other students or groups.

Were there any significant differences? What do you think accounted for the differences?

The students should go to the O*Net Web site at http://online.onetcenter.org to find sample job descriptions in order to create a job description for you. Once they create a job description, they should develop a job specification.

4-11: Appendix A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam and/or SHRM exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so the students in all teams can answer the exam questions created by the other teams.

Topics covered in this chapter include job analysis, how to write job descriptions and develop job competencies; identification and documentation of essential job functions for positions; and establishing hiring criteria based on the competencies needed.

Experiential Exercise: The Instructor’s Job Description Purpose: The purpose of this exercise is to give you experience in developing a job description by developing one for your instructor.

Required Understanding: You should understand the mechanics of job analysis and be thoroughly familiar with the job analysis questionnaires. (See Figures 4-4 and 4-9).

How to Set up the Exercise/Instructions: Set up each group of several students for this exercise. As in all exercises in this book, the groups should be separated and should not converse with each other. Half the groups in the class will develop a job description using the job analysis questionnaire (Figure 4-4), and the other half of the groups will develop it using the job

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description questionnaire (Figure 4-9). Each student should review his or her questionnaire (as appropriate) before joining his or her group.

4-12: Each group should do a job analysis of the instructor's job: half of the groups will use the Figure 4-4 job analysis questionnaire for this purpose, and half will use the Figure 4-9 job description questionnaire.

4-13: Based on this information, each group will develop its own job description and job specification for the instructor.

4-14: Next, each group should choose a partner group, one that developed the job description and job specification using the alternate method. (A group that used the job analysis questionnaire should be paired with a group that used the job description questionnaire.)

4-15: Finally, within each of these new combined groups, compare and critique each of the two sets of job descriptions and job specifications. Did each job analysis method provide different types of information? Which seems superior? Does one see more advantageous for some types of jobs than others?

Application Case: Talent Management at Dubai Airport 4-16: Which elements of Dubai Airport’s organizational culture do you think are most likely to appeal to the employees it seeks? Explain how it conveys those elements to prospects candidates.

A number of Dubai Airport’s elements may appeal to prospective employees. According to Dubai Airport’s unique HR philosophy for managing talent, they need innovative thinkers ready for any challenge. It represents those elements in the five key values that are at the heart of Dubai Airport’s HR approach, “we are proud, ambitious, energetic, caring, and reliable.”

4-17: Referring to the information in the case, and on Dubai Airport’s Web site, which elements of the talent management process mentioned in the chapter do you think are clearly visible?

Students’ answers will vary. Several elements of the talent management process can easily be recognized in the talent management process of Dubai Airport such as ensuring all talent management functions are goal-directed; management focuses on all functions required for managing the firm’s talent; using the same set of competencies for all talent management activities; actively managing each employee’s segment; and integrating all talent management functions.

Continuing Case: Carter Cleaning Company – The Job Description 4-18: What should be the format and final form of the store manager’s job description?

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Students may recommend that Jennifer include a standard of performance section in the job description. This lists the standards the employee is expected to achieve under each of the job description’s main duties and responsibilities, and would address the problem of employees not understanding company policies, procedures, and expectations. In addition, students may recommend that Jennifer instead take a competency-based approach, which describes the job in terms of the measurable, observable, and behavioral competencies that an employee doing that job must exhibit. Because competency analysis focuses more on “how” the worker meets the job’s objectives or actually accomplishes the work, it is more worker-focused.

4-19: Is it practical to specify standards and procedures in the body of the job description, or should these be kept separately?

They do not need to be kept separately, and in fact both Jennifer and the employees would be better served by incorporating standards and procedures into the body of the description. The exception to this would be if the standards and procedures are so complex or involved that it becomes more pragmatic to maintain a separate procedure manual.

4-20: How should Jennifer go about collecting the information required for the standards, procedures, and job description?

She should first conduct the job analysis by collecting information about the work activities, human behaviors, machines, tools, equipment, work aids, performance standards, job context, and human requirements. The best methods for collecting this information in this case are through interviews, questionnaires, observations, and employee diaries/logs. In addition, she should ensure that she is identifying the essential functions of the job, and that the descriptions are ADA-compliant.

4-21: What, in your opinion, should the store manager’s job description look like and contain?

The store manager’s job description should include a list of the job’s significant responsibilities and duties. For example, the following duties should include quality control, store appearance and cleanliness, customer relations, bookkeeping and cash management, cost control and productivity, damage control, pricing, inventory control, etc.

The job description should also include any educational requirements as well as information regarding working conditions.

Hotel Paris: Improving Performance at the Hotel Paris – The New Job Descriptions 4-22: Based on the hotel’s stated strategy, list at least four or more important employee behaviors important for Hotel Paris’s staff to exhibit.

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Students’ answers will vary. Important employee behaviors might include: • The ability to project a positive attitude and put the customer’s needs first, even if the customer is curt.

• Showing tact and discretion in responding to personal requests from a hotel guest.

• Being aware of the reactions of others and responding to those reactions in an appropriate way.

• Being able to handle multiple priorities without getting “flustered.”

• The ability to resolve billing issues with discretion and a positive demeanor.

4-23: If time permits, spend some time prior to class observing the front desk clerk at a local hotel. In any case, create a job description for a Hotel Paris front desk clerk.

Use of O*NET is recommended. A full description of tasks and responsibilities is located under the job title “Hotel, Motel, and Resort Desk Clerks.”

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 4-24: What is job analysis? How can you make use of the information it provides?

4-25: Explain what a competencies model is and what the model would look like for the job of university professor.

Key Terms: Talent Management – The goal-oriented and integrated process of planning, recruiting, developing, managing, and compensating employees.

Job Analysis – The procedure for determining the duties and skill requirements of a job and the kind of person who should be hired for it.

Job Description – A list of a job's duties, responsibilities, reporting relationships, working conditions, and supervisory responsibilities – one product of a job analysis.

Job Specifications – A list of a job's "human requirements," that is, the requisite education, skills, personality, and so on – another product of a job analysis.

Organization Chart – A chart that shows the organization-wide distribution of work, with titles of each position and interconnecting lines that show who reports to and communicates with whom.

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Process Chart – A work flow chart that shows the flow of inputs to and outputs from a particular job.

Workflow Analysis – A detailed study of the flow of work from job to job in a work process.

Business Process Reengineering – Redesigning business processes, usually by combining steps, so that small multifunction process teams using information technology do the jobs formerly done by a sequence of departments.

Job Enlargement – Assigning workers additional same-level activities.

Job Rotation – Systematically moving workers from one job to another.

Job Enrichment – Redesigning jobs in a way that increases the opportunities for the worker to experience feelings of responsibility, achievement, growth, and recognition.

Diary/Log – Daily listings made by workers of every activity in which they engaged along with the time.

Position Analysis Questionnaire (PAQ) – A questionnaire used to collect quantifiable data concerning the duties and responsibilities of various jobs.

Standard Occupational Classification (SOC) – Classifies all workers into one of 23 major groups of jobs, which are subdivided into minor groups of jobs and detailed occupations.

Job-requirements Matrix – A more complete description of what the worker does and how and why he or she does it; it clarifies each tasks purpose and each duty’s required knowledge, skills, abilities, and other characteristics.

Task Statement – Written item that shows what the worker does on one particular job task; how the worker does it; the knowledge, skills, and aptitudes required to do it; and the purpose of the task.

Competency-Based Job Analysis – Describing the job in terms of the measurable, observable, behavioral competencies (knowledge, skills, and/or behaviors) that an employee doing that job must exhibit to do the job well.

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Part Two Recruitment, Placement, and Talent Management Chapter 5 Personnel Planning and Recruiting Lecture Outline: Introduction Workforce Planning and Forecasting Strategy and Workforce Planning Improving Performance: The Strategic Context Forecasting Personnel Needs (Labor Demand) Forecasting the Supply of Inside Candidates Forecasting the Supply of Outside Candidates Predictive Workforce Monitoring Improving Performance: HR as a Profit Center Match Projected Labor Supply and Labor Demand Succession Planning Why Effective Recruiting Is Important The Recruiting Yield Pyramid Know Your Employment Law The Supervisor Role Internal Sources of Candidates Finding Internal Candidates Employee Engagement Guide for Managers Promotion from Within Outside Sources of Candidates Informal Recruiting and the Hidden Job Market Recruiting via the Internet Improving Performance Through HRIS: Using Applicant Tracking Trends Shaping HR: Science in Talent Management Trends Shaping HR: Digital and Social Media Advertising Employment Agencies Recruitment Process Outsourcers Temporary Workers and Alternative Staffing Know Your Employment Law Trends Shaping HR: The New Extended Workforce Offshoring and Outsourcing Jobs Executive Recruiters Improving Performance: HR Tools for Line Managers and Small Businesses Referrals and Walk-Ins ..

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On-Demand Recruiting Services College Recruiting Telecommuters Military Personnel Improving Performance: HR as a Profit Center Recruiting a More Diverse Workforce Recruiting Women Recruiting Single Parents Older Workers Diversity Counts Recruiting Minorities The Disabled Developing and Using Application Forms Purpose of Application Forms Application Guidelines Know Your Employment Law Using Application Forms to Predict Job Performance Mandatory Arbitration Chapter Review

Where Are We Now… The purpose of this chapter is to improve your effectiveness in recruiting candidates. The topics we discuss include personnel planning, forecasting, recruiting job candidates, and developing and using application forms.

Interesting Issues: Like most luxury hotel businesses, Four Seasons builds its strategy around offering superior customer service, and doing that requires staffing its hotels with highly motivated and highmorale employees. Therefore, in thinking through how to recruit employees, Four Seasons managers sought a way to use recruitment to encourage the employee motivation and morale that would lead to improved customer service. We will see what they did.

Learning Objectives: 5-1. Explain the main techniques used in employment planning and forecasting.

5-2. Explain and give examples for the need for effective recruiting.

5-3. Name and describe the main internal sources of candidates.

5-4. Discuss a workforce planning method you would use to improve employee engagement.

5-5. List and discuss the main outside sources of candidates.

5-6. Explain how to recruit a more diverse workforce.

5-7. Discuss practical guidelines for obtaining application information.

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Chapter 5: Personnel Planning and Recruiting Introduction – Figure 5-1 illustrates the recruiting and selecting process.

I. Workforce Planning and Forecasting A. Strategy and Workforce Planning – workforce plans should flow from the firm's strategic plans and will be affected by the need to fill or eliminate positions and reduce or increase cost.

B. Improving Performance: The Strategic Context C. Forecasting Personnel Needs (Labor Demand) – forecast revenues, and then estimate the size of the staff required to achieve this sales volume.

1. Trend Analysis requires studying a firm’s employment levels over a period of years to predict future needs.

2. Ratio Analysis involves making forecasts based on the ratio between (1) some causal factor, such as sales volume, and (2) the number of employees required, like the number of salespeople.

3. The Scatter Plot shows graphically how two variables (such as sales and your firm’s staffing levels) are related.

4. Managerial Judgment – is needed to adjust the forecast.

D. Forecasting the Supply of Inside Candidates – (availability of candidates) 1. Personnel Replacement Charts – show the present performance and promotability for each position’s potential replacement. Position replacement cards can also be created for each position to show possible replacements as well as their present performance, promotion potential, and training.

2. Computerized skills inventories systems are used to help management anticipate staffing and skill shortages and facilitate workforce planning, recruitment, and training.

3. Markov Analysis involves creating a matrix that shows probabilities that employees in the chain of feeder positions for a key job will move from position to position and therefore be available to fill the key position.

E. Forecasting the Supply of Outside Candidates – this may involve considering general economic conditions and the expected rate of unemployment.

F. Predictive Workforce Monitoring – having a talent management philosophy for workforce planning requires organizations to pay continuous attention to workforce planning issues.

G. Improving Performance: HR as a Profit Center 1. Predicting Labor Needs H. Match Projected Labor Supply and Labor Demand – this is laying out the employer’s projected workforce and skill gaps, as well as staffing plans for filling these gaps.

I. Succession Planning – involves developing workforce plans for the company’s top positions and developing organizational leadership to enhance performance.

II. Why Effective Recruiting Is Important

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Chapter 5: Personnel Planning and Recruiting A. The Recruiting Yield Pyramid is used by some managers to gauge the number of applicants they must generate to hire the required number of new employees. Figure 5.5 illustrates this example.

B. Know Your Employment Law 1. Recruiting Employees – numerous federal, state, and local laws and court decisions restrict what employers can and cannot do when recruiting job applicants.

C. The Supervisor’s Role – the HR manager charged with filling an open position is seldom familiar with the job itself and must rely on the supervisor to give the details about and specifications of the job or position.

III. Internal Sources of Candidates A. Finding Internal Candidates – in other words, current employees or “hiring from within” are often the best source of candidates and is increasingly popular.

IV. Employee Engagement Guide for Managers A. Promotion from Within – many employers encourage internal recruiting, on the reasonable assumption that doing so improves employee engagement.

V. Outside Sources of Candidates A. Informal Recruiting and the Hidden Job Market – many (or most) job openings aren’t publicized at all; jobs are created and become available when employers serendipitously encounter the right candidates.

B. Recruiting via the Internet – most employers find that the Internet is their best choice for recruitment efforts.

1. Pros – online recruiting generates more responses, more quickly, and for a longer time at less cost than just about any other method. Online recruiting also has a stronger effect on applicant attraction than printed ads do.

2. Cons – online recruiting may inadvertently exclude older people and some minorities since they are less likely to use the Internet. Internet overload is another.

C. Improving Performance Through HRIS: Using Applicant Tracking – most employers now use applicant tracking software to screen applicants. Most of the applicant tracking systems (ATS) is from application service providers.

(ASPs) – these basically redirect applicants from the employers to the ASP’s site.

D. Trends Shaping HR: Science in Talent Management – most employers use tools like job boards to produce large numbers of recruits, and then use ATS and screening systems to cut those numbers down.

1. Improving Online Recruiting Effectiveness – Figure 5-6 illustrates.

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E. Trends Shaping HR: Digital and Social Media – Accenture predicts that about 80% of new recruits will soon come through prospective employees’ social media connections.

F. Advertising – Web-based recruiting is replacing traditional help wanted print ads, at a glance almost any paper will confirm that print ads are still popular. To use successfully, employers should address two issues: the advertising medium and the ad construction.

1. The Media – the best medium should be selected based on the positions for which you are recruiting.

2. Constructing (Writing) the Ad – many experienced advertisers use a guide called AIDA (attention, interest, desire, action) to construct their ads. Figure 5-7 illustrates this AIDA guide.

G. Employment Agencies – there are three main types of employment agencies: 1) public agencies operated by federal, state, or local government; 2) agencies associated with nonprofit organizations; and 3) privately owned agencies.

H. Public and Nonprofit Agencies – every state has a public, state-run employment service agency supported by the Department of Labor, in part through grants and other assistance, such as a nationwide computerized job bank. Most (non-profit) professional and technical societies and special public agencies have units that help their members or people in special categories find jobs.

I. Private Agencies – are important sources of clerical, white-collar, and managerial personnel. They charge fees (set by state law and posted in their offices) for each applicant they place. The employer pays the fee.

J. Recruitment Process Outsourcers – special vendors that handle all or most of an employer’s recruiting needs.

K. Temporary Workers and Alternative Staffing – employers increasingly supplement their permanent workforces by hiring contingent or temporary workers. Also known as part-time or just-in-time workers. Employers have used “temps” for short-term projects and to fill-in for employees who were out sick or on vacation.

1. The Temp Agency – employers can hire temp workers either through direct hires or through the use of temporary staff agencies.

2. Temp Employee’s Concerns – to make temporary relationships successful, those supervising temps should understand their concerns.

L. Know Your Employment Law 1. Contract Employees – for the purpose of most employment laws, with certain limited exceptions, employees of temporary staffing firms working in an employer’s workplace will be considered to be employees both of the agency and of the employer.

M. Trends Shaping HR: The New Extended Workforce – many employers today build their staff wholly or in part around an extended workforce consisting, for instance, of freelance programmers, designers, or marketers.

N. Offshoring/Outsourcing Jobs – rather than bringing people in to do the company’s job, outsourcing and offshoring sends the job out. There are

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Chapter 5: Personnel Planning and Recruiting several specific issues that the HR manager should keep in mind when considering this option.

O. Executive recruiters, also called headhunters, are special employment agencies retained by employers to seek out top-management talent for their clients.

1. Working with Recruiters – retaining and working with executive recruiters requires some caution.

2. Internal Recruiting – many employers are bringing management recruiting in-house. They have their own internal executive recruiting offices doing most of their own management recruiting.

P. Improving Performance: HR Tools for Line Managers and Small Businesses 1. Recruiting 101 Q. Referral and Walk-Ins – employee referral campaigns are a very important recruiting option. The big advantage is that referrals generate “more applicants, more hires, and a higher yield ratio (hires/applicants).” Walk-ins are direct applicants made at your office.

R. On-Demand Recruiting Services (ODRS) – this service provides short-term, specialized recruiting to support specific projects without the expense of retaining traditional search firms. They are paid by the hour or project, instead of a percentage fee, to support a specific project. ODRS firms charge by time, rather than per hire.

S. College Recruiting – involves sending employers’ representatives to college campuses to prescreen applicants and create an applicant pool from the graduating class. This type of recruiting can be expensive. There are two main goals: 1) to determine if a candidate is worthy of further consideration, and 2) to make the employer attractive to candidates.

T. On-Campus recruiting goals involve attracting good candidates and determining whether a candidate is worthy of further consideration. The school’s reputation and the performance of previous hires from that source affect school selection.

1. Internships – this can be a win-win situation for the student and the employer. For the student, it can mean honing business skills, learning more about potential employers, and discovering one’s career likes (and dislikes). For employers, they can use interns to make useful contributions while evaluating them as possible full-time employees.

U. Telecommuters – do all or most of their work remotely, often from home, using information technology.

V. Military Personnel – returning and discharged U.S. military personnel provide an excellent soure of trained and disciplined recruits.

W. Improving Performance: HR as Profit Center (Cutting Recuritment Cost) VI. Recruiting a More Diverse Workforce A. Recruiting Women – the most effective strategy is top management driven.

Here, the employer emphasizes the importance of recruiting women (as well as men), identifies gaps in the recruitment and retention of women, and puts in place a comprehensive plan to attract women applicants. ..

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Chapter 5: Personnel Planning and Recruiting B. Recruiting Single Parents – recruiting and keeping them requires understanding the problems they face, such as a need for personal sick time or excused days off to care for sick children. Many firms have flextime programs that provide employees with some schedule flexibility.

C. Older Workers – the fastest-growing labor force segment is those from 45-64 years old. A survey by AARP and SHRM concluded that older workers tend to have lower absenteeism rates, more reliability, and better work habits than younger workers.

D. Diversity Counts E. Recruiting Minorities – requires employers to understand the barriers that prevent minorities from applying and to tailor their way of thinking to design HR practices that make their firms attractive to minority workers.

F. The Disabled – employers can do several things to tap into this huge potential workforce. The Department of Labor’s Office of Disability Employment Policy offers several programs, and all states have local agencies that provide placement services and other recruitment and training tools.

VII. Developing and Using Application Forms A. Purpose of Application Forms – The application form is usually the first step in the prescreening process. Application forms provide four types of information: substantive matters, previous progress, stability, and prediction of which candidate will succeed on the job.

B. Application Guidelines – organizations should request detailed information on each prior employer, including the name of the supervisor and his or her email address and telephone number; this is essential for reference checking. Also, in signing the application, the applicant should certify his or her understanding that falsified statements may be cause for dismissal, that investigation of credit, employment, and driving records is authorized, that a medical examination may be required, that drug screening tests may be required, and that employment is for no definite period.

C. Know Your Employment Law 1. Application Forms and EEO Law – application forms must comply with equal employment laws. Problematic items include: education, arrest record, who to notify in case of emergency, membership in organizations, physical handicaps, martial status, housing, and video resumes.

D. Using Application Forms to Predict Job Performance – some employers use analysis of application forms to predict employee tenure and performance.

E. Mandatory Arbitration – many employers, aware of the high cost of employment litigation, require applicants to agree to binding arbitration to settle disputes.

Chapter Review Chapter Section Summaries: 5-1: Recruitment and selection start with workforce planning and forecasting.

5-2: Managers need to understand why effective recruiting is important. ..

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5-3: Filling open positions with internal sources of candidates has several advantages.

5-4: Workforce plans influence employee engagement.

5-5: Employers use a variety of outside sources of candidates when recruiting applicants.

5-6: Understanding how to recruit a more diverse workforce is important.

5-7. Employers develop and use application forms to collect essential background information about the applicant.

Discussion Questions: 5-1: Briefly outline the workforce planning process.

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

5-2: Explain the best ways to recruit a more diverse workforce.

The application form is a good means of quickly collecting verifiable, and therefore, potentially accurate historical data from the candidate. It usually includes information on education, prior work history, and other experience related to the job. The application form can provide four types of information: substantive matters (such as education and experience); previous progress and growth; stability based on previous work history; and prediction of job success.

5-3: What are the four main types of information that application forms provide?

The application form is a good means of quickly collecting verifiable, and therefore potentially accurate, historical data from the candidate. It usually includes information on education, prior work history, and other experience related to the job. The application form can provide four types of information: 1. substantive matters (such as education and experience); 2. previous progress and growth; 3. stability based on previous work history; and 4. prediction of job success.

5-4: How do employers approach potential employees who are not actually looking for work?

Employers approach potential employees who are not actually looking for work by using social networking sites such as LinkedIn to browse résumés, and also by using Twitter and Facebook to announce opportunities to subscribers. Some companies employ recruiters to proactively search through social websites for potential candidates and others have social media pages that demonstrate the benefits of working for their company.

5-5: Why is having a diverse workforce considered to be advantageous for an organization?

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Students’ answers may vary, but the key point is that the more diverse the workforce, the greater life skills and experience the workforce has. If an organization has a mix of individuals from different racial, educational, and social backgrounds, it helps to encourage creativity and innovation. There is a major competitive advantage in having a diverse workforce as the organization is better placed to understand the requirements and tastes of a broader range of customers. They are also better prepared to interact with a broader customer base. By embedding diversity across the whole organization, talent can be recognized and nurtured. Ignoring some groups of potential workers weakens the choices and variability on offer to the organization. Age, gender, disability, etc. should not be seen as negatives, but as potential positives.

Individual and Group Activities: 5-6: Working individually or in groups, find a recruitment video created for a large corporation. Analyze and list the aspects of the job that have been stressed in the video. Differentiate between a written job description and a video.

The answers will vary depending on which video is chosen. One example is Apple. The company produced a recruitment video using testimonials from staff depicting an innovative culture that valued teamwork, diversity, and excellence. It is difficult to convey the passion expressed by the said employees for these values in written text, but examples can be detailed in discussion.

5-7: Working individually or in groups, briefly explain and discuss the factors that influence the supply of labor outside an organization.

The factors that influence the supply of labor outside an organization are unemployment rates, skill base of local population, demographics (in terms of gender, age, and ethnic background), and labor mobility.

5-8: Assume you are working in a successful company that has a high business profile, a successful brand name, and a reputation for good working conditions.

Unemployment rates are high and, therefore, you think it will be relatively easy to attract candidates while maintaining the company’s high caliber requirements.

Explain why it can still be difficult to attract such candidates. What actions can you take to try to improve the situation?

The candidates may not have the required skills and knowledge for the jobs available.

Attracting candidates with the right qualifications can also be a problem. For example the relative shortage of science and math graduates has affected the ability of companies in these fields to attract suitable candidates.

5-9: Working individually or in groups, use the Internet to find the best locations for a job advertisement for a programming consultant. Share your list with the class and explain the factors that influenced your choice. ..

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Students may choose the corporate websites of companies employing programming consultants. They may also suggest generalist and specialist job agencies as well as social media. A direct approach to appropriate graduates or postgraduates would also be possible. Clearly, a narrow focus on those with the right attributes rather than communicating more widely is the most important objective.

5-10: Working individually or in groups, interview a manager between the ages of 25 and 35 at a local business who manages employees 40 or older. Ask the manager to describe three or four of his or her most challenging experiences managing older employees.

Students should probe the manager to see if he/she mentions that the older employee found the experience challenging as well.

5-11: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) certification exam needs to know in each area of human resource management (such as in Strategic Management and Workforce Planning).

In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam and/or the SHRM exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other team.

Experiential Exercise: Comprehensive HR Strategies To a large extent, recruitment is cyclical and is tied to the movements of the economy in general, which in turn determines recruitment demand. An organization will often find it difficult to predict their recruitment needs as there are so many factors that could influence it. It is often seen that the problem is that there are times when recruitment lags behind organizational needs and HR needs to immediately provide a solution in order to plug the gaps.

Purpose: The purpose of this exercise is to give you the opportunity to develop your own recruitment program.

Required Understanding: You should be thoroughly familiar with the material in this chapter.

You should choose an organization from your country and be able to access details of one of their latest recruitment campaigns.

How to Set up the Exercise/Instructions: Set up groups of three or four students for this exercise. The groups should work separately and should not converse with one another. Each group should address the following tasks:

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5-12: Assuming you will need to recruit employees from both the domestic and the international market, create two recruitment advertisements. Select suitable media (television, print, radio, billboards, and others) and justify your team’s choice of medium.

Student responses will vary to this task, but they will need to create a professional and attractive advertisement for both the domestic and the international market. They should be clear about the differences and why the differences are necessary. They should also research the markets and make a judgment as to the choice of media. This needs to be justified to some extent. The other key point is to consider the actual job roles that are being advertised. Students should try to find media that is the most appropriate fit for the job post.

5-13: Does the organization carry out recruitment online? Analyze its effectiveness and appeal.

Most organizations will have a section on their own websites for recruitment. In many cases, this is vary bland and unappealing, often hidden somewhere on the site. Many other organizations will use more attractive means of online recruitment and a common and effective one is to use social media as the call for likely candidates.

5-14: Prepare a recruiting program for your organization assuming a 20 percent increase in employees at all levels. What would be necessary?

Students’ approaches will vary, but they will be able to use the recruitment program advice given in the chapter. This will mean using internal sources for possible recruitment to more senior positions and using external recruitment for most of the other vacancies.

Application Case: Ya Kun Kaya International 5-15: How would you forecast the manpower needs of Ya Kun? As stated in the case, each outlet requires 10 Full-Time Equivalent (FTE). To provide for employees going on leave and absenteeism, we add a 10% allowance, making it 11 FTE. Let n be the number of outlets in a given year.

Let e be the projected number of outlets Ya Kun plans to open in the next year.

Let t be the estimated number of resignations over the next year.

Let p be the estimated number of personnel who are promoted to store manager or transferred to the headquarters in the next year.

Total number of new outlet staff required in the next year = Total number of manpower required in one year’s time - Total number of manpower required now + Estimated number of resignations over the next year + Estimated number of promotions over the next year.

Total number of manpower required in one year’s time = 11 (n + e) Total number of manpower required now = 11n ..

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Total number of new outlet staff required in the next year = 11 (n + e) - 11n + p + t = 11 e +p+t 5-16: What are the advantages and disadvantages of Ya Kun’s hiring part-time workers?

Advantages of hiring part-time workers include flexibility in scheduling as they help fill in the gaps when the full-time workers go on leave or are taken ill; complement the fulltime workers; allows Ya Kun to tap into a larger available pool of job applicants as many more people may be willing and able to work part-time as opposed to full-time; and can be deployed strategically during peak hours. On the other hand, the disadvantages include less commitment to the company, difficulty in integrating them as they only work occasionally, and their large numbers may affect teamwork.

5-17: Good attitude and commitment are two important attributes that Ya Kun looks for in prospective employees. Is a job interview an effective method to assess these two attributes? How else can Ya Kun get reliable information about these two attributes?

A job interview may not be the most effective method to assess these two attributes as these may not be immediately apparent during the interview process.

In order to obtain reliable information on these two attributes, managers of Ya Kun may ask the job applicants for referrals in the application pack and contact the referrals to obtain information regarding these two attributes; use critical incidence interviews to test if the job applicants have past examples of these attributes; provide job applicants with a realistic job preview by telling them about all the challenges and worst case scenarios that their staff faces, allowing the applicants to have a better idea of the job and make a betterinformed choice of whether to take up the job or not; and use role-playing exercises where the applicants play the role of the staff and the managers the customers, so that the managers may observe how the applicants may potentially react when they are actually working for Ya Kun. 5-18: What suggestions would you make to Ya Kun to improve its recruiting processes?

Ya Kun’s low turnover rate and large pool of hardworking committed workers indicates that its recruitment processes are working well. However, to improve its recruiting process, Ya Kun’s managers may choose to use more internal referrals as employees know what kinds of applicants will fit well with the prevalent company culture; hire a larger ratio of part-timers to full-timers as this allows them greater flexibility in scheduling; convert parttimers to full-timers if they perform well and if they are open to the switch; and maintain contact with former staff of the company so that they can be informed of any new positions or openings in the company.

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Continuing Case: Carter Cleaning Company – Getting Better Applicants 5-19: First, how would you recommend we go about reducing the turnover in our stores?

The students should base their responses on the information presented in the advertising section of the chapter, and their response should include placing and constructing ads that will attract candidates who will find the job attractive.

5-20: Provide a detailed list of recommendations concerning how we should go about increasing our pool of acceptable job applicants, so we no longer have to hire almost anyone who walks in the door. (Your recommendations regarding the latter should include completely worded online and hard-copy advertisements and recommendations regarding any other recruiting strategies you would suggest we use.)

The students should review the section on outside sources of candidates, and their responses should include advertising and the possible use of employment and/or temp agencies.

Hotel Paris: Improving Performance at the Hotel Paris – The New Recruitment Process 5-21: Given the hotel’s required personnel skills, what recruiting sources would you suggest they use, and why?

Though the local paper may bring in applicants, the development of a succession plan will ensure that lower-level employees are ready to move into higher levels when an opening occurs. College recruitment and employee referral may also be a good resource.

The company should begin using selection testing, particularly in the areas of integrity and conscientiousness.

5-22: What would a Hotel Paris help wanted ad look like?

Elements from the text should be incorporated into student responses, which will vary.

The hotel should consider developing a recognizable logo and color scheme, along with a standard format for ads, which should be used by the various hotels.

5-23: How would you suggest they measure the effectiveness of their recruiting efforts?

The number of qualified applicants per position, percentage of jobs filled from within, the offer-to-acceptance ratio, acceptance by recruiting source, turnover by recruiting source, and selection test results by recruiting source are used by other hotels, and should be considered for use by Hotel Paris.

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My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 5-24: What are the pros and cons of five sources of job candidates?

5-25: As explained in this chapter, technology is in many ways revolutionizing how Employers recruit for employees. You manage a small women’s clothing store and need to hire an assistant manager. How would you use social media to recruit candidates?

Key Terms: Workforce (or Employment or Personnel) Planning – The process of deciding what positions the firm will have to fill, and how to fill them.

Trend Analysis – Study of a firm's past employment needs over a period of years to predict future needs.

Ratio Analysis – A forecasting technique for determining future staff needs by using ratios between, for example, sales volume and number of employees needed.

Scatter Plot – A graphical method used to help identify the relationship between two variables.

Personnel Replacement Charts – Company records showing present performance and promotablity of inside candidates for the most important positions.

Position Replacement Card – A card prepared for each position in a company to show possible replacement candidates and their qualifications.

Succession Planning – The ongoing process of systematically identifying, assessing, and developing organizational leadership to enhance performance.

Employee Recruiting – Finding and/or attracting applicants for the employer’s open positions.

Recruiting Yield Pyramid – The historical arithmetic relationships between recruitment leads and invitees, invitees and interviews, interviews and offers made, and offers made and offers accepted.

Job Posting – Publicizing an open job to employees (often by literally posting it on bulletin boards) and listing its attributes, like qualifications, supervisors, working schedule, and pay rate.

Applicant Tracking Systems (ATS) – Online systems that help employers attract, gather, screen, compile, and manage applicants.

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Alternative Staffing – The use of nontraditional recruitment sources.

On-Demand Recruiting Services (ODRS) – Services that provide short-term, specialized recruiting services to support specific projects without the expense of retaining traditional search firms.

College Recruiting – Sending an employer’s representatives to college campuses to prescreen applicants and create an applicant pool from the graduating class.

Application Form – The form that provides information on education, prior work record, and skills.

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Part Two Recruitment, Placement, and Talent Management Chapter 6 Employee Testing and Selection Lecture Outline: Why Employee Selection Is Important The Basics of Testing and Selecting Employees Reliability Validity Trends Shaping HR: Digital and Social Media Evidence-Based HR: How to Validate a Test Bias Utility Analysis Improving Performance: HR as a Profit Center Validity Generalization Know Your Employment Law Test Takers’ Individual Rights and Test Security Diversity Counts: Gender Issues in Testing How Do Employers Use Tests at Work?

Types of Tests Tests of Cognitive Abilities Tests of Motor and Physical Abilities Measuring Personality and Interests Improving Performance: HR Practices Around the Globe Achievement Tests Improving Performance: Computerization and Online Testing Improving Performance: The Strategic Context Work Samples and Simulations Using Work Sampling for Employee Selection Situational Judgment Tests Management Assessment Centers Situational Testing and Video-Based Situational Testing The Miniature Job Training and Evaluation Approach Realistic Job Previews Choosing a Selection Method Improving Performance: HR Tools for Line Managers and Small Businesses Background Investigations and Other Selection Methods Why Perform Background Investigations and Reference Checks?

Know Your Employment Law How to Check a Candidate’s Background Trends Shaping HR: Digital and Social Media ..

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Using Pre-employment Information Services Making the Background Check More Valuable The Polygraph and Honesty Testing Testing for Honesty: Practical Guidelines Graphology “Human Lie Detectors” Physical Exams Substance Abuse Screening Drug Testing Legal Issues Complying with Immigration Law Chapter Review

Where We Are Now… The purpose of this chapter is to explain how to use various tools to select the best candidate for the job. The main topics we’ll cover include the selection process, basic testing techniques, backgound and reference checks, ethical and legal questions in testing, types of tests, and work samples and simulations.

Interesting Issues: Google job candidates used to have a dozen or more grueling interviews. But, with Google hiring thousands of people annually, this selection process proved too slow. Now Google uses just four to five interviews, but lets all its employees express opinions on each candidate by email, using what it calls “crowdsourcing.” The changes speed up hiring and bring Google’s hiring policies more in line with its fast-growth strategy.

Learning Objectives: 6-1. Answer the questions: Why is it important to test and select employees?

6-2. Explain what is meant by reliability and validity.

6-3. List and briefly describe the basic categories of selection tests, with examples.

6-4. Explain how to use two work simulations for selection.

6-5. Describe four ways to improve an employer’s background checking process.

Annotated Outline: I. Why Employee Selection Is Important – selecting the right employees is important for three main reasons: 1) employees with the right skills will perform better for you and the company; 2) it is costly to reruit and hire employees; and 3) inept hiring has legal consequences.

II. The Basics of Testing and Selecting Employees A. Reliability – refers to the consistency of scores obtained by the same person when

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retested with identical or equivalent tests. You can measure reliability in several ways.

One is to administer a test to a group of people one day, re-administer the same test several days later to the same group, and then correlate the first set of scores with the second (test-retest reliability estimates). Or you could administer a test and then administer what experts believe to be an equivalent test later; this would be an equivalent or alternate form estimate. Or, compare the test taker's answers to certain questions on the test with his or her answers to a separate set of questions on the same test aimed at measuring the same thing.

B. Validity – tells you whether the test is measuring what you think it’s suppose to be measuring. It often refers to evidence that the test is job related – in other words, that performance on the test accurately predicts job performance.

There are serveral ways to demonstrate a test’s validity: 1. Criterion validity – shows that scores on the test (predictors) are related to job performance. It involves demonstrating statistically a relationship between scores on a selection procedure and the job performance of a sample of workers.

2. Content validity – is a demonstration that the content of a selection procedure is representative of important aspects of performance on the job.

3. Construct validity – involves demonstrating that (a) a selection procedure measures a construct (an abstract idea such as morale or honesty) and (b) the construct is important for successful job performance.

C. Trends Shaping HR: Digital and Social Media D. Evidence-Based HR: How to Validate a Test – in order for a selection test to be useful, you need evidence that scores on the test relate in a predictable way to performance on the job. The validation process consists of five steps: 1. Analyze the Job – the aim is to specify the human traits and skills you believe are required for the job performance. These requirements become the predictors that also define “success on the job.” The standards of success are criteria.

2. Choose the Test – use test in a manner consistent with equal employment laws and in a manner that is ethical and protects the test taker’s privacy.

3. Administer the Test – with employees currently on the job, you compare their test with their current performance. A more dependable way is to test applicants before you hire them, then measure their performance and compare it to earlier test scores.

4. Relate Your Test Scores and Criteria – ascertain if there is a significant relationship between test scores (predictors) and performance (criterion).

5. Cross-Validate and Revalidate – before using the test, you may want to check it by performing steps 3 and 4 on a new sample of employees, in other words – revalidate.

E. Bias – employers must be careful to avoid bias whenever possible.

F. Utility – knowing the test is reliable and valid is important, but one must also consider the practical use of the test. Completing a utility analysis shows the degree to which a selection test improves the quality of those selected versus what decision would have been made without it. Utility analysis usually includes the validity of the measures, a

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measure of job performance in dollars, the applicant’s average test scores, the cost of the measure, and the number of applicants tested and selected.

G. Improving Performance: HR as a Profit Center H. Validity Generalization – “refers to the degree to which evidence of a measure’s validity obtained in one situation can be generalized to another situation without further study.”

I. Know Your Employment Law 1. Testing and the Equal Employment Opportunity – with respect to testing, the EEO laws boil down to two things: a) you must be able to prove that your tests are related to success or failure on the job, and b) you must prove that your tests don’t unfairly discriminate against either minority or nonminority subgroups.

J. Test Takers’ Individual Rights and Test Security – test takers have certain rights to privacy and information under the American Psychological Association’s (APA) standard for educational and psychological tests. The Federal Privacy Act provides protection against disclosing information about them to people outside the company.

K. Diversity Counts: Gender Issues in Testing – gender issues may distort results.

L. How Do Employees Use Tests at Work? – in general, as work demands increase (in terms of skill requirements, training, and pay), employers tend to rely more on selection testing. And employers don’t use tests just to find good employees, but also to screen out bad ones.

III. Types of Tests A. Tests of Cognitive Abilities – cognitive tests include tests of general reasoning ability (intelligence) and tests of specific mental abilities like memory and inductive reasoning.

1. Intelligence Tests – are tests of general intellectual abilities ranging from memory, vocabulary, and verbal fluency to numerical ability.

2. Specific Cognitive Abilities – are tests (aptitudes) that include inductive and deductive reasoning, verbal comprehension, memory, and numerical ability.

B. Tests of Motor and Physical Abilities – employers may use various tests to measure such motor abilities as finger dexterity, manual dexterity, and reaction time. They may also want to measure such physical abilities as static strength, dynamic strength, body coordination, and stamina.

C. Measuring Personality and Interests – can be used to assess characteristics such as attitude, motivation, and temperament. These tests measure basic aspects of an applicant’s personality, such as introversion, stability, and motivation. Interest inventories compare one’s interest to those of people in various occupations.

D. Improving Performance: HR Practices Around the Globe 1. Testing for Assignments Abroad – living and working abroad requires some special talents. Employers often use special inventories such as the Global Competencies Inventory (GCI) which focuses on three aspects of adaptability: Perception Management Factor, Relationship Management Factor, and SelfManagement Factor.

E. Achievement Tests – measures what someone has learned.

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F. Improve Performance Through HRIS: Computerization and Online Testing G. Improve Performance: The Strategic Context IV. Work Samples and Simulations A. Using Work Sampling for Employee Selection – the basic procedure is to select a sample of several tasks crucial to performing the job, and then to test applicants on them. Figure 6-7 illustrates this.

B. Situational Judgment Tests – are personnel tests “designed to assess an applicant’s judgment regarding a situation encountered in the workplace.”

C. Management Assessment Centers – is a 2-to 3-day simulation in which candidates perform realistic management tasks under the observation of experts who appraise each candidate’s leadership potential. Typical simulated tasks include: The in-basket, Leaderless group discussion, Management games, Individual oral presentations, Testing, and The interview.

D. Situational Testing and Video-Based Situational Testing – typically presents the candidate with several online, or computer video situations, each followed by one or more multiple-choice questions.

E. The Miniature Job Training and Evaluation Approach – involves training candidates to perform several of the job’s tasks and then evaluating the candidates’ performance prior to hire.

F. Realistic Job Previews – being explicit about work schedules, preferences, and other job standards during the interview can help reduce turnover later.

G. Choosing a Selection Method – the employer needs to consider several things: the tool’s reliability and validity, its return on investment (in terms of utility analysis), applicant reactions, usability, adverse impact, and the tool’s selection ratio.

H. Improving Performance: HR Tools for Line Managers and Small Businesses V. Background Investigations and Other Selection Methods A. Why Perform Background Investigations and Reference Checks? – most employers check and verify an applicant’s background information and references. There are two main reasons to check backgrounds – to verify the applicant’s information (name and so forth) and to uncover damaging information. Another is legal reasons.

B. Know your Employment Law 1. Giving References – there are laws that affect references and thus, most employers restrict who can give a reference and what they can say.

C. How to Check a Candidate’s Background – most employers at least try to verify an applicant’s current or former position and salary with current or former employers by phone, (assuming you cleared doing so with the candidate). Many employers get background reports from commercial credit rating companies for information about credit standing, indebtedness, reputation, character, and lifestyle.

D. Trends Shaping HR: Digital and Social Media E. Using Preemployment Information Services – these services use databases to access information about matters such as workers’ compensation, credit

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histories, and conviction and driving records. Automatic Data Processing Inc., First Advantage, HireRight, and Sterling Backcheck are some of the providers.

F. Making the Background Check More Valuable – there are steps one can take to improve the usefulness of the background information being sought. Specifically: 1. Include on the applicaton form a statement for applicants to sign explicitly authorizing a background and credit check.

2. Use a form for telephone reference. Figure 6-8 illustrates this.

3. Be persistence and attentive to possible red flags.

4. Compare the application to the resume.

5. Try to ask open-ended questions (such as “How much structure does the applicant need in his/her work?”)

6. Ask the reference supplied by the applicant to suggest other references.

G. The Polygraph and Honesty Testing – the polygraph is a device that measures physiological changes like increased perspiration.

1. Written Honesty Test – known as paper-and pencil (or computerized or online) honesty tests; designed to predict the job applicants’ proneness to dishonesty and other forms of counterproductivity.

H. Testing for Honesty: Practical Guidelines – there is a lot a manager can do to screen out dishonest applicants or employees such as: ask blunt questions, listen, rather than talk, watch for telltale body signals, do a credit check, check all employment and personal references, use written honesty and psychological tests, test for drugs, and establish a search and seizure policy and conduct searches.

I. Graphology – the use of handwriting analysis to determine the writer’s basic personality traits.

J. “Human Lie Detectors” – experts who may (or may not) be able to identify lying just by watching candidates.

K. Physical Exams – once an offer is made and the person is hired, a medical exam is usually the next step in the selection process.

L. Substance Abuse Screening – employers may use urine testing to test for illicit drugs, breath alcohol test to determine amount of alcohol in the blood, blood test to measure alcohol or drugs in the blood at the time of the test, hair analysis to reveal drug history, saliva tests for substances such as marijuana and cocaine, and skin patches to determine drug use.

M. Drug Testing Legal Issues – several federal laws affect workplace drug testing.

N. Complying with Immigration Law – employees hired in the United States must prove his/her identity and employment eligibility to work in the U.S.

Chapter Review

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Chapter Section Summaries: 6-1: Careful, employee selection is important for several reasons.

6-2: Whether you are administering tests or making decisions based on test results, managers need to understand several basic testing concepts.

6-3: Whether they are administered via paper and pencil, by computer, or online, we discussed several main types of tests.

6-4: With work samples and simulations, you present examinees with situations representative of the jobs for which they are applying.

6-5: Testing is only part of an employer’s selection process; you also want to conduct background investigations and other selection procedures.

Discussion Questions: 6-1: What is the difference between reliability and validity?

Reliability is the consistency of scores obtained by the same person when retested with an identical test or with an equivalent form of a test. It is a measure of internal consistency of the instrument. Validity is the degree to which a test measures what it is purported to measure. It is a measure of external consistency. They are similar in that both are concerned with aspects of consistency of the instrument, and that reliability is a necessary condition for validity.

6-2: Should other (non-HR) departments be allowed to help with the recruitment of candidates? Why or why not? Discuss three pros and cons.

Students should discuss the following in general.

The pros of allowing other departments to help with the recruitment of candidates include giving insights to the job fit of candidates to be hired. Department managers may participate in interviews to look for the characteristics of the “right” candidate. They may interview candidates to assess specifics of a job requirement, especially in technically demanding or higher-level posts. For example, recruiting a new professor in a university may require the expertise of other professors helping to determine the suitability of new candidates. They can also supplement the HR department in areas where they lack subject matter experts; for example, English language assessments are best done by language experts from the Training Department who may assess language competency while interviewing the candidates, that is, the oral portion of the Common European Framework Language Assessment.

The cons, however, are that over reliance on the services of the other departments may erode the credibility of the HR department in their traditional role of recruitment. Hiring may become more ad-hoc rather than a structured process and the organizational culture of a company may be altered by business needs rather than be perpetuated by the careful selection of like-minded individuals being inducted into the company as guided by the job description.

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6-3: Why is it important to conduct pre-employment background investigations? How would you do so?

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

6-4: What are the current laws that pertain to providing references? List, and briefly explain the positive and negative implications that they have for employers.

There are several federal laws that pertain to giving references including the Privacy Act 1974, Fair Credit Reporting Act 1970, Family Education Rights & Privacy Act 1974 (and the Buckley Amendment 1974), and the Freedom of Information Act 1966. The positive implications restricted access to personal or employment information by employers. They also restrict who may give references, and institute policies in place that only allow company members to reveal dates of employment, last drawn salary, and designation held. This protects the privacy of employees. The negative implications include constraint on employers in telling the truth about an employee when giving references out of fear of being sued for defamation.

6-5: How can employers protect themselves against negligent hiring claims?

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

Individual and Group Activities: 6-6: Write a short essay discussing some of the ethical and legal considerations in testing.

State and federal laws, EEOC guidelines, and court decisions require that you must be able to prove that your tests are related to success or failure on the job and that they are not having an adverse impact on members of a protected group. Test takers also have certain basic rights to privacy and information. The test taker also has the right to expect that the test is equally fair to all test takers.

6-7: Working individually or in groups, consider how a major corporation or government department might carry out a background check on an individual being considered for a sensitive post. What steps are they likely to take?

Students should use the chapter material as a guide, but it is important to consider issues such as data protection. Background checks are becoming an integral part of the recruitment process. Areas to consider are: Identification documents (providing proof that the candidate has a right to work in the country); Employment history and references (full history with references); Professional registration and/or qualifications (verification of membership and qualifications); and criminal record and barring checks (checks to see if any convicts might bar employment). Other checks could include investigating social media profiles.

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6-8: Working in groups of three, visit each member’s social media page (for example Facebook or Google+) and analyze the information on the page from the perspective of an employer. Is there any content in the personal social media pages that might be viewed negatively by a prospective employer? How can you make it more interesting to a prospective employer and maximize your chances in a job search?

Students should be able to objectively discuss pictures, statements, and personal hobbies that appear on their social media pages and assess the impact it has on an employer’s first impression of them. Lecturers should moderate this activity, using their own prior experience of job hunting and share constructive feedback with the class.

6-9: Appendix A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam and/or the SHRM exam; and (4) if time permits, have someone from your team post your team's questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

Material included in this chapter that relates to the HRCI certification exam includes establishing and implementing selection procedures of testing; reference and background checking; post-offer employment activities; knowledge of reliability and validity of selection tests/tools/methods; and use and interpretation of selection tests.

Experiential Exercise: A Test for a Reservation Clerk Purpose: The purpose of this exercise is to give you practice in developing a test to measure one specific ablilty for the job of airline reservation clerk for a major airline. If time permits, you’ll be able to combine your tests into a test battery.

Required Understanding: Your airline has decided to outsource its reservations jobs to Asia.

You should be fully acquainted with the procedure for developing a personnel test and should read the following description of an airline reservation clerk’s duties.

How to Set up the Exercise/Instructions: Divide the class into teams of five or six students.

The ideal candidate will need to have a number of skills and abilities to perform this job well.

Your job is to select a single ability and to develop a test to measure that ability. Use only the materials available in the room, please. The test should permit quantitative scoring and may be an individual or group test.

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Please go to your assigned groups. As per our discussion of test development in this chapter, each group should make a list of the skills relevant to success in the airline reservation clerk’s job. Each group should then rate the importance of these abilities on a five-point scale. Then, develop a test to measure what you believe to be the top ranked ability. If time permits, the group should combine the various tests from each group into a test battery. If possible, leave time for a group of students to take the test battery.

Application Case: Selection Process at FC Barcelona (FCB) 6-10: Visit FC Barcelona’s (or a similar club’s) official Web site and discuss the selection criteria used for selecting team players.

Selection Criteria mainly include two types of assessments: Technical ability and personality traits. Technical ability incorporates a player’s skill level with the ball and the technique applied when in possession of the ball under pressure, such as “striking the ball” which includes all forms striking the ball such as short/long passing; shooting, crossing, heading; “first touch” which includes controlling the ball with all body parts, with exception of the arms; and “running with the ball” which is running at speed with a lot of space or ‘dribbling’ in tight areas, involving techniques for protecting the ball and changing direction.

In addition to the above mentioned three core skills, the selection panel normally assesses a player on 1) Positioning, 2) Communication Left and / or right footedness: The ability to use one or both feet and the ability to perform the above techniques in specific formats of the game.

6-11: Several types of selection tests are discussed in the chapter. Do you think these are applicable to a sports club like FCB? Discuss using relevant examples.

Student answers will vary. Yes, some of the tests are clearly applicable to selecting players for soccer club like FCB. For example, the physical abilities test is very useful, and they usually try to measure physical abilities such as static strength, dynamic strength, body coordination, and stamina. Measuring Personality and Interests can be used to assess characteristics such as attitude, motivation, stability, openness to experience, and temperament of future players.

1http://www.forbes.com/sites/mikeozanian/2015/05/06/real-madrid-tops-ranking-of-theworlds-most-valuable-soccer-teams/ 2http://fcbescola.fcbarcelona.com/vancouver/information-about-the-fcb-escola-registrationprocess/#sthash.yTGg4Siu.dpuf

Continuing Case: Carter Cleaning Company – Honesty Testing 6-12: What would be the advantages and disadvantages to Jennifer’s company of routinely administering honesty tests to all its employees?

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Polygraph testing raises a large number of legal and moral issues, issues Carter Cleaning would best avoid. Using some of the available “paper-and-pencil” honesty tests may be a possibility. In general, these have been shown to be reasonably reliable and valid, but they are still controversial. The costs associated with these tests may also make them prohibitive to a small operation like Jennifer’s.

6-13: Specifically, what other screening techniques could the company use to screen out theft-prone and turnover-prone employees, and how exactly could these be used?

More thorough background checks are a recommended technique to eliminate potential thieves. Some firms choose to contract this out to a private security agency, although cost may be an issue to Jennifer. However, the company can quickly check to see if savings from reduced theft would offset the cost of an outside agency. As part of the job preview, Carter must communicate that dishonesty and theft will not be tolerated. Further, company policies regarding theft should be clearly communicated to new and existing employees.

6-14: How should her company terminate employees caught stealing, and what kind of procedure should be set up for handling reference calls about these employees when they go to other companies looking for jobs?

Terminating employees for theft should include the involvement of the proper authorities and should only be done when there is absolute proof of the theft and who committed it.

Such an action will also send a message to other employees that you will not tolerate theft of company resources. While many employers are reluctant to prosecute employees for theft, developing evidence with police and through the courts can be beneficial in providing future employers of the individual with truthful and factual information.

Hotel Paris: Improving Performance at the Hotel Paris – The New Employee Testing Program 6-15: Provide a detailed example of a security guard work sample test.

Students should begin by discussing the types of tasks a security guard is responsible for.

6-16: Provide a detailed example of two possible personality test items you would suggest they use, and why you would suggest using them.

Student answers will vary.

6-17: Based on what you read here in this Dessler Human Resource Management Chapter, what other tests would you suggest to Lisa, and why would you suggest them?

Because front desk employees usually handle credit cards and make cash transactions, Lisa should consider the benefits of paper-and-pencil honesty testing.

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6-18: How would you suggest Lisa try to confirm that it is indeed the testing and not some other change that accounts for the improved performance?

Students’ answers will vary.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 6-19: Explain how you would go about validating a test. How can this information be useful to a manager?

6-20: Explain how digital and social media have changed the employee selection process, and the advice you would give an employer about avoiding problems using such tools for selection.

Key Terms: Negligent Hiring – Hiring workers with questionable backgrounds without proper safeguards.

Reliability – The consistency of scores obtained by the same person when retested with idential tests or with alternate forms of the same test.

Test Validity – The accuracy with which a test, interview, and so on, measures what it purports to measure or fulfills the function it was designed to fill.

Criterion Validity – A type of validity based on showing that scores on the test (predictors) are related to job performance (criterion).

Content Validity – A test that is content valid is one that contains a fair sample of the tasks and skills actually needed for the job in question.

Construct Validity – A test that is construct valid is one that demonstrates that a selection procedure measures a construct and that construct is important for successful job performance.

Expectancy Chart – A graph showing the relationship between test scores and job performance for a group of people.

Interest Inventory – A personal development and selection device that compares the person’s current interests with those of others now in various occupations so as to determine the preferred occupation for the individual.

Work Samples – Actual job tasks used in testing applicants' performance.

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Work Sampling Technique – A testing method based on measuring performance on actual job tasks.

Management Assessment Center – A situation in which management candidates are asked to perform realistic tasks in hypothetical situations and are scored on their performance. It usually also involves testing and the use of management games.

Situational Test – A test that requires examinees to respond to situations representative of the job.

Video-based Simulation – A situational test in which examinees respond to video simulations of realistic job situations.

Miniature Job Training and Evaluation – Training candidates to perform several of the job’s tasks, and then evaluating the candidates’ performance prior to hire.

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Part Two Recruitment, Placement, and Talent Management Chapter 7 Interviewing Candidates Lecture Outline: Basic Types of Interviews Structured Versus Unstructured Interviews Interview Content (What Types of Questions to Ask) How Should We Conduct the Interview?

Trends Shaping HR: Digital and Social Media Improving Performance: The Strategic Context Avoiding Errors That Can Undermine an Interview’s Usefulness First Impressions (Snap Judgments) Not Clarifying What the Job Requires Candidate-Order (Contrast) Error and Pressure to Hire Nonverbal Behavior and Impression Management Effect of Personal Characteristics: Attractiveness, Gender, Race Diversity Counts: Applicants Disability and the Employment Interview Improving Performance: HR Practices Around the Globe Interviewer Behavior How to Design and Conduct the Effective Interview Designing the Structured Situational Interview Improving Performance: HR Tools for Line Managers and Small Businesses Profiles and Employee Interviews Employee Engagement Guide for Managers Building Engagement: A Total Selection Program The Toyota Way Trends Shaping HR: Science in Talent Management Developing and Extending the Job Offer Chapter Review

Where Are We Now… The main topics we’ll cover in this chapter include types of interviews, things that undermine interviewing, things that undermine interviewing’s usefulness, designing and conducting effective selection interviews, using a total selection process to improve employee engagement, and making the offer.

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Interesting Issues: When it comes to hiring, Urban Outfitters knows just what it’s looking for. The lifestyle retailer, with over 200 stores in the United States, Canada, and Europe, built its strategy around fostering a culture of creativity and individuality within its stores. That means that maintaining its unique store environment requires employees that match its core values of community, pride, creativity, and respect. The question is, how do you find and attract such applicants, while controlling hiring costs in the competitive retail industry?

Learning Objectives: 7-1.

7-2.

7-3.

7-4.

7-5.

List and give examples of the main types of selection interviews.

List and explain the main errors that can undermine an interview’s usefulness.

Define a structured situational interview and explain how to design and conduct effective selection interviews.

Discuss how to use employee selection methods to improve employee engagement.

List the main points to know about developing and extending the actual job offer.

Annotated Outline: I. Basic Types of Interviews A. Structured versus Unstructured Interviews – unstructured or nondirective interviews generally have no set format. Structured or directive interviews generally identify questions ahead of time and may even weigh possible alternative answers for appropriateness.

B. Interview Content (What Types of Questions to Ask) – interviews can be classified according to the nature or content of their questions, such as situational interviews, behavioral, and job-related. In a situational interview, you ask a candidate what his or her behavior would be in a given situation.

Behavioral interviews ask applicants how they reacted to actual situations in the past. In job-related interviews, the interviewer asks applicants questions about job-relevant past experiences.

1. Other Types of Questions – there are other, lesser-used types of questions.

In a stress interview, the interviewer seeks to make the applicant uncomfortable with occasionally rude questions. Puzzle questions are also popular.

C. How Should We Conduct the Interview? – employers administer interviews in various ways: one-on-one, by a panel of interviewers, sequentially or all at once, computerized or personally, or online.

1. Phone Interviews – can be more useful than face-to-face interviews for judging one’s conscientiousness, intelligence, and interpersonal skills.

2. Computer-Based Job Interviews – is one in which the job candidate’s oral and/or keyed replies are obtained in response to computerized oral, visual, or written questions and/or situations.

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3. Web-Based Video Interviews – with phone and tablet video functionalities and FaceTime and Skype, Web-based “in-person” interviews are widely used.

D. Trends Shaping HR: Digital and Social Media E. Improving Performance: The Strategic Context II. Avoiding Errors That Can Undermine an Interview’s Usefulness – keep three things in mind: use structured interviews, know what to ask, and avoid the common interviewing errors.

A. First Impressions (Snap Judgments) – one of the most widespread errors is that interviewers tend to jump to conclusions about candidates during the first few minutes of the interview.

B. Not Clarifying What the Job Requires – interviewers who don’t have an accurate picture of what the job entails and what sort of candidate is best suited for it usually make their decisions based on incorrect impressions or incomplete stereotypes of what a good applicant is.

C. Candidate-Order (Contrast) Error and Pressure to Hire – the order in which you see applicants affects how you rate them. Pressure to hire can undermine an interview’s usefulness.

D. Nonverbal Behavior and Impression Management – the applicant’s nonverbal behavior (smiling, avoiding your gaze, and so on) can have a surprisingly large impact on an applicant’s rating. Impression management includes ingratiation, agreeing with the interviewer’s opinions, and self-promotion to create an impression of competence are used by clever interviewees to manage the impression they present.

E. Effect of Personal Characteristics: Attractiveness, Gender, Race – interviewers have to guard against letting an applicant’s attractiveness, gender, and race play a role in candidate ratings.

F. Diversity Counts: Applicant Disability and the Employment Interview – what the disabled people prefer is a discussion that lets the employer address his or her concerns and reach a knowledgeable conclusion.

G. Improving Performance: HR Practices Around the Globe III. How to Design and Conduct the Effective Interview A. Designing the Structured Situational Interview Step 1: Analyze the job.

Step 2: Rate the job’s main duties.

Step 3: Create interview questions.

Step 4: Create benchmark answers.

Step 5: Appoint the interview panel and conduct interviews.

B. Improving Performance: HR Tools for Line Managers and Small Businesses How to Conduct an Effective Interview 1. Know the Job – do not conduct an interview unless you know what KSAs you are looking for.

2. Structure your Interview – a) base questions on actual job duties; b) use specific job-knowledge, situational, or behaviorally-oriented questions and

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objective criteria to evaluate the interviewee’s responses; c) use the same questions with all candidates; d) use rating scales to rate answers; and e) use a structured interview form.

3. Get Organized – the interview should take place in a private room where interruptions can be minimized. Prior to the interview, the interviewer should review the candidate’s application and resume, as well as the job duties and required skills and traits.

4. Establish Rapport – the interviewer should put the interviewee at ease so he/she can find out the necessary information about the interviewee.

Studies show that people who feel more self-confident about their interviewing skills perform better in interviews.

5. Ask Questions – the interviewer should follow the interview guide.

6. Take Brief, Unobtrusive Notes – notes will help the interviewer avoid snap judgments and remember more clearly what was discussed in the interview.

7. Close the Interview – leave time to answer any questions the candidate may have and, if appropriate, advocate your firm to the candidate. Try to end the interview on a positive note.

8. Review the Interview – once the candidate leaves, and while the interview is fresh on the interviewer’s mind, he/she should review his/her notes and fill in the structured interview guide.

C. Profiles and Employees Interviews – employers using competency models or profiles (which list required skills, knowledge, behaviors, and other competencies) can use these for formulating job-related situational, behavioral, and knowledge interview questions. Table 7-1 illustrates it.

IV. Employee Engagement Guide for Managers A. Building Engagement: A Total Selection Program – this type of program aims at selecting candidates whose totality of attributes best fits the employer’s total requirements.

B. The Toyota Way – this hiring process aims to identify such assembler candidates. The process takes about 20 hours and six phases over several days: Step 1: an in-depth online application (20-30 minutes) Step 2: a 2-5 hour computer-baseds assessment Step 3: a 6-8 hour work simulation assessment Step 4: a face-to-face interview Step 5: a background check, drug screen, and medical check Step 6: job offer C. Trends Shaping HR: Science in Talent Management V. Developing and Extending the Job Offer – after all the interviews, background checks, and other tests, the employer decides who to make an offer to using one or more approach. The judgmental approach subjectively weighs all the evidence about the candidate. The statistical approach quantifies all the evidence and perhaps uses a formula to predict job success.

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Chapter Review Chapter Section Summaries: 7-1: A selection interview is a selection procedure designed to predict future job performance based on applicants’ oral responses to oral inquiries; we discussed several basic types of interviews.

7-2: One reason selection interviews are often less useful than they should be is that managers make predictable errors that undermine an interview’s usefulness.

7-3: The manager should know how to design and conduct an effective interview.

7-4: High-engagement firms like Toyota use total hiring programs to select employees.

7-5: After choosing which candidate to hire, the employer turns to developing and extending the job offer.

Discussion Questions: 7-1: There are several ways to conduct a selection interview. Explain the difference between structured and unstructured interviews. Which is better?

Students should be able to discuss that structured interviews are standardized interview processes, whereas unstructured interviews do not have a set format; which is better would depend largely on the job that one is being interviewed for. For example, the Department of Homeland Security uses a structured guide to help screen Coast Guard officers. Whereas the neighborhood park might adopt a less rigorous or formal recruiting strategy.

7-2: Discuss the different types of errors that can undermine an interview’s usefulness.

Students should be able to discuss: 1. First impressions or making snap judgments 2. Not clarifying the job requirements 3. Candidate order (contrast error)and pressure to hire 4. Non-verbal behavior impression management 5. The effects of the interviewees’ personal characteristics 6. The interviewer’s inadvertent behaviors 7-3: According to this chapter, an online video interview doesn’t require much special preparation from both employers and job candidates. List and discuss factors that interviewees should remember for such an interview.

According to this chapter and careerfaq.com.au, more and more employers are opting to conduct interviews using Skype, Live Messenger, or video chat in today's global workplace.

In this regard, all the general rules of a job interview apply to an online video interview.

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For instance the candidate must look presentable. While this may feel silly sitting at home wearing a formal dress, it could make a difference.

The candidate should ensure that their surrounding environment (room or café table) is clean.

The interviewer shouldn’t be able to see clutter, or observe the candidate sitting behind a messy desk, or look at the mess in the candidate’s room.

The candidate should also ensure that noise is at a minimal level. Finding a quiet place to do the interview is vital as the microphone picks up more background noise than you might think.

Every candidate must be familiar with the technology. A few minutes before the video interview is not a good time to realize that the internet connection is down, Skype or Facetime isn't working, or a pet has chewed through the microphone cord.

Candidates should attempt a dry run prior to the actual interview. Candidates can record themselves before the interview to see how they are coming across.

Relax: the golden rule with an online video interview is to treat it like any other face-to-face meeting. Smile, look confident and enthusiastic, make eye contact, and don’t shout but do speak clearly.

7-4: How would you explain the fact that structured interviews, regardless of content, are generally more valid than unstructured interviews for predicting job performance?

This item can be assigned as a discussion question in MyManagementLab. Student responses will vary.

7-5: Briefly discuss why selection interviews may be less useful than they should be.

One reason why selection interviews are considered less useful than they should be is that managers make predictable errors that undermine an interview’s usefulness. Interviewers usually jump to conclusions or make snap judgments based on preliminary information, they omit to clarify, what the job really requires, they succumb to candidate-order error and pressure to hire, and they let a variety of nonverbal behaviors and personal characteristics undermine the validity of the interview.

7-6: What items should a letter of offer definitely contain?

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

7-7: Google takes a scientific and evidence-based approach to its selection process. Briefly explain and discuss this approach.

In its hiring process, Google starts with strong candidates for its new job opportunities, and its internal recruiting group proactively identifies candidates rather than using job boards to

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attract unscreened resumes. The main elements in Google’s selection process include work samples, testing, and structured interviewing. Early in its evolution, Google was known for putting candidates through a dozen or more interviews. However, Google’s own analysis showed that after the first four interviews the amount of useful information it ended up with was not large. It therefore now generally makes hiring decisions after the fourth interview.

These interviews mainly emphasize situational and behavioral questions.

Individual and Group Activities: 7-8: Working individually or in groups, discuss how interviews with the physically disabled should be handled.

Students should be able to discuss how interviewers must be able to address their concerns on how the disability may affect their performance so that they may allay their concerns and reach a knowledgeable conclusion. Refer to Diversity Counts: Applicant Disability and the Employment Interview. In the role play, Interviewers should practice asking some of the questions to simulate positive behaviors.

7-9: Does an interviewee really need to be informed about the prospective employer before an interview takes place? Discuss in groups and present your answers.

Students should be able to discuss the benefits of being prepared versus not being prepared and understand how having that extra knowledge or insight about their prospective employer prior to the interview may affect their interviewer’s first impression of the candidate.

7-10: In groups, discuss and compile examples of “the worst interview I ever had.” What was it about these interviews that made them so bad? If time permits, discuss as a class.

Based on their experiences, the students should come up with various examples. They should also discuss their suggestions for improving the interview.

7-11: In groups of three, list and discuss the advantages and disadvantages of unstructured sequential interviews, structured sequential interviews, and mass interviews. Under what circumstances will it be best for each to be used by employers?

Students should be able to discuss unstructured sequential interviews and an interview in which each interviewer forms an independent opinion after asking different questions.

7-12: Interviewers will tend to use an interview to try to determine what a potential new hire is like in person. The main priority of an interviewer is to ascertain how the interviewee will get along with other employees as well as how strong their motivation to work is. One of the ways for interviewers to do this is by observing how interviewees behave, how truthfully they answer questions, as well as how their personal opinions are stated. This means interviewees not only need to be prepared with the relevant

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paper qualifications and documents, but they also have to be psychologically prepared.

What all should an interviewee consider, before an interview, in order to get an edge?

Students should be able to discuss the following: a) The type of job being applied for: if it is a customer-relations or sales job for example, then one may expect a few rude questions being thrown their way as the interviewers attempt to root out those sensitive applicants and those with low (or high stress tolerance).

If it is an engineering job, then one may expect knowledge questions being asked. b) Non-verbal behavior: it has been shown that candidates who put in effort making eyecontact, exhibiting high energy levels, and appropriating voice-modulation techniques got a second interview.

7-13: Assume you are the Assistant Vice-President of HR looking to interview high-speed train drivers for your company, which operates high-speed mass rapid transit trains that run between major cities. The trains are technologically advanced and routinely run at a speed of 500 km/h in order to meet the tight timelines for passenger delivery.

Given the tight schedules, trains arrive within 30 seconds of the stated time on the clock. This is a matter of much pride for the company’s staff. Due to the demanding nature of this job, there are few candidates with the right academic qualifications or correct temperament to qualify for the job. Finding these candidates is difficult due to competition for the same jobs from a rival company that may poach your existing staff by offering higher salaries and better perks. Considering that perks and a higher salary isn’t always the solution, how would you increase employee loyalty, and stop employees from leaving?

Students should be able to discuss: • •

The role of the corporate culture in retaining the loyalty of employees, and how this can be articulated to the interviewees The AVP of HR may also articulate the expectations of the job to the interviewees to set the right expectations for the job, along with the company’s belief that better perks and more salary does not always translate to satisfied employees.

7-14: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the required knowledge Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam and/or the SHRM exam; and (4) if time permits, have someone from your team post your team's questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

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Material from this chapter that may be included in the HRCI certification exam includes interviewing procedures, federal, state, and local employment-related laws, and interviewing techniques.

Experiential Exercise: The Most Important Person You’ll Ever Hire Purpose: The purpose of this exercise is to give you practice using some of the interview techniques you learn from this chapter.

Required Understanding: You should be familiar with the information presented in the chapter, and to read this: “For parents, children are precious.” It's therefore interesting that parents who hire “nannies” to take care of the children usually do little more than ask several interview questions and conduct what is often, at best, a perfunctory reference check. Given the often questionable validity of interviews, and the (often) relative inexperience of the father or mother doing the interviewing, it's not surprising that many of these arrangements are disappointments.

You know from this chapter that it is difficult to conduct a valid interview unless you know exactly what you are looking for. Most parents simply aren't trained to do this.

How to Set up the Exercise/Instructions: Set up groups of five or six students. Two students will be the interviewees, while the other students in the group will serve as panel interviewers.

The interviewees will develop an interviewer assessment form, and the panel interviewers will develop a structured situational interview for a “nanny.”

7-15: Instructions for the interviews: The interviewees should leave the room for about 20 min. While out of the room, the interviewees should develop an “interviewer assessment form” based on the information presented in the chapter regarding factors that can undermine the usefulness of an interview. During the panel interview, the interviewees should assess the interviewers using the interviewer assessment form. After the panel interviewers have conducted the interview, the interviewees should leave the room to discuss their notes. Did the interviewers exhibit any of the factors that can undermine the usefulness of an interview? If so, which ones? What suggestions would you (the interviewees) make to the interviewers on how to improve the usefulness of the interview?

7-16: Instructions for interviewers: while the interviewees are out of the room, the panel interviewers will have 20 min. to develop a short structured situational interview form for a “nanny.” The panel interview team will interview two candidates for the position. During the panel interview, each interviewer should be taking notes on a copy of the structured situational interview form. After the panel interview, the panel interviewers should discuss their notes. What were your first impressions of each interviewee? Were your impressions similar? What candidate would you all select for the position and why?

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Application Case: Job Interview Challenges or Oddest job interview questions 7-17: The chapter recommends that managers use a job’s profile to formulate job-related situational, behavioural, and knowledge-based interview questions. Briefly discuss whether you think the questions from Quora are based on this recommendation.

It is important to know the job before conducting an interview, especially what KSAs you are looking for. Students should note that the questions should be based on job duties, use specific job-knowledge, situational, or behavior-oriented questions and objective criteria to evaluate the interviewee’s responses; and use the same questions with all candidates. The questions from the question-and-answer website Quora, which are mentioned in the case, are definitely not based on these instructions but such questions could very well be asked to almost all candidates.

7-18: What strategies would you use to prepare for such odd questions during job interviews?

Students’ answers will vary. There are no special techniques to prepare for such special question. The most useful method would be to prepare the interview in a good way based on the information available for the vacant position and the company. Additionally, to be prepared for any distracting or indirect question linked to candidate’s behavior or response to such questions.

7-19: Do you think it is necessary for managers to create benchmark answers for questions like those mentioned in the case? Explain why or why not.

Some of these questions may look somewhat funnier than general serious interview questions. However, there is always a logic or reason for majority of these questions. For example, the question asked to astronomer and mathematician Akshat Singhal was clearly intended to judge the confidence of a prospective employee in an unforeseen or unexpected scenario. The most important thing was not the answer but how you would react to the questions and respond.

Continuing Case: Carter Cleaning Company – The Better Interview 7-20: In general, what can Jennifer do to improve her employee interviewing practices?

Should she develop interview forms that list questions for management and nonmanagement jobs. If so, how should these look, and what questions should be included? Should she initiate a computer-based interview approach? If so, why and how?

Carter Cleaning Company has an inadequate, unstructured way of interviewing and hiring. One solution students could suggest is to utilize a structured interview guide such as the one provided in Figure 7-1 as an example of a tool that managers could use to improve their interviewing practices. Have students brainstorm a list of questions to be

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included in the structured interview guide. A computer-based approach is also a possibility; students should explore the pros and cons of this given the nature of the organization and weigh the cost/benefit of utilization of this technology.

7-21: Should she implement a training program for her managers, and if so, specifically what should be the content of such a training program? In other words, if she did decide to start training her management people to be better interviewers, what should she tell them and how should she tell it to them?

The obvious answer to this question is yes, a training program should be designed and delivered. Students should include suggestions from the section on designing and conducting effective interviews, including training in preparation, utilization of a structured interview process, and interviewing techniques discussed in this chapter. She should educate managers in the potential pitfalls that come up in the interviewing process as outlined in the text. She should also provide an opportunity for practice with mock interviews in the training session so that managers can use the skills they learn and become comfortable with the process.

Hotel Paris: Improving Performance at the Hotel Paris – The New Interviewing Program 7-22: For the jobs of security guard or valet, develop five additional situational, five behavioral, and five job knowledge questions, with descriptive good/average/poor answers.

Examples may be found in Figures 7-2 and 7-3. Student answers will vary. For the security guard, questions might focus on ascertaining the level of dependability, responsibility, initiative, and cool-headedness under pressure. The car hop position’s desired behaviors may include detail orientation, friendliness, and ability to follow directions.

7-23: Combine your questions into a complete interview that you would give to someone who must interview candidates for these jobs.

Students should follow the outline for interviewing in Figure 7-1 and refer to Figure 7-3.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab.

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7-24: Briefly discuss and give examples of at least five common interviewing mistakes. What recommendations would you give for avoiding these interviewing mistakes?

7-25: What parallels do you see between the Toyota and Google total selection process? What differences?

Key Terms: Unstructured (or Nondirective) Interview – An unstructured conversational-style interview in which the interviewer pursues points of interest as they come up in response to questions.

Structured (or Directive) Interview – An interview following a set sequence of questions.

Situational Interview – A series of job-related questions that focus on how the candidate would behave in a given situation.

Behavioral Interview – A series of job-related questions that focus on how the candidate reacted to actual situations in the past.

Job-Related Interview – A series of job-related questions which focus on relevant past jobrelated behaviors.

Stress Interview – An interview in which the applicant is made uncomfortable by a series of often rude questions. This technique helps identify hypersensitive applicants and those with low or high stress tolerance.

Unstructured Sequential Interview – An interview in which each interviewer forms an independent opinion after asking different questions.

Structured Sequential Interview – An interview in which the applicant is interviewed sequentially by several persons; each rates the applicant on a standard form.

Panel Interview – An interview in which a group of interviewers questions the applicant.

Mass Interview – A panel interviews several candidates simultaneously.

Candidate-Order (or Contrast) Error – An error of judgment on the part of the interviewer due to interviewing one or more very good or very bad candidates just before the interview in question.

Structured Situational Interview – A series of job-relevant questions with predetermined answers that interviewers ask of all applicants for the job.

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Part Three Training and Developing Chapter 8 Training and Developing Employees Lecture Outline: Orienting and Onboarding New Employees The Purpose of Employee Orientation/Onboarding The Orientation Process Employee Engagement Guide for Managers: Onboarding at Toyota Overview of the Training Process Know Your Employment Law Aligning Strategy and Training Improving Performance: The Strategic Context The ADDIE Five-Step Training Process Conducting the Training Needs Analysis Designing the Training Program Developing the Program Trends Shaping HR: Digital and Social Media Implementing the Training Program On-the-Job Training Apprenticeship Training Informal Learning Job Instruction Training Lectures Programmed Learning Behavior Modeling Audiovisual-Based Training Vestibule Training Electronic Performance Support Systems Videoconferencing Computer-Based Training (CBT) Simulated Learning and Gaming Lifelong and Literacy Training Techniques Improving Performance: HR Practices Around the Globe Team Training Internet-Based Training The Virtual Classroom Trends Shaping HR: Digital and Social Media Improving Performance: HR Tools for Line Managers Implementing Management Development Programs Strategy’s Role in Management Development ..

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Succession Planning Improving Performance Through HRIS: Succession Systems Candidate Assessment and the 9-Box Grid Managerial On-the-Job Training and Rotation Improving Performance: HR Practices Around the Globe Off-the-Job Management Training and Development Techniques Leadership Development at GE Trends Shaping HR: Customized Talent Management Differential Development Assignments Talent Management and Differential Development Assignments Managing Organizational Change Programs Lewin’s Change Process Using Organizational Development Evaluating the Training Effort Designing the Study Training Effects to Measure Chapter Review

Where Are We Now… The purpose of this chapter is to increase your effectiveness in training employees. The main topics we’ll cover include orientating employees, designing onboarding to improve employee engagement, the training process, analyzing training needs, implementing training and development programs, and evaluating the training efforts.

Interesting Issues: For about 6 years after buying May Department Stores Co., Macy’s Inc. emphasized consolidation. First it focused on integrating the regional department stores under one Macy’s umbrella. Then the recession hit and Macy’s turned to cutting costs. Meanwhile, Macy’s customer service suffered. Many sales associates failed to provide the service level that customers wanted. With deteriorating service cutting into its sales and profits, the question was, what should Macy’s do about it now? We’ll see what it did.

Learning Objectives: 8-1.

8-2.

8-3.

8-4.

8-5.

8-6.

8-7.

Summarize the purpose and process of employee orientation.

Give an example of how to design onboarding to improve employee engagement.

List and briefly explain each of the steps in the training process.

Explain how to use five training techniques.

List and briefly discuss four management development methods.

List and briefly discuss the importance of the steps in leading organizational change.

Explain why a controlled study may be superior for evaluating the training program’s effects.

Annotated Outline:

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Chapter 8: Training and Developing Employees I. Orienting and Onboarding New Employees – making sure employees do know what to do and how to do their jobs is the purpose of orientation and training. Every manager therefore should know how to orient and train employees.

A. The Purpose of Employee Orientation/Onboarding – employee orientation programs provide new employees with the basic background information required to perform their jobs; ideally it should also help them start becoming emotionally attached to and engage in the firm.

B. The Orientation Process – the length of the orientation program depends on what you cover. At a minimum, the orientation should provide information on matters such as employee benefits, personnel policies, safety measures, and regulations, and a facilities tour. New employees should receive (and sign for) print or Internet-based employee handbooks covering such matters.

1. The Employee Handbook – should include a disclaimer stating “nothing in this handbook should be taken as creating a binding contract between employer and employee and all employment is on an at will basis.”

2. Orientation Technology – employers use technology to support orientation such as online learning, virtual environments, streaming videos, iPhone apps, scannable QR codes, and gaming.

II. Employee Engagement Guide for Managers: Onboarding at Toyota – it does cover routine topics such as company benefits, however its main aim is to engage Toyota’s new employees in the firm’s ideology of quality, teamwork, personal development, open communication, and mutual respect. The initial program takes about 4 days.

III. Overview of the Training Process – training begins after orientation. Having high potential employees does not guarantee they will succeed. Organizations must train employees how to do the job.

A. Know Your Employment Law – training and the Law; inadequate training can also expose the employer to liability for negligent training.

B. Aligning Strategy and Training – the employer’s strategic plans should govern its training goals. In essence, the task is to identify the employee behaviors the firm will need to execute its strategy and then from that, deduce what competencies (for instance, skills, and knowledge) employees will need.

C. Improving Performance: The Strategic Context D. The ADDIE Five-Step Training Process – ADDIE stands for analyze, design, develop, implement, and evaluate.

E. Conducting the Training Needs Analysis – this may address the employer’s strategic/longer-term training needs and/or its current training needs.

1. Strategic Training Needs Analysis – this focuses on identifying the training the employer will need to fill new future jobs, and is tied to succession planning.

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Chapter 8: Training and Developing Employees 2. Current Training Needs Analysis – most training is focused on improving current performance. Analyzing current employee needs is more complex than new employee needs. Two main ways to identify training needs are task analysis (an analysis of the job’s requirements) and performance analysis (an analysis to verify if there is a performance deficiency).

3. Task Analysis: Analyzing New Employees’ Training Needs – a task analysis can be used to determine the training needs of new employees. A task analysis record form can also be used. It contains the following information: task list; when and how often performed; quantity and quality performance standards; conditions under which performed; skills or knowledge required; and where best learned.

Table 8-1 illustrates the task analysis record form.

4. Competency Profiles and Models in Training and Development – the American Society for Training and Development (ASTD) built a competencies model for the job of training and development professionals. It includes 10 core trainer competencies.

5. Performance Analysis: Analyzing Current Employees’ Training Needs – there are several methods that can be used to identify an employee’s training needs, including supervisor, peer, self, and 360-degree performance reviews; job-related performance data; observation by supervisors or other specialists; interviews with the employee or his/her supervisor; tests of things like job knowledge, skills, and attendance; attitude surveys; individual employee daily diaries; assessment centers, and special performance gap analytical software.

6. Can’t Do/Won’t Do – the biggest issue is to figure out what is causing the lower performance. If the problem is employee motivation then training is unlikely to fix this. Can’t Do means the employees don’t know what to do or what your standards are. Won’t Do, the employee could do the job if they wanted to.

F. Designing the Training Program – designing means planning the overall training program including objectives, delivery methods, and program evaluation.

1. Setting Learning Objectives – should specify in measurable terms what the trainee will be able to accomplish when the training is completed.

2. Creating a Motivational Learning Environment – the learning environment should take into account both the trainees’ ability and motivation.

3. Making the Learning Meaningful – material that is meaningful is usually easier for trainees to understand and remember.

4. Making Skills Transfer Obvious and Easy – make skills and behaviors easy to transfer from the training site to the job site.

5. Reinforcing the Learning – trainees need plenty of feedback.

6. Ensuring Transfer of Learning to the Job – prior to training, get trainee and supervisor input in designing the program, institute a training attendance policy, and encourage employees to participate. During

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Chapter 8: Training and Developing Employees training, provide trainees with training experiences and conditions (surroundings, equipment) that resemble the actual work environment.

After training, reinforce what the trainees learned.

7. Other Training Design Issues – managers must review alternate training methods and choose the one they feel will be most effective.

They must also decide how to organize the training as well as how to evaluate it.

G. Developing the Program – involves actually assembling the program’s training content and materials. It means choosing the specific content the program will present as well as designing/choosing the specific instructional method (lectures, cases, Web-based, and so on) you will use.

H. Trends Shaping HR: Digital and Social Media IV. Implement the Training Programs A. On-the-Job Training (OJT) – the most familiar is the coaching or understudy method which involves simply observing the supervisor or (preferably) having the supervisor or job expert show the new employees the ropes, step-by-step.

B. Apprenticeship Training – a structured process by which people become skilled workers usually through a combination of formal learning and long-term on-the-job training, often under the tutelage of a master craftsperson.

C. Informal Learning – surveys estimate that as much as 80% of what employees learn on the job they learn through informal means, including performing their jobs while interacting every day with their colleagues.

D. Job Instruction Training – teaching a new employee the logical sequence of a job step-by step.

E. Lectures – quick and simple ways to provide knowledge to large groups.

F. Programmed Learning – a step-by-step self-learning method that involves three parts: 1) presenting questions, facts, or problems to the learner; 2) allowing the person to respond; and 3) providing feedback on the accuracy of the answers, with instructions on what to do next.

G. Behavior Modeling – involves (1) showing trainees the right (or “model”) way of doing something, (2) letting them practice, and then (3) giving feedback on the performance.

H. Audiovisual-Based Training – tools include films, PowerPoint presentations, video conferences, audiotapes, and videotapes.

I. Vestibule Training – a method in which trainees learn on the actual or simulated equipment they will use on the job while being trained off the job.

J. Electronic Performance Support Systems (EPSS) – sets of computerized tools and displays that effectively automate and integrate training, documentation, and phone support, thus enabling individuals to provide support that’s faster, cheaper, and more effective than the traditional methods. Performance support systems are modern job aids which are a

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set of instructions, diagrams, or similar methods available at the job site to guide the worker.

K. Videoconferencing – involves delivering programs over broadband lines, the Internet, or satellite.

L. Computer-Based Training (CBT) – training methods that use interactive computer-based systems to increase knowledge or skills.

M. Simulated Learning – a variety of different activities including but not limited to virtual reality-type games, step-by-step animated guides, role playing, and software training.

N. Lifelong and Literacy Training Techniques – providing employees with a continual learning experience over their tenure with the firm.

O. Improving Performance: HR Practice Around the Globe P. Team Training – this does not always come naturally and companies devote many hours training new employees to listen to and to be cooperative with each other.

Q. Internet-Based Training – used to deliver almost all types of training such as the Blackboard learning management system, Learning Portals which is a section of the employer’s website that offers employees online access to training courses, and blended learning which uses multiple delivery methods.

R. The Virtual Classroom – special collaboration software enables multiple remote learners to use their PCs or laptops to participate in live discussions.

S. Trends Shaping HR: Digital and Social Media – learning content is delivered on demand via mobile devices whenever and wherever the learner desires.

T. Improving Performance: HR Tools for Line Managers and Small Businesses V. Implementing Management Development Programs A. Strategy’s Role in Management Development – management development is any attempt to improve managerial performance by imparting knowledge, changing attitudes, or increasing skills. Management development is important for several reasons: 1) promotion from within being a source of talent, and virtually all promoted managers require some development, and 2) it facilitates organizational continuity.

B. Succession planning is part of this process and is the process through which a company plans for and fills senior-level openings.

C. Improving Performance Through HRIS: Succession Systems D. Candidate Assessment and the 9-Box Grid – the 9-box grid is a tool to help in the selection process and in succession planning that shows the potential and performance of managers.

E. Managerial On-the-Job Training and Rotation–- methods include job rotation, coaching/understudy approach, and action learning.

1. Improving Performance: HR Practices Around the Globe 2. The Coaching/Understudy Approach – occurs when a trainee works directly with a senior manager or with the person he/she is to replace, and the latter is responsible for coaching the trainee.

3. Action Learning – gives managers and others released time to work full-time on projects to analyze and solve problems in departments other than their own.

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Chapter 8: Training and Developing Employees F. Off-the-Job Management Training and Development Techniques 1. The case study method has a trainee solve realistic problems after studying written or video case descriptions.

2. Management games or computerized management games allow for the trainees to make realistic decisions in simulated situations.

3. Outside seminars are offered by many companies and universities.

4. University-related programs provide executive education and continuing education programs in leadership, supervision, and the like.

5. Role playing is aimed at creating a realistic situation and then having the trainees assume the parts (or roles) of specific persons in that situation.

6. Corporate universities are in-house development centers that have been established by many companies to expose prospective managers to realistic exercises that develop improved management skills. The best corporate universities: a) actively align offerings with corporate goals, b) focus on developing skills that support business needs, c) evaluate learning and performance, d) use technology to support learning, and e) partner with academia.

7. Executive coaches are being used by firms to improve their top managers’ effectiveness. An executive coach is an outside consultant who questions the executive’s boss, peers, subordinates, and sometimes family, in order to identify strengths and weaknesses. The coach then counsels the executive so he or she can capitalize on those strengths and overcome the weaknesses.

8. The SHRM Learning System encourages HR professionals to get certified by taking one of three exams: professional, senior professional, and global HR. E. Leadership Development at GE is known for its success in developing its executive talent. The program includes a leadership program, an intensive performance appraisal process, a training campus, annual meetings to network and share ideas, a focus on central themes and ideas, and monthly dinners.

F. Trends Shaping HR: Talent Management and Differential Development Assignments – in today’s competitive environment, it is crucial that an organization distribute its resources effectively. It is no longer appropriate to provide across-the-board raises, for example, but instead firms must allocate resources in a way that supports the strategic goals of the company.

VI. Managing Organizational Change Programs A. What to Change – when organizations are faced with the need to manage change, there are five different aspects that can be targeted, including strategy, culture, structure, technologies, and attitudes/skills.

B. Lewin’s Change Process – the most difficult part of implementing organizational change is overcoming employees’ resistance to it.

Psychologist Kurt Lewin formulated a classic explanation of how to

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implement change in the face of resistance. His change process consists of three steps: 1) unfreezing; 2) moving; and 3) refreezing.

C. Implementing Organizational Change – the ten steps are 1) establish a sense of urgency; 2) mobilize commitment through joint diagnosis of problems; 3) create a guiding coalition; 4) develop a shared vision; 5) communicate the vision; 6) help employees make the change; 7) generate short-term wins; 8) consolidate gains and produce more change; 9) anchor the new ways of doing things in the company culture; and 10) monitor progress and adjust the vision as required.

D. Using Organizational Development – organizational development is a special approach to organizational change in which the employees themselves formulate the change required and implement it, often with the assistance of a trained consultant. OD has several distinguishing characteristics, including: action research; applied behavioral science knowledge to improve the organization’s effectiveness; the ability to change attitudes, values, and beliefs of employees so that they can implement the technical, procedural, or structural changes needed; and the ability to change the organization in a particular direction.

VII. Evaluating the Training Effort A. Designing the Study – the evaluation process of choice is controlled experimentation, which uses both a training group and a control group (one that receives no training) to assess before and after performance to determine the extent to which performance in the training group resulted from the training itself rather than some organization-wide change. In practice, few firms use this method, preferring to simply measure trainees’ reactions, or to measure trainee job performance before and after the training.

B. Training Effects to Measure – four basic categories of training outcomes can be measured: 1) reaction; 2) learning; 3) behavior; and 4) results.

Chapter Review Chapter Section Summaries: 8-1: 8-2:

8-3: 8-4: 8-5:

Getting your new employee on board and up to speed begins with orienting and training.

There is more to orientating employees than introducing them to coworkers. Even without a company-wide program like Toyota’s, use this onboarding opportunity to begin instilling in the new employee the company values and traditions in which you expect the person to become engaged.

We use the acronym ADDIE to outline the training process: analyze, develop, design, implement, and evaluate.

With this in place, you can turn to implementing the training program.

Most training methods are useful for all employees, but some are particularly appropriate for management development programs.

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When facing economic, competitive, or other challenges, managers have to execute organizational change programs.

Whatever the training program, it’s important to evaluate the training effort.

Discussion Questions: 8-1: A company should have a good training process in order to retain employees. Describe and explain each step of the training process.

Students should be able to discuss the ADDIE five-step training process as discussed on page 272.

8-2: What is meant by “organizational development”? Briefly explain the different characteristics of organizational development?

The different characteristics of organizational development are as follows: a. Usually involves action research – collecting data about a group, department, or organization, and feeding the information back to employees so they can analyze it and develop a hypothesis about what the problem might be. b. It applies behavioral science knowledge to improve the organization’s effectiveness c. It changes the organization in a particular direction – toward empowerment, improved problem solving, responsiveness, quality of work and effectiveness.

8-3:What are some typical on-the-job training techniques? What do you think are some of the main drawbacks of relying on informal on-the-job training for breaking new employees into their jobs?

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

What are some important advantages to using cloud-based training?

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

8-4: Describe the pros and cons of five management development methods.

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

8-5: Do you think job rotation is a good method to use for developing management trainees? Why or why not?

Most students will probably support job rotation for management trainees. It gives the trainee the opportunity to experience several areas and to develop cross-departmental skills

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and cooperation. It also gives the trainee the chance to experience different areas to see what he or she likes.

8-6: Discuss the reasons behind Kurt Lewin’s suggestions for unfreezing and refreezing an organization.

Students should be able to discuss that the traditional approach to organizational change involves Lewin’s 3-Stages: a. Unfreezing Stage b. Moving Stage c. Refreezing Stage The difference between them lies in who initiates the change, as Lewin’s traditional approach tends to be an initiative from management, whereas the employees initiate change in organizational development.

8-7: Define employee orientation. Explain the benefits of a proper orientation for new employees.

Students should be able to define employee orientation as a process for providing new employees with basic background information about the firm.

1. Benefits of employee orientation: 2. Better awareness about the company’s activities & business 3. Closer bond among employees 4. Implantation of the organizational culture in a new batch of recruits 5. New employees get acclimatized to the work environment & work expectations 6. Greater loyalty to the company

Individual and Group Activities: 8-8: Suppose you are the team leader in the call center of a bank. All employees at the call center were required to undergo training on customer service. Lately, your shift has received complaints from customers about miscommunication and rude staff on the phone. These complaints were referred to top management, and you have been asked to look into the training needs of call-center employees. a. What are some of the staffing factors that could have contributed to this problem? b. How would you know if it is indeed a training problem?

Students should be able to discuss: a) Some of the staffing factors that could have contributed to this problem could include: 1. Incorrect hiring procedures causing employees with wrong attitude, skill-sets & aptitudes being hired/assigned to the call centre by the HR department 2. Ineffective training methods 3. Insufficient coaching & on-the-job support

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4. Staff insufficiently prepared in the cultural & linguistic aspect of customer service training b) Identifying that it is a training problem, by measuring/evaluating the training effort.

One can measure reaction, learning outcomes, analyze behaviors exhibited & overall results.

8-9: Evaluate the use of social networking in the development of a training session for new lecturers.

Students should be able to discuss the measurement of reaction, learning behavior or results, and be able to compare a control group that is not exposed to social networking with another group that is trained in/well exposed to social media.

8-10: Discuss in groups of three, what would be the best method(s) of training for the following jobs: a. An entry level chef in a five-star restaurant b. A new manager at a fast food outlet.

Students should be able to discuss: a) An entry level chef in a five-star restaurant – Any combinations of On-Job-Training, apprenticeship under a more experienced chef, informal learning, job instruction training. b) A new manager at a fast food outlet – On-the-job-training, apprenticeship/ mentoring under a more experienced manager, as well as an appropriate Management Development Program. (See Pg 281 for more details).

8-11: In groups, research and outline one of the methods of training below, and identify its advantages and disadvantages. a. Job rotation, secondment, and shadowing b. E-learning c. On-the-job learning Students should be able to discuss: a. Job rotation: a management training technique that involves moving a trainee from one department to another to broaden the employees’ experience and identify their strong and weak points.

Advantages of Job rotation include that employees make useful contacts in many departments; employees understand the functions of each department better; and that employees understand the big-picture of the company.

Disadvantages include the fact that it takes a long time to move from each department for an employee to get the proper exposure and that it puts a premium on the HR department in understanding what personal ambitions drive a particular employee, get the job-fit wrong and employees may resign .

Secondment: Similar to Job rotation, secondment usually means being sent to work out of town or a foreign overseas location for a specific amount of time

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Advantages include that employees make useful contacts in overseas/out-of-town locations; they receive exposure to cross-cultural environments; it helps build the bigpicture environment of the company as a whole; and employees are appreciate the effects of globalization on the company Disadvantages include possible home-sickness or culture-shock affecting employees; remuneration for overseas duty might be high to attract employees (this is a disadvantage to the company); under this method companies are responsible for creating a support system for expatriate workers, where employees may face a second round of shock when returning to their home country after changes in office and family life during secondment.

Shadowing: a process of mentoring, where the mentee follows (or shadows) the mentor in order to learn about the mentor’s roles before succeeding the mentor in their role The advantages of shadowing include affordable way of training a successor; the close relationship ensures formal &informal information gets passed on; and it offers personalized instructions.

The disadvantages are potential for personality conflict between mentor and mentee; the mentor may not pass on everything they know to the mentee; and during the shadowing process, mentee may not be able to perform other functions. b. E-Learning: Learning with information technology can range from the various forms of computer-based simulations to interactive learning.

Advantages include large numbers of trainees may be trained simultaneously very quickly; learners may learn at their own pace and time; and the IT keeps track of past learning and performance and is able to track employee progress automatically.

The disadvantages are that simulations are only as good as the programming and hardware capabilities.

High upfront costs for software and hardware; changes in the business environment may force a change in software to replicate real-life scenarios, driving up training costs; and that it cannot replace real-life interactions with a trainer.

8-12: Working individually or in groups, identify and discuss some of the barriers to effective training.

Students should be able to discuss: a. Financial constraints b. Time constraints c. Non-conducive learning environments d. Employee incentives being not attractive enough to motivate employee to train 8-13: Working individually or in groups, search the Internet to find the most popular training methods used by most organizations. Compile the information into a list, carefully noting the features and requirements of each training method. Identify the features that you think would make learning easy and fun, then contrast them with features that would make training difficult or boring. Then, from your own experience, identify the training method that enabled better learning and the one that

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hindered it. Outline the features for both good and bad training methods from your experience. As a trainer, what would you change?

Students should be able to discuss and display an understanding of the benefits of the different training methods, with emphasis on what is fun or boring training. This would give them a basis to change their training methods to suit each learner.

8-14: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

Material covered in this chapter relevant to the HRCI exam would include succession planning, needs analysis, development, implementation and evaluation of training programs, development, training methods, programs and techniques, instructional methods and program delivery, implementation and evaluation of programs to assess employees’ potential for growth and development in the organization, change management programs and activites, organizational development theories and aplications, and employee involvement strategies.

8-15: Perhaps no training task in Afghanistan was more pressing than that involved in creating the country’s new army, which is an ongoing task. These were the people who were to help the coalition bring security to Afghanistan. However, many new soldiers and even officers had no experience. There were language barriers between trainers and trainees. And some trainees found themselves quickly under fire from insurgents when they went as trainees out into the field. Based on what you learned about training from this chapter, list the five most important things you would tell the officer in charge of training to keep in mind as he prepares the training program.

Lead a discussion with students to identify concepts learned in this chapter that apply to this example. Have them identify how each recommendation addresses the unique issues in this scenario. Suggest that students do Internet research to discover how, in fact, training was conducted, and have them critique the approach, techniques, and methods used based on the material in the text.

Experiential Exercise: Flying the Friendlier Skies Purpose: The purpose of this exercise is to give you practice in developing a training program for the job of airline reservation clerk for a major airline.

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Required Understanding: You should be fully acquainted with the material in this chapter and should read the following description of an airline reservation clerk’s duties: Customers contact our airline reservation clerks to obtain flight schedules, prices, and itineraries.

The reservation clerks look up the requested information on our airline’s online flight schedule systems, which are updated continuously. The reservation clerk must deal courteously and expeditiously with the customer, and be able to quickly find alternative flight arrangements in order to provide the customer with the itinerary that fits his or her needs. Alternative flights and prices must be found quickly, so that the customer is not kept waiting, and so that our reservations operations group maintains its efficiency standards. It is often necessary to look under various routings, since there may be a dozen or more alternative routes between the customer’s starting point and destination. You may assume that we just hired 30 new clerks, and that you must create a 3-day training program.

How to Set up the Exercise/Instructions: Divide the class into teams of five or six students.

Airline reservation clerks obviously need numerous skills to perform their jobs. JetBlue Airlines has asked you to design quickly the outline of a training program for its new reservation clerks.

8-16: You may want to start by listing the job’s main duties and by reviewing any work you may have done for the exercise.

8-17: In any case, please produce the requested outline, making sure to be very specific about what you want to teach the new clerks, and what methods and aids you suggest using to train them.

Application Case: The Mentorship Program at TVH 8-18: If you were Paul Sanders, how would you deal with the issues raised in the letter?

Unless TVH wants to lose all the knowledge that older employees had available to them, the company must prepare itself for a possible sudden exit of mature employees. To address the problems raised, there is a need for a coherent (HR) strategy. In order to stay ahead of competitors TVH decided to make knowledge management a priority, dedicating resources to internal knowledge management. The approach of TVH puts knowledge creation at the very centre of the company’s human resource management strategy.

8-19: What would make the mentoring program a success? How would you define success, and failure?

Barriers for failure to transfer knowledge include: • The knowledge source is not motivated to share knowledge. For example, in this case Freddy does not have sufficient time to do his own job and teach youngsters.

Moreover, he thinks that sharing knowledge will give him a weak position.

• Team members do not see a (personal) use of coding experience and assume to address knowledge carriers directly as more efficient; the knowledge gap is too big.

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There is missing documentation – misplaced “modesty” (for positive experiences) or fear of negative sanctions (in case of mistakes).

There is a lack of knowledge on debriefing methods or on putting “debriefing” procedures in project manuals.

An important critical success factor is the co-operation between generations. Better co-operation automatically signifies better knowledge transfer.

A number of various strategies can be adopted to overcome these problems. Support of senior management and company’s no-blame culture is of crucial importance. Moreover, appropriate incentive schemes (intrinsic or extrinsic) need to be developed to motivate employees to participate in appraisals and knowledge transfer and sharing.

8-20: Under what circumstances would you choose these training processes?

The underlying objectives for investing in intensive training processes typically are improved performance, competitive advantage, innovation, the sharing of lessons learned, and thus continuous improvement of the organization. Training can help individuals and groups to share valuable organizational insights, to reduce redundant work, to avoid reinventing the wheel, to reduce training time for new employees, to retain intellectual capital as employee turnover in an organization, and to adapt to changing environments and markets.

Furthermore, it can improve product development and quality, and establish a better relationship and understanding of customer and stakeholders.

Reference is often made to a particular industry being knowledge-intensive: for example, biotechnology or management consulting. It is, however, important to recognize that big differences could exist between firms within a particular industry. Firms that have a higher need for sharing knowledge in for instance mentorship programs are often characterized by: 1. The nature and quality of their highly skilled human capital; 2. The work processes that create market value through knowledge; and 3. The deployment of the knowledge involving innovation, initiative and competence building in the provision of bespoke services.

Continuing Case: Carter Cleaning Company – The New Training Program 8-21: Specifically, what should the Carters cover in their new employee orientation program, and how should we convey this information?

The students should refer to the orientation checklist in Figure 8-1 and the section on orienting employees in the chapter.

8-22: In the HR management course Jennifer took, the book suggested using a job instruction sheet to identify tasks performed by an employee. Should the Carter Cleaning Centers use a form like this for the counter person’s job? If so, what should the form look like, say, for a counter person?

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The students should refer to the section on the training needs of new employees. This section discusses a job instruction sheet. Students should use this to formulate their answers.

8-23: Which specific training techniques should Jennifer use to train her pressers, her cleaner-spotters, her managers, and her counter people? Why should these training techniques be used?

The students should review the training techniques discussed in the chapter and conduct research on the Internet to review the various training resources offered for each of these positions.

Hotel Paris: Improving Performance at the Hotel Paris – The New Training Program 8-24: Based on what you read in this chapter, what would you have suggested Lisa and her team do first with respect to training, particularly in terms of the company’s strategy? Why? Lisa should review employee performance evaluation forms to determine whether and where there are deficits. Customer feedback may also indicate whether there is a need for certain types of training.

8-25: Have Lisa and the CFO sufficiently investigated whether training is really called for?

Why? What would you suggest?

No. Although there are large differences in such measures as spending as a percentage of payroll, that in itself does not mean training is lacking. On-the-job training costs little and may be taking place on an informal, and therefore unmeasured, basis. Additionally, such things as employee tenure may be having an effect on training costs. If Hotel Paris employees have been there for many years, they may require less training than the employees of a hotel which has high turnover. Lisa needs to analyze the need for training more thoroughly.

8-26: Based on what you read in this chapter, and what you may access via the Web, develop a detailed training program for one of these hotel positions: security guard, housekeeper, or door person.

Student answers will vary.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab.

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8-27: John Santos is an undergraduate business student majoring in accounting. He just failed the first accounting course, Accounting 101. He is understandably upset. How would you use performance analysis to identify what, if any, are John’s training needs?

8-28: Knowing that you are taking an HR management course, a friend asks you this: I just hired a nanny for my child and I want to make sure she knows what to do; in outline form, what should I cover in the training program I give her?

Key Terms: Employee Orientation – A procedure for providing new employees with basic background information about the firm.

Training – The process of teaching new or current employees the basic skills they need to perform their jobs.

Negligent Training – A situation where an employer fails to train adequately, and the employee subsequently harms a third party.

Task Analysis – A detailed study of a job to identify the skills required.

Competency Model – A graphic model that consolidates, usually in one diagram, a precise overview of the competencies (the knowledge, skills, and behaviors) someone would need to do a job well.

Performance Analysis – Verifying that there is a performance deficiency and determining whether that deficiency should be corrected through training or through some other means (such as transferring the employee).

The Cloud – Refers to placing software programs and services on vendors’ remote servers, from which they can then deliver these programs and services seamlessly to employee’s digital devices.

On-The-Job Training (OJT) – Training a person to learn a job while working at it.

Apprenticeship Training – A structured process by which people become skilled workers through a combination of classroom instruction and on-the-job training.

Job Instruction Training (JIT) – Listing each job's basic tasks, along with key points in order to provide step-by-step training for employees.

Programmed Learning – A systematic method for teaching job skills involving presenting questions or facts, allowing the person to respond, and giving the learner immediate feedback on the accuracy of his or her answers.

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Behavior Modeling – A training technique in which trainees are first shown good management techniques in a film, are then asked to play roles in a simulated situation, and are then given feedback and praise by their supervisor.

Electronic Performance Support Systems (EPSS) – Sets of computerized tools and displays that automate training, documentation, and phone support, integrate this automation into applications, and provide support that’s faster, cheaper, and more effective than traditional methods.

Job Aid – A set of instructions, diagrams, or similar methods available at the job site to guide workers.

Lifelong Learning – Provides employees with continuing learning experiences over their tenure with the firm, with the aims of ensuring they have the opportunity to learn the skills they need to do their jobs and to expand their occupational horizons.

Cross-Training – Training employees to do different tasks or jobs than their own; doing so facilitates flexibility and job rotation.

Virtual Classroom – Teaching method that uses special collaboration software to enable multiple remote learners, using their PCs or laptops, to participate in live audio and visual discussions, communicate via written text, and learn via content such as PowerPoint slides.

Web 2.0 Learning – Training that uses online technologies such as social networks, virtual worlds (such as Second Life), and systems that blend synchronous and asynchronous delivery with blogs, chat rooms, bookmark sharing, and tools such as 3-D simulations.

Management Development – Any attempt to improve current or future management performance by imparting knowledge, changing attitudes, or increasing skills.

Job Rotation – A management training technique that involves moving a trainee from department to department to broaden his or her experience and identify strong and weak points.

Action Learning – A training technique by which management trainees are allowed to work full time analyzing and solving problems in other departments.

Case Study Method – A development method in which the manager is presented with a written description of an organizational problem to diagnose and solve.

Management Game – A development technique in which teams of managers compete with one another by making computerized decisions regarding realistic but simulated companies.

Role-Playing – A training technique in which trainees act out the parts in a realistic management situation.

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In-House Development Center – A company-based method for exposing prospective managers to realistic exercises to develop improved management skills.

Executive Coach – An outside consultant who questions the executive’s associates in order to identify the executive’s strengths and weaknesses, and then counsel the executive so he or she can capitalize on those strengths and overcome the weaknesses.

Organizational Development – A special approach to organizational change in which employees themselves formulate and implement the change that’s required.

Controlled Experimentation – Formal methods for testing the effectiveness of a training program, preferably with before-and-after tests and a control group.

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Part Three Training and Development Chapter 9 Performance Management and Appraisal Lecture Outline: Basics of Performance Appraisal The Performance Appraisal Process Why Appraise Performance?

Defining the Employee’s Goals and Performance Standards Improving Performance: HR as a Profit Center Improving Performance: HR Tools for Line Managers and Small Businesses Who Should Do the Appraising?

Techniques for Appraising Performance Graphic Rating Scale Method Alternation Ranking Method Paired Comparison Method Forced Distribution Method Critical Incident Method Narrative Forms Behaviorally Anchored Rating Scales Mixed Standard Scales Management by Objectives (MBO) Computerized and Web-Based Performance Appraisal Electronic Performance Monitoring Conversation Days Appraisal in Practice: Using Multiple Methods Trends Shaping HR: Customized Talent Management Improving Performance: The Strategic Context Dealing with Rater Error Appraisal Problems Potential Rating Problems Diversity Counts: The Problem of Bias The Need for Fairness Know Your Employment Law Managing the Appraisal Interview How to Conduct the Appraisal Interview How to Handle a Defensive Subordinate How to Criticize a Subordinate How to Handle a Formal Written Warning Employee Engagement Guide for Managers Use the Appraisal Interview to Build Engagement Performance Management

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Total Quality Management and Performance Appraisal What Is Performance Management?

Trends Shaping HR: Digital and Social Media Improving Performance: HR Practices Around the Globe The Manager’s Role in Performance Management Chapter Review

Where Are We Now… The purpose of this chapter is to show you how to appraise employee’s performance. The main topics we cover include the basics of performance appraisal, tools for appraising performance, dealing with rater error appraisal problems, the appraisal interview, employee engagement guide for managers, and performance management.

Interesting Issues: TRW supplies automotive steering, braking, and safety and electronic equipment to customers worldwide. Several years ago, TRW was deeply in debt. With over 100,000 employees on five continents, TRW management knew it had to base its new strategy on improving competitiveness and performance. At the time, most of the firm’s far-flung departments used their own paper-based performance appraisal systems. Top management decided it needed a new company-wide performance management system to help bring what TRW’s employees were doing into synch with the firm’s new strategic goals. We’ll see what they did.

Learning Objectives: 9-1: 9-2: 9-3: 9-4: 9-5: 9-6:

Describe the appraisal process.

Discuss the pros and cons of at least eight performance appraisal methods.

Give examples of potential appraisal problems and how to deal with them.

List steps to take in the appraisal interview.

Explain key points in how to use the appraisal interview to boost employee engagement.

Explain how you would take a performance management approach to appraisal.

Annotated Outline: I. Basics of Performance Appraisal A. The Performance Appraisal Process – stripped to its essentials, performance appraisal always involves the 3-step performance appraisal process: (1) setting work standards; (2) assessing the employee’s actual performance relative to those standards, which usually involves some rating form; and (3) providing feedback to the employee with the aim of helping him or her to eliminate performance deficiencies or to continue to perform above par.

B. Why Appraise Performance? – for several reasons: 1) many employers still base pay, promotion, and retention on employee appraisals; 2) appraisals play a ..

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central role in the employer's performance management process; 3) the appraisal lets the manager and subordinate develop a plan for correcting any deficiencies, and reinforce those things the employee does correctly; 4) they serve a useful career planning purpose; and 5) appraisals play a role in identifying training and development needs.

C. Defining the Employee’s Goal and Performance Standards – includes comparing “what should be” with “what is” and assess to what extent the employee is attaining his or her numerical goals. Effective goals should be SMART = specific, measurable, attainable, relevant, and timely.

D. Improving Performance: HR as a Profit Center E. Improving Performance: HR Tools for Line Managers and Small Businesses How to Set Effective goals involve four guidelines: 1) Assign specific goals, 2) Assign measurable goals, 3) Assign challenging but doable goals, 4) Encourage participation.

F. Who Should Do the Appraising?

1. The immediate supervisor is at the heart of the appraisal process. Getting a supervisor’s appraisal is relatively straightforward and makes sense.

However, it does not stop with him or her.

2. Peer Appraisals – being appraised by one’s peer can be effective. One’s peer sees aspects of the person that the boss may never see, so peers’ opinions can be useful developmentally.

3. Rating Committees – consist of multiple raters, typically the employee’s immediate supervisor and three or four other supervisors.

4. Self-Ratings – tend to be higher than supervisor or peer ratings.

5. Appraisal by Subordinates – also known as upward feedback. It is where subordinates anonymously rate their supervisor’s performance.

6. 360-Degree Feedback – ratings are collected from the employee’s supervisors, subordinates, peers, and internal or external customers. One study found significant correlation between 360-degree ratings and conventional ratings. Firms should carefully assess potential costs, carefully train those giving feedback, and not rely solely on 360-degree feedback.

II. Techniques for Appraising Performance A. Graphic Rating Scale Method – it is the simplest and most popular performance appraisal technique. A scale is used to list a number of traits and a range of performance for each, then the employee is rated by identifying the score that best describes his/her performance level for each trait. Managers must decide which job performance aspects to measure. Some options include generic dimensions, actual job duties, or behaviorally recognizable competencies. Figure 9-2 illustrates.

B. Alternation Ranking Method – employees are ranked from best to worst on a particular trait, choosing highest, then lowest, until all are ranked.

C. Paired Comparison Method – it involves ranking employees by making a chart of all possible pairs of employees for each trait and indicating which one is the better employee of the pair. ..

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D. Forced Distribution Method – predetermined percentages of rates are placed in various performance categories, which is similar to grading on a curve.

E. Critical Incident Method – a supervisor keeps a record of positive and negative examples of a subordinate’s work-related behavior, and reviews the record with the employee at predetermined times.

F. Narrative Forms – the method involves rating the employee’s performance for each performance factor, writing down examples and an improvement plan, aiding the employee in understanding where his/her performance was good or bad, and summarizing with a focus on problem solving.

G. Behaviorally Anchored Rating Scales (BARS) – a method that combines the benefits of narratives, critical incidents, and quantified scales by anchoring a scale with specific behavioral examples of good or poor performance. The five steps in developing a BARS are: 1) generate critical incidents; 2) develop performance dimensions; 3) reallocate incidents; 4) scale the incidents; and 5) develop a final instrument. The advantages of BARS include a more accurate gauge, clearer standards, feedback, independent dimensions, and consistency.

H. Mixed Standard Scales – these are similar to BARS. The employer “mixes” together sequentially the good and poor behavioral example statements when listing them. The aim is to reduce rating errors by making it less obvious to the appraiser 1) what performance dimensions he or she is rating; and 2) whether the behavioral example statements represent high, medium, or low performance.

I. Management by Objectives (MBO) – the manager sets specific measurable goals with each employee and then periodically discusses the employee’s progress toward these goals. The process consists of six steps: 1) set the organization's goals; 2) set departmental goals; 3) discuss departmental goals; 4) define expected results (set individual goals); 5) conduct performance reviews; and 6) provide feedback.

J. Computerized and Web-Based Performance Appraisal – this method generally enables managers to keep notes on subordinates during the year, to rate employees on a series of performance traits, and then generate written text to support each part of the appraisal. About 1/3 of employers use online performance management tools for at least some employees.

K. Electronic Performance Monitoring – these systems use computer network technology to allow managers to monitor their employees’ computers and employee rate, accuracy, and time spent working online.

L. Conversation Days – manager-employee conversation that focus on areas of improvement, growth, and setting stretch goals.

M. Appraisal in Practice: Using Multiple Methods N. Trends Shaping HR: Customized Talent Management O. Improving Performance: The Strategic Context III. Dealing with Rater Error Appraisal Problems – it can be difficult to rate performance for several reasons, such as a systematic error in judgment that occurs when people evaluate each other: unclear standards, halo effect, central tendency, leniency or strictness, and bias. ..

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A. Potential Rating Problems: 1. Unclear Standards – ambiguous traits and degrees of merit can result in an unfair appraisal.

2. Halo Effect – the influence of a rater’s general impression on ratings of specific qualities can be a problem.

3. Central Tendency – this occurs when supervisors stick to the middle of the rating scales, thus rating everyone average.

4. Leniency or Strictness – supervisors have the tendency to rate everyone either high or low.

5. Regency Effects – this involves letting what the employee has done recently blind the manager to the employee’s performance over the rest of the year.

B. Diversity Counts: The Problem of Bias –the tendency to allow individual differences such as age, race, and sex affect employee appraisal ratings is a problem.

C. The Need for Fairness – due to a supervisor’s ineptness or the method’s inherent unfairness many are unfair.

D. Know Your Employment Law – it’s important for an employer to ensure that appraisals are legally defensible.

IV. Managing the Appraisal Interview – the supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths.

A. How to Conduct the Appraisal Interview – prepare for the interview by assembling the data, preparing the employee, and choosing the time and place. Be direct and specific, using objective examples; don’t get personal; encourage the person to talk; and reach agreement.

B. How to Handle a Defensive Subordinate – recognize that defensive behavior is normal; never attack a person’s defenses; postpone action; and recognize your own limitations.

C. How to Criticize a Subordinate – when required, criticize in a private and constructive manner that lets the person maintain his/her dignity and sense of worth.

D. How to Handle a Formal Written Warning – written warnings should identify the standards by which the employee is judged, make it clear that the employee was aware of the standard, specify any deficiencies relative of the standard, and show that the employee had an opportunity to correct the behavior.

V. Employee Engagement Guide for Managers A. Use the Appraisal Interview to Build Engagement – managers can use the appraisal interview to improve their employee’s engagement by doing some of the following: 1. Take the opportunity to show the employee how his or her efforts contribute to the “big picture.”

2. Use the interview to emphasize the meaningfulness to the company of what the employee is doing.

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3. Be candid and objective but do so supportively and without unnecessarily undermining the employee’s self-image.

4. Make certain the employee has what he or she needs to do a good job.

5. Managers should be candid and honest. Focus on the strengths.

6. Show your employees that you listen to their ideas and value their contributions.

7. Allow the opportunity for the employee to discuss where he or she sees himself or herself heading career-wise to improve their career.

8. Make sure that the interviewee views the appraisal and the rewards or remedial actions as fair.

VI. Performance Management A. Total Quality Management and Performance – (TQM) Total Quality Management programs are organizationwide programs that integrate all functions and processes of the business. TQM advocates argue that the organization is a system of interrelated parts, and that employees’ performance is more a function of things like training, communication, tools, and supervision than of their motivation.

B. What is Performance Management? – is a continuous process of identifying, measuring, and developing the performance of individuals and teams and aligning their performance with the organization’s goals.

C. Trends Shaping HR: Digital and Social Media D. Improving Performance: HR Practices Around the Globe E. The Manager’s Role in Performance Management – link employees’ goals to the company’s goals, give employees continuous feedback, provide required resources and coaching, reward good performance, and remember that employees’ performance reflects more than just whether they’re motivated.

Chapter Review Chapter Section Summaries: 9-1: Performance appraisal means evaluating an employee’s current or past performance relative to his or her performance standards.

9-2: The appraisal is generally conducted using one or more popular appraisal methods or tools.

9-3: The appraisal process can be improved by eliminating chronic problems that often undermine appraisals and graphic rating scales in particular.

9-4: An appraisal typically culminates in an appraisal interview.

9-5: The manager can use the appraisal interview to improve the employees’ level of engagement.

9-6: Performance management is the continuous process of identifying, measuring, and developing the performance of individuals and teams and aligning their performance with the organization’s goals.

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Discussion Questions: 9-1: What is the purpose of a performance appraisal?

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

9-2: Should the appraisal process concentrate on past performance, future performance, or both? Give reasons for your answer.

Appraisals by the immediate supervisor are still the heart of most appraisal processes, however, with more firms using self-managing teams, appraisal of an employee by his or her peers—peer appraisal—is popular, as is 360° feedback. With 360-degree feedback, the employer collects performance information all around an employee—from his or her supervisors, subordinates, peers, and internal or external customers—generally for developmental rather than pay purposes. Some employers obtain employees’ self-ratings, usually in conjunction with supervisors’ ratings. Many employers even have subordinates rate their managers, usually for developmental rather than for pay purposes. Anonymity affects the feedback.

9-3: What is a critical incident, and how can it help improve performance?

These are negative or positive examples of an employee’s work-related behaviour that can be used to aid discussion of past performance. It can help improve performance by focussing on incidents throughout the year (instead of just the most recent) which can be used to explain performance ratings at appraisals.

9-4: Explain management by objectives, and suggest some benefits and drawbacks of this process.

Management by objectives involves the setting up of a company-wide goal-setting and appraisal programme. Managers set specific measurable and relevant goals with each employee, and then periodically discuss the latter’s progress toward these goals. However, it is not suitable for all companies. It would be appropriate for a knowledge-based company where roles involve a high level of empowerment rather than a high level of supervision. In this situation it could encourage teams to manage themselves and therefore promote creativity and innovation. The results orientated nature of MBO could also be useful to manage the performance of senior managers.

9-5: Explain in your own words how you would go about developing a behaviorally anchored rating scale.

Each student should express the five steps in his or her own words. Those five steps are to generate critical incidents; to develop performance dimensions; to reallocate incidents; to scale the incidents; and to develop a final instrument.

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9-6: Explain the problems to be avoided in appraising performance.

The five main rating scale problems listed in the text are: 1) unclear standards; 2) halo effect; 3) central tendency; 4) leniency or strictness; 5) regency effects; and 6) bias.

9-7: Identify and explain the problems in performance ratings.

Unclear standards: A rating scale that uses definitions like creativity and quality can be open to interpretation. Managers can also have different ideas about what constitutes “good”, “satisfactory” or “excellent” performance.

Halo effect: A manager’s impression of the personality of an employee can influence their judgment of their work abilities.

Central tendency: There can be a tendency to rate the majority of employees as average or satisfactory.

Leniency or strictness: Conversely some managers rate employees either high or low.

Recency effect: Recent achievements by an employee can impress managers more than performance over the year as a whole.

Individual and Group Activities: 9-8: Working individually or in groups, suggest disadvantages of using peer appraisals and 360-degree feedback for an organization.

In peer appraisals, the people responsible for rating may not have much experience with rating employees, and may be reluctant to rate a colleague of the same grade at a low level.

In 360 degree appraisals subordinates may have an agenda against a manager and this can affect their judgement. Also confidentiality can be difficult to maintain.

9-9: Working individually or in groups, study the drawbacks of segmenting employees based on how critical they are to an organization’s success.

It may be difficult to devise a truly objective method of deciding which employees are critical to the company. Those deemed non-critical may feel that their development is being neglected. This may lead to de-motivation particularly if they feel their role may be outsourced.

9-10: Working individually or in groups, discuss how you would appraise employees who feel defensive about their performance.

Encourage the employee to discuss their own performance. Ensure that the conversation focuses on facts and remains objective throughout. Criticize employees constructively and always in private. Recognize that defensive behavior is normal.

9-11: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in ..

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each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

9-12: Amelia employs 50 people and she embraces performance management. The four elements of her system are simple: continual review of job descriptions, managers providing instant feedback to employees about performance, seeking immediate solutions to problems, and to always rebuke employees in private. What is your opinion of Amelia’s performance management approach and how do you think it measures up against the ideal system?

While students’ answers will vary, they should compare the four basic elements of Amelia’s approach with the more detailed approach discussed in the chapter. Amelia’s primary responsibility is to get the best possible performance out of her employees. For this purpose, effective performance management is something that needs to be developed over time, with the understanding that there is no one-size-fits-all approach. Therefore, Amelia’s system may work well for her.

Experiential Exercise: Grading the Professor Purpose: The purpose of this exercise is to give you practice in developing and using a performance appraisal form.

Required Understanding: You are going to develop a performance appraisal form for an instructor and should therefore be thoroughly familiar with the discussion of performance appraisals in this chapter.

How to Set up the Exercise/Instructions: Divide the class into groups of four or five students.

9-13: First, based on what you now know about performance appraisal, do you think Figure 9-1 is an effective scale for appraising instructors? Why? Why not?

9-14: Next, your group should develop its own tool for appraising the performance of an instructor. Decide which of the appraisal tools (graphic rating scales, alternation ranking, and so on) you are going to use, and then design the instrument itself.

9-15: Next, have a spokesperson from each group post his or her group’s appraisal tool on the board. How similar are the tools? Do they all measure the same factors? Which factor appears most often? Which do you think is the most effective tool on the board?

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9-16: The class should select the top 10 factors from all of the appraisal tools presented to create what the class perceives to be the most effective tool for appraising the performance of the instructor.

Application Case: Appraising the Secretaries at Sweetwater U 9-17: Do you think that the experts' recommendations will be sufficient to get most of the administrators to fill out the rating forms properly? Why? Why not? What additional actions (if any) do you think will be necessary?

While controversial, the recommendations would, in fact, encourage administrators to fill the forms out correctly. Using the more detailed form and not tying the performance ratings to salary increases would allow the managers to feel more free about rating the secretaries accurately. There would, however, need to be some strong training sessions (both for administrators and secretaries) to help them understand the new system. Since all secretaries have traditionally received the same salary increases and have been pleased with that, it would be advisable to consider lowering the maximum increase to an amount that could be given to all secretaries while staying within budget. Then all secretaries with a satisfactory rating or better would receive that increase.

9-18: Do you think that Vice President Winchester would be better off dropping graphic rating forms, substituting instead one of the other techniques we discussed in this chapter such as a ranking method? Why or why not?

Certainly other methods could be used. He has already had a taste of what would result if he went to a forced distribution or other ranking method. A BARS system might be best, but it could be costly to develop if the clerical staff has positions that are significantly different.

9-19: What performance appraisal system would you develop for the secretaries if you were Rob Winchester? Defend your answer.

If the development costs are not too great, the BARS system would give the strongest solution to the current situation. The behavioral anchors would make it more difficult to just rate everyone at the top. It would also help to eliminate the different interpretations of what the rating scales mean.

Continuing Case: Carter Cleaning Company – The Performance Appraisal 9-20: Is Jennifer right about the need to evaluate the workers formally? The managers?

Why or why not?

Based on the information presented in the chapter, the students need to determine if the workers and managers should be evaluated formally or informally, and they need to provide

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reasons for their decision. Outcome: Describe the process of performance appraisal and different appraisal methods.

9-21: Develop a performance appraisal method for the workers and managers in each store.

The students need to be familiar with thr different appraisal methods discussed in the chapter.

They should use the sample appraisal forms given in the chapter as guides.

Hotel Paris: Improving Performance at the Hotel Paris – The New Performance Management System 9-22: Choose one job, such as front desk clerk. Based on any information you have (including job descriptions you may have created in other chapters), write a list of duties, competencies, and performance standards for that chosen job.

Answers should include competencies that will help Hotel Paris become more service oriented. Use examples from the case itself, such as the “ability to check a guest in or out in five minutes or less,” to get the class started. Discuss what has made students happy or unhappy when checking into a hotel, or in seeking other services.

9-23: Based on that, create a performance appraisal form for appraising that job.

There are samples in the text. If possible, before class ask students to bring in sample performance appraisal forms, either from jobs they have held or samples from the Internet.

Suggest combining graphic rating scales with the critical incident method to improve ongoing coverage of employee performance. Also stress that a once-yearly formal appraisal will not be sufficient unless it is supplemented by regular verbal feedback.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 9-24: Discuss the pros and cons of using different potential raters to appraise a person’s performance.

9-25: As a new supervisor, you’re about to hold your first-ever appraisal interview with one of your subordinates, someone who has not been performing very well for the past 6 months.

What should you keep in mind about managing the appraisal interview as you begin the conversation?

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Key Terms: Performance Appraisal – Evaluating an employee’s current and/or past performance relative to his or her performance standards.

Performance Appraisal Process – A three-step appraisal process involving (1) setting work standards, (2) assessing the employee’s actual performance relative to those standards, and (3) providing feedback to the employee with the aim of helping him or her to eliminate performance deficiencies or to continue to perform above par.

Graphic Rating Scale – A scale that lists a number of traits and a range of performance for each. The employee is then rated by identifying the score that best describes his or her level of performance for each trait.

Alternation Ranking Method – Ranking employees from best to worst on a particular trait, choosing highest, then lowest, until all are ranked.

Paired Comparison Method – Ranking employees by making a chart of all possible pairs of the employees for each trait and indicating which is the better employee of the pair.

Forced Distribution Method – Similar to grading on a curve; predetermined percentages of rates are placed in various performance categories.

Critical Incident Method – Keeping a record of uncommonly good or undesirable examples of an employee's work-related behavior and reviewing it with the employee at predetermined times.

Behaviorally Anchored Rating Scale (BARS) – An appraisal method that aims at combining the benefits of narrative critical incidents and quantified ratings by anchoring a quantified scale with specific narrative examples of good and poor performance.

Electronic Performance Monitoring (EPM) – Having supervisors electronically monitor the amount of computerized data an employee is processing per day, and thereby his or her performance.

Unclear Standards – An appraisal scale that is too open to interpretation.

Halo Effect – In performance appraisal, the problem that occurs when a supervisor's rating of a subordinate on one trait biases the rating of that person on other traits.

Central Tendency – A tendency to rate all employees the same way, such as rating them all average.

Strictness/Leniency – The problem that occurs when a supervisor has a tendency to rate all subordinates either high or low.

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Bias – The tendency to allow individual differences such as age, race, and sex to affect the appraisal ratings employees receive.

Appraisal Interviews – An interview in which the supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths.

Performance Management – The continuous process of identifying, measuring, and developing the performance of individuals and teams and aligning their performance with the organization’s goals.

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Part Three Training and Development Chapter 10 Managing Careers and Retention Lecture Outline: Career Management Careers Today The Psychological Contract The Employee’s Role in Career Management The Employer’s Role in Career Management Employer Career Management Methods Improving Performance Through HRIS: Integrating Talent Management and Career and Succession Planning Diversity Counts: Toward Career Success The Manager as Mentor and Coach Improving Performance: The Strategic Context Employee Engagement Guide for Managers Career Management Commitment-Oriented Career Development Efforts Improving Performance: HR Practices Around the Globe Managing Employee Turnover and Retention Improving Performance: HR as a Profit Center Managing Voluntary Turnover A Comprehensive Approach to Retaining Employees Trends Shaping HR: Digital and Social Media Job Withdrawal Employee Life-Cycle Career Management Making Promotion Decisions Know Your Employment Law Diversity Counts: The Gender Gap Managing Transfers Managing Retirements Managing Dismissals Grounds for Dismissal Know Your Employment Law Avoiding Wrongful Discharge Suits Security Measures Supervisor Liability The Exit Process and Termination Interview Layoffs and the Plant Closing Law Adjusting to Downsizing and Mergers ..

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Chapter Review

Where Are We Now… The main purpose of this chapter is to explain how to support your employees’ career development needs and improve employee retention. The main topics we’ll address are career management, improving employee engagement through career development, managing employee turnover and retention, employee life-cycle management, and managing dismissals.

Interesting Issues: Cognizant Corporation creates products for things like managing huge volumes of images and other content in computer systems. Creating such products requires creative and engaged employees. Cognizant therefore takes talent development very seriously, and its managers consciously consider the talent development implications of each of their strategic decisions.

We’ll see how they do this.

Learning Objectives: 10-1: Discuss what employers and supervisors can do to support employees’ career development needs.

10-2: Explain why career development can improve employee engagement.

10-3: Describe a comprehensive approach to retaining employees.

10-4: List and briefly explain the main decisions employers should address in reaching promotion and other employee life-cycle career decisions.

10-5: Explain each of the main grounds for dismissal.

Annotated Outline: I. Career Management – is a process of enabling employees to better understand and develop their career skills and interests and to use these skills and interest most effectively both within the company and after they leave that firm.

A. Careers Today – people once viewed careers as a sort of upward stairway from job to job. Today, many people do still move up but many (or most) find themselves having to reinvent themselves.

B. The Psychological Contract – this is what psychologists say is what the employer and employee expect from each other. This is an “unwritten agreement that exists between the employers and employees.” The psychological contract identifies each party’s mutual expectations.

C. The Employee’s Role in Career Management – although the employee, the manager, and the employer all have roles in the employee’s career development, ultimately however, it is the employee who must shoulder responsibility for his or her own career. The employee is to assess interest, skills, and values; seek out career information resources; and generally take those steps that must be taken to ensure a happy and fulfilling career.

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D. The Employer’s Role in Career Management – the employer should give a realistic job preview, provide challenging first job, and assign mentors.

These are things an employer can do to help prevent reality shock.

E. Employer Career Management Methods – career planning workshops and career coaches are methods employers use for career guidance. Career planning workshops is “a planned learning event in which participants are expected to be actively involved, completing career planning exercises and inventories, and participating in career skills practice sessions.” Career coaches generally help employees create 1- to 5-year plans showing where their careers with the firm may lead. Career coaches help individual employees identify their development needs and obtain the training, professional development, and networking opportunities that they require to satisfy those needs.

F. Improving Performance Through HRIS: Integrating Talent Management and Career and Succession Planning G. Diversity Counts: Toward Career Success H. The Manager as Mentor and Coach – for the supervisor, mentoring can be both valuable and risky. It is valuable insofar as you can influence in a positive way the careers and lives of your less experienced subordinates and colleagues. The danger is it can backfire. Coaching focuses on teaching daily tasks that you can easily relearn, so coaching’s downside is usually limited.

I. Improving Performance: The Strategic Context II. Employee Engagement Guide for Managers A. Career Management – due to labor market turbulences, many people ask the question “why should they be loyal to their employers?” Employers today therefore have to think through how they’re going to maintain employee engagement, and thereby minimize voluntary departures, and maximize employee effort.

B. Commitment-Oriented Career Development Efforts – the employer’s career development process should send the signal that the employer cares about the employee’s career success. Career-oriented appraisal allows the supervisor and employee to jointly merge the latter’s past performance, career preferences, and developmental needs into a formal career plan.

C. Improving Performance: HR Practices Around the Globe III. Managing Employee Turnover and Retention – not all employees’ career plans will coincide with the company’s need. Turnover—the rate at which employees leave the firm—varies markedly among industries, whether voluntary or involuntary.

A. Improving Performance: HR as a Profit Center B. Managing Voluntary Turnover – identifying why employees voluntarily leave is not so easy. People who are dissatisfied with their jobs are more likely to leave, but the sources of dissatisfaction are many and varied. The manager should understand that retaining employees is a talent management issue, and that the best retention strategies are therefore

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multifunctional. Thus, trying to formulate a “retention strategy” requires one to consider all practices.

C. A Comprehensive Approach to Retaining Employees – identifying the problem is an important step that can be done by doing the following: exit interview, attitude surveys, hotlines, and stay interview. Once analyzed, some of the simple solutions may be the following: raise pay, hire smart, discuss careers, provide direction, offer flexiblity, use high-performance HR practices, and counteroffer.

D. Trends Shaping HR: Digital and Social Media E. Job Withdrawal – generally has been identified as “actions intended to place physical or psychological distance between employees and their work environments.” Absences and voluntary turnover are the two obvious types.

IV. Employee Life-Cycle Career Management A. Making Promotion Decisions – promotions usually provide opportunities to reward the exceptional performance and to fill open positions with tested and loyal employees. However, unfairness, arbitrariness, or secrecy can diminish the effectiveness of the promotion process for all concerned.

B. Know Your Employment Law – Establish Clear Guidelines for Managing Promotions 1. Decision 1: Is Seniority or Competence the Rule? Today’s focus on competitiveness favors competence. However, union agreements and civil service regulations often emphasize seniority.

2. Decision 2: How Should We Measure Competence? Define the job, set standards, use one or more appraisal tools to record the employee’s performance, and use a valid procedure for predicting a candidate’s potential for future performance.

3. Decision 3: Is the Process Formal or Informal? Each firm will determine whether the promotional process is formal or informal.

4. Decision 4: Vertical, Horizontal, or Other? Promotions can be vertical (within the same functional area) or horizontal (in different functional areas).

5. Practical Considerations – there are several practice steps that should be taken by employers and managers: 1) establish eligibility requirements; 2) review the job description; 3) review candidates’ performance and history, and 4) hire only those who meet the requirements.

C. Diversity Counts: The Gender Gap – women still don’t reach the top of the career ladder in numbers proportionate to their numbers in U.S. industry. Women constitute more than 40% of the workforce, but hold less than 2% of top management positions.

To help eliminate the barriers that impede women’s career progress, employers can take some of the following specific steps: a) eliminate barriers, b) improve networking and mentoring, c) break the glass ceiling, and d) adopt flexible career tracks.

D. Managing Transfers – transfers are moves from one job to another, usually with no change in salary or grade. Transfers are a way to give displaced employees a chance for another assignment or, perhaps, some personal growth.

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D. Managing Retirements – studies show that employees who are more committed and loyal to the employer are more likely to stay beyond their normal retirement age. It helps to create a culture that honors experience. Employers use several techniques to keep older workers such as offering part-time employment, which is an alternative to outright retirement, or hiring them as consultants or temporary workers. Also offering flexible work arrangements, encouraging them to work past traditional retirement age, providing training to upgrade skills, and instituting a phased retirement program.

V. Managing Dismissals – not all employee separations are voluntary. Some career plans and appraisals end not in promotion or graceful retirement but in dismissal – involuntary termination of an employee’s employment with the firm.

A. Grounds for Dismissal – there are four bases for dismissal: unsatisfactory performance, misconduct, lack of qualifications for the job, and changed requirements of (or elimination of) the job.

1. Insubordination – a form of misconduct, is sometimes the grounds for dismissal.

The two basic categories of insubordination are: 1) unwillingness to carry out the manager’s orders, and 2) disrespectful behavior toward the manager. (This assumes that the orders were legitimate and that the manager did not incite the reaction through his or her own extreme behavior).

B. Know Your Employment Law: Termination at Will – there are three main protections against wrongful discharge which are statutory exceptions, common law exceptions, and public policy exceptions.

C. Avoiding Wrongful Discharge Suits – wrongful discharge (or termination) occurs when an employee’s dismissal does not comply with the law or with the contractual arrangement stated or implied by the employer. To avoid it requires several things: 1. Have employment policies include grievance procedures that help show you how treat employees fairly.

2. Review and refine all employment-related policies, procedures, and documents to limit challenges.

3. Procedural steps include: a. Have applicants sign the employment application. Make sure it contains a statement that “the employer can terminate at any time.” b. Review your employee manual to delete statements that could undermine your defense in a wrongful discharge case. For example, delete “employees can be terminated only for just cause.” c. Have written rules listing infractions that may require discipline and discharge. d. If a rule is broken, get the worker’s side of the story in front of witnesses, and preferably get it signed. Then check out the story. e. Be sure that employees get a written appraisal at least annually. If an employee shows evidence of incompetence, give that person a warning. Provide an opportunity to improve. f. Keep careful confidential records of all actions such as employee appraisals, warnings or notices, and so on. g. Finally, ask the questions in Figure 10-4.

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D. Security Measures – using a checklist to ensure (for instance) that dismissed employees return all keys and company property, and (often) accompanying them out of the building. The employer should also disable Internet-related passwords and accounts of former employees, plug any holes that could allow an ex-employee to gain illegal online access, and have rules for the return of company laptops and handhelds.

E. Supervisor Liability – courts may hold managers personally liable for their supervisory actions, including dismissal. The Fair Labor Standards Act defines an employer to include “any person acting directly or indirectly in the interest of an employer in relation to any employee.” This can mean the individual supervisor.

F. The Exit Process and Termination Interview – dismissing an employee is one of the most difficult tasks you can face at work. Guidelines for the termination interview are as follows: 1. Plan the interview carefully 2. Get to the point 3. Describe the situation 4. Listen 5. Review the severance package 6. Identify the next step G. Layoffs and the Plant Closing Law – for the employer, reduced sales or profits or the desire for more productivity may require layoffs. Employees (as we’ve seen) may leave for better jobs, to retire, or for other reasons. The Worker Adjustment and Retraining Notification Act (WARN Act, or the plant closing law) requires employers of 100 or more employees to give 60 days’ notice before closing a facility or starting a layoff of 50 or more people.

H. Adjusting to Downsizing and Mergers – the basic idea is to cut costs and raise profitability. Downsizings (some call them “productivity transformation programs”) require careful consideration of several matters.

Chapter Review Chapter Section Summaries: 10-1: Employees are ultimately responsible for their own career, but employers and managers also have roles in career management.

10-2: The employer career planning and development process and practices (including careeroriented appraisal) help to foster employee engagement.

10-3: Managing voluntary turnover requires identifying its causes and then addressing them. A comprehensive approach to retaining employees should be multifaceted.

10-4: Employers need to address employee lifecycle career management issues.

10-5: Managing dismissals is an important part of any supervisor’s job.

Discussion Questions:

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10-1: What is the relationship between turnover and performance? Explain how an employer can use HR practices to manage employee turnover and ensure stable performance.

Some studies (http://www.ipaa.ir/files/site1/pages/Employee%20Turnover%20and%20Organizational. pdf) seem to suggest that all turnover, voluntary or involuntary, is associated with reduced organizational performance. The suggestion is that any increase in turnover rates means that the organization’s performance and their workforce are at risk. There are costs associated with recruiting, screening, interviewing, and testing applicants. There are also other cost implications which include a loss of productivity (new employees are not as productive) and the cost of dealing with any errors that new employees might make. The HR can play a vital role in keeping turnover down by using practices such as promotion opportunities, training and development, pay and reward satisfaction, and family-friendly policies.

10-2: What is meant by the term “reality shock”? Who might suffer from it and what can be done about it?

It is a situation that some employees face after they have passed through their initial period in a new career. They will be faced by the prospect of a career that offers them little in terms of excitement or a challenge. They realized that the work is boring and unattractive. Realistic job interviews can be used to warn the employee about the realities of the job role. After recruitment however, the options range of job rotation to seeking employment in an entirely different field.

10-3: What are the main decisions employers should address in reaching promotion decisions?

The decisions to make are: 1) Is seniority or competence the rule? 2) How should we measure competence? 3) Is the process formal or informal? 4) Is the process vertical, horizontal, or other?

10-4: While employees do build their own careers, what roles do employers and managers play in an employee’s career management?

Many employers also have formal mentoring programs. For instance, the employer may pair protégés with potential mentors, and provide training to help mentor and protégé better understand their respective responsibilities. Either formal or informal, studies show that having a mentor give career-related guidance and act as a sounding board can significantly enhance one’s career satisfaction and success.

10-5: What would you as a supervisor do to avoid someone accusing you of wrongful dismissal?

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• • • • •

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Have applicants sign the employment application. Make sure it contains a statement that the employer can terminate at any time.

Review your employee manual to delete statements that could undermine your defense in a wrongful discharge case. For example, delete “employees can be terminated only for just cause.” Have written rules listing infractions that may require discipline and discharge.

If a rule is broken, get the worker’s side of the story in front of witnesses, and preferably get it signed. Then check out the story.

Be sure that employees get a written appraisal at least annually.

If an employee shows evidence of incompetence, give that person a warning. Provide an opportunity to improve.

Keep careful confidential records of all actions such as employee appraisals, warnings, or notices, and so on.

Finally, ask the questions in Figure 10-6.

Individual and Group Activities: 10-6: Many rightfully offer IBM as an example of an employer that works hard to improve employee retention and engagement. Browse through the employment pages of IBM’s Web site (such as www03.ibm.com/employment/build_your_career.html). In this chapter, we discussed actions employers can take to improve employee retention and engagement. From the information on IBM’s Web pages, what is IBM doing to support retention and engagement?

Look for students to integrate the principles in this chapter in the analysis and suggestions.

10-7: When MNCs enter the Chinese market they assume that attracting employees won’t be difficult due to China’s huge population. Now, it may be easy to attract unskilled labor, but finding individuals with transferable skills is an issue. Why is it difficult to find and retain them?

Business in China is changing at a rapid pace. There is an unprecedented demand for skilled labor and this means that employees readily move from job to job in search of better pay and conditions. China’s salary increases are running at a rate of 9 percent per annum. Added to this, managers are being promoted to more demanding roles much faster than any other country in the Asia Pacific region. When employees move from one job role to another in a different business, the average increase in pay is around 40 percent. This means that retention is very difficult in China and is one of the major challenges for HR. 10-8: With reference to your findings in the previous question, suggest steps to increase retention of key skilled employees. Is there a clear strategy to address the rapid promotion of management in China?

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There are a number of retention strategies that could be suggested. Many of these are already in place in China: • Competitive market compensation (above inflation running at 8 per cent) • Bonuses are popular for the younger employee (performance related bonuses are rare, annual bonuses are around one month’s salary) • Caring leadership (personalized attention, learning and development) • Fringe benefits (e.g. health care programs) • Opportunities to work overseas • Promotion and reward related to performance rather than years in service • Prestigious job titles (director rather than manager) • Creating training and internship programs at universities and colleges 10-9: In groups of four or five students, interview a small business owner or an HR manager with the aim of writing a 2-page paper addressing the topic “steps our company is taking to reduce voluntary employee turnover.” What is this employer’s turnover rate now? How would you suggest it improve its turnover rate?

Look for students to integrate the principles in this chapter in the analysis and suggestions.

10-10: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

10-11: Several years ago, a survey of college graduates in the United Kingdom found that although many hadn’t found their first jobs, most were already planning “career breaks” and to keep up their hobbies and interests outside work. As one report of the findings put it, “the next generation of workers is determined not to wind up on the hamster wheel of long hours with no play.” Part of the problem seems to be that many already see their friends “putting in more than 48 hours a week” at work.

Career experts reviewing the results concluded that many of these recent college grads “are not looking for high-pay, high-profile jobs anymore.” Instead, they seem to be looking to “compartmentalize” their lives. They want to keep the number of hours they spend at work down, so they can maintain their hobbies and outside interests. If you were mentoring one of these people at work, what three bits of career advice would you give him or her? Why? What (if anything) would you suggest their employers do to accommodate these graduates’ stated career wishes?

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The advice needs to be relevant to the issues surrounding the blending of this world view with the political realities of the workforce.

10-12: Web sites such as Sporting News occasionally run a story listing what they called the greatest coaches. Look at this list, and pick out two of the names. Then research these people online to determine what behaviors they exhibited that seemed to account for why they were great coaches. How do these behaviors compare with what this chapter had to say about effective coaching?

Student conclusions should accurately reflect the concepts in this chapter on coaching.

Experiential Exercises: Where Am I Going . . . and Why? Purpose: The purpose of this exercise is to provide you with experience in analyzing your career preferences.

Required Understanding: Students should be thoroughly familiar with the “Employee’s Role in Career Management” section in this chapter, as well as using O*NET (which we discussed in Chapter 4).

How to Set up the Exercise/Instructions: Using O*NET and the “Employee’s Role in Career Management” section in this chapter, analyze your career-related inclinations (you can also take the Self-Directed Search for about $10 at www.self-directed-search .com). Based on this analysis, answer the following questions (if you wish, you may do this analysis in teams of three or four students).

10-13: What does your research suggest to you about what would be your preferable occupational options?

10-14: What are the prospects for these occupations?

10-15: Given these prospects and your own occupational inclinations, outline a brief, 1page career plan for yourself, including current occupational inclinations, career goals, and an action plan listing four or five development steps you will need to take in order to get from where you are now career-wise to where you want to be, based on your career goals.

Application Case: Malaysia’s War on Talent 10-16: Consider the five top retention factors listed in the case. Do you think they are universal or would you consider pay and benefits as key to employee retention?

Student answers may vary.

Increasingly employees are looking for quality-related factors rather than simply focusing on pay and benefits. It has been proven that pay and benefits alone are not strong enough to retain employees (assuming that they are reasonable and in line with market rates). There

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will also be some regional variation. Globally, the key retention factors are base pay/salary, career advancement opportunities, trust/confidence in senior leadership, job security, length of commute, relationship with supervisor/manager and limiting work-related stress.

10-17: Empowerment is the most important engagement driver for Malaysian workers.

What do you think needs to be done by organizations in order to achieve this?

Students will suggest several options from the text. From an employee’s perspective, they want to feel that the organization both seeks and acts according to their suggestions. They want to see that management involves them in the decision making process, particularly in issues that directly impact them. It is vital that the organization communicates the goals of the organization to the employees and that the employees feel connected to the goals. The challenge is to not only ensure that employees understand the goals of the organization, but also to ensure that they understand how they contribute to the success of the organization.

10-18: What steps do you think Malaysian organizations should take to improve employee retention? What fundamental changes would you suggest are necessary in order for a major difference to be made in the employment market?

Malaysian organizations need to take the same steps that have worked so well with consumer – in other words to improve engagement. They need to align the organization’s strategies and priorities with their employers and understand the close relationship between sustainable engagement and retention and financial results. They need to focus on the key engagement drivers. They then need to identify the strategies that will ensure that the organization’s performance continues to improve.

Continuing Case: Carter Cleaning Company – The Career Planning Program 10-19: What would be the advantages to Carter Cleaning of setting up such a career planning program?

Some examples of the advantages of setting up a career planning program for employees include increasing job satisfaction, helping employees navigate through the company, and helping employees think about and plan their careers.

10-20: Who should participate in the program, and why? All employees? Selected employees?

Students should justify why they think certain employees should or should not participate in the program.

10-21: Outline and describe the career development program you would propose for the cleaners, pressers, counter people, and managers at the Carter Cleaning Centers.

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Based on the career planning activities discussed in the chapter, students should design a tailored career planning and development program for the employees.

Hotel Paris: Improving Performance at the Hotel Paris – The New Career Management System 10-22: “Many hotel jobs are inherently ‘dead end’; for example, maids, laundry workers, and valets, for instance, either have no great aspirations to move up, or are just using these jobs temporarily, for instance, to help out with household expenses.”

First, do you agree with this statement? Why, or why not? Second, list three specific career activities you would recommend Lisa implement for these employees.

There are no dead end jobs; every job offers an employee the opportunity to be seen and if performing successfully, to be considered for other jobs within the organization. Some possible career activities include job posting programs, educational assistance, career pathing, job rotation, etc.

10-23: Build on the company’s new system by recommending two more specific career development activities the hotel should implement.

The hotel should use the performance management system to do specific career counseling.

First, however, a training program to assist supervisors in how to coach employees should be developed.

10-24: What other specific career development activities would you recommend in light of the fact that the Hotel Paris’s hotels and employees are dispersed around the world?

Answers will vary. Discuss the feasibility of expatriation programs in a hotel environment.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 10-25: You manage a small restaurant in Columbus, Ohio and keeping good employees is one of your biggest challenges. Most wait staff and kitchen staff last no more than 8-9 months.

Explain what you would do to improve employee retention.

10-26: Explain what you as a supervisor can do to support your employee’s career management needs.

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Key Terms: Career – The occupational positions a person has had over many years.

Career Management – The process for enabling employees to better understand and develop their career skills and interests, and to use these skills and interests more effectively.

Career Development – The lifelong series of activities that contribute to a person’s career exploration, establishment, success, and fulfillment.

Career planning – The deliberate process through which someone becomes aware of personal skills, interests, knowledge, motivations, and other characteristics, and establishes action plans to attain specific goals.

Reality Shock – Results of a period that may occur at the initial career entry when the new employee’s high job expectations confront the reality of a boring, or otherwise unattractive work situation.

Mentoring – Advising, counseling, and guiding.

Coaching – Educating, instructing, and training subordinates.

Promotion – Advancement to a position of increased responsibility.

Transfers – Reassignments to similar positions in other parts of the firm.

Dismissal – Involuntary termination of an employee’s employment with the firm.

Insubordination – Willful disregard or disobedience of the boss’s authority or legitimate orders; criticizing the boss in public.

Terminate at Will – In the absence of a contract, either the employer or the employee can terminate at will the employment relationship.

Termination Interview – The interview in which an employee is informed of the fact that he or she has been dismissed.

Outplacement Counseling – A formal process by which a terminated person is trained and counseled in the techniques of self-appraisal and securing a new position.

Exit Interviews – Interviews with employees who are leaving the firm, conducted for obtaining information about the job or related matters, to give the employer insight about the company.

Layoff – An employer sending employees home due to a lack of work; this is typically a temporary situation.

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Downsizing – The process of reducing, usually dramatically, the number of people employed by a firm.

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Part Four Compensation Chapter 11 Establishing Strategic Pay Plans Lecture Outline: Basic Factors in Determining Pay Rates Aligning Total Rewards with Strategy Equity and Its Impact on Pay Rates Legal Considerations in Compensation Know Your Employment Law – The Workday Know Your Employment Law – Independent Contractor Union Influences on Compensation Decisions Pay Policies Improving Performance: The Strategic Context Improving Performance: HR Practices Around the Globe Job Evaluation Methods Compensable Factors Preparing for the Job Evaluation Job Evaluation Methods: Ranking Job Evaluation Methods: Job Classification Job Evaluation Methods: Point Method Computerized Job Evaluations How to Create A Market-Competitive Pay Plan Choose Benchmark Jobs Select Compensable Factors Assign Weights to Compensable Factors Convert Percentages to Points for Each Factor Define Each Factor’s Degrees Determine for Each Factor Its Factor Degree’s Points Review Job Descriptions and Job Specifications Evaluate the Jobs Draw the Current (Internal) Wage Curve Conduct a Market Analysis: Salary Surveys Draw the Market (External) Wage Curve Compare and Adjust Current and Market Wage Rates for Jobs Developing Pay Grades Establish Rate Ranges Address Remaining Jobs Correcting Out-of-Line Rates Improving Performance: HR Tools for Line Managers and Small Businesses Pricing Managerial and Professional Jobs ..

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What Determines Executive Pay? Compensating Executives Compensating Professional Employees Improving Performance Through HRIS: Payroll Administration Contemporary Topics in Compensation Competency-Based Pay Improving Performance: HR Practices Around the Globe Broadbanding Comparable Worth Diversity Counts: The Pay Gap Board Oversight of Executive Pay Employee Engagement Guide For Managers Total Rewards Programs Trends Shaping HR: Digital and Social Media Total Rewards and Employee Engagement Chapter Review

Where Are We Now… The main purpose of this chapter is to show you how to establish a pay plan. The main topics we cover are basic factors in determining pay rates; job evaluation methods; how to create a market competitive pay plan; pricing managerial and professional jobs; and contemporary topics in compensation.

Interesting Issues: In the grocery business, when Walmart opens a store, the other stores’ usual reaction is to cut costs, particularly wages and benefits. So as Wegmans Food Markets, Inc., adds more stores and increasingly competes with Walmart, its management needs to decide this: Should we cut pay to better compete based on cost, or pursue a different compensation policy? We’ll see how Wegmans boosted profits by raising pay.

Learning Objectives: 11-1: 11-2: 11-3: 11-4: 11-5: 11-6:

List the basic factors determining pay rates.

Define and give an example of how to conduct a job evaluation.

Explain in detail how to establish a market-competitive pay plan.

Explain how to price managerial and professional jobs.

Explain the difference between competency-based and traditional pay plans.

Describe the importance of total rewards for improving employee engagement.

Annotated Outline:

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I. Basic Factors in Determining Pay Rates – employee compensation refers to all forms of pay or rewards going to employees, which include direct financial payments and indirect payments. Direct financial payments include wages, salaries, incentives, commissions, and bonuses. Indirect payments include financial benefits like employer-paid insurance and vacations.

A. Aligning Total Rewards with Strategy – the compensation plan should first advance the firm’s strategic aims – management should produce an aligned reward strategy.

This means creating a compensation package that produces the employee behaviors the firm needs to achieve its competitive strategy.

B. Equity and Its Impact on Pay Rates – the equity theory of motivation postulates that people are motivated to maintain a balance between what they perceive as their contributions and their rewards. External and internal equity are crucial in pay rates. External equity refers to how pay compares with rates in other organizations. Internal equity refers to employees viewing their pay as equitable given other pay rates in the organization. Individual equity refers to the fairness of an individual’s pay as compared with what his/her coworkers are earning for the same or very similar jobs in the company. Last, procedural equity refers to the perceived fairness of the processes and procedures used to make decisions regarding the allocation of pay.

C. Legal Considerations in Compensation – there are many laws that govern compensation. For example, the Fair Labor Standards Act (FLSA) regulates the minimum wage and requires that overtime be paid at a rate of one and one half times the normal rate of pay for hours worked over 40 in a workweek. Employees are categorized as exempt from the act or nonexempt from its provisions. Other compensation laws include Davis-Bacon Act, Walsh-Healey Public Contract Act, and Title VII of the 1964 Civil Rights Act. D. Know Your Employment Law – The Workday – Employers need to be vigilant about employees who arrive early or leave late, lest the extra time spent on the employer’s property obligate the employer to compensate the employee for that time.

E. Know Your Employment Law – Independent Contractor F. Union Influences on Compensation Decisions – union and labor relations laws also influence pay plan design. The National Labor Relations Act of 1935 (Wagner Act) granted employees the right to unionize and to bargain collectively. Also the Wagner Act was created by the National Labor Relations Board (NLRB) to oversee employer practices and ensure that employees receive their rights.

G. Pay Policies – the employer’s compensation strategy will manifest itself in pay policies. A range of issues such as seniority, high or low performance can be used.

H. Improving Performance: The Strategic Context I. Improving Performance: HR Practices Around the Globe

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II. Job Evaluation Methods – is a formal and systematic comparision of jobs to determine the work of one job relative to another. The aim is to determine a job’s relative worth and eventually establish a wage or salary structure. The basic principle of job evaluation is this: jobs that require greater qualifications, more responsibilities, and more complex job duties should receive more pay than jobs with lesser requirements.

A. Compensable Factors – factors that jobs have in common can be used to establish how the jobs compare to one another. The fundamental, compensable element of a job, such as skills, effort, responsibility, and working conditions.

B. Preparing for the Job Evaluation – job evaluation is a judgmental process and demands close cooperation among supervisors, HR specialists, employees, and union representatives. The main steps include identifying the need for the job evaluation, getting cooperation, and then choosing an evaluation committee. The committee then performs the actual evaluation which consists of three main functions: 1) identifying 10 to 15 key benchmark jobs, 2) selecting compensable factors, and 3) evaluating the worth.

C. Job Evaluation Methods: Ranking – the simplest job evaluation method ranks each job relative to all other jobs, usually based on some overall factor like “job difficulty.” There are several steps in the job ranking method: obtain job information, select and group jobs, select compensable factors, rank jobs, combine ratings, compare current pay with what others are paying based on salary survey, and assign a new pay scale.

D. Job Evaluation Methods: Job Classification – this is a simple, widely used method in which raters categorize jobs into groups; all the jobs in each group are of roughly the same value for pay purposes. The groups are called classes if they contain similar jobs or grades if they contain jobs that are similar in difficulty but otherwise different. Also known as job grading.

E. Job Evaluation Methods: Point Method – it involves identifying several compensable factors for the jobs, as well as the degree to which each factor is present in each job. Assume there are five degrees of the compensable factor “responsibility” a job could contain. Further, assume you assign a different number of points to each degree of each compensable factor. Once the evaluation committee determines the degree to which each compensable factor (like “responsibility” and “effort”) is present in the job, the committee can calculate a total point value for the job by adding up the corresponding points for each factor. The result is a quantitative point rating for each job.

F. Computerized Job Evaluations – using quantitative job evaluation methods such as the point method can be time-consuming. Computeraided job evaluation streamlines this process. Most computerized systems have two main components: structured questionnaires and statistical models. These elements allow the computer program to price jobs more or less automatically by assigning points.

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III. How to Create a Market-Competitive Pay Plan A. Choose Benchmark Jobs – these are representative of the entire range of jobs the organization needs to evaluate.

B. Select Compensable Factors – the choice of compensable factors depends on tradition (as noted, the Equal Pay Act of 1963 uses four compensable factors − skill, effort, responsibility, and working conditions) and on strategic and practical considerations. The employer should carefully define each factor to ensure that the evaluation committee members apply the factors with consistency.

C. Assign Weights to Compensable Factors – this determines the relative amount of each compensable factor the job contains. Assume there is a total of 100 percentage points for each job that needs to be allocated among those compensable factors selected.

D. Convert Percentages to Points for Each Factor – using the provided formula, percentages weights assigned to each compensable factor are converted to point values for each factor.

E. Define Each Factor’s Degrees – next, define each of several degrees for each factor so that raters may judge the amount or degree of a factor existing in a job. The number of degrees usually does not exceed five or six, and the actual number depends mostly on judgment.

F. Determine for Each Factor Its Factor Degrees’ Points – the evaluation committee must be able to determine the number of points each job contains. To do this, the committee must be able to examine each job and (from the degree definitions) determine what degree of each compensable factor that job has. The committee then needs to know how many points each degree of each compensable factor is worth. To do this, we must first assign points to each degree of each compensable factor.

G. Review Job Descriptions and Job Specifications – the heart of job evaluation involves determining the amount or degree to which the job contains the selected compensable factors such as skill, effort, responsibility, and working conditions. Those conducting the job evaluation will frequently do so by reviewing each job’s job description and job specification.

H. Evaluate the Jobs – the committee determines the degree to which each compensable factor is present in each job. Knowing the skill, effort, responsibility, and conditions degrees for each job, and knowing the number of points we previously assigned to each degree of each compensable factor, we can now determine how many skill, effort, responsibility, and conditions points each benchmark job should contain. Finally, we can then add up these degree points to get a total point value for each benchmark job.

I. Draw the Current (Internal) Wage Curve – plotting each job’s points and wage rate produces a scatter plot. A wage curve can be drawn through these plots to show how point values relate to current wage rates.

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J. Conduct a Market Analysis: Salary Surveys – virtually all employers conduct at least an informal telephone, newspaper, or Internet salary survey to price benchmark jobs and benefits.

1. Commercial, Professional, and Government Salary Surveys – many employers use surveys published by consulting firms, professional associations, or government agencies. The Bureau of Labor Statistics (BLS) annually conducts area wage surveys, industry wage surveys, and professional, administrative, technical, and clerical (PATC) surveys for the National Compensation Survey.

2. Using the Internet to Do Compensation Surveys – a rapidly expanding array of Internet-based options makes it fairly easy for anyone to access published compensation survey information.

K. Draw the Market (External) Wage Curve – the current (internal) wage curve does not reveal whether our pay rates are too high, or too low, or just right, relative to what other firms are paying. For this, we need to draw a market or external wage curve. The market/external wage curve compares our jobs’ points with market pay rates for these jobs.

L. Compare and Adjust Current and Market Wage Rates for Jobs – next, combine both the current/internal and market/external wage curves on one graph. The market wage curve might be higher than our current wage curve or below our current wage curve. Based on comparing the current/internal wage curve and market/external wage curve, the company must decide whether to adjust the current pay rates for our jobs, and if so how.

M. Developing Pay Grades – the committee will probably group similar jobs into grades for pay purposes, instead of having to deal with hundreds of pay rates. A pay (or wage) grade is comprised of jobs of approximately equal difficulty or importance as determined by job evaluation.

N. Establish Rate Ranges – most employers develop vertical pay (rate) ranges for each horizontal pay grade. These pay ranges may appear as vertical boxes within each grade, showing minimum, maximum, and midpoint pay rates for that pay grade. You may depict the pay ranges as steps or levels, with specific corresponding pay rates for each step within each pay grade.

O. Address Remaining Jobs – once the job evaluation of the benchmark jobs is complete, the remaining jobs must be added either through a formal process (like the one described for benchmark jobs) or informally, where the company feels they fit.

P. Correcting Out-of-Line Rates – the wage rate for a job may fall well off the wage line or well outside the rate range for its grade. Which means that, the average pay for the job is currently too high or too low, relative to other jobs in the firm. If the point falls well below the line, a pay raise for the job may be required. If the point falls well above the wage line, a pay cut or freeze may be required.

Q. Improving Performance: HR Tools for Line Managers and Small Businesses IV. Pricing Managerial and Professional Jobs

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A. What Determines Executive Pay? – one study concluded that three main factors account for about two-thirds of executive compensation variance: job complexity (span of control, the number of functional divisions over which the executive has direct responsibility, and management level), the ability to pay (total profit and rate of return) and the executive’s human capital (educational level, field of study, work experience).

B. Compensating Executives – basic compensation elements for top executives include: base pay, short-term incentives, long-term incentives, and executive benefits and perks. Shareholder activism has tightened the restrictions on what companies pay top executives.

C. Compensating Professional Employees – employers must first ensure that the person is actually a “professional” under the law. The Fair Labor Standards Act “provides a professional has to earn at least $455 per week, and the person’s main duties must “be the performance of work requiring advanced knowledge” and “the advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.”

D. Improving Performance through HRIS: Payroll Administration is one of the first functions most employers computerize or outsource, and for good reason. Administering the payroll system – keeping track of each employee’s worker status, wage rate, dependents, benefits, overtime, tax status, and so on; computing each paycheck; and then directing the actual printing of checks or direct deposits is a time-consuming task, one complicated by the need to comply with many federal, state, and local wage, hour, and other laws.

V. Contemporary Topics in Compensation A. Competency-Based Pay 1. What Is Competency-Based Pay? – the company pays for the employee’s range, depth, and types of skills and knowledge, rather than for the job title he or she holds. With more companies organizing around teams, you want to encourage employees to get and to use the skills required to rotate among jobs.

2. Competency-Based Pay in Practice – these contain five elements: 1) a system where the employer defines specific required skills; 2) chooses a method for basing the person’s pay on; 3) a training system for acquiring skills; 4) a competency testing system; and 5) a work design that allows employees to move among jobs.

3. The Bottom Line on Competency-Based Pay – there are a variety of pros and cons that are discussed, as well as implementation pitfalls.

B. Improving Performance: HR Practices Around the Globe C. Broadbanding – this method involves collapsing salary grades and ranges into just a few wide levels or bands.

1. Pros and Cons – broadbanding injects greater flexibility into employee assignments, and it allows an employee to move up or down along the pay scale without changing pay ranges. Broadbanding can, however,

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eliminate a sense of permanence in a set of job responsibilities. This is particularly difficult for new employees.

D. Comparable Worth – refers to the requirement to pay men and women equal wages for jobs that are dissimilar but of comparable value (for instance measured in points) to the employer. The Gunther Supreme Court Case involved Washington County, Oregon, prison matrons who claimed sex discrimination. Washington County finally agreed to pay 35,000 employees in female-dominated jobs almost $500 million in pay raises over 7 years to settle the suit.

E. Diversity Counts: The Pay Gap – although the gap is narrowing a bit, women still earn only about 77% as much as men. Education may reduce the wage gap.

F. Board Oversight of Executive Pay – boards are clamping down on executive pay. Since 2005, the Financial Accounting Standards Board (FASB) has required that companies recognize, as an expense, the fair value of the stock options they grant. The Sarbanes-Oxley Act makes executives personally liable for lapses in corporate financial oversight.

VI. Employee Engagement Guide For Managers A. Total Rewards Programs – total rewards encompass the traditional financial compensation components. However, they also include personal and professional growth opportunities and a motivating work environment.

B. Trends Shaping HR: Digital and Social Media C. Total Rewards and Employee Engagement

Chapter Review Chapter Section Summaries: 11-1: In establishing strategic pay plans, managers first need to understand some basic factors in determining pay rates.

11-2: Employers use two basic approaches to setting pay rates: market-based approaches and job evaluation methods.

11-3: We said the process of creating a market-competitive pay plan while ensuring external, internal, and procedural equity consist of 16 steps.

11-4: Pricing managerial and professional jobs involves some special issues.

11-5: We addressed five important special topics in compensation.

11-6: Research shows that if employee engagement is the aim, it makes sense to emphasize total rewards, not just financial rewards.

Discussion Questions: 11-1: What is the difference between exempt and nonexempt jobs?

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This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

11-2: Should the job evaluation depend on an appraisal of the jobholder’s performance?

Why? Why not?

No. Job evaluation involves comparing jobs to one another based on their content.

Individual performance is covered under performance evaluation and does not affect the content of the job.

11-3: Suppose the pay rates of all employees in an organization were published on the company intranet. What issues would the company face? How would they be handled?

Many employees would be surprised by how much some colleagues are paid and some may feel underpaid. Others may wish to find out how jobs are evaluated and reward oriented. Depending on their standpoint they may feel they are subject to an unfair system that needs some rethinking. Many may feel that the senior management pay is too high and some redistribution may be appropriate. The company may encourage employees to participate in designing a performance and reward process that they feel is fairer, thus encouraging more ownership of the chosen system.

11-4: Discuss methods of job evaluation. Can evaluations ever be completely accurate?

A basic method of job evaluation could be to compare some jobs directly and decide which is worth more. A more sophisticated method is to use compensable factors such a skills, effort, responsibility and working conditions. Comparable jobs can then be compared using those factors. A system can never be totally accurate because there is always a measure of objectivity and judgement employed when evaluating the criteria and scoring and weighting the factors.

11-5: In a large and complex organization that has a wide variety of job roles, pay scales can be complex and may have numerous anomalies. What would you suggest to help simplify the pay scales and consolidate into a less complex system?

The immediate answer to this question would be to consider broad banding, which entails consolidating a range of pay rates and job roles into a few wide bands. This process aims at encouraging a level, more flexible, and less bureaucratic structure. The process may also help facilitate change, do away with complex pay structures, empower managers to make pay-related decisions, check the granting of promotions and subsequent increase in pay, promote development and learning, have fewer and more broadly defined job roles, and focus more on the individual than the job itself. Usually, an organization will opt for two executive bands, further consisting of four managerial/ professional and four nonmanagerial bands.

11-6: Do small companies need to develop a pay plan? Why or why not?

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Yes, small companies need to develop a pay plan. Students should use information learned in the chapter to justify their responses.

Individual and Group Activities: 11-7: Working individually or in groups, discuss why women are sometimes paid less than men for the same or similar jobs. What measures could you implement to work toward pay parity for men and women?

Students’ answers will vary but look for responses to incorporate material from the chapter.

11-8: Working individually or in groups, imagine you are the HR director in a company that is having difficulty retaining staff despite having a successful brand profile and high sales. You consider raising pay to improve retention. Can this measure improve retention rates by itself? What other measures could you try?

Students’ answers will vary but look for responses to incorporate material from the chapter.

11-9: Working individually or in groups, access relevant Web sites to determine the average pay for a customer service employee in a country in the developed world, a country with an emerging economy, and a developing country. (Ideally try to find pay rates for a customer service employee for the same global corporation indifferent countries). How large is the discrepancy? What factors do you think were taken into account when deciding on pay rates in each case?

Students should use resources and Internet sites discussed in the chapter to determine the pay ranges and average pay in each city.

11-10: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

Material from this chapter that relates to the test would include: determining pay rates, corporate policies and competitive strategy, equity and its impact on pay rates, the salary survey, job evaluation, pay grades, wage curves, fine-tuning pay rates, compensating managers, compensating professional employees, competency-based pay, strategic ..

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compensation, and comparable worth. Virtually everything in this chapter applies. Look for questions that have more than one plausible answer.

11-11: Working individually or in groups, suggest how an organization would go about ensuring that they fix their own pay rates at the market wage rate. Remember there is an inverse relationship between the demand for labor and the wage rate. Also keep in mind that when the wage rate is high it is more expensive to hire additional employees and when wages are low, labor is relatively cheaper.

Students may approach this in different ways, making sure that they consider both the internal and external wage rates, and plotting a middle course between the two. The closer the organization is to the external market rates, the more competitive and attractive it will be to the employees, even more so if its rates are higher and far less attractive if they are lower.

Experiential Exercises: Ranking the College’s Administrators Purpose: The purpose of this exercise is to give you experience in performing a job evaluation using the ranking method.

Required Understanding: You should be thoroughly familiar with the ranking method of job evaluation and obtain job descriptions for your college’s dean, department chairperson, director of admissions, library director, registrar, and your professor.

How to Set up the Exercise/Instructions: Divide the class into groups of four or five students.

The groups will perform a job evaluation of the positions of dean, department chairperson, and professor using the ranking method.

Perform a job evaluation by ranking the jobs. You may use one or more compensable factors.

11-12: If time permits, a spokesperson from each group can put his or her group’s rankings on the board. Did the groups end up with about the same results? How did they differ? Why do you think they differed?

Application Case: Eighty-one Years to Close the Gender Gap 11-13: In their domestic market, Flaming Groovey has to adhere to very strict antidiscrimination legislation. Recently, the media has identified that the corporation employs a considerable number of women on a lower pay scale than men in East Asia. Critics claim that the corporation is discriminating on the basis of gender. Do you agree or disagree with the critics? Explain your answer.

Students’ answers will vary.

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According to certain studies, gender discrimination accounts for up to 80 percent of the pay gap. While this may be the case, employment discrimination will not disappear even if women attain the same level of education or work experience as their male counterparts. Views regarding the status, position, and responsibilities of women— particularly those related to their families—may be responsible for maintaining the gender gap. Gender stereotyping also contributes to such skewed perceptions in a professional arena. The best approach for the corporation would be to ensure there is no difference in the pay scale for subcontractors employed, and to insist that all parties involved enter into an agreement to discourage and eliminate such discrimination.

11-14: At a recent business forum a representative of Flaming Groovey said, “Pay isn’t about discrimination at all. The vast majority of our workers in East Asia are women, we don’t discriminate, and they choose lower paid work.” Is this a case of stereotyping in pay? Why or why not?

The statement is a complete fallacy as far as choice is concerned. The case being referred to is that of men being more attracted to male-dominated and women to femaledominated jobs, since it is easier for them to find work this way. On the contrary, workers looking for a job that is not commonly associated with their gender, find them with difficulty. As a result of the dynamics of this situation, women tend to find work at the lower end of the pay scales with lesser responsibility and career opportunities. Several studies across the Asian region have identified a number of reasons as to why women (particularly in the garment trade) have lower paid jobs. A good example would be Nelien Haspel and Eva Majurin’s Work, Income and Gender Equality in East Asia.

Similar work has also been done by the Asian Development Bank, which reflects in their institutional document, under Gender Equality and Women’s Empowerment Operational Plan, 2013–2020.

11-15: What sort of compensation plan would you propose Flaming Groovey implement for the employees in East Asia, so that it does not incur too great a cost and at the same time is able remove any form of discrimination from their practices?

Some measures could be suggested which might not cost the corporation too much, like job evaluation methods made free from gender bias (this is being trialled in the Republic of Korea and the Philippines), developing web based wage indicator tools , and adopting government guidelines in place of legislations. The importance of a balance between family and work should also be considered. In some countries, allowances are made for individuals to help them fulfil their family and personal responsibilities without being penalized at work.

Continuing Case: Carter Cleaning Company – The New Pay Plan 11-16: Is the company at the point where it should be setting up a formal salary structure based on a complete job evaluation? Why?

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Yes, the company should set up a formal salary structure complete with job evaluations.

The students should reference points in the chapter to justify their responses.

11-17: Is Jack Carter’s policy of paying 10% more than the prevailing rates a sound one, and how could that be determined?

The students should use their judgment based on information presented in the chapter in giving their responses.

11-18: Similarly, is Carter’s male–female differential wise? If not, why not?

The salesperson’s male-female differential is not wise. The students should reference the Equal Pay Act of 1963 when providing their rationale.

11-19: Specifically, what would you suggest Jennifer do now with respect to her company’s pay plan?

There are many things that students could reasonably suggest – among them: eliminate the gender pay differential, establish performance or competency-based pay, and establish a formal pay structure.

Hotel Paris: Improving Performance at the Hotel Paris – The New Compensation Plan 11-20: Lisa knew little about setting up a new compensation plan. What would you tell her if she asked, “How do I set up a new compensation plan for the Hotel Paris?”

Answers will vary widely. Look for examples with good tie-ins between policies, behaviors, and proposed outcomes.

11-21: Would you suggest that Hotel Paris implement a competency based pay plan for its non-managerial staff? Why or why not? Outline what they need to do.

The current plan is not linked to Hotel Paris’ strategic goals, and the link between pay and performance is weak and sometimes counterproductive. Competency-based pay would enable management to reward employees for exhibiting the skills Hotel Paris values.

11-22: Devise a ranking job evaluation system for the Hotel Paris’s non-managerial employees (housekeepers, valets, front-desk clerks, phone operators, wait staff, groundskeepers, and security guards) and use it to show the worth of these jobs relative to one another.

Students’ answers will vary. It is important to discuss how frequently each job interacts with the customer, what competencies are needed in each position, how students believe

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these jobs are paid in the local market, and whether assumptions are appropriate in light of what Hotel Paris is trying to do strategically.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 11-23: You want to hire a new salesperson for the small dress shop you own in Columbus, Ohio, but first need to decide what sort of pay package to offer whomever you eventually hire. How would you conduct a salary survey to determine what the pay should be?

11-24: Compare and contrast the following methods of job evaluation: ranking, classification, factor comparison, and point method.

Key Terms: Employee Compensation – All forms of pay or rewards going to employees and arising from their employment.

Direct Financial Payments – Pay in the form of wages, salaries, incentives, commissions, and bonuses.

Indirect Financial Payments – Pay in the form of financial benefits, such as insurance.

Davis-Bacon Act (1931) – A law passed in 1931 that sets wage rates for laborers employed by contractors working for the federal government.

Walsh-Healey Public Contract Act (1936) – A law that requires minimum wage and working conditions for employees working on any government contract amounting to more than $10,000.

Title VII of the 1964 Civil Rights Act – This act makes it unlawful for employers to discriminate against any individual with respect to hiring, compensation, terms, conditions, or privileges of employment because of race, color, religion, sex, or national origin.

Fair Labor Standards Act (1938) – This act provides for minimum wages, maximum hours, overtime pay, and child labor protection. The law has been amended many times and covers most employees.

Equal Pay Act – A 1963 amendment to the Fair Labor Standards Act designed to require equal pay for women doing the same work as men.

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Employee Retirement Income Security Act (ERISA) – The 1974 law that provides government protection of pensions for all employees with company pension plans. It also regulates vesting rights (employees who leave before retirement may claim compensation from the pension plan).

Job Evaluation – A systematic comparison done in order to determine the worth of one job relative to another.

Market-Competitive Pay Plan – Pay plan where pay rates are equitable both internally (based on each job’s relative value) and externally (in other words when compared with what other employers are paying).

Compensable Factor – A fundamental, compensable element of a job, such as skills, effort, responsibility, and working conditions.

Benchmark Job – A job that is used to anchor the employer's pay scale and around which other jobs are arranged in order of relative worth.

Ranking Method – The simplest method of job evaluation that involves ranking each job relative to all other jobs, usually based on overall difficulty.

Job Classification (or job grading) – A method for categorizing jobs into groups.

Classes – Grouping jobs based on a set of rules for each group or class, such as amount of independent judgment, skill, physical effort, and so forth, required. Classes usually contain similar jobs.

Grades – A job classification system like the class system, although grades often contain dissimilar jobs, such as secretaries, mechanics, and firefighters. Grade descriptions are written based on compensable factors listed in classification systems.

Grade Definition – Written descriptions of the level of, say, responsibility and knowledge required by jobs in each grade. Similar jobs can then be combined into grades or classes.

Point Method – The job evaluation method in which a number of compensable factors are identified and then the degree to which each of these factors is present on the job is determined.

Market-Competitive Pay System – A pay system in which the employer’s actual pay rates are competitive with those in the relevant labor market.

Wage Curve – Shows the relationship between the value of the job and the average wage paid for this job.

Salary Survey – A survey aimed at determining prevailing wage rates. A good salary survey provides specific wage rates for specific jobs. Formal written questionnaire surveys are the most comprehensive, but telephone surveys and newspaper ads are also sources of information.

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Pay (or wage) Grade – A pay grade is comprised of jobs of approximately equal difficulty.

Pay (or rate) Range – A series of steps or levels within a pay grade, usually based upon years of service.

Compa Ratio – Equals an employee’s pay rate divided by the pay range midpoint for his or her pay grade.

Competency-Based Pay – Where the company pays for the employee’s range, depth, and types of skills and knowledge, rather than for the job title he or she holds.

Broadbanding – Consolidating salary grades and ranges into just a few levels or “bands,” each of which contains a relatively wide range of jobs and salary levels.

Comparable Worth – The concept by which women who are usually paid less than men, can claim that men in comparable rather than strictly equal jobs, are paid more.

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Part Four Compensation Chapter 12 Pay for Performance and Financial Incentives Lecture Outline: Money’s Role in Motivation Incentive Pay Terminology Linking Strategy, Performance, and Incentive Pay Motivation and Incentives Know Your Employment Law Individual Employee Incentive and Recognition Programs Piecework Merit Pay as an Incentive Incentives for Professional Employees Nonfinancial and Recognition-Based Awards Trends Shaping HR: Digital and Social Media Improving Performance: HR Tools for Line Managers and Small Businesses Job Design Improving Performance: The Strategic Context Incentives for Salespeople Salary Plan Commission Plan Combination Plan Maximizing Sales Results Sales Incentives in Action Trends Shaping HR: Digital and Social Media Incentives for Managers and Executives Strategy and the Executive’s Long-Term and Total Rewards Package Short-Term Incentives and the Annual Bonus Improving Performance: HR Practices Around the Globe Some Other Executive Incentives Team and Organization-Wide Incentive Plans How to Design Team Incentives Evidence-Based HR: Inequities That Undercut Team Incentives Profit-Sharing Plans Scanlon Plans Other Gainsharing Plans At-Risk Pay Plans Employee Stock Ownership Plans Incentive Plans in Practice: Nucor Employee Engagement Guide for Managers ..

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Incentives and Engagement Chapter Review

Where Are We Now..

The main purpose of this chapter is to explain how managers use incentives to motivate employees. The main topics we’ll discuss are money’s role in motivation, individual employee incentive and recognition programs, incentives for salespeople, incentives for managers and executives, team and organization-wide incentive plans and incentives, and employee engagement.

Interesting Issues: The owners of a 21-store fast-food franchise in the Midwest knew that their stores’ performance and profits depended on their employees’ performance. They hoped a new employee incentive program could boost their employees’ and their stores’ performance. We’ll see that they did.

Learning Objectives: 12-1: 12-2: 12-3: 12-4: 12-5: 12-6:

Explain how you would apply four motivation theories in formulating an incentive plan.

Discuss the main incentives for individual employees.

Discuss the pros and cons of commissions versus straight pay for salespeople.

Describe the main incentives for managers and executives.

Name and describe the most popular organization-wide incentive plans.

Explain how to use incentives to improve employee engagement.

Annotated Outline: I. Money’s Role in Motivation – Frederick Taylor made three contributions in the late 1800s: He saw the need for 1) formulating a “fair day’s work,” namely precise output standards for each job, 2) the scientific management movement, which emphasized improvement of work through observation and analysis, and 3) using incentives pay to reward employees who produce over standards.

A. Incentive Pay Terminology – Often managers use two terms synonymously with incentative plans: Pay-for-performance and Variable pay. They both tie the employee’s pay to the employee’s performance.

Variable pay is more specific; it is usually an incentive plan that ties pay to some measure of the firm’s overall profitbaility.

B. Linking Strategy, Performance, and Incentive Pay – compensation experts argue that managers should understand the motivational bases of incentive plans when tying workers’ pay to their performance.

C. Motivation and Incentives – the law of individual differences means that people differ in personality, abilities, values, and needs. They therefore

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react to different incentives in different ways. Several theorists have contributed relevance to designing incentive plans.

1. Motivators and Frederick Herzberg – hygiene-motivator theory divides needs into two factors. Hygiene factors include such things as working conditions, salary, and incentives. Motivators factors include those factors that make the job more intrinsically motivating, like challenge, feedback, and recognition.

2. Demotivators and Edward Deci – Deci found that extrinsic rewards could at times actually detract from a person’s intrinsic motivation.

3. Expectancy Theory and Victor Vroom – the theory suggests that a person’s motivation to exert some level of effort is a function of three things: the person’s expectancy (in terms of probability) that his or her effort will lead to performance; instrumentality, or the perceived connection (if any) between successful performance and actually obtaining the rewards; and valence, which represents the perceived value the person attaches to the reward.

4. Behavior Modification/Reinforcement and B. F. Skinner – Psychologist B.F. Skinner proposed that to understand behavior, one must understand the consequences of that behavior. Behavior modification means changing behavior through rewards or punishments that are contingent upon performance.

D. Know Your Employment Law II. Individual Employee Incentive and Recognition Programs A. Piecework – piecework involves paying the worker a sum (piece rate) for each unit he/she produces. Straight piecework entails a strict proportionality between results and rewards regardless of output. With a standard hour plan, the worker gets a premium equal to the percent by which his/her performance exceeds the standard.

B. Merit Pay as an Incentive – merit pay or a merit raise is any salary increase the firm awards to an employee based on his/her individual performance. It is different from a bonus in that it usually becomes part of the employee’s base salary, whereas a bonus is a one-time payment.

C. Incentives for Professional Employees – professional employees are those whose work involves the application of learned knowledge to the solution of the employer’s problems, such as lawyers, doctors, economists, and engineers. Making incentive pay decisions for professional employees can be challenging because such employees are usually paid well anyway.

D. Nonfinancial and Recognition-Based Awards – recognition programs usually refer to formal programs, such as employee-of-the-month programs. Social recognition programs are more informal manager-employee exchanges, including praise and approval. Performance feedback is similar but provides quantitative or qualitative information on performance in order to change the performance or maintain it.

Most employers combine both financial and non-financial incentives to motivate employees.

E. Trends Shaping HR: Digital and Social Media – there are many reasons to use Internet sites to manage awards programs. The sites can offer a much broader

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range of products than most employers could catalog and offer by themselves. And perhaps most importantly, the whole process is expedited, so it’s much easier to bestow and deliver the awards.

F. Improving Performance: HR Tools for Line Managers and Small Businesses G. Job Design – research has shown that job design is a primary driver of employee engagement.

H. Improving Performance: The Strategic Context III. Incentives for Salespeople A. Salary Plan – fixed salaries are offered by some firms. Straight salary makes it simple to switch territories or to reassign salespeople, and it can foster loyalty among the sales staff. A disadvantage is that it can constrict sales and de-motivate potentially high-performing salespeople.

B. Commission Plan – salespeople are paid for results, and only for results; thus, such plans tend to attract high-performing salespeople who see that effort clearly leads to rewards. But, it may cause them to neglect non-selling duties like servicing small accounts, cultivating dedicated customers, and pushing hard-to-sell items.

C. Combination Plan – most companies pay salespeople a combination of salary and commissions, usually with a sizable salary component. Combination plans give salespeople a floor to their earnings and still provide an incentive for superior performance. But, they can become complicated, and misunderstandings can result.

D. Maximizing Sales Results – setting effective quotas is an art. In today’s fastchanging business scene, sales quotas must become more flexible than they have been in the past. There is a tendency to set commission rates informally, without considering how much each sale must contribute to covering expenses.

E. Sales Incentives in Action – car salespersons’ compensation ranges from 100% commission to a small base salary with commission accounting for most of the total compensation. This approach encourages the salesperson to hold firm on the retail price, and to push “after sale products” like floor mats and side moldings. There may also be extra incentives to sell packages such as rustproofing. Commission plans like these still dominate, but not as much. Many dealerships are substituting salary plus bonus plans for commissions. This reflects the growing emphasis on “one price no hassle” pricing.

F. Trends Shaping HR: Digital and Social Media IV. Incentives for Managers and Executives A. Strategy and the Executive’s Long-Term and Total Rewards Package – few HR practices have as profound or obvious an impact on strategic success as the company’s long-term incentives. In creating the compensation package, you should: 1) define the strategic context for the executive compensation program, including the internal and external issues that face the company, and the firm’s business objectives; 2) shape each component of the executive compensation package based on your strategic aims, and then group the components into a balanced plan that makes sense in terms of these aims; 3) create a stock option plan that gives the executive compensation package the special character it needs to meet

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the unique needs of the executives, the company, and the firm’s strategy; 4) check the executive compensation plan for compliance with all legal and regulatory requirements and for tax effectiveness; and 5) install a process for reviewing and evaluating the executive compensation plan whenever a major business change occurs.

1. Sarbanes-Oxley – the law affects how employers formulate their executive incentive programs and injects a higher level of responsibility into executives’ and board members’ decisions.

B. Short-Term Incentives and The Annual Bonus – is aimed at motivating the short-term performance of managers and executives.

1. Eligibility usually includes both top and lower-level managers.

2. Fund size refers to the total amount of bonus money the firm makes available. A nondeductible formula is where employers use a straight percentage (usually of the company’s net income) to create the shortterm incentive fund. A deductible formula assumes that the fund should start to accumulate only after the firm has met a specified level of earnings.

3. The Individual Awards – typically, a target bonus (as well as maximum amount) is set for each eligible position, and the actual award reflects the person’s performance.

4. Stock Options – these account for over half of executives’ compensation. A stock option is the right to purchase a specific number of shares of company stock at a specific price during a specific period of time; the executive thus hopes to profit by exercising his/her option to buy the shares in the future but at today’s price.

5. Other Stock Plans – stock appreciation rights permit the recipient to exercise the stock option (by buying the stock) or to take any appreciation in the stock price in cash, stock, or some combination of these. A performance achievement plan awards shares of stock for the achievement of predetermined financial targets. In a restricted stock plan, shares are usually awarded without cost to the executive, but selling the stock is restricted for a specified time period.

6. Ethics and Incentives – simplistic, financial-performance-oriented incentives, in the absence of strong ethical standards may breed unethical behavior. The solution is to foster an ethical culture.

C. Improving Performance: HR Practices Around the Globe D. Other Executive Incentives – companies provide various incentives to persuade executives to remain with the firm, such as golden parachutes and loans.

V. Team and Organization-Wide Incentive Plans A. How to Design Team Incentives – team (or group) incentive plans pay incentives to the team based on the team’s performance. Occasionally, the employer may want to pay team members according to some other formula such as based on how well the best team member does.

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B. Evidence-Based HR: Inequities that Undercut Team Incentives – research suggests that team incentives are often counterproductive.

C. Profit-Sharing Plans – involve employees receiving a share of the company’s annual profits. There are several types of profit-sharing plans: cash plans and deferred profit-sharing plans.

D. Scanlon Plans – this is an incentive plan developed in 1937 by Joseph Scanlon. The basic features of the plan include: philosophy of cooperation, identity, competence, involvement system, and sharing of benefits formula.

E. Other Gainsharing Plans – are incentive plans that engage many or all employees in a common effort to achieve a company’s productivity objectives, with any resulting cost-savings gains shared among employees and the company.

F. At-Risk Pay Plans – put some portion of the employee’s normal pay at risk (forego it), subject to the firm meeting its financial goals.

G. Employee Stock Ownership Plans (ESOP) – are company-wide plans in which a firm contributes shares of its own stock (or cash to purchase the stock) to a trust established to purchase shares of the firm’s stock for employees.

1. Broad-Based Stock Options – some employers offer these with the basic of thinking that shared ownership in the company with employees makes motivational and practical sense.

H. Incentive Plans in Practice: Nucor – Nucor Corp. is the largest steel producer in the United States. It also has the highest productivity and lowest labor cost per ton.

Employees can earn bonuses of 100% or more of base salary, and all Nucor employees participate in one of their four performance-based incentive plans which are: production incentive plan, department manager incentive plan, professional and clerical bonus plan, and senior officer incentive plan.

VI. Employee Engagement Guide for Managers A. Incentives and Engagement – although the compensation professionals believed that total rewards programs can influence employee engagement, many of them did not specifically include employee engagement as one of the goals of their compensation plans. They also concluded that the most direct ways to encourage employee engagement with incentives are 1) to measure the extent to which supervisors are encouraging their subordinates to be engaged, and 2) to use incentives to reward supervisors for improving employee engagement. Even more importantly than the rewards themselves, getting employees involved in developing the rewards programs was the “gold standard” for building employee cooperation and commitment.

Chapter Review

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Chapter Section Summaries: 12-1: In designing an effective financial incentive plan, it’s important to understand the relationship between money and motivation.

12-2: Piecework is an individual employee incentives and recognition program incentive plan in which a person is paid a sum for each item he or she makes.

12-3: Incentives for salespeople are typically sales commissions.

12-4: Managers take many things into consideration when formulating incentives for managers and executives.

12-5: With more employers organizing their efforts around teams, team and organizationalwide incentive plans are more important.

12-6: Consciously make employee engagement a target of your compensation plan.

Discussion Questions: 12-1: Provide examples of Herzberg’s hygiene and motivator factors.

Hygiene factors can include: factors outside the job itself, such as working conditions, salary, and incentive pay. Motivators focus on job content, such as enriching employee’s jobs so that the jobs are more challenging, and by providing feedback and recognition.

12-2: Explain five reasons why incentive plans fail.

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

12-3: Distinguish between short and long term incentives.

Short-term incentives generally refer to measures that provide some kind of incentive within 12 months. Typically, these are adjustments to salaries and can include bonus payments. They are designed to implicitly reward employees to make decisions and take actions that have an immediate, positive impact on the organization’s output. Bonuses are paid for accomplishing specific goals or for achievements beyond the scope of their usual responsibilities.

Long-term incentives are linked to decisions and activities that have a lasting positive impact on the organization. The theory behind this is if short-term incentives are paid, there remains no reason for employees to take initiatives that have any impact other than an immediate one. Long-term incentives are, therefore, introduced to encourage employees to make decisions that may help the organization to reap more long-term benefits.

12-4: You are applying for a job as a manager and are at the point of negotiating salary and incentives. What questions would you ask your prospective employer concerning incentives? Describe the incentives package you would try to negotiate for yourself.

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Students’ answers will vary but should include discussion on long-term and total rewards incentives, including the advantages and disadvantages of both.

12-5: In this chapter, we listed a number of guidelines for instituting a pay-forperformance plan. Do you think these points make sense in terms of motivation theory? Why or why not?

Students’ answers will vary but should include discussion on piecework and standard hour plans, including the advantages and disadvantages of each.

12-6: What is merit pay? Do you think it’s a good idea to award employees merit raises?

Why or why not?

Merit pay is a salary increase that is awarded to an employee based on his or her individual performance. It is a good idea to award merit raises when you have a good performance appraisal system and employees' individual effort can be fairly and accurately evaluated or measured.

12-7: What are the twelve most used forms of reward to motivate employees? Rank them according to their effectiveness.

The twelve key rewards listed in the chapter include employee recognition; gift certificates; special events; cash rewards; merchandise incentives; email or print communications; training programs; work–life benefits; variable pay; group travel; individual travel, and sweepstakes. Students are likely to have different views regarding the relative effectiveness of each of these rewards.

Individual and Group Activities: 12-8: In the United Kingdom, from September 2013, schools were given the power to link teachers’ pay to their performance. The move was designed to allow the schools to pay good teachers more. This meant that by September 2013, every school in the United Kingdom would have had to revise its pay and appraisal structures related to pay setting. This would also mean introducing clear rules about how pay progression would be linked in the future to performance. The first performance-based pay increases are to be implemented in September 2014. The initiative was designed to give the schools greater flexibility to develop their pay policies to meet their own specific needs. In other words, an attractive policy would be a major factor in being able to recruit teachers in specific subject areas that the school needed. It would also mean that the school could recruit from across the country whilst retaining its best teachers. How might a system like this work?

Schools will almost certainly adopt different ways in assessing the performance of teachers. The UK Government made several suggestions which included: how the teacher

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had an impact on pupil progress, the wider outcomes for pupils; whether the teacher made a contribution to improvements in other areas (such as behavior, attendance etc.); the teacher’s professional and career development and whether the teacher was involved in activities outside the classroom which had a positive impact on the school or increased in standing in the local community. At a practical level, the assessment would take the form of self-assessment, lesson observations, and the views of other teachers and parents and pupils.

12-9: A construction business in the Middle East uses subcontractors to carry out many of the tasks involved in fitting doors, electric sockets, showers and wash basins into their hotel and apartment projects. Instead of paying them an hourly rate, they pay them for each completed installation. The system works reasonably well with no change in the piece rate paid per item completed even if the subcontractor finishes more per week. S Justify which incentive system should be used in order to encourage increased productivity.

There are two viable variations to the straight piece rate system. Under the current system, the subcontractor can earn more during a week by simply completing more installations. This, in itself, does not appeal much to the piece rate worker. This system can be modified by increasing the payments per piece after an agreed number of installations have been completed. To make the system advantageous to both the business and the piece rate worker, a second option of paying a little less per piece after an agreed number can be availed, so that both parties can benefit from increased productivity.

12-10: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

12-11: The stockholders were livid. Twenty per cent of the corporation’s independent investors had voted against the scheme to offer the CEO more than $23 million as a bonus. This was part of a $42 million bonus scheme to be shared by the corporation’s top five executives. It was proposed to be the first part of a six year scheme that would pay out over $500 million. A corporation spokesperson was quoted as saying: “this is part of our policy of rewarding success. Stockholder returns over the past five years has been 400 per cent. It’s been 500 per cent over the past ten. The corporation is on track to meet its earnings target of $2 billion during the next three years.” If you were a stockholder, how would you have voted and why?

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Students’ answers will vary. As the chapter suggests, rewards need to be in line with the strategic objectives of the business. In this case, the increase in earnings is mirrored by the increase in bonuses. It is also useful to notice that this reward scheme lies in alignment with the long-term goals of the organization, as the executives get paid in periodic installations, keeping strictly within the $500 million budget for an earning target of $2 billion. Regardless of whether the student would vote for or against such a scheme, this arrangement is, in fact, very common in reality.

Experiential Exercise: Motivating the Sales Force at Express Auto Purpose: The purpose of this exercise is to give you practice developing an incentive plan.

Required Understanding: Be thoroughly familiar with this chapter, and read the following: Express Auto, an automobile mega-dealership with more than 600 employees that represents 22 brands, has just received a very discouraging set of survey results. Customer satisfaction scores have fallen for the ninth straight quarter. Customer complaints include: • It was hard to get prompt feedback from mechanics by phone.

• Salespeople often did not return phone calls.

• The finance people seemed “pushy.”

• New cars were often not properly cleaned or had minor items that needed immediate repair or adjustment.

• Cars often had to be returned to have repair work redone. Table 12-3 describes Express Auto’s current compensation system.

How to Set up the Exercise/Instructions: Divide the class into groups of four to five students.

One or more groups should analyze each of the five teams in column one. Each student group should analyze the compensation package for its Express Auto team. Each group should address these questions: 12-12: In what ways might your team’s compensation plan contribute to the customer service problems?

Sales force: pay is based almost entirely on commission. The salesperson has no motivation to assist customers who they do not believe will result in a sale. Finance office: bonuses for getting customers to use the company financing encourage finance employees to coerce customers into making that choice. Detailing: pay is based entirely on the number of cars detailed per day. There is no measure of quality, nor requirement of it regarding pay. Mechanics: pay is based almost entirely on number of cars serviced as well as servicing them faster than the standard estimated repair time. There is no measurement of quality or accuracy of repairs. Receptionist/phone service people: straight hourly rate does not have any performance rewards.

12-13: What recommendations would you make to improve the compensation system in a way that would likely improve customer satisfaction?

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The dealership already has a customer satisfaction survey in place. They need to link results from quality measures to the incentives that their employees receive. Examples are: Sales force: one might decrease the commission somewhat and place that amount in a pool that is distributed based on customer comments about specific sales personnel.

Finance office: bonuses for using company financing should be no more than bonuses based on customer satisfaction ratings. Detailing: there must be a measure of quality and detailers should be docked for any problem that results from their lack of attention to detail. Mechanics: re-works should dock a mechanic’s pay and mechanics whose work results in no complaints should receive a significant bonus. Receptionist/phone service people: those who answer the phone should be able to gain either performance increases in pay, or bonuses based on customer satisfaction ratings. In general, the approach should be like “teaching to the test.” If you want test scores to improve, you teach what will be on the test. If you want measures of customer satisfaction to improve, you reward (or punish) people for those measures.

Application Case: GYC Financial Advisory Pte. Ltd. 12-14: How do GYC’s remuneration packages relate to the various motivation theories?

Consistent with the Expectancy Theory, GYC’s support staffs’ bonuses are calculated as a function of their personal performance. Likewise, the on target earnings (OTEs) of the business development staff, and the partners & practices are directly remunerated based on the revenue they bring in. The use of incentives and variable bonuses in GYC’s remuneration packages directly alludes to the Reinforcement Theory. The use of nonmonetary benefits to attract or retain selected talent staff is an application of the Maslow’s Hierarchy of Needs Theory to cater to the different level of needs of employees.

12-15: What are strengths and weaknesses of GYC’s remuneration packages?

Strengths of GYC’s remuneration packages include: (a) Alignment to GYC’s business model of revenue generation. (b) Flexibility - the diverse remuneration schemes meet the diverse motivation needs for each type of employee.

Weaknesses include: (a) Difficulty in administration - GYC’s complicated remuneration packages make it difficult for administration and therefore costly. (b) Complexity - difficult for the staff to understand. (c) Propensity to take undue risk - the remuneration scheme may cause the business development staff to take undue risk in their attempts to attract new businesses. (d) Staff turnover - business development staff are prone to leaving the company after earning a lot of money in a good year.

12-16: Portfolio executives are paid based on retainer fees. Is this effective? What else can be done to reward portfolio executives?

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Retainer fees alone may not be the most effective way to remunerate the portfolio executives. These people are already very successful in their own professions, and are unlikely to be highly-motivated by monetary rewards. As such, they should be engaged on their higher order needs such as challenging assignments and developmental opportunities through social networking. Giving them prestigious titles and awards may appeal to their self-esteem needs.

12-17: What advice would you give to Goh Yang Chye to overcome the remuneration challenges GYC faces?

To prevent employees from leaving after making a lot of money in a good year, Mr. Goh may consider offering a differed payment scheme. For example, Mr. Goh could set up an investment scheme for the staff to put in a certain percentage of their bonus into the investment fund. To prevent employees from taking undue risks in securing new business, some form of a penalty scheme may be put in place to make the business development staff accountable.

Continuing Case: Carter Cleaning Company – The Incentive Plan 12-18: Should this plan be extended to pressers in the other stores?

No, not in its present form. While the piece-rate plan does make more effective use of Walt’s time and saves the company energy money, the quality control issue is a problem.

An incentive for quality needs to be included.

12-19: Should other employees (cleaner/spotters, counter people) be put on a similar plan?

Why? Why not? If so, how exactly?

It makes sense for some positions but not for others. Cleaner-spotters are production employees who could also benefit from a similar plan. It would have to have a quality incentive that makes sure they actually get the garments cleaned correctly! An incentive plan that focuses on customer satisfaction makes more sense for the counter people.

12-20: Is there another incentive plan you think would work better for the pressers?

Describe it.

Some ideas might include combination plans (salary plus piece-rate), profit-sharing, or merit pay (higher pay for those who produce more).

12-21: A store manager’s job is to keep total wages to no more than 30% of sales and to maintain the fuel bill and the supply bill at about 9% of sales each. Managers can also directly affect sales by ensuring courteous customer service and by ensuring that the work is done properly. What suggestions would you make to Jennifer and her father for an incentive plan for store managers or front-desk clerks?

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Profit-sharing, gain sharing, performance plans, annual bonus, recognition, and merit pay are all options.

Hotel Paris: Improving Performance at the Hotel Paris – The New Incentive Plan 12-22: Discuss what you think of the measurable criteria Lisa and the CFO set for their new incentive plan.

Having a large percentage of employees eligible for merit increases or incentive pay is good, but will also be expensive. A 10% difference in reward level will likely motivate improved performance. In order to justify the expense, there should be some proof that the behaviors which will be rewarded are linked to improved organizational financial performance. Lisa will need to track and communicate these connections. It is also important that the Hotel Paris find ways to measure what they plan to reward.

12-23: Given what you know about the Hotel Paris’ strategic goals, list three or four specific behaviors you would incentivize for each of the following groups of employees: front desk clerks, hotel managers, valets, and housekeepers.

Answers will vary but may include: • Front desk clerks – speed of check-in, number of positive comments by guests, decrease in number of complaints.

• Hotel managers – decrease in absenteeism, process improvements.

• Valets – time taken to deliver luggage from curb to room, decrease in number of wrong deliveries, positive feedback received.

• Housekeepers – decrease in number of complaints, decrease in number of deliveries to rooms of forgotten items, increase in number of rooms available for early check-in.

12-24: Lay out a complete incentive plan (including all long- and short-term incentives) for the Hotel Paris’ hotel managers.

The Hotel Paris has placed outstanding customer service as a major goal for all employees especially the management staff. Unfortunately, the current pay plan does not link pay to performance. Therefore, both short- and long-term incentives should be considered to help support management staff who are modeling the importance of providing outstanding customer service to the entire hotel staff. Also an incentive plan should be implemented to recognize and reward the accomplishment of organizational goals. Short-term incentives should include periodic recognition and reward programs to all staff who demonstrate outstanding customer service on a routine basis. In addition, an annual bonus based on performance and goal accomplishments could be implemented to those key staff responsible for front line customer service as well as the accomplishment of other goals which advance the mission of the organization. The organization should also consider implementing a merit pay program that would link pay to effective job

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performance. Long-term bonuses could include profit sharing based on hotel occupancy and customer service reviews.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 12-25: When and why would you pay a salesperson based solely on commission? Based on a combined salary and commission?

12-26: Explain the role recognition and other non-material incentives play in an effective incentive plan.

Key Terms: Financial Incentives – Financial rewards paid to workers whose production exceeds some predetermined standard.

Productivity – The ratio of outputs (goods and services) divided by the inputs (resources such as labor and capital).

Fair Day’s Work – Standards of output devised based on careful, scientific analysis.

Scientific Management Movement – Management approach based on improving work methods through observation and analysis.

Variable Pay – Any plan that ties pay to productivity or profitability, usually as one-time lump payments.

Intrinsic Motivation – Motivation that derives from the pleasure someone gets from doing the job or task.

Expectancy – A person’s expectation that his or her efforts will lead to performance.

Instrumentality – The perceived relationship between successful performance and obtaining the reward.

Valence – The perceived value a person attaches to the reward.

Behavior Modification – Using contingent rewards or punishment to change behavior.

Piecework – A system of pay based on the number of items processed by each individual worker in a unit of time, such as items per hour or items per day.

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Straight Piecework – An incentive plan in which a person is paid a sum for each item he or she makes or sells, with a strict proportionality between results and rewards.

Standard Hour Plan – A plan by which a worker is paid a basic hourly rate, but is paid an extra percentage of his or her base rate for production exceeding the standard per hour or per day.

Similar to piecework payment but based on a percent premium.

Merit Pay (merit raise) – Any salary increase awarded to an employee based on his or her individual performance.

Annual Bonus – Plans that are designed to motivate short-term performance of managers and are tied to company profitability.

Stock Option – The right to purchase a stated number of shares of a company stock at today's price at some time in the future.

Golden Parachute – Payments companies make in connection with a change in ownership or control of a company.

Team (or Group) Incentive Plan – A plan in which a production standard is set for a specific work group, and its members are paid incentives if the group exceeds the production standard.

Organization-Wide Incentive Plan – Incentive plans in which all or most employees can participate.

Profit-Sharing Plan – A plan whereby employees share in the company's profits.

Scanlon Plan – An incentive plan developed in 1937 by Joseph Scanlon and designed to encourage cooperation, involvement, and sharing of benefits.

Gainsharing Plan – An incentive plan that engages employees in a common effort to achieve productivity objectives and share the gains.

Earnings At-Risk Pay Plan – Plans that put some portion of the employees’ normal pay at risk if they don’t meet their goals, in return for possibly obtaining a much larger bonus if they exceed their goals.

Employee Stock Ownership Plan (ESOP) – A corporation contributes shares of its own stock to a trust in which additional contributions are made annually. The trust distributes the stock to employees on retirement or separation from service.

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Part Four Compensation Chapter 13 Benefits and Services Lecture Outline: Introduction: The Benefits Picture Today Policy Issues Pay for Time Not Worked Unemployment Insurance Vacations and Holidays Know Your Employment Law Sick Leave Improving Performance: HR as a Profit Center Leaves and the Family Medical Leave Act Know Your Employment Law Severance Pay Supplemental Unemployment Benefits Insurance Benefits Workers’ Compensation Hospitalization, Health, and Disability Insurance Know Your Employment Law Trends in Employer Health-Care Cost Control Improving Performance: HR as a Profit Center Long-Term Care Life Insurance Benefits for Part-Time and Contingent Workers Retirement Benefits Social Security Pension Plans Know Your Employment Law Pensions and Early Retirement Improved Performance Through HRIS: Online Benefits Management Systems Trends Shaping HR: Digital and Social Media Personal Services and Family-Friendly Benefits Personal Services Family-Friendly (Work-Life) Benefits Other Personal Services Benefits Diversity Counts Improving Performance: The Strategic Context Executive Perquisites Flexible Benefits Programs ..

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The Cafeteria Approach Improving Performance: HR Tools for Line Managers and Small Businesses Flexible Work Schedules Employee Engagement Guide For Managers Costco’s Compensation Plan Chapter Review

Where Are We Now… The main purpose of this chapter is to explain the third major pay component: employee benefits.

The main topics we discuss are pay for time not worked benefits, insurance benefits, retirement benefits, and using benefits to improve engagement and performance. This chapter will complete our discussion on employee compensation.

Interesting Issues: About 25 years ago, Gary Erickson was biking through California and got an idea that changed his life—to create tastier and healthier bars than those then available. That was the beginning of Clif Bar, a company Erickson started as a small bakery and then grew into one with hundreds of employees selling healthy foods and drinks. He wanted an employee benefits plan for his employees that highlighted Clif Bar’s healthy/sustainable focus; we’ll see what he did.

Learning Objectives: 13-1: 13-2: 13-3: 13-4: 13-5: 13-6:

Name and define each of the main pay for time not worked benefits.

Describe each of the main insurance benefits.

Discuss the main retirement benefits.

Outline the main employees’ services benefits.

Explain the main flexible benefit programs.

Explain how to use benefits to improve engagement, productivity, and performance.

Annotated Outline: Introduction: The Benefits Picture Today – benefits are indirect financial and nonfinancial payments.

A. Policy Issues – the list of policy issues includes what benefits to offer, who receives coverage, whether to include retirees in the plan, whether to deny benefits to employees during initial “probationary” periods, how to finance benefits, cost-containment procedures, and how to communicate benefits’ options to employees. Benefits can be classified by 1) pay for time not worked; 2) insurance benefits; 3) retirement benefits; and 4) services. Some benefits are required by law, while others are discretionary.

I. Pay for Time Not Worked – also called supplemental pay benefits; it is a very costly benefit because of the large amount of time off most employees receive. ..

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A. Unemployment Insurance – all states have unemployment insurance or compensation acts (that follow federal guidelines), which provide for weekly benefits if a person is unable to work through some fault other than his/her own. The benefits derive from an unemployment tax on employers that can range from 0.1% to 5% of taxable payroll in most states. An employer’s unemployment tax rate reflects its rate of personnel terminations.

B. Vacations and Holidays – the number of paid employee vacation days and holidays varies considerably from employer to employer. Firms have to address several holidayand vacation-related policy issues. There are a myriad of laws that affect benefits.

Vacation and holiday pay legal issues are discussed.

C. Sick Leave – provides pay to employees when they’re out of work due to illness. Most sick leave policies grant full pay for a specified number of permissible sick days. To minimize employees using their sick leave as extensions to their vacations, some employers are repurchasing unused sick leave at the end of the year by paying their employees a daily equivalent sum for each sick leave day not used or creating a leave bank or paid time off (PTO).

D. Cost-Reduction Tactics – employers use several tactics to reduce excessive sick leave absence. Some repurchase unused sick leave at the end of the year by paying their employees a sum for each unused sick day. The problem is that legitimately sick employees may come to work. Many employers use pooled paid leave plans (or “banks”). These plans lump together sick leave, vacation, and personal days into a single leave pool.

E. Improving Performance: HR as a Profit Center F. Leaves and the Family Medical Leave Act – the law stipulates that: 1) private employers of 50 or more employees must provide eligible employees up to 12 weeks of unpaid leave for their own serious illness, the birth or adoption of a child, or the care of a seriously ill child, spouse, or parent; 2) employers may require employees to take any unused paid sick leave as part of the 12-week leave provided in the law; 3) employees taking leave are entitled to receive health benefits while they are on unpaid leave; and 4) employers must guarantee employees the right to return to their previous or equivalent position with no loss of benefits at the end of the leave; however, the law provides a limited exception from this provision. Vague interpretations of the law have resulted in leaves sometimes being approved even when they were not legitimate.

G. Know Your Employment Law H. Severance Pay – a one-time payment when terminating an employee, severance is considered a humanitarian gesture and good public relations. Most managers expect employees to give them at least one or two weeks’ notice if they plan to quit; it therefore seems appropriate to provide at least one or two weeks’ severance if an employee is being dismissed. A severance plan may be subject to ERISA if the employer has a legal obligation to make severance payments, as is the case under some union contracts. Even voluntary plans could become subject to ERISA if the employer identifies it as a plan established or maintained by the employer in employee handbooks.

I. Supplemental Unemployment Benefits – these benefits supplement the employee’s unemployment compensation and help the person maintain his/her standard of living for a time while he/she is out of work due to layoffs, reduced workweeks, and relocations.

They are becoming more prevalent in union agreements.

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II. Insurance Benefits A. Workers’ Compensation – refers to the sure, prompt income and medical benefits provided in work-related accidents to the victims or their dependents, regardless of fault.

Every state has its own workers’ compensation law and administrative commission, and some run their own insurance programs. Most states require employers to carry workers’ compensation insurance. Neither the state nor the federal government contributes any funds for workers’ compensation.

1. How Benefits Are Determined – workers’ compensation can be monetary or medical.

Monetary awards are based on a formula regarding the disability involved and the worker’s average weekly wages. Some disabilities or losses also receive monetary awards based on a schedule of those losses.

2. Controlling Workers’ Compensation Costs – the costs of insurance premiums depend on the number and dollar amount of claims, thus minimizing such claims is important. Some ways to reduce such claims is to screen out accident-prone workers, reduce accident-causing conditions in facilities, institute effective safety and health programs, and comply with government standards on these matters. Many firms institute rehabilitation programs to get injured employees back on the job as fast as possible, since workers’ compensation costs accumulate as long as the person is out of work.

B. Hospitalization, Health, and Disability Insurance – these benefits are aimed at providing protection against hospitalization costs and loss of income arising from accidents or illness occurring from off-the-job causes. They are offered by most employers because medical care and insurance are so expensive. Employer health and hospitalization plans must comply with the Americans with Disabilities Act. Accidental death and dismemberment coverage provides a lump-sum benefit in addition to life insurance benefits when death is accidental. Disability insurance provides income protection for loss of salary due to illness or accident.

1. A health maintenance organization (HMO) is a medical organization consisting of several specialists operating out of a community-based health-care center.

2. Preferred provider organizations (PPOs), a cross between HMOs and the traditional doctor/patient arrangement, are groups of health care providers that contract to provide medical care services at a reduced fee. The costs of mental health treatment are rising because of widespread drug and alcohol problems.

There is an increase in the number of states requiring employers to offer a minimum package of mental health benefits.

3. The Mental Health Parity Act of 1996 sets minimum mental health care benefits at the national level.

C. Know Your Employment Law D. Trends in Employer Health-Care Cost Control – many employers are changing their medical plans and using cost-containment specialists to reduce health-care costs. Also, consumer education is among the most important initiatives in health administration.

Employees must know the costs of health choices in order to make better decisions.

More employers are requiring employees to pay higher premiums and co-payments.

Clinical prevention programs include mammograms, immunizations, and routine

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checkups. Wellness programs, claim audits, as well as other cost-control options are discussed.

E. Improving Performance: HR as a Profit Center F. Long-Term Care – is a new benefit aimed at supporting people in their old age. The Health Insurance Portability and Accountability Act (HIPAA), enacted in 1996, lets employers and employees deduct the cost of long-term care insurance premiums from their annual income taxes.

G. Life Insurance – most employers provide group life insurance plans, which usually accept all employees, regardless of health or physical condition. Accidental death and dismemberment coverage provides a lump-sum benefit in addition to life insurance benefits when death is accidental.

H. Benefits for Part-Time and Contingent Workers – some firms provide holiday, sick leave, vacation benefits, and some form of health-care benefits for employees who work less than 35 hours a week.

III. Retirement Benefits A. Social Security – provides three types of benefits: retirement benefits, survivor’s (death) benefits, and disability payments. Retirement benefits provide an income if you retire at age 62 or thereafter and are insured under the Social Security Act. Survivor’s (death) benefits provide monthly payments to your dependents regardless of your age at death if you were insured under the Social Security Act. Disability payments provide monthly payments to employees who become totally disabled (and their dependents) if they work and meet certain requirements. The Social Security system also administers the Medicare program, which provides a wide range of health services to people 65 or older.

B. Pension Plans – there are a variety of pension plans. Defined contribution plans specify what contributions the employer will make to the employee’s retirement or savings fund.

In a 401(k) plan, an employee authorizes the employer to deduct a certain amount of money from his/her paycheck before taxes and to invest it in the 401(k) plan. Many federal laws govern pensions.

1. 401(k) Plans – this is a popular defined contribution plan in which the employee can have money deducted from his or her paycheck and deposited in the account before payroll taxes.

2. Other Plans – in a savings thrift plan, employees contribute a portion of their earnings to a fund. The employer usually matches this contribution in whole or in part. In deferred profit sharing plans, employers contribute a portion of their profits to the pension fund. An employee stock ownership plan (ESOP) is a tax-deductible stock bonus plan.

3. Cash Balance Pension Plans – these are defined benefit plans for federal tax purposes, but have the portability advantages of defined contribution plans. Defined benefit plans are most advantageous to older employees with long service terms. Younger employees, or those who want to change jobs, usually prefer defined contribution plans. The cash balance plan has both portability and predictable benefits.

C. Know Your Employment Law D. Pensions and Early Retirement – the company opens up (for a limited time only) the opportunity for employees to retire earlier than usual, with a financial incentive, which

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is generally a combination of improved or liberalized pension benefits plus a cash payment.

E. Improving Performance Through HRIS: Online Benefits Management Systems – benefits administration can be an enormously labor-intensive and time-consuming activity for an HR department. One of the main ways HR managers are increasing the productivity of their benefits dollars is by increasing the utilization of technology.

F. Trends Shaping HR: Digital and Social Media IV. Personal Services and Family-Friendly Benefits A. Personal services are being provided by many companies. Options may include credit unions, legal services, and counseling.

1. Employee Assistance Programs – EAPs provide employees with counseling and/or treatment for problems such as alcoholism, gambling, or stress.

B. Family-Friendly (Work-Life) Benefits – there are more families in which both adults work, more one-parent households, more women working, and more people over 55 working. Onsite child care, fitness and medical facilities, flexible work scheduling, telecommuting, occasional sabbaticals, loan programs for home computers, stock options, concierge services, and even insurance for the family pet are all part of the compensation package in the new workplace. Employers are increasingly granting fathers time off, or flexible schedules, to take care of the kids.

1. Subsidized child care is an increasingly desirable benefit, which tends to improve recruiting results, lower absenteeism, improve morale, garner favorable publicity, and lower turnover.

2. Sick Child Benefits – unexpected absences due to last-minute child-care emergencies can be problematic for employers, who then need to hire temporary help or cope with reduced productivity. Emergency child-care benefits are being offered by more employers.

3. Elder Care – programs are being offered to employers to help employees who must care for elderly who can’t fully care for themselves.

4. Educational Subsidies – the percentage of employers offering education benefits is diminishing. It’s expensive and the employer may be paying its best employees to leave.

C. Other Personal Services Benefits – employers often provide services for on site programs such as ATMs, mobile libraries, car washes, oil changes, dry cleaning, haircuts, and organic grocery delivery as just a few options to help boost employees’ efficiency by reducing the need for them to seek services off-site. Non-monetary benefits such as schedule flexibility and additional training and development are also offered.

D. Diversity Counts: Domestic Partner Benefits E. Improving Performance: The Strategic Context F. Executive Perquisites – perks include management loans, salary guarantees, protection for executives if their firms become targets of acquisitions or mergers, financial counseling, relocation benefits, time off with pay, outplacement assistance, company cars, chauffeured limousines, security systems, company planes and yachts, executive dining rooms, physical fitness programs, legal services, tax assistance, liberal expense accounts, club memberships, season tickets, credit cards, and children’s education.

V. Flexible Benefits Programs – when given the opportunity to choose, employees do prefer flexibility in their benefits plan.

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A. The Cafeteria Approach – a cafeteria benefits plan, which is generally synonymous with a flexible benefits plan, is where each employee is given a benefits fund budget to spend on whichever benefits he/she wants once the employer limits the total cost for each benefits package and includes certain non-optional items. Flexible spending accounts let employees pay for certain benefits expenses with pretax dollars. Core plus option plans establish a core set of benefits, which are usually mandatory for all employees; then the employees can choose from various benefits options.

B. Improving Performance: HR Tools for Line Managers and Small Businesses C. Flexible Work Schedules 1. Flextime – is an arrangement by which employees have flexibility in scheduling their workday around core hours.

2. Telecommuting – telecommuters work at home and use phones and the Internet to conduct business.

3. Compressed Workweeks – May consist of four 10-hour days, three 12-hour days, or other such combinations.

4. Other Flexible Work Arrangements – there are many other arrangements that employers may offer. Job sharing is when two people share one full-time job. Job sharing can be useful for retirement-aged employees, allowing the company to retain the employee, who experiences reduced hours. Work sharing is when a whole group reduces its hours to prevent layoffs 5. Effectiveness of Flexible Work Schedule Arrangements – studies indicate that they increase employee satisfaction and productivity. Some critics are concerned that fatigue and accidents may increase.

VI. Employee Engagement Guide for Managers 1. Costco’s Compensation Plan – the HR strategy is to deflect Walmart’s famously low costs and wages by paying employees more, and thereby producing improved employee engagement, productivity, and customer service. Costco’s employee benefits are also highly competitive, particularly when compared with the typically sparse offerings in the retail industry. Costco doesn’t directly measure employee engagement; it says it tracks engagement by “byproducts,” such as turnover and productivity. Costco, like other large chains with traditionally excellent customer service like Nordstrom and the Container Store, also do well financially, in part by treating employees well and keeping engagement up.

Chapter Review Chapter Section Summaries: 13-1: Employers provide numerous pay for time not worked benefits.

13-2: Most employers also provide required or voluntary insurance benefits.

13-3: Retirement benefits are important to employees today.

13-4: Most employers also provide various personal services and family-friendly benefits.

13-5: Employees prefer choice in their benefits plans, so flexible benefits programs are important.

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13-6: Costco’s HR strategy is to deflect Walmart’s low wages by paying employees more, thereby producing more employee engagement.

Discussion Questions: 13-1: What is severance pay? What other types of payment do employees receive when they permanently leave a company?

Unemployment insurance provides benefits to an individual who is unable to work through some fault other than his/her own. An organization is not required to pay unemployment benefits to all dismissed employees. You could minimize your organization’s unemployment insurance tax by making sure that all your managers understand the unemployment insurance code, training managers and supervisors on discipline and discharge, conducting exit interviews, verifying employment claims, filing protests against a former employee's claim on a timely basis, knowing your local unemployment insurance official, and auditing the annual benefit charges statement.

13-2: Explain how ERISA protects employees’ pension rights.

Under ERISA, pension rights must be vested under one of three formulas. Also, ERISA established the Pension Benefits Guarantee Corporation to help ensure that pensions meet vesting obligations. The PBGC also insures pensions should a plan terminate without sufficient funds to meet its vested obligations.

13-3: Why do companies offer employee assistance programs?

Employee assistance programs (EAP’s) can reduce absence rates by assisting with employees problems and promoting their health and welfare. This can lead to a more contented and motivated workforce. Employers can typically offer personal legal and financial services advice, adoption assistance, mental health and family problem counseling as well as offering on site facilities such as gym membership.

13-4: What are the main provisions of the FMLA? This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

Individual and Group Activities: 13-5: Working individually or in groups, access relevant Web sites and identify two large corporations. Comment on their wellness plans. What benefits do they offer for both the employee and the company? Can you think of any disadvantages for corporations that offer wellness plans?

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Answers will depend on students’ research. One disadvantage could be the cost of wellness plans particularly during an economic downturn. Also employees who do not use any of the benefits of a wellness plan may feel that they are subsidizing those who do.

13-6: Imagine you are a businessman in a successful organization. You are thinking about retiring in the near future. Working individually or in groups, discuss the benefits and drawbacks of your early retirement for both yourself and your employer.

Benefits for the employee could be an enhanced pension and possibly a one-time payment.

However if employees miss the work experience they can find often it difficult to find another job easily. The company may benefit from reducing a workforce which is too large and possibly de-motivated staff may leave. However they will lose the knowledge and experience of employees who may have spent all their working life at the company and this can be irreplaceable.

13-7: Your employees and the trade union have been complaining that their work–life balance is not as favorable as in similar companies. Discuss the advantages and disadvantages of introducing a flextime and telecommuting scheme for both the company and employees.

For employees flextime can offer more control over hours worked, and ensure maximum time is spent with families. Peak time traffic can also be avoided. However employers will expect dental and other appointments to be arranged outside work hours. For employers, with flextime time wasted at work should be minimised and operational time can be extended. Peaks and troughs of business activity can be more easily covered. However, it can be unsuitable when a task needs to be completed by a strict deadline. Telecommuting can benefit employees by giving them much more flexibility which can allow a more satisfactory work life balance, but can also lead to a sense of isolation. Telecommuting workers usually have to pay for expenses such as heating and lighting so this is an advantage for the company and a drawback for employees. It is suitable for data entry work that may be targeted but not suitable for types of work where a high level of supervision is required.

13-8: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

The material in this chapter that relates to the HRCI certification exam includes: unemployment insurance, vacations and holidays, sick leave, parental leave and FMLA,

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severance pay, supplemental unemployment benefits, workers’ compensation, hospitalization, health and disability insurance, life insurance, benefits for part-time workers, social security, pension plans, pension planning, pensions and the law, pension trends, executive perquisites, and flexible benefits programs. Multiple-choice questions should reflect material in this chapter and should have answer choices which could appear plausible.

Experiential Exercise: Towards A Global Benefits Package Purpose: The purpose of this exercise is to provide practice in developing a benefits package for a growing global organization.

Required Understanding: Be very familiar with the material presented in this chapter. In addition review chapter to reacquaint with source of compensation survey information and come to class prepared to share with the group your thoughts on the information provided in the next section.

How to Set up the Exercise/Instructions: Divide the class in groups for four or five students. Your assignment is as follows: A growing global organization operates in your own country, and any two other countries that the group is familiar with. They want to develop an organization wide benefits package for their employees. Until now, benefits have been decided on a local level and there is no organization-wide database or system for a benefits package. 90 per cent of managers do not think the current system is fit for purpose.

Create the foundations of a workable, multi-country benefits package that has the potential to continue to operate as the organization grows.

Students should suggest that the system needs to be centralized and monitored. They may not agree on whether the benefits packages should be identical in different countries or relevant to each country. Importance lies in creating the infrastructure to manage employee benefits on a global basis. There may be problems in terms of data, resources, and administration, but only in this way can the governance and effectiveness of the benefits system be ensured.

Application Case: $5 Billion Industry Under Threat 13-9: Assume you have been employed by the global brands to mediate between the employers and the workers, what assurances would you demand from the employers going forward?

Students’ answers will vary; while answering the question students should largely adhere to the following thought process.

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On one hand, the employers would need assurances regarding the passing on of any extra costs to them and not having to run the risk of the global brands looking elsewhere for garment production. What needs to be established is a fair sharing of the profits from the garment trade that rewards the workers as well as the employers. Contracts, antidiscrimination and other issues could then follow.

13-10: What are the ethical issues for the global brands in basing their production in lower pay countries with some knowledge of the fact that workers are being exploited by employers.

Students will have differing views of this type of operation. In order to keep costs down, global brands will always look for the cheapest production facilities. However, it could be suggested that they would have a moral obligation to at least monitor the situation and ensure that workers are not being exploited. At the very least, this is a corporate social responsibility issue. One of the workers’ representatives was quoted as suggesting that the global brands were fully aware of the prices they were paying and the consequences of such prices as being very complicit.

13-11: Should global organizations based in highly developed countries not be concerned about the conditions in subcontractors countries? Do you think that the global brands in terms of compensation have a duty to try to export western standards of living?

Students’ answers will vary, but it is likely that they will suggest compensation packages as needing to be made fair by local terms and not by global ones. In a global market, organizations will always look for the best possible location for their production so they can remain competitive.

Continuing Case: Carter Cleaning Company – The New Benefit Plan 13:12: Draw up a policy statement regarding vacations, sick leave, and paid days off for Carter Cleaning Centers.

The students are likely to create different policy statements, which will reflect their different preferences for benefits. You should get the students to discuss how LearnInMotion.com might allow for flexibility in their pay for time not worked.

13-13: What would you tell Jennifer are the advantages and disadvantages to Carter Cleaning Centers of providing its employees with health, hospitalization, and life insurance programs?

The student should refer to the hospitalization, medical, and disability insurance section of the chapter to develop their lists of advantages and disadvantages.

13-14: Would you advise establishing some type of day care center for the Carter Cleaning employees? Why or why not?

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A better approach for a small company such as Carter would be to locate a licensed day care provider that would be willing to give a discount to Carter employees. From that starting point, she could then consider whether to subsidize childcare.

Hotel Paris: Improving Performance at the Hotel Paris – The New Benefits Plan 13-15: What is your opinion of the new Hotel Paris benefits plan?

Students’ answers will vary.

13-16: Because employers typically make benefits available to all employees, they may not have the motivational effects of incentive plans. Given this, list five employee behaviors you believe Hotel Paris could try to improve through an enhanced benefits plan, and explain why you chose them.

Answers will vary. Some possible answers include calling in sick, leaving early or coming in late, being short with customers or staff, passing illness to other staff members by coming in sick, and showing a lack of motivation.

13-17: Given your answer to question 13-16 and what you read in this chapter of Dessler Human Resource Management, explain specifically what other benefits you would recommend the Hotel Paris implement to achieve these behavioral improvements.

Students’ answers will vary.

13-18: Explain specifically what other benefits you would recommend the Hotel Paris implement to achieve these behavioral improvements.

Flexible benefit plans would allow employees in different age groups, with different needs, to adjust their benefits to their situation. An on-site child care facility or voucher system may be a possibility depending on need.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com: 13-19: You are applying for a job as a manager and are at the point of negotiating salary and benefits. What questions would you ask your prospective employer concerning benefits?

Describe the benefits package you would try to negotiate for yourself.

13-20: Your clients want to know how they can use their employee benefits package to improve employee engagement. What would you tell them?

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Key Terms: Benefits – Indirect financial and nonfinancial payments employees receive for continuing their employment with the company.

Supplemental Pay Benefits – Benefits for time not worked such as unemployment insurance, vacation and holiday pay, and sick pay.

Unemployment Insurance (or compensation) – Provides benefits if a person is unable to work through some fault other than his or her own.

Sick Leave – Provides pay to an employee when he or she is out of work because of illness.

Severance Pay – A one-time payment some employers provide when terminating an employee.

Supplemental Unemployment Benefits – Provide for a guaranteed annual income in certain industries where employers must shut down to change machinery or due to reduced work. These benefits are paid by the company and supplement unemployment benefits.

Workers’ Compensation – Provides income and medical benefits to work-related accident victims or their dependents regardless of fault.

Health Maintenance Organization (HMO) – A prepaid health care system that generally provides routine round-the-clock medical services as well as preventative medicine in a clinic-type arrangement for employees, who pay a nominal fee in addition to the fixed annual fee the employer pays.

Preferred Provider Organization (PPO) – Groups of health care providers that contract with employers’ insurance companies or third-party payers to provide medical care services at a reduced fee.

Group Life Insurance – Provides lower rates for the employer or employee and includes all employees, including new employees, regardless of health or physical condition.

Social Security – Federal program that provides three types of benefits: retirement income at age 62 and thereafter; survivor's or death benefits payable to the employee's dependents regardless of age at time of death; and disability benefits payable to disabled employees and their dependents.

These benefits are payable only if the employee is insured under the Social Security Act. Pension Plans – Plans that provide a fixed sum when employees reach a predetermined retirement age or when they can no longer work due to disability.

Defined Benefit Pension Plan – A plan that contains a formula for determining retirement benefits.

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Defined Contribution Pension Plan – A plan in which the employer's contribution to employee's retirement or savings funds is specified.

Portability – Instituting policies that enable employees to easily take their accumulated pension funds when they leave an employer.

401(k) Plan – A defined contribution plan based on section 401(k) of the Internal Revenue Code.

Savings and Thrift Plan – Plan where employees contribute a portion of their earnings to a fund; the employer usually matches this contribution in whole or in part.

Deferred Profit-Sharing Plan – A plan in which a certain amount of profits is credited to each employee’s account, payable at retirement, termination, or death.

Employee Stock Ownership Plan (ESOP) – A qualified, tax-deductible stock bonus plan in which employers contribute stock to a trust for eventual use by employees.

Cash Balance Plans – Plans under which the employer contributes a percentage of employees’ current pay to employees’ pension plans every year, and employees earn interest on this amount.

Employee Retirement Income Security Act of 1975 (ERSIA) – Signed into law by President Ford to require that pension rights be vested, and protected by a government agency, the PBGC. Pension Benefits Guarantee Corporation (PBGC) – Established under ERISA to ensure that pensions meet vesting obligations; also insures pensions should a plan terminate without sufficient funds to meet its vested obligations.

Early Retirement Window – A type of offering by which employees are encouraged to retire early, the incentive being liberal pension benefits plus perhaps a cash payment.

Employee Assistance Program (EAP) Benefits – A formal employer program for providing employees with counseling and/or treatment programs for problems such as alcoholism, gambling, or stress.

Family-Friendly (or work-life) Benefits – Benefits such as child care and fitness facilities, that make it easier for employees to balance their work and family responsibilities.

Flexible Benefits Plan/Cafeteria Benefits Plan – Individualized plans allowed by employers to accommodate employee preferences for benefits.

Flextime – A work schedule in which employees’ workdays are built around a core of midday hours and employees determine, within limits, what other hours they will work.

Compressed Workweek – A schedule in which employees work fewer but longer days each week.

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Job Sharing – Allows two or more people to share a full-time job.

Work Sharing – Refers to a temporary reduction in work hours by a group of employees during economic downturns as a way to prevent layoffs.

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Part Five Enrichment Topics in Human Resource Management Chapter 14 Building Positive Employee Relations

Lecture Outline: What is Employee Relations?

Employee Relations Programs For Building And Maintaining Positive Employee Relations Ensuring Fair Treatment Improving Performance: The Strategic Context Bullying and Victimization Improving Employee Relations Through Communication Programs Develop Employee Recognition/Relations Programs Use Employee Involvement Programs Trends Shaping HR: Digital and Social Media Improving Performance: HR As a Profit Center The Ethical Organization Ethics and Employee Rights What Shapes Ethical Behavior at Work?

The Person (What Makes Bad Apples?)

Which Ethical Situations Make for Ethically Dangerous Situations (Bad Cases)?

What Are the “Bad Barrels?” – The Outside Factors That Mold Ethical Choices How Managers Can Create More Ethical Environments How Human Resource Managers Can Create More Ethical Environments Improving Performance: HR Tools For Line Managers and Small Businesses Know Your Employment Law – Electronic Monitoring Trends Shaping HR: Digital and Social Media Managing Employee Discipline The Three Pillars of Fair Discipline Diversity Counts How to Discipline an Employee Discipline Without Punishment Employee Engagement Guide For Managers How Companies Become “Best Companies to Work For” The “Best Companies to Work For” SAS: Great Benefits, Trust, and Work-Life Balance Google: Happiness and People Analytics FedEx: Guaranteed Fair Treatment A “Best Company” Human Resource Philosophy?

Chapter Review

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Where Are We Now… The main purpose of this chapter is to explain the building blocks of positive employee relations.

Our topics include what is employee relations, managing employee relations, using human resources management tools to promote ethics and fair treatment, managing employee discipline, and developing employee engagement and great places to work for.

Interesting Issues: After a worker uprising over pay and work rules at Apple Inc.’s Foxconn IPhone assembly plant in Shenzhen, China, Apple asked the plant’s owner to have the Fair Labor Association (FLA) survey the plant’s workers. The FLA found “tons of issues.” We’ll see what they found and what Foxconn’s management did to improve the situation.

Learning Objectives: 14-1: 14-2: 14-3: 14-4: 14-5:

Define employee relations.

Discuss at least four methods for managing employee relations.

Explain what is meant by ethical behavior.

Explain what is meant by fair disciplinary practices.

Answer the question: “How do companies become “Best Companies to Work For?"

Annotated Outline: I.

What is Employee Relations? – it’s the managerial activity that involves establishing and maintaining the positive employee-employer relationship that contributes to satisfactory productivity, motivation, morale, and discipline, and to maintaining a positive, productive, and cohesive work environment.

II.

Employee Relations Programs For Building And Maintaining Positive Employee Relations A. Ensuring Fair Treatment – unfair treatment reduces morale, increases stress, and has negative effects on performance. Employees of abusive supervisors are more likely to quit, and to report lower job and life satisfaction and higher stress. The effects on employees of such abusiveness are particularly pronounced where the abusive supervisors seem to have support from higher-ups. The employer and the manager are responsible for ensuring that the employee is treated fairly and with respect.

B. Improving Performance: The Strategic Context C. Bullying and Victimization – some unfairness is blatant. Bullying—singling out someone to harass and mistreat—is an increasingly serious problem. The U.S. government (www.stopbullying.gov/#) points out that while definitions of bullying vary, most would agree that bullying involves three things:

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1. Imbalance of power – people who bully use their power to control or harm, and the people being bullied may have a hard time defending themselves.

2. Intent to cause harm – actions done by accident are not bullying; the person bullying has a goal to cause harm.

3. Repetition – incidents of bullying happen to the same person over and over by the same person or group, and that bullying can take many forms: a. Verbal: name-calling, teasing . b. Social: spreading rumors, leaving people out on purpose, breaking up friendships. c. Physical: hitting, punching, shoving. d. Cyberbullying: using the Internet, mobile phones, or other digital technologies to harm others.

D. Improving Employee Relations Through Communication Programs – many employers use communications programs to bolster their employee relations efforts on the reasonable assumption that employees feel better about their employers when they are “kept in the loop.” The employers can use the following: open door policy, employee handbook, email, hard copy memoranda, focus groups, ombudsman, suggestion boxes, telephone, messaging, Web-based hotlines, and exit interviews.

1. Using Organizational Climate Surveys – these are used to “take the pulse” of their employees’ attitudes toward a variety of organizational issues including leadership, safety, role clarity, fairness, pay, and to thereby get a sense of whether their employee relations need improvement.

E. Develop Employee Recognition/Relations Programs – instituting recognition and service award programs requires planning. Service award programs require reviewing the tenure of existing employees and establishing meaningful award periods (1 year, 5 years, etc.). Recognition Programs require developing criteria for recognition (such as customer service, cost savings, etc.), creating forms and procedures for submitting and reviewing nominations, selecting meaningful recognition awards, and establishing a process for actually awarding the recognition awards.

F. Using Employee Involvement Programs – employers encourage employee involvement in various ways, such as focus groups.

G. Trends Shaping HR: Digital and Social Media H. Improving Performance: HR As a Profit Center III.

The Ethical Organization – ethics are “the principles of conduct governing an individual or a group”; the principles that people use to decide what their conduct should be.

A. Ethics and Employee Rights – the enforceable rights embedded in employment law also govern what employers and employees can do.

B. What Shapes Ethical Behavior at Work? – three factors combine to determine the ethical choices we make: 1)”Bad Apples” which are people who are inclined to make unethical choices must deal with 2)”Bad Cases” which are the ethical situations that are ripe for unethical choices while working in 3)”Bad Barrels” which is the company environment that foster or condone unethical choices.

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C. The Person: (What Makes Bad Apples?) – because people bring to their jobs their own ideas of what is morally right and wrong, the individual must shoulder much of the credit (or blame) for the ethical choices he or she makes.

D. Which Ethical Situations Make for Ethically Dangerous Situations (Bad Cases)? – people seem more likely to “do the wrong thing” in “less serious” situations. People tend to cut more ethical corners on small things.

E. What Are the “Bad Barrels” – The Outside Factors That Mold Ethical Choices? – companies that promote an “everyone for him or herself” culture were more likely to suffer from unethical choices.

F. How Managers Can Create More Ethical Environments – by reducing job-related pressures and walk the talk. The level of misconduct at work drops dramatically when employees say their supervisors exhibit ethical behavior.

G. How Human Resource Managers Can Create More Ethical Environments – by instituting ethics policies and codes, enforce the rules, encourage whistleblowers, and foster the right culture.

H. Improving Performance: HR Tools For Line Managers and Small Businesses I. Know Your Employment Law: Electronic Monitoring J. Trends Shaping HR: Digital and Social Media IV.

Managing Employee Discipline – the purpose of discipline is to encourage employees to behave sensibly at work (where sensible means adhering to rules and regulations).

A. The Three Pillars of Fair Discipline – the manager builds a fair discipline process on three pillars: 1) rules and regulations, 2) a system of progressive penalties, and 3) an appeals process.

B. Diversity Counts C. How to Discipline an Employee – to help guide managers and head off errors, fair discipline guidelines would include the following: 1. Make sure the evidence supports the charge of employee wrongdoing.

2. Make sure to protect the employee’s due process rights.

3. Adequately warn the employee of the disciplinary consequences of his or her alleged misconduct. Have employee sign a form.

4. The rule that allegedly was violated should be “reasonably related” to the efficient and safe operation of the particular work environment.

5. Objectively investigate the matter before administering discipline.

6. The investigation should produce substantial evidence of misconduct.

7. Apply applicable rules, orders, or penalties without discrimination.

8. Maintain the employee’s rights to counsel.

9. Don’t rob your subordinate of his or her dignity, for instance by disciplining the person in public.

10. Listen to what the person has to say.

11.Remember that the burden of proof is on you.

12. Get the facts.

13. Don’t act while angry.

14. Adhere to your company’s disciplinary appeals process.

D. Discipline Without Punishment – aims to reduce the punitive nature of the discipline.

Steps include the following:

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1. Issue an oral reminder for a first infraction.

2. Should another incident arise within 6 weeks, issue a formal written reminder, and place a copy in the employee’s personnel file.

3. Give a paid, one-day “decision-making leave.”

4. If no further incidents occur in the next year or so, purge the 1-day paid suspension from the person’s file. If the behavior is repeated, the next step is dismissal.

5. The process would not apply to exceptional circumstances. Criminal behavior or in-plant fighting might be grounds for immediate dismissal, for instance.

V.

Employee Engagement Guide for Managers A. How Companies Become “Best Companies to Work For” – the focus is on programs managers use to cultivate positive employee relations.

B. The “Best Companies” to Work For – based on an extensive multinational survey of employees by the Great Place to Work Institute (www.greatplacetowork.com). The Great Place to Work Institute defines a great workplace “as one where employees trust the people they work for, have pride in the work they do, and enjoy the people they work with.”

C. SAS: Great Benefits, Trust, and Work-Life Balance – SAS, whose headquarters is in Cary, North Carolina, is a leader in providing business analytics software and services to companies. The company is privately owned and has long been known for the quality of its benefits and for the support it provides for its employees’ work-life balance.

D. Google: Happiness and People Analytics – the founders turned to SAS to better understand what made it consistently a “Best Company to Work For, and thus made benefits equal to or exceed those of SAS including providing on-site dry cleaners, bowling alleys, café’s, transportation to and from campus, and nap pods.

E. FedEx: Guaranteed Fair Treatment – this company has been one of the “Fortune Magazine’s 100 Best Companies to Work For” for 12 of the past 15 years. Excellent benefits, competitive salaries, and a focus on promoting from within help to explain this; however, it may be FedEx’s emphasis on building trust through communications that most sets it apart. The Guarantee Fair Treatment Process (GFTP) is a sort of turbocharged grievance process, an appeal can go all the way to top executives.

GFTP is available to all permanent employees. It has three steps: 1) management review, 2) officer complaint, and 3) executive appeal review.

F. A “Best Company” Human Resources Philosophy – every personnel decision you make, the people you hire, the training you provide, your leadership style, and the like, reflects (for better or worse) the basic philosophy. One thing that also molds your own philosophy is that of your organization’s top management. While it may not be stated, it is usually communicated by their actions and permeates every level and department.

Chapter Review Chapter Section Summaries:

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14-1: Employee Relations is the activity that involves establishing and maintaining the positive employee-employer relationships.

14-2: Managers and HR Management use programs to develop positive employee relations.

14-3: Ethics refers to the principles of conduct governing an individual or a group, and specifically to standards you use to decide what your conduct should be.

14-4: A fair and just discipline process is based on rules and regulations, a system of progressive penalties, and an appeal process.

14-5: There are several things that any manager intent on building positive employee relations and employee engagement can draw from by studying “Best Companies to Work For.”

Discussion Questions: 14-1: Bullying can take many forms. What are the four main forms of bullying in the workplace? What can be done about it?

The four main types of bullying are verbal, social, physical and cyber. It is the responsibility of the employers to deal with such events. This can be achieved through training, management vigilance and an uncompromising refusal to allow it to happen. If it does happen, the perpetrator should be disciplined.

14-2: Why is it important in our litigious society to manage electronic monitoring properly?

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

14-3: How might the management of an organization go about fostering the right culture?

What steps are necessary in order to achieve this?

Students’ answers will vary. The chapter suggests that clarifying expectations, using signs and symbols, and providing physical support are all useful tools in achieving this aim.

14-4: How do you think a business can ensure that employee privacy is maintained?

Employees are likely to view invasion of their privacy as being both unfair and unethical.

Monitoring employees needs to be handled with care. Typically, intrusions may include surveillance, publication or disclosure of private matters, or using images or names of employees for commercial purposes. A great deal of information is gathered about employees during background checks, monitoring off-duty conduct and lifestyle, drug testing, workplace searches, and workplace monitoring. Employers need to be transparent about the information they are gathering and set limits on how it will be used. Some countries will have clear legislation and regulation regarding the use of employee information.

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14-5: A review of research into ethical behavior at work was entitled “Bad Apples, Bad Cases and Bad Barrels.” What lessons can be learned from this review?

Students’ answers may vary, although it’s important to notice that the review looked at three determining factors- people, situations, and the environment. Not surprisingly, it established the fact that in some cases, one or a combination of more than one factors are responsible for unethical behavior and problems in the workplace.

14-6: You believe your coworker is being bullied. How would you verify this and what would you do about it if it is true?

It is important to conduct a full investigation of suspicions. Asking trusted employees for feedback on performance in the unit on a regular basis often will assist in clarifying where problems exist. Once the allegations are clear, meeting with the employee to discuss the situation, and their reasons is crucial. Depending on the situation, the reasons, and the severity of the offense, progressive discipline would be the next step.

14-7: How would you advise an organization in carrying out a climate survey?

There are six dimensions to be examined in this case (according to Litwin and Stringer, the Harvard psychologists). These are clarity, standards, responsibility, flexibility, rewards, and team commitment. The OCS feedback is collected using a 180° survey, and shows the climate that managers experience within their own leadership team as well as the one they actually create in their team.

Individual and Group Activities: 14-8: In the vast majority of traditional disciplinary processes there are some major problems. The first issue is that no one actually likes to be punished. The second issue is that punishment, if it works at all, will only ensure (in most cases) shortterm compliance. It does not mean that individuals will give their long-term cooperation. Discuss examples of non-punitive discipline.

There are a number of options open to the business if they choose not to use punishment as a disciplinary measure. These may include: issuing an oral reminder for a first infraction; then issuing a formal written reminder if another incident takes place (a copy of which is placed on the personnel file); holding private discussions with the employee; giving the employee a paid decision-making leave day followed by a meeting where the employee must make a commitment to follow the company rules; this could be followed up by a second leave day; suspend the employee for one day, still paid. If the employee complies, then the documents relating to the disciplinary issue occurring over the course of the following year are destroyed. If all of this fails, then the employee is dismissed.

14-9: Working individually or in groups, obtain copies of the student handbook for your college and determine to what extent there is a formal process through which

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students can air grievances. Based on your contacts with other students, has it been an effective grievance process? Why or why not?

Ask what effect this has on the sense of organizational justice.

14-10: This chapter suggests that all employees have a series of “unalienable” rights, while others are underwritten by laws. This may not always be the case. As individuals or in groups, analyze the range of employee rights in your country.

It is probably the case that the majority of employee rights listed in Figure 14.1 apply to many western countries and other countries that have developed and mixed economies. In many other countries, the employee rights will be far more limited. Websites such as http://www.globallabourrights.org/reports expose specific situations where the employee rights are limited in particular countries or instances when individual companies flout employee rights as a matter of course.

14-11: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

Material from this chapter that applies to the HRCI exam would include: the meaning of ethics, ethics and the law, ethics fair treatment and justice, what shapes ethics behavior at work, ethics policies and codes, the organization’s culture, HR ethics activities, building two-way communications, formal disciplinary appeals processes, discipline without punishment, employee privacy, grounds for dismissal, avoiding wrongful discharge suits, personal supervisory liability, the termination interview, layoffs and the plant closing law, and adjusting to downsizings and mergers.

14-12: The UAE is among a number of countries, which are beginning to realize that corruption in business is a serious issue. Over the past few years, the UAE has passed several laws to combat money laundering, fraud, and the use of local residents to front business activities by foreigners. In 2013, the process began by framing and discussing a brand new federal law, and an anti-corruption authority that would be based in Abu Dhabi. The Organization, which will be known as the Federal Authority for Combating Corruption, will have necessary powers to investigate a wide range of crimes throughout the emirates. It will have the power to investigate money-laundering, embezzlement, breach of trust, bribery, and other business-related abuses. In addition to these powers, the authority will also take steps to ensure that whistle-blowers are guaranteed their freedom, security, and

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well-being. Whistle-blowers will be protected from civil, administrative, and criminal prosecution. This move has come about as a result of the UAE signing the United Nations Convention against Corruption. Individually or in groups, identify the underlying goals of the convention. Has your country signed it?

The convention aims to prevent first and prosecute if necessary. It has several measures aimed at prevention first (anti-corruption bodies, enhanced transparency etc.) It seeks to criminalize corruption, with signatory states obliged to establish a range of offenses. The convention also seeks to obtain international cooperation, including prevention, investigation and prosecution; signatories are bound to provide mutual legal assistance (in terms of gathering and transferring evidence etc.) Finally, the convention requires signatories to engage in asset recovery in cases where there has been corruption. This is particularly important in developing countries where stolen funds and assets could be used for reconstruction and development. A full listing of the signatories can be found at http://www.unodc.org/unodc/en/treaties/CAC/signatories.html. This details the current status of ratification of the convention.

Experiential Exercise: Discipline or Not? Purpose: The purpose of this exercise is to provide you with some experience in analyzing and handling an actual disciplinary action.

Required Understanding: Students should be thoroughly familiar with the facts of the following incident, titled “Botched Batch.” Do not read the “award” or “discussion” sections until after the groups have completed their deliberations.

How to Set up the Exercise/Instructions: Divide the class into groups of four or five students.

Each group should take the arbitrator’s point of view and assume that they are to analyze the case and make the arbitrator’s decision. Review the case again at this point, but please do not read the award and discussion sections. Each group should answer the following questions: 14-13: Based on what you read in this chapter, including all relevant guidelines, what would your decision be if you were the arbitrator? Why? 14-14: Do you think that after their experience in this arbitration the parties involved will be more or less inclined to settle grievances by themselves without resorting to arbitration?

Botched Batch Facts: A computer department employee made an entry error that botched an entire run of computer reports. Efforts to rectify the situation produced a second set of improperly run reports.

Because of the series of errors, the employer incurred extra costs of $2,400, plus a weekend of overtime work by other computer department staffers. Management suspended the employee for 3 days for negligence, and revoked a promotion for which the employee had previously been approved. Protesting the discipline, the employee stressed that she had attempted to correct her error in the early stages of the run by notifying the manager of computer operations of her

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mistake. Maintaining that the resulting string of errors could have been avoided if the manager had followed up on her report and stopped the initial run, the employee argued that she had been treated unfairly because the manager had not been disciplined even though he compounded the problem, whereas she was severely punished. Moreover, citing her “impeccable” work record and management’s acknowledgment that she had always been a “model employee,” the employee insisted that the denial of her previously approved promotion was “unconscionable.”

(Please do not read beyond this point until after you have answered the two questions.)

Award: The arbitrator upholds the 3-day suspension, but decides that the promotion should be restored.

Discussion: “There is no question,” the arbitrator notes, that the employee’s negligent act “set in motion the train of events that resulted in running two complete sets of reports reflecting improper information.” Stressing that the employer incurred substantial cost because of the error, the arbitrator cites “unchallenged” testimony that management had commonly issued 3-day suspensions for similar infractions in the past. Thus, the arbitrator decides, the employer acted with just cause in meting out an “evenhanded” punishment for the negligence. Turning to the denial of the already approved promotion, the arbitrator says that this action should be viewed “in the same light as a demotion for disciplinary reasons.” In such cases, the arbitrator notes, management’s decision normally is based on a pattern of unsatisfactory behavior, an employee’s inability to perform, or similar grounds. Observing that management had never before reversed a promotion as part of a disciplinary action, the arbitrator says that by tacking on the denial of the promotion in this case, the employer substantially varied its disciplinary policy from its past practice. Because this action on management’s part was not “evenhanded,” the arbitrator rules, the promotion should be restored.

Application Case: Enron, Ethics, and Organizational Culture 14-15: Based on what you read in this chapter, summarize in one page or less how you would explain Enron’s ethical meltdown.

Lax oversight by the six-person audit committee was a major contributor to the collapse of the firm. Executives carried out a series of complex financial transactions designed to remove debt from the balance sheet and artificially inflate the revenue.

14-16: It is said that when one securities analyst tried to confront Enron’s CEO about the firm’s unusual accounting statements, the CEO publicly used vulgar language to describe the analyst, and that Enron employees subsequently thought doing so was humorous. If true, what does that say about Enron’s ethical culture?

Enron promoted a culture of reckless financial deals, avarice, and deceit. A sense of social responsibility, ethical behavior, and respect appeared completely absent.

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14-17: This case and chapter had something to say about how organizational culture influences ethical behavior. What role do you think culture played at Enron? Give five specific examples of things Enron’s CEO could have done to create a healthy ethical culture.

Create an independent external board of directors to oversee the goals and corporate strategies, create and implement effective auditing practices, select a CEO who is responsible for the ethical behavior of the organization, remove the CEO if not effective, and encourage employees to report unethical behavior and take appropriate corrective counseling.

Continuing Case: Carter Cleaning Company – Guaranteeing Fair Treatment 14-18: What would you do if you were Jennifer, and why?

The difficulty is that even though they have always “felt strongly about not allowing employees to smoke, eat, or drink in their stores,” they had apparently never established any policies about this. Given this, it seems appropriate to give them a strong verbal warning, including the explanation that future violations will result in more severe disciplinary action.

14-19: Should a disciplinary system be established at Carter Cleaning Centers?

Definitely, a corrective coaching program should be implemented immediately. This type of program will help employees understand why their behavior/performance is not meeting standards. It will also help protect the organization from future litigation claims.

In this situation, the staff may not have realized the severity of their actions.

14-20: If so, what should it cover? How would you suggest it deal with a situation such as the one with the errant counter people?

It should cover all behavior and performance that is expected of employees. It would identify the steps of the process, including verbal warnings, written warnings, and dismissal.

14-21: How would you deal with the store manager?

The real question is whether the store manager knew about their beliefs about eating in the store. If he or she did, then a written warning is appropriate – if not, then a strong verbal warning is the best action.

Hotel Paris: Improving Performance at the Hotel Paris – The Hotel Paris’s New Ethics, Justice, and Fair Treatment Process ..

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14-22: Based on what you learned in this chapter, what do you think of the adequacy and effectiveness of the steps Lisa has taken so far?

Student answers will vary however, it was very smart of Lisa to do her research and present a fully thought-out plan to the board. Student answers will be more robust.

14-23: List three more specific steps Hotel Paris should take with respect to each individual human research function (selection, training, and so on) to improve the level of ethics in the company.

Answers will vary. However, some possible steps would be to incorporate honesty testing in selection, to train employees using ethics cases, and to discipline immediately and severely for ethics breaches on the part of any employee.

14-24: Based on what you learned in this chapter, write a short (less than one page) explanation Lisa can use to sell to top management the need to further improve the hotel chain’s fairness and justice processes.

Senior leadership should be educated that claims of unfair treatment can be both expensive and expansive. Litigation to defend a claim can be costly and result in an unpopular reflection of the organization in the media. Also, recent cases have included personal liability on the part of senior management. Senior management can have the most significant impact on creating and maintaining a culture of fair treatment.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 14-25: What techniques would you use as alternatives to traditional discipline? Why do you think alternatives like these are important, given industry’s need today for highly engaged and committed employees?

14-26: Using several “Best Companies to Work For” as examples, explain what you would do to improve employee relations in an organization.

Key Terms: Employee Relations – The activity that involves establishing and maintaining the positive employee–employer relationships that contribute to satisfactory productivity, motivation, morale, and discipline, and to maintaining a positive, productive, and cohesive work environment.

Fair Treatment – Reflects concrete actions, such as “employees are treated with respect,” and “employees are treated fairly.”

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Procedural Justice – Refers to just procedures in the allocation of rewards or discipline in which the actual results or outcomes are evenhanded and fair.

Distributive Justice – Refers to a system of distributing rewards and discipline in which the actual results or outcomes are evenhanded and fair.

Social Responsibility – Refers to the extent to which companies should and do channel resources toward improving one or more segments of society other than the firm’s owners or stockholders.

Organizational Climate – The perceptions a company’s employees share about the firm’s psychological environment; for instance, in terms of things like concern for employee’s wellbeing, supervisory behavior, flexibility, appreciation, ethics, empowerment, political behaviors, and rewards.

Suggesstion Teams – Temporary teams whose members work on specific analytical assignments, such as how to cut costs or raise productivity.

Problem-Solving Teams – Teams that identify and research work processes and develop solutions to work-related problems.

Quality Circle – A special type of formal problem-solving team; usually composed of 6 to 12 specially trained employees who meet once a week to solve problems affecting their work area.

Self-Managed/Self-Directed Work Team – A small (usually 8 to 10 members) group of carefully selected, trained, and empowered employees who basically run themselves with little or no outside supervision, usually for the purpose of acomplishing a specific task or mission.

Ethics – The study of standards of conduct and moral judgment; also the standards of right conduct.

Organizational Culture – The characteristics values, traditions, and behaviors a company’s employees share.

Electronic Communications Privacy Act (ECPA) – The ECPA is a federal law intended to help restrict interception and monitoring of oral and wire communications.

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Part Five Enrichment Topics in Human Resource Management Chapter 15 Labor Relations and Collective Bargaining Lecture Outline: The Labor Movement Improving Performance: The Strategic Context Why Do Workers Organize?

Employee Engagement and Unionization What Do Unions Want?

The AFL-CIO and the SEIU Unions And The Law Period of Strong Encouragement: The Norris LaGuardia (1932) and National Labor Relations (or Wagner) Acts (1935) Period of Modified Encouragement Couple with Regulations: The Taft-Hartley Act 1947 Unfair Union Labor Practices The Union Drive and Election Step 1. Initial Contact Step 2. Obtaining Authorization Cards Step 3. Hold a Hearing Step 4. The Campaign Step 5. The Election How to Lose an NLRB Election Evidence-Based HR: What to Expect the Union to do to Win the Election The Supervisor’s Role Know Your Employment Law Decertification Elections: Ousting the Union Improving Performance: HR Practices Around the Globe The Collective Bargaining Process What Is Collective Bargaining?

What Is Good Faith?

The Negotiating Team Costing the Contract Bargaining Items Building Negotiating Skills Bargaining Hints Impasses, Mediation, and Strikes Trends Shaping HR: Digital and Social Media The Contract Agreement Dealing With Disputes And Grievances ..

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Sources of Grievances The Grievance Procedure Guidelines for Handling Grievances Improving Performance: HR Tools For Line Managers and Small Businesses The Union Movement Today And Tomorrow What Are Unions Doing About It Cooperative Clause Improving Performance: HR Around the Globe Chapter Review

Where Are We Now… The main purpose of this chapter is to help you deal effectively with unions and grievances.

After briefly discussing the history of the American labor movement, we describe the basic law, including unfair labor practices. We explain labor negotiations, including the union actions you can expect during the union campaign and election. And we explain what you can expect during the actual bargaining sessions, and how to handle grievances.

Interesting Issues: Some people call Costco “The Anti-Walmart,” because Costco treats its workers and unions so well. Whereas Walmart is known for difficult labor relations (it said, for instance, it was eliminating health insurance for future employees working under 24 hours per week), Costco actually keeps profits up in part with positive labor relations policies. We’ll see how they do it.

Learning Objectives: 15-1: 15-2: 15-3: 15-4: 15-5: 15-6:

Give a brief history of the American labor movement.

Discuss the main features of at least three major pieces of labor legislation.

Present examples of what to expect during the union drive and election.

Illustrate with examples of bargaining that is not in good faith.

Develop a grievance procedure.

Describe a strategy for cooperative labor relations.

Annotated Outline: I. The Labor Movement – unions have changed dramatically since their creation. Today over 14 million U.S. workers belong to unions. Unions, in many cases, are perceived in a negative light, but this is a poor assumption to make. Most unions are in the public sector as compared to the private sector.

A. Improving Performance: The Strategic Context

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B. Why Do Workers Organize? – the urge to unionize often seems to boil down to the belief on the part of workers that it is only through unity that they can get their fair share of the pie. It is sometimes the result of workers trying to protect themselves from management’s whims. Union workers tend to receive significantly more pay, holidays, sick leave, unpaid leave, insurance plan benefits, long-term disability benefits, and various other benefits than nonunion workers do. Unions seem to have reduced the impact of downsizings and wage cuts in most industries, in part because union employees are not entirely “at will.”

C. Employee Engagement and Unionization – paying attention to employee engagement levels within your organization helps to foster positive relationships between employees and management and decreases the likelihood of a workforce seeking union representation.

D. What Do Unions Want? – Unions have two sets of aims − one for union security and one for improved wages, hours, working conditions, and benefits for their members.

1. Union Security – the five types of union security are closed shop, union shop, agency shop, preferential shop, and maintenance of membership arrangement.

2. Improved Wages, Hours, and Benefits – the typical labor agreement also gives the union a role in other HR activities, including recruiting, selecting, compensating, promoting, training, and discharging employees.

E. The AFL-CIO and the SEIU – the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) is a voluntary federation of about 57 national and international labor unions in the United States. The AFL and CIO merged in 1955. The three layers of structure in the AFL-CIO are the local union (a single chapter in a national union), the national union, and the national federation. Changes have occurred recently.

Four big unions have withdrawn from the AFL-CIO and have established the Change to Win Coalition. The Service Employees International Union (SEIU) is one of them. They are the fastest growing federation with more than 2.2 million members.

II. Unions and the Law – there were no special labor laws until about 1930, so employers were virtually unrestrained in their behavior toward unions. Since the Great Depression, in response to changing public attitudes, values, and economic conditions, labor law has gone through three clear changes: from strong encouragement of unions, to modified encouragement coupled with regulation, and finally, to detailed regulation of internal union affairs.

A. Period of Strong Encouragement: The Norris-LaGuardia (1932) and the National Labor Relations (or Wagner) Acts (1935) – the Norris-LaGuardia Act guaranteed to each employee the right to bargain collectively free from interference, restraint, or coercion, but it did little to restrain employers from fighting labor organizations. The National Labor Relations (Wagner) Act of 1935 (1) banned certain unfair labor practices; (2) provided for secret-ballot elections and majority rule for determining whether a firm’s employees were to unionize; and (3) created the National Labor Relations Board (NLRB) for enforcing these two provisions.

1. Unfair Employer Labor Practices – as deemed by the Wagner Act, a) it is unfair for employers to interfere with, restrain, or coerce employees in exercising their legally sanctioned right of self-organization; b) it is unfair for company representatives to dominate or interfere with either the formation or the

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administration of labor unions; c) companies are prohibited from discriminating in any way against employees for their legal union activities; d) employers are forbidden to discharge or discriminate against employees simply because the latter file unfair practice charges against the company; and e) it is unfair for employers to refuse to bargain collectively with their employees’ duly chosen representatives.

2. From 1935 to 1947 – union membership increased quickly after passage of the Wagner Act in 1935, but the tide had begun to turn by the mid-1940s.

B. Period of Modified Encouragement Coupled with Regulation: The Taft-Hartley Act (1947) – the law amended the Wagner Act with provisions aimed at limiting unions in four ways: (1) by prohibiting unfair union labor practices, (2) by enumerating the rights of employees as union members, (3) by enumerating the rights of employers, and (4) by allowing the President of the United States to temporarily bar national emergency strikes.

C. Unfair Union Labor Practices – according to the Taft-Hartley Act, a) unions cannot restrain or coerce employees from exercising their guaranteed bargaining rights; b) unions cannot cause an employer to discriminate in any way against an employee in order to encourage or discourage his/her membership in a union; c) unions cannot refuse to bargain in good faith with the employer about wages, hours, and other employment conditions (certain strikes and boycotts are also unfair union labor practices); and d) unions cannot engage in featherbedding.

1. Rights of Employees – the Taft-Hartley Act protects employees from their unions.

2. Rights of Employers – the Taft-Hartley Act explicitly gives employers full freedom to express their views concerning union organization. The only major restraint is that employers must avoid threats, promises, coercion, and direct interference with workers who are trying to reach a decision. The employer (1) cannot meet with employees on company time within 24 hours of an election or (2) suggest to employees that they vote against the union while they are at home or in the employer’s office, although he/she can do so while in their work area or where they normally gather.

3. National Emergency Strikes – the Taft-Hartley Act allows the U.S. President to intervene in national emergency strikes. The President may appoint a board of inquiry and, based on its report, apply for an injunction restraining the strike for 60 days. If the parties don’t reach a settlement during that time, the President can have the injunction extended for another 20 days, during which time employees take a secret ballot to ascertain their willingness to accept the employer’s last offer.

4. Period of Detailed Regulation of Internal Union Affairs: The Landrum-Griffin Act (1959) (officially, the Labor Management Reporting and Disclosure Act) – an amendment to the Wagner Act, it is aimed at protecting union members from possible wrongdoing on the part of their unions. This law provides a bill of rights for union members; lays out rules regarding union elections; regulates the kind of person who can serve as a union officer; greatly expands the list of

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unlawful employer actions; and requires reports from unions and employers, covering such practices as the use of labor relations consultants.

5. Labor Law Today – unions are pushing for new legislation today that would substantially improve union’s efforts; although on the other hand, economic realities (shrinking state budgets, for instance) have undoubtedly reduced union membership.

III. The Union Drive and Election – there are five basic steps: A. Step 1. Initial Contact – the union determines the employees’ interest in organizing, and an organizing committee is established. The initiative for the first contact between the employees and the union may come from the employees, from a union already representing other employees of the firm, or from a union representing workers elsewhere. Once an employer becomes a target, a union official usually assigns a representative to assess employee interest. He/she identifies employees who would make a good organizing committee, and educates them on the benefits of forming a union, the law and procedures involved in forming a local union, and the issues management is likely to raise during a campaign. The union must follow certain rules when it starts contacting employees.

1. Labor Relations Consultants are outside advisors (such as law firms, researchers, psychologists, labor relations specialists, or public relations firms) used by both management and unions to provide advice and related services to assist in the winning of elections.

2. Union Salting is an organizing tactic by which full-time undercover union organizers are hired by unwitting employers. A U.S. Supreme Court decision held the practice to be legal. Critics claim that “salts” interfere with business operations and harass employees.

B. Step 2. Obtaining Authorization Cards – this step is necessary for the union to petition the NLRB for the right to hold an election. Thirty percent of the eligible employees in an appropriate bargaining unit must sign authorization cards before the union can petition the NLRB for an election. During this stage, both union and management typically use various forms of propaganda. However, neither side can threaten, bribe, or coerce employees, and an employer may not make promises that benefit employees or make unilateral changes in terms and conditions of employment.

C. Step 3. Hold a Hearing – one of three things can occur once the union collects the authorization cards: 1) no hearing is needed if the employer chooses not to contest union recognition and a consent election is held immediately; 2) if the employer chooses not to contest the union’s right to an election, and/or scope of the bargaining unit, and/or which employees are eligible to vote in the election, no hearing is needed and the parties can stipulate an election; or 3) if an employer does wish to contest the union’s right, it can insist on a hearing to determine those issues. An employer’s decision about whether to insist on a hearing is a strategic one based on the facts of each case and whether it feels it needs additional time to develop a campaign to try to persuade a majority of its employees not to elect a union to represent them. The hearing addresses several issues.

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If the results of the hearing are favorable for the union, the NLRB will order holding an election, issue a Notice of Election to that effect, and send NLRB Form 707.

D. Step 4. The Campaign – during this stage, the union and the employer appeal to employees for their votes, but neither side can threaten, bribe, or coerce employees.

E. Step 5. The Election – a secret ballot election is held within 30 to 60 days after the NLRB issues its Decision and Direction of Election. The NLRB provides the ballots, voting booth, and ballot box, and counts the votes and certifies the results of the election. The union becomes the employees’ representative if it wins the election by a majority of the votes cast.

F. How to Lose an NLRB Election – the four sure ways to lose an election are: 1. Asleep at the switch 2. Appointing a committee 3. Concentrating on money and benefits 4. Delegating too much to division G. Evidence-Based HR: What to Expect the Union to Do to Win the Election – research suggests that pursuing a “rank and file strategy” is the best way for unions to win elections.

H. The Supervisor’s Role – supervisors are an employer’s first line of defense when it comes to the unionizing effort. Supervisors need some special training because they can discover the early signs of union activity or they can inadvertently take actions that hurt their employers’ union-related efforts. Supervisors must be knowledgeable about what they can and can’t do to legally hamper organizing activities.

1. Some TIPS: The Supervisor’s Role in the Unionizing Effort – one company helps its supervisors remember what they may and may not do with respect to unionization with the acronyms TIPS and FORE. For example, the manager should remember TIPS for what he or she may not do: threaten, interrogate, promise, or spy. To remember what to do to discourage unionization, the supervisor may remember FORE: facts, opinion, rules, and experience.

I. Know Your Employment Law – Rules Regarding Literature and Solicitation J. Decertification Elections: Ousting the Union – the same law that grants employees the right to unionize also gives them a way to legally terminate their union’s right to represent them, which is known as decertification. Decertification campaigns don’t differ much from certification campaigns.

K. Improving Performance: HR Practices Around the Globe IV. The Collective Bargaining Process A. What Is Collective Bargaining? – according to the National Labor Relations Act, collective bargaining “is the performance of the mutual obligation of the employer and the representatives of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and terms and conditions of employment, or the negotiation of an agreement, or any question arising thereunder, and the execution of a written contract incorporating any agreement reached if requested by either party, but such obligation does not compel either party to agree to a proposal or require the making of a concession.”

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B. What Is Good Faith? – in collective bargaining, good faith means that both parties communicate and negotiate, that proposals are matched with counterproposals, and that both parties make every reasonable effort to arrive at an agreement.

C. The Negotiating Team – both union and management send a negotiating team to the bargaining table. It is vital that the team understand the impact, particularly the financial impact, of the things they either propose or accept in negotiations.

D. Costing the Contract – collative bargaining experts emphasize the need to cost the union’s demands carefully – know how it will impact you financially.

E. Bargaining Items – labor law sets out categories of items that are subject to bargaining: mandatory, voluntary, and illegal items. Mandatory items are items that a party must bargain over if they are introduced by the other party. Voluntary (permissible) items are neither mandatory nor illegal; they become a part of the negotiations only through the joint agreement of both management and union. Illegal items are forbidden by law.

F. Building Negotiating Skills – hammering out a satisfactory labor agreement requires negotiating skills. Experienced negotiators use leverage, desire, time, competition, information, credibility, and judgment to improve their bargaining positions. Leverage means factors that help or hinder the negotiator.

G. Bargaining Hints – according to expert Reed Richardson, the following is advise for bargainers: Be sure you have set clear objectives for every bargaining item, and you understand on what grounds the objectives are established; do not hurry; when in doubt, caucus with your associates; be well prepared with firm data supporting your position; always strive to keep some flexibility in your position; don’t just concern yourself with what the other party says and does – find out why; respect the importance of face saving for the other party; constantly be alert to the real intentions of the other party with respect not only to goals but also priorities; be a good listener; build a reputation for being fair but firm; learn to control your emotions – don’t panic; be sure as you make each bargaining move that you know its relationship to all other moves; measure each move against your objectives; pay close attention to the wording of every clause negotiated; remember that collective bargaining negotiations are, by their nature, part of a compromise process; try to understand people and their personalities; and remember that excessive bargainer transparency and openness can backfire.

H. Impasses, Mediation, and Strikes 1. Third Party Involvement – three types of third-party interventions are used to overcome an impasse: mediation, fact-finding, and arbitration. With mediation a neutral third party tries to assist the principals in reaching agreement. A fact finder is a neutral party who studies the issues in a dispute and makes a public recommendation of what a reasonable settlement ought to be. Arbitration (binding or unbinding) can guarantee a solution to an impasse because the arbitrator often has the power to determine and dictate the settlement terms. Various public and professional agencies make mediators and arbitrators available.

2. Sources of third-party assistance come from various public and professional agencies.

3. Strikes – is a withdrawal of labor. There are four types of strikes: economic strike, unfair labor practice strike, wildcat strike, and sympathy strike. An economic strike results from a failure to agree on the terms of a

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contract that involve wages, benefits, and conditions of employment.

Unfair labor practice strikes are called by unions to protest illegal conduct by the employer. A wildcat strike is an unauthorized strike occurring during the term of a contract. Picketing, or having employees carry signs announcing their concerns near the employer’s place of business is one of the first activities that occur during a strike.

4. Strike Guidelines for Employees – several guidelines are discussed that can minimize confusion during a strike.

5. Other “weapons” – to break an impasse include corporate campaigns and boycotts. A corporate campaign is an organized effort by the union that exerts pressure on the corporation by pressuring the company’s other unions, shareholders, directors, customers, creditors, and government agencies, often directly. A boycott is a refusal by employees and other interested parties to buy or use the employer’s product.

I. Trends Shaping HR: Digital and Social Media J. The Contract Agreement may be 20-30 pages or longer, and the main sections cover these subjects: 1) management rights, 2) union security and automatic payroll dues deduction, 3) grievance procedures, 4) arbitration of grievances, 5) disciplinary procedures, 6) compensation rates, 7) hours of work and overtime, 8) benefits: vacations, holidays, insurance, pensions, 9) health and safety provisions, 10) employee security seniority provisions, and 11) contract expiration date.

V. Dealing with Disputes and Grievances A. Sources of Grievances – employees may use just about any factor involving wages, hours, or conditions of employment as the basis of a grievance.

B. The Grievance Procedure – it is specified in most collective bargaining contracts; it specifies the various steps in the procedure, time limits, and specific rules. Union grievance procedures differ from firm to firm.

C. Guidelines for Handling Grievances – Do’s: As a manager, do investigate and handle each and every case as though it may eventually result in an arbitration hearing; talk with the employee about his/her grievance; require the union to identify specific contractual provisions allegedly violated; comply with the contractual time limits of the company for handling the grievance; visit the work area of the grievance; determine whether there were any witnesses; examine the grievant’s personnel record; fully examine prior grievance records; treat the union representative as your equal; hold your grievance discussions privately; and fully inform your own supervisor of grievance matters.

Don’ts: discuss the case with the union steward alone – the grievant should be there; make arrangements with individual employees that are inconsistent with the labor arrangement; hold back the remedy if the company is wrong; admit the binding effect of a past practice; relinquish to the union your rights as a manager; settle grievances on the basis of what is fair – stick to the labor agreement; bargain over items not covered by the contract; treat as subject to arbitration claims demanding the discipline or discharge of managers; give long written grievance answers; trade a grievance settlement for a grievance withdrawal; deny grievances on the premise that your “hands have been tied by management;” and do not agree to informal amendments in the contract.

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VI. The Union Movement Today and Tomorrow – union membership has gradually declined in America from about 20% of the workforce in 1938 (when 17.8 million workers belonged to unions), to about 11% ( just over 14 million workers) recently.

A. What Are Unions Doing About it – unions are becoming more aggressive and becoming more proactive in coordinating their efforts including extending them abroad. Several recent NLRB decisions have supported union efforts.

B. Cooperative Clauses – parties commit to adhere to one or more of these cooperative themes (in descending order of frequency-of-mention in the agreements): 1. Intent to cooperate 2. A statement of commitment to cooperate 3. Committees to review mutual concerns that arise 4. Decisions on traditional issues 5. Guarantees of employment security 6. Commitments to high-performance practices 7. Decisions on strategic issues 8. Full cooperation C. Improving Performance: HR Around the Globe

Chapter Review Chapter Section Summaries: 15-1: The labor movement is important. About 14 million U.S. workers belong to unions – about 11% of the total.

15-2: To understand unions and their impact, one should understand the interplay between unions and the law.

15-3: When unions begin organizing, all managers and supervisors usually get involved, so it’s essential to understand the mechanics of the union drive and election.

15-4: The employer and union hammer out an agreement via the collective bargaining process.

15-5: Most managers become involved with disputes and grievances during their careers.

15-6: Membership is down but unions are still influential today, so it’s important to understand the union movement today and tomorrow.

Discussion Questions: 15-1: Why do employees join unions? What are the advantages and disadvantages of being a union member?

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

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15-2: Discuss four sure ways to lose an NLRB election.

The four sure ways to lose an election are listed and described in the text: 1) being asleep at the switch; 2) appointing a committee; 3) concentrating on money and benefits; and 4) delegating too much to divisions or branches.

15-3: Briefly explain the purpose of trade unions with the help of examples.

Trade unions seek to obtain better conditions and higher pay for the workers they represent and play a role in negotiating redundancies. They also represent employees on an individual basis in discipline and other cases. They can act as a counterbalance to what some see as excessive management power were also and are heavily involved in the political scene in some countries.

15-4: Explain the steps involved in collective bargaining.

Employers and Trade Unions bargain collectively in good faith with respect to pay and working conditions. Negotiating in good faith means that unions and employers offer proposals and counter-proposals to each other in a reasonable effort to reach an agreement.

15-5: What steps should a business take when an employee strike is impending?

The chapter suggests several steps that the business should take, however, these are generally U.S. reactions and based on U.S. law and practices. The actual steps taken by the business may depend on local laws and conditions. Amongst the steps that can be taken include ensuring that all striking workers have been paid up to date; securing the premises; notifying customers and suppliers; preparing a standardized response (press release); investigate means to secure any necessary supplies and how they will be brought onto the site; arranging for overnight accommodation on site if necessary; contact employment offices for back-up temporary workers; install surveillance (in case of damage or break-ins); and monitor the demonstrations and picket lines.

Individual and Group Activities: 15-6: Working individually or in groups, use the Internet and do some research on a dispute legislation in your country. Do you think it has been effective?

Answers will depend on students’ own research. They could attempt to find the relevant legislation on government websites and statistics to help them make a judgment on its effectiveness such as working days lost through industrial action. They could also access news media Web sites to find stories about notable cases of industrial action.

15-7: Working individually or in groups, use Internet resources to identify industries that have had a relatively high number of industrial disputes. Suggest reasons why this

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has been the case. Is it easier to organize strikes in some industries? Why or why not? Explain with examples.

Answers will depend on students’ own research. However, they should find that certain industries such as manufacturing lend themselves to organizing collectively, thus less manufacturing in some developed nations has been a factor in union decline. There is also often a high density of union membership in the public sector, and a low density in industries where many employees work on a part time or temporary basis.

15-8: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

Material from this chapter that would be relevant to the HRCI test includes: history of the American Union Movement, why workers organize, what do unions want, the AFL-CIO, unions and the law, the union drive and election, the collective bargaining process, grievances, and the union movement today and tomorrow. In short, virtually the entire chapter is applicable to material covered on the test.

15-9: In the United Kingdom, in the 1970s, unions had used their collective power to strike in essential service industries, such as electricity and oil refineries. The purpose of such strikes was to influence government policies and improve union workers’ pay. The government of the day even called an election on the basis of who actually controlled the country. Would you consider it legitimate for unions to use their power in this way? If not, what should be the legitimate aims for trade unions?

Opinions may vary depending on how unions are viewed in the students’ country. The British Labour Party was formed partly by trade unionists and unions have also more recently been a force for social change and free elections in Poland. However many believe that unions should only represent workers for fair pay and conditions, and politics.

Experiential Exercise: The Union-Organizing Campaign at Sam’s Cupcake Shop Purpose: The purpose of this exercise is to give you practice in dealing with some of the elements of a union-organizing campaign.

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Required Understanding: You should be familiar with the material covered in this chapter, as well as the following incident, “The Organizing Campaign at Sam’s Cupcake Shop.”

Incident: Sam’s Cupcake Shop sells baked goods (croissants, cupcakes, rolls, cakes, etc.) and serves light meals such as breakfast and salads through its chain of ten small retail stores in the borough of Manhattan in New York City. Each store is staffed with about 9 employees (plus one manager), some of whom do the cooling and some of whom staff the counter and sell the food items. As with Sam’s other stores, the Sam’s Cupcake Shop on First Avenue is staffed primarily with recent (legal) immigrants to America, all of who are paid at or just above minimum wage.

It was no secret that at least one New York City agency was pressing (in 2015) for food service owners to raise the minimum wage for food service employees to $15 per hour. Everything at the First Avenue store seemed to be going smoothly, but that apparent tranquility ended abruptly in July 27, 2015. That was the day that Anesha, the First Avenue store’s manager called Taylor Brook, Sam Cupcake’s human resource manager, to tell her that they had “an employee problem.”

The problem, Anesha said, was that she’d heard from a few employees that the Service Employees International Union was trying to organize Sam’s Cupcake Store employees.

Taylor’s first reaction was one of caution, particularly because food service employees are historically difficult to organize –“they don’t stay in their jobs long enough to unionize them,” to paraphrase one union leader. Unfortunately, Anesha said she had already taken what she called “sensible steps” to blunt the unionization effort. She had, first, explained to her employees that if costs went up because they unionized, then “we’d probably have to close this shop.” She said she also promised better work schedules if they “ignored” the union, and told them they were prohibited from discussing union matters during work time. “And don’t worry” she said to Taylor, “I’ve got a list of the employees who are pushing for the union.”

The more Anesha talked, the more concerned Taylor became, not just with the union but with the possible consequences of Anesha’s efforts. She wondered particularly if Anesha’s actions could cause problems down the road for Sam’s Cupcakes with the NLRB. As it turned, she didn’t have long to wait for an answer. The following week pickets from the union and its supporters appeared in front of the First Avenue store carrying signs decrying the company’s “unfair labor practices.” At that point Sam came into Taylor’s office and said, “if they think they can railroad me into giving them big raises they are wrong; I am closing that store down.” Taylor was in a quandary as to how to reply to Sam, and in general, what she should she.

How to Set up the Exercise/Instructions: Divide the class into groups of several students.

Assume that you are labor relations consultants retained by Taylor to identify the problems and issues involved and to advise Taylor and Sam of the company’s right and obligations, as well as the implications of what’s transpired so far, add finally what to do next. Each group will spend the time allotted discussing the issues. Then, outline those issues, as well as an action plan for Taylor and Sam. What should they do next? Can Sam really close the store down?

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If time permits, a spokesperson from each group should list on the board the issues involved and the group’s recommendations.

Student responses will vary but should use the information found in the text to explain and defend their answers: including the Do’s and Don’ts, TIPS, and FORE.

Application Case: Negotiating with Dutch Airline Pilots Association (VNV) 15-10: Do you agree with Elbers that this agreement represents a significant leg of the journey towards creating a more competitive and healthy KLM? If yes then what makes it so and if no then why not?

The answer would be yes. The negotiations between both parties appeared to be in good faith. Their communications were honest and attempted to make a reasonable effort to arrive at a realistic agreement for both. This provided a win-win situation that endorsed the statement of Mr. Elbers. However, at least a year would be necessary to satisfactorily determine the level of this negotiation’s success, as it would be difficult to draw conclusions based only on the information available at such an early stage of the agreement.

15-11: Would a similar deal be possible for any major regional or flag carrier airline of your own country? In answering, state the reasoning with examples, for a likely or an unlikely outcome.

Students’ answers will vary. Such a deal depends on multiple factors like the commitment of all the stakeholders, the level of the overall performance of the firm, and the possibility of some benefits for both the parties. However, in such situations/negotiations, top management would prefer to have an effective deal over any unlikely outcome to avoid any conflict with the employees. Confrontation with employees almost always results in a loss to the company, whether it is in terms of low employee commitment or low revenues. The bargaining process described in this application case is no different from the day-to-day negotiations between any union and the top management of an organization. The most common issues in such situations are related to compensation and fringe benefits, working hours, and working conditions.

15-12: Is it a sustainable agreement based on the available information? What other factors could have made it more effective?

Based on the benefits mentioned in the case, it appears to be a good deal for both the parties. The pilots seem to be happy with the additional fringe benefits resulting from this deal. KLM should be able complete the stated time frame of three years without going through any further issues or problems with Dutch Airline Pilots Association and Vereniging Nederlandse Verkeersvliegers (VNV). A review committee consisting of members from both sides to review any unforeseen events would have made it even more sustainable.

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Other factors that may have strengthened this deal and lead to sustainable outcomes would include providing benefits for VNV members to complete the agreed term of this negotiation or to be able to support themselves after the end of the agreed three years’ period.

15-13: What role (with examples) did negotiating skills seem to play in the KLM-VNV negotiations?

Experienced negotiators use several negotiation skills mentioned in the chapter, like desire, time, information, credibility, and judgment to help improve their bargaining positions for labour agreements. Lengthy and intense negotiations took place between KLM’s top management and VNV’s delegation for several months. Timing played a role as well as marathon bargaining sessions which worked to make each side more flexible and reach an agreement. Also, the credibility and judgement on the sides of both parties, especially KLM’s top management’s to invest in a new KLM, played a role in moving both parties toward an agreement.

Continuing Case: Carter Cleaning Company – The Grievance 15-14: Do you think it is important for Carter Cleaning Company to have a formal grievance process? Why or why not?

Certainly it is important for many reasons. First, it is important from a standpoint of justice and fair treatment. Second, the lack of justice and fair treatment is a prime catalyst for union activity.

15-15: Based on what you know about the Carter Cleaning Company, outline the steps in what you think would be the ideal grievance process for this company.

Because it is a small company, it should be simple and short. One suggestion is a twostep process that begins with a written appeal to the store manager. The second step is to send that appeal to Jennifer and her father for review.

15-16: In addition to the grievance process, can you think of anything else that Carter Cleaning Company might do to make sure grievances and gripes like this one are expressed and are heard by top management?

The grievance procedure is critical. Students may identify many things from the previous chapter’s sections on justice and fair treatment.

The Hotel Paris: Improving Performance at the Hotel – The Hotel Paris’s New Labor Relations Practices

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15-17: List and briefly describe what you believe are the three most important steps Hotel Paris management can take now to reduce the likelihood unions will organize more of its employees.

Hotel Paris should train managers and supervisors to recognize the signs of union activity and to deal with it. They should also develop a procedure whereby employees can air their grievances in a productive manner (an appeals process.) Third, the company needs to constantly and positively communicate the benefits their employees have by staying non-union.

15-18: Write a detailed two-page outline for a “What You Need to Know When the Union Calls” manual. Lisa will distribute this manual to her company’s supervisors and managers, telling them what they need to know about looking out for possible unionizing activity, and how to handle actual organizing process–related supervisory tasks.

Student responses will vary but should use the information found in the text to explain and defend their answers which including the Do’s and Don’ts, TIPS, and FORE.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab.

15-19: Describe important tactics you would expect the union to use during the union drive and election.

15-20: Why, would you say, workers join unions and what would you as a manager do to make it less likely your employees would want to join a union a your workplace.

Key Terms: Closed Shop – A form of union security in which the company can hire only union members.

This was outlawed in 1947 but still exists in some industries (such as printing).

Union Shop – A form of union security in which the company can hire nonunion people, but they must join the union after a prescribed period of time and pay dues. (If they do not, they can be fired.)

Agency Shop – A form of union security in which employees who do not belong to the union must still pay union dues on the assumption that union efforts benefit all workers.

Preferential Shop – Union members get preference in hiring, but the employer can still hire nonunion members.

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Right to Work – A term used to describe state statutory or constitutional provisions banning the requirement of union membership as a condition of employment.

Norris-LaGuardia Act of 1932 – This law marked the beginning of the era of strong encouragement of unions and guaranteed to each employee the right to bargain collectively "free from interference, restraint, or coercion."

National Labor Relations (or Wagner) Act (NLRA) – This law banned certain types of unfair labor practices and provided for secret-ballot elections and majority rule for determining whether or not a firm's employees want to unionize.

National Labor Relations Board (NLRB) – The agency created by the Wagner Act to investigate unfair labor practice charges and to provide for secret-ballot elections and majority rule in determining whether or not a firm's employees want a union.

Taft-Hartley Act of 1947 – Also known as the Labor Management Relations Act, this law prohibited unfair union labor practices and enumerated the rights of employees as union members. It also enumerated the rights of employers.

National Emergency Strikes – Strikes that might "imperil the national health and safety."

Landrum-Griffin Act of 1959 – Also known as the Labor Management Reporting and Disclosure Act, this law is aimed at protecting union members from possible wrongdoing on the part of their unions.

Union Salting – A union-organizing tactic by which workers who are in fact employed full-time by a union as undercover organizers and are hired by unwitting employers.

Authorization Cards – In order to petition for a union election, the union must show that at least 30% of employees may be interested in being unionized. Employees indicate this interest by signing authorization cards.

Bargaining Unit – The group of employees the union will be authorized to represent.

Decertification – Legal process for employees to terminate a union’s right to represent them.

Collective Bargaining – The process through which representatives of management and the union meet to negotiate a labor agreement.

Good Faith Bargaining – Both parties are making every reasonable effort to arrive at agreements; proposals are being matched with counterproposals.

Voluntary (or permissible) Bargaining items – Items in collective bargaining over which bargaining is neither illegal nor mandatory – neither party can be compelled against its wishes to negotiate over those items.

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Illegal Bargaining Items – Items in collective bargaining that are forbidden by law; for example, the clause agreeing to hire "union members exclusively" would be illegal in a right-towork state.

Mandatory Bargaining – Items in collective bargaining that a party must bargain over if they are introduced by the other party – for example, pay.

Impasse – Collective bargaining situation that occurs when the parties are not able to move farther toward settlement, usually because one party is demanding more than the other is willing to offer.

Mediation – Intervention in which a neutral third party tries to assist the principals in reaching agreement.

Fact Finder – A neutral party who studies the issues in a dispute and makes a public recommendation for a reasonable settlement.

Arbitration – The most definitive type of third-party intervention, in which the arbitrator usually has the power to determine and dictate the settlement terms.

Interest Arbitration – Arbitration enacted when labor agreements do not yet exist or when one or both parties are seeking to change the agreement.

Rights Arbitration – Arbitration that interprets existing contract terms, for instance, when an employee questions the employer’s right to have taken some disciplinary action.

Strike – A withdrawal of labor.

Economic Strike – A strike that results from a failure to agree on the terms of a contract that involve wages, benefits, and other conditions of employment.

Unfair Labor Practice Strike – A strike aimed at protesting illegal conduct by the employer.

Wildcat Strike – An unauthorized strike occurring during the term of a contract.

Sympathy Strike – A strike that takes place when one union strikes in support of another.

Picketing – Having employees carry signs announcing their concerns near the employer’s place of business.

Corporate Campaign – An organized effort by the union that exerts pressure on the corporation by pressuring the company’s other unions, shareholders, directors, customers, creditors, and government agencies, often directly.

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Boycott – The combined refusal by employees and other interested parties to buy or use the employer's products.

Inside Games – Union efforts to convince employees to impede or to disrupt production – for example, by slowing the work pace.

Lockout – A refusal by the employer to provide opportunities to work.

Injunction – A court order compelling a party or parties either to resume or to desist from a certain action.

Grievance Procedure – Formal process for addressing any factor involving wages, hours, or conditions of employment that is used as a complaint against the employer.

Co-determination – An employee representation system in which workers elect their own representatives to the supervisory (management) board of the employer and have the legal right to a voice in setting company policies on matters such as company organization, hiring, and performance appraisal.

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Part Five Enrichment Topics in Human Resources Management Chapter 16 Safety, Health, and Risk Management Lecture Outline: Introduction: Safety and the Manager Why Safety Is Important Improving Performance: HR as a Profit Center Management’s Role in Safety Improving Performance: The Strategic Context The Supervisor’s role in Accident Prevention Manger’s Briefing on Occupational Safety Law OSHA Standards and Record Keeping Inspections and Citations Responsibilities and Rights of Employers and Employees Improving Performance: HR Tools for Line Managers and Small Businesses Trends Shaping HR: Digital and Social Media What Causes Accidents?

What Causes Unsafe Conditions?

What Causes Unsafe Acts?

How to Prevent Accidents Reducing Unsafe Conditions Diversity Counts: Protecting Vulnerable Workers Reducing Unsafe Acts Reducing Unsafe Acts Through Screening Reducing Unsafe Acts Through Training Improving Performance Through HRIS: Online Safety Training Reducing Unsafe Acts Through Posters, Incentives, and Positive Reinforcement Improving Performance: HR as a Profit Center Reducing Unsafe Acts by Fostering a Culture of Safety Reducing Unsafe Acts by Creating a Supportive Environment Reducing Unsafe Acts by Establishing a Safety Policy Reducing Unsafe Acts by Setting Specific Loss Control Goals Reducing Unsafe Acts Through Behavior-Based and Safety Awareness Programs Reducing Unsafe Acts Through Employee Participation Trends Shaping HR: Digital and Social Media Conducting Safety and Health Audits and Inspections Employee Engagement Guide for Managers Milliken & Company—World-Class Safety Through Employee Engagement Involvement-Based Employee Engagement ..

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Workplace Health Hazards: Problems and Remedies Chemicals and Industrial Hygiene Improving Performance: HR Practices Around the Globe Know Your Employment Law: Hazard Communication Asbestos Exposure at Work and Air Quality Alcoholism and Substance Abuse Stress, Burnout, and Depression Solving Computer-Related Ergonomic Problems Repetitive Motion Disorders Infectious Diseases Workplace Smoking Occupational Security and Risk Management Enterprise Risk Management Preventing and Dealing with Violence at Work Securing the Facility Company Security and Employee Privacy Business Continuity and Emergency Plans Trends Shaping HR: Digital and Social Media Twitter Notifications Terrorism Chapter Review

Where Are We Now..

The main purpose of this chapter is to provide you with knowledge managers need to reduce workplace safety and health problems. The main topics we discuss are safety and the manager; manager’s briefing on occupational safety law; what causes accidents; how to prevent accidents; employee engagement based safety programs; workplace health hazards – problems and remedies; and occupational security and risk management.

Interesting Issues: When it comes to safety strategy, the explosion and fire on British Petroleum’s (BP’s) Deepwater Horizon rig in the Gulf of Mexico back in 2010 still stands out for what can go wrong. The blast took the lives of 11 workers. Reports from the scene said a malfunctioning blowout preventer failed to activate, causing the disaster. Past critics of BP’s safety practices weren’t so sure.

Learning Objectives: 16-1: Explain the supervisor’s role in safety.

16-2: Explain the basic facts about safety law and OSHA.

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Answer the question, “What causes accidents?”

List and explain five ways to prevent accidents at work.

Describe how one company uses employee engagement to improve workplace safety.

List five workplace health hazards and how to deal with them.

Discuss the prerequisites for a security plan and how to set up a basic security program.

Annotated Outline: I. Introduction: Safety and the Manager A. Why Safety Is Important – safety and accident prevention concern managers for several reasons, one of which is the staggering number of workplace accidents.

B. Improving Performance: HR as a Profit Center C. Management’s Role in Safety – reducing accidents often boils down to reducing accident-causing conditions and accident-causing acts. Most safety experts would agree that safety should start at the top.

D. Improving Performance: The Strategic Context E. The Supervisor’s Role in Accident Prevention – local supervisors are responsible for dayto-day inspections. Daily inspections should be part of a supervisor’s routine.

II. Manger’s Briefing on Occupational Safety Law – Congress passed the Occupational Safety and Health Act of 1970 “ to assure so far as possible every working man and woman in the nation safe and healthful working conditions and to preserve our human resources.” This act created the Occupational Safety and Health Administration (OSHA) within the Department of Labor.

A. OSHA Standards and Record Keeping – under OSHA, employers with 11 or more employees must maintain records of, and report occupational injuries and occupational illnesses, which are any abnormal conditions or disorders caused by inhalation, absorption, ingestion, or direct contact with toxic substances or harmful agents.

B. What The Employer Must Report – employers must report all occupational illnesses and injuries, specifically those that result in medical treatment (other than first aid), loss of consciousness, restriction of work, (one or more lost workdays), restrictions of motion, or transfer to another job.

C. Inspections and Citations – are how OSHA enforces its standards. The agency has limited funds so it tries to encourage cooperative safety programs as well.

1. The Inspection – it begins when the OSHA officer arrives at the workplace. He or she displays credentials and asks to meet an employer’s representative. (The credentials must include photograph and serial number). The OSHA inspector looks for all types of violations, but some areas grab more attention. The five most frequent OSHA inspection violations are: scaffolding, fall protection, hazard communication, lockout/tagout (electrical disengagement), and respiratory problems.

2. Penalties – OSHA can impose penalties. These generally range from $5000 up to $150,000 for willful or repeat serious violations but can be far higher. In general, OSHA calculates penalties based on the gravity of the violation and usually takes

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into consideration things like the size of the business, the firm’s compliance history, and the employer’s good faith.

D. Responsibilities and Rights of Employers and Employees – employers are responsible for providing a hazard-free workplace, being familiar with mandatory OSHA standards, and examining workplace conditions to make sure they conform to applicable standards.

Employers have the right to seek advice and off-site consultation from OSHA, request and receive proper identification of the OSHA compliance officer before inspection, and be advised by the compliance officer of the reason for an inspection. OSHA can’t cite employees for violations of their responsibilities. Employees are responsible for complying with all applicable OSHA standards, for following all employer safety and health rules and regulations, and for reporting hazardous conditions to the supervisor.

Employees have a right to demand safety and health on the job without fear of punishment. The act forbids employers from punishing or discriminating against workers who complain to OSHA about job safety and health hazards.

E. Improving Performance: HR Tools for Line Managers and Small Businesses F. Trends Shaping HR: Digital and Social Media III. What Causes Accidents? – there are three basic causes of workplace accidents: chance occurrences, unsafe conditions, and employees’ unsafe acts.

A. What Causes Unsafe Conditions? – unsafe conditions are a main cause of accidents such as improperly guarded equipment, defective equipment, hazardous procedures around machines or equipment, unsafe storage, improper illumination, and improper ventilation.

1. Safety Climate – work schedules and fatigue can affect accident rate. The workplace “climate” or psychology is very important. A strong pressure to complete the work as quickly as possible, employees who are under stress, and poor safety climate were some of the psychological conditions leading to accidents.

B. What Causes Unsafe Acts? – unfortunately, there are no easy answers to the question of what causes unsafe acts. The consensus is that accident proneness is situational. Some accident repeaters are just unlucky, or they may be more meticulous about reporting. Certain traits have been identified with accident proneness. For example, people who are impulsive, sensation seeking, extremely introverted, and less conscientious (in terms of being less fastidious and dependable) have more accidents.

IV. How to Prevent Accidents A. Reducing Unsafe Conditions – reducing unsafe conditions is always an employer’s first line of defense. Safety engineers should design jobs to remove hazards, and supervisors and managers should help identify and remove potential hazards.

1. Job Hazard Analysis – performing a job hazard analysis involves looking at the situation and asking the following questions: What can go wrong? What are the consequences? How could it happen? What are other contributing factors? The job hazard analysis should provide the basis for creating countermeasures.

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2. Operational Safety Reviews – are conducted by agencies to ascertain whether units under their jurisdiction are complying with all the applicable safety laws, regulations, orders, and rules.

3. Personal Protective Equipment (PPE) – protective gear should fit properly, be easy to care for, maintain, and repair; be flexible and lightweight; provide comfort and reduce heat stress; have rugged construction, be relatively easy to put on and take off; and be easy to clean, dispose of, and recycle.

B. Diversity Counts – Protecting Vulnerable Workers – in designing safe and healthy environments, employers should pay special attention to venerable workers, such as young, immigrant, aging, and women workers.

C. Reducing Unsafe Acts – human misbehavior will short-circuit even the best safety efforts. Sometimes misbehavior is intentional. Unfortunately, just telling employees to “pay attention” isn’t enough, employers should identify and try to eliminate potential risks, reduce potential distractions, and carefully screen and train employees.

D. Reducing Unsafe Acts through Screening – the basic aim is to identify the trait that might predict accidents on the job in question, and then screen candidates for this trait. Studies suggest that the Employee Reliability Inventory (ERI)—which measures reliability dimensions such as emotional maturity, conscientiousness, safe job performance, job simulation test, and physical capabilities—is also used.

E. Reducing Unsafe Acts through Training – training is especially appropriate for new employees. You should instruct employees in safe practices and procedures, warn them of potential hazards, and work on developing a safety-conscious attitude. OSHA’s standards require more than training. Employees must demonstrate they actually learned what to do. OSHA has published two booklets: “Training Requirements under OSHA” and “Teaching Safety and Health in the Workplace.” The main aim is to impart the knowledge and skills required to reduce accidents.

F. Improving Performance Through HRIS: Online Safety Training – many employers are turning to the Web to support their safety and training programs.

G. Reducing Unsafe Acts through Posters, Incentives, and Positive Reinforcement – safety posters are one, incentive programs are another, in which the emphasis is on nontraditional incentive like recognition, which should be a part of the comprehensive safety program.

H. Improving Performance: HR as a Profit Center: Using Positive Reinforcement – many employers use positive reinforcement to improve safety. This segment discusses the experience of a wholesale bakery. The firm set and communicated a reasonable goal; trained the employees; then posted a graph with their pre-training safety record plotted and a list of safety rules. Observers walked through collecting safety data to provide workers with feedback on their safety performance as a form of positive reinforcement.

I. Reducing Unsafe Acts by Fostering a Culture of Safety – employers and supervisors should create a safety-conscious culture by showing that they take safety seriously. A workplace with a safety-oriented culture exhibits the following: teamwork, communication and collaboration, shared vision, assignment, continuous effort, and encouragement.

J. Reducing Unsafe Acts by Creating a Supportive Environment – “Organizations can develop a supportive environment by training supervisors to be better leaders,

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emphasizing the importance of teamwork and social support, and establishing the value of safety.”

K. Reducing Unsafe Acts by Establishing a Safety Policy – the company’s written safety policy should emphasize that accident prevention is of the utmost importance at your firm, and that the firm will do everything practical to illuminate or reduce accidents and injuries.

L. Reducing Unsafe Acts by Setting Specific Loss Control Goals – set specific safety goals to achieve. For example, set safety goals in terms of frequency of loss-time injuries per number of full-time employees.

M. Reducing Unsafe Acts through Behavior-Based and Safety Awareness Programs – this involves identifying the worker behaviors that contribute to accidents and then training workers to avoid these behaviors.

N. Reducing Unsafe Acts through Employee Participation – there are at least two reasons to get the employees involved in designing the safety program. First, those actually doing the jobs are often management’s best source of ideas about what the potential problems are and how to solve them. Second, it is generally easier to get employees to accept and enthusiastically follow the safety program when they’ve had a hand in designing it.

O. Trends Shaping HR: Digital and Social Media P. Conducting Safety and Health Audits and Inspections – managers should inspect all premises for possible safety and health problems, using checklists as aids. All accidents and near misses should be investigated. A system should be in place for employees to notify management about hazardous conditions.

V. Employee Engagement Guide for Managers A. Milliken & Company—World class Safety Through Employee Engagement – founded in 1865 and is privately owned. It is the only company to consistently rank as a “most ethical company” for 15 years running. A survey of the employees found an 80% positive engagement level, based on questions concerning employees’ commitment, pride in the company, and empowerment efforts. Its extraordinary low workplace illness and injury rates means it consistently rates as one of the safest companies in which to work.

B. Involvement-Based Employee Engagement – this is the centerpiece of Milliken’s safety program. Employees staff the safety steering and safety subcommittee system, who then submit “opportunity for improvement” suggestions weekly, review each suggestion, and provide feedback on every suggestion.

VI. Workplace Health Hazards: Problems and Remedies A. Chemicals and Industrial Hygiene – first, the facility’s health and safety officers must recognize possible exposure hazards. The evaluation phase involves determining how severe the hazard is. Finally, the hazard control phase involves taking steps to eliminate or reduce the hazard so that it no longer ranks as dangerous.

B. Improving Performance: HR Practices Around the Globe C. Know Your Employment Law – Hazard Communication D. Asbestos Exposure at Work and Air Quality – there are four major sources of occupational respiratory diseases: asbestos, silica, lead, and carbon dioxide. Of these, asbestos has become a major concern. Air Quality –“Green” office buildings produce illnesses such as itchy eyes and troubled breathing. The solution is to monitor the air

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quality whenever they expect the level of asbestos to rise to one-half the allowable limit (0.1 fibers per cubic centimeter).

E. Alcoholism and Substance Abuse – about two-thirds of people with an alcohol disorder work full-time. Some estimate that almost 13 million workers use drugs illicitly.

Alcoholism may cost U.S. employers about $226 billion per year in higher absenteeism and accidents. For many employers, dealing with substance abuse begins with substance abuse testing. Drug-free workplace programs include five components: 1) A drug-free workplace policy, 2) Supervisor Training, 3) Employee Education, 4) Employee Assistance, and 5) Drug Testing.

F. Stress, Burnout, and Depression – can sometimes lead to alcoholism and drug abuse, which are problematic for both the employee and employer. A variety of external workplace factors can lead to job stress. Personal factors also influence stress – no two people react to the same job in the very same way. Human consequences of stress include anxiety, depression, anger, and various physical consequences. Organizational consequences include reductions in the quantity and quality of job performance, increased absenteeism and turnover, increased grievances, and increased health care costs. Stress is not necessarily dysfunctional; it can lead some people to be more productive and/or creative.

1. Reducing Job Stress – employees can reduce stress by getting more sleep, eating better, and negotiating with managers for realistic deadlines on important projects.

The three-step stress-reduction technique involves developing awareness, adjusting attitudes, and taking action. The HR department can take a positive role in reducing stress.

2. What The Employer Can Do – supportive supervisors and fair treatment are important. Reducing personal conflicts on the job and encouraging open communication between management and employees can help. Some employers use “resilience training” to help employees deal with stress.

3. Burnout – is the total depletion of physical and mental resources caused by excessive striving to reach an unrealistic work-related goal. Some suggestions for alleviating burnout include breaking your patterns; getting away from it all periodically; reassessing your goals in terms of their intrinsic worth; and thinking about your work.

4. Employee Depression – organizations must ensure that depressed employees use available support services. Employers need to train supervisors to identify depression’s warning signs and to counsel those who may need such services to use the firm’s employee assistance program. Depression is a disease.

G. Solving Computer-Related Ergonomic Problems – short-term eye problems (like burning, itching, tearing, eyestrain, and eye soreness), backaches, and neck-aches are common complaints among video display operators. The National Institute for Occupational Safety and Health (NIOSH) has several recommendations for reducing these problems.

H. Repetitive Motion Disorders – such disorders include carpal tunnel syndrome and tendonitis. Employees can reduce the issue if the pace of work is altered.

I. Infectious Diseases – with many employees traveling to and from international destinations, monitoring and controlling infectious diseases like H1N1, Ebola, and SARS has become an important safety issue. Obviously, employers must make provisions for ensuring that a returning employee does not inadvertently infect one or more colleagues.

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Employers can take a number of steps to prevent the entry or spread of infectious diseases into their workplaces. These steps include: 1. Closely monitor the Center for Disease Control and Prevention’s (CDC) travel alerts. Access this information at www.cdc.gov.

2. Provide daily medical screenings for employees returning from infected areas.

3. Deny access for 10 days to employees or visitors who have had contact with suspected infected individuals.

4. Tell employees to stay home if they have a fever or respiratory system symptoms.

5. Clean work areas and surfaces regularly. Make sanitizers containing alcohol easily available.

6. Stagger breaks. Offer several lunch periods to reduce overcrowding.

G. Workplace Smoking – the nature of the problem is serious for employees and employers.

Smokers have significantly greater risk of occupational accidents and higher absenteeism rates than nonsmokers. Smokers increase the cost of health and fire insurance.

VI. Occupational Security and Risk Management – workplace security relates to protecting employees from internal and external surety risks.

A. Enterprise Risk Management – is “the process of assessing exposures to loss within an operation and determining how best to eliminate, manage, or otherwise reduce the risk of an adverse event from having a negative impact on the business.” Companies face a variety of risks, only some of which are direct risks to employees’ health and safety.

Specific risks include, for instance, natural disaster risks, financial risks, and risks to the firm’s computer systems. Human capital risks would rank high. These include safety risks like those we discussed in this chapter as well as, for instance, risks from unionization and from inadequate staffing plans.

B. Preventing and Dealing with Violence at Work – violence against employees is one such internal preventable enterprise risk, and a huge problem. Human Resources can take several steps to reduce workplace violence risk which include the following: heighten security measures, improve employee screening, use workplace violence training, use guidelines for firing a high-risk employee, and awareness of violence toward women at work.

C. Securing the Facility – in simplest terms, instituting a basic security program requires four steps: analyzing the current level of risk, and then installing mechanical, natural, and organizational security systems.

D. Company Security and Employee Privacy – employers must consider employee privacy when using monitoring to investigate possible employee security breaches. Security programs often entail monitoring employee communications and workplace activities.

E. Business Continuity and Emergence Plans – the possibility of emergencies prompted by fires, attacks, and similar issues means that employers need facility continuity and emergency plans. One source estimates that 40% of companies never reopen after suffering business disruptions from a major catastrophe, so putting a disaster plan in place is imperative. Such plans should cover early detection of a problem, methods for communicating the emergency externally, and communications plans for initiating an evacuation.

F. Trends Shaping HR: Digital and Social Media – Twitter notifications.

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G. Terrorism – the employer can take several steps to protect its employees and physical assets from a terrorist attack. These steps, now familiar at many workplaces, include: 1. Screen the identities of everyone entering the premises.

2. Check mail carefully.

3. Identify ahead of time a lean “crisis organization” that can run the company on an interim basis after a terrorist threat.

4. Identify in advance under what conditions you will close the company down, as well as the shutdown process.

5. Institute a process to put the crisis management team together.

6. Prepare evacuation plans and make sure exits are well marked and unblocked.

7. Designate an employee who will communicate with families and off-site employees.

8. Identify an upwind, off-site location near your facility to use as a staging area for all evacuated personnel.

9. Designate in advance several employees who will do headcounts at the evacuation staging area.

10. Establish an emergency text-messaging policy and procedure to notify affected individuals that an emergency may exist.

Chapter Review Chapter Section Summaries: 16-1: The subject safety and the manager concerns managers for several reasons, one of which is the number of workplace accidents.

16-2: All managers need to be familiar with occupational safety laws.

16-3: There are three basic causes of workplace accidents: chance occurrences, unsafe conditions, and employees’ unsafe acts.

16-4: In practice, how to prevent accidents boils down to reducing unsafe conditions and reducing unsafe acts.

16-5: The centerpiece of Milliken’s safety process is its involvement-based employee engagement program.

16-6: Most workplace health hazards aren’t obvious, like unguarded equipment.

16-7: Most employers today have occupational security and risk management programs.

Discussion Questions: 16-1: What is a management’s role in health and safety? How can an employer encourage a “safety climate”?

The key responsibility is to prevent health and safety problems, or to reduce or eliminate (ideally but not always possible) unsafe acts, processes, and behavior. Management must respond to dangers in the workplace and minimize accidents. An unsafe condition is a situation that may trigger an accident. A safety climate aims to prevent unsafe conditions from occurring in the first place. In some cases, the pace of work and the requirement to

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achieve a certain level productivity may create an unsafe climate. Accident rates are low at the beginning of work periods, but as employees overwork themselves and hit new levels of fatigue, accidents increase. Creating safety climates involves off-setting these potential incidents, ensuring sufficient employee breaks and manpower and restricting overtime hours for employees.

16-2: Can safety really imply higher profits?

Students will differ on this as a concept. The chapter suggests that a fall in accidents and safety problems in the workplace result in a fall in injury claims and compensation (including insurance premiums). There would also be a fall in disruption due to the smooth running of the organization as areas would be investigated, upgraded or closed after an incident.

16-3: Explain what causes unsafe acts.

People are the main cause of unsafe acts. Some researchers say that certain personal characteristics are the basis for behavioral tendencies that result in unsafe acts. There are several human traits that contribute to accident proneness, and they are listed in the chapter. There is also a list of some examples of unsafe acts.

16-4: Should organizations discriminate against those with “accident” traits?

The chapter suggests that measures such as the ERI will successfully screen out people with these traits. Face to face interviews are also effective. Students’ views will vary as to whether this is discrimination or simply the organization protecting itself (and individuals) from being involved in situations where they could come to harm as a result of their inherent traits.

16-5: Explain how you would reduce stress at work.

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

Individual and Group Activities: 16-6: Working individually or in groups, choose a manual task and carry out a job hazard analysis. Incorporate the following in your analysis: • What can go wrong?

• What are the consequences?

• How could it happen?

• What are other contributing factors?

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This is a practical task that could be achieved by the students focusing on a manual task that they may have carried out by themselves, by interviewing someone who does this kind of work or by observation. The students should be able to identify all of the key issues that could contribute to an accident or incident as a result of undertaking such work.

16-7: Instances of substance abuse can be found across the world in many different situations, workplaces, and job roles. How can a business create a substance-abuse or drug-free program?

The essential issue is to state that the workplace must be a substance- and drug-free environment and to adopt a zero-tolerance policy towards it. The basic steps include: writing and distributing a drug-free workplace policy; provide supervisor training; running employee education events; providing employee assistance and carrying out random drug testing.

16-8: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

Management Commitment and Safety, What Causes Accidents?, How to Prevent Accidents, Workplace Health Hazards: Problems and Remedies, and Occupational Security, Safety, and Health in a Post 9/11 World. In short, virtually the entire chapter is applicable to the test.

16-9: A safety journal presented some information about what happens when OSHA refers criminal complaints about willful violations of OSHA standards to the U.S. Department of Justice (DOJ). In one 20-year period, of the 119 cases OSHA referred to the DOJ, only 9 resulted in prison time for at least one of the defendants.

“The Department of Justice is a disgrace,” charged the founder of an organization for family members of workers killed on the job. One possible explanation for this low conviction rate is that the crime in cases like these is generally a misdemeanor, not a felony, and the DOJ generally tries to focus its attention on felony cases. Given this information, what implications do you think this has for how employers and their managers should manage their safety programs, and why do you take that position?

Hopefully students will understand that it really should not have any implication as to how they should manage their safety programs. Just as was discussed in Chapter 14 on

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Ethics, Justice, and Fair Treatment, the legal implications should be the least of the motivations for doing what is right. Just because the penalties may not be severe is not a reason to allow unsafe conditions to exist.

16-10: Knowingly or unknowingly, employers can contribute to employee burnout. Despite steps employers might try to take to avoid this, ultimately, it is the individual employee’s responsibility to recognize signs of burnout and to try to create a coping strategy. Suggest what an individual can do in such situations.

A good way to handle the problem at a personal level would be to follow the advice outlined by Herbert Freudenberger. In his book, How to Beat the High Cost of Success, he makes a number of useful suggestions: the individual should try to break his or her normal patterns of work; try and get away from the work from time to time, reassess goals in terms of their intrinsic worth (re-evaluate previously set goals); think about doing the work in a less intensive manner and to stay active (take up a sport or do exercises).

Experiential Exercise: How Safe Is My University?

Purpose: The purpose of this exercise is to give you practice in identifying unsafe conditions.

Required Understanding: You should be familiar with material covered in this chapter, particularly on unsafe conditions and Figures 16-6 and 16-8.

How to Set up the Exercise/Instructions: Divide the class into groups of four. Assume that each group is a safety committee retained by your college’s or university’s safety engineer to identify and report on any possible unsafe conditions in and around the school building. Each group will spend about 45 minutes in and around the building you are now in for the purpose of identifying and listing possible unsafe conditions. (Make use of the checklists in Figures 16-6 and 16-8.) Return to the class in about 45 minutes. A spokesperson for each group should list on the board the unsafe conditions you have identified. How many were there? Do you think these also violate OSHA standards? How would you go about checking?

Application Case: A Safe and Healthy Kitchen at Edmund Café 16-11: Based on your knowledge of health and safety at the work- place and your observations on kitchen operation, make a comprehensive list of the potential hazardous conditions employees and customers face at Edmund Café. How should Edmund go about identifying hazardous conditions?

Burns, slips, trips, falls, fire and stove explosions are some of the potential hazardous conditions. Edmund should look out for heat sources in the kitchen that may cause hazardous conditions such as ovens, grills, deep fryers, microwave ovens, boiling water, and steam bath. In addition, Edmund should look out possible scenarios when employees

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might be affected if they experience burnout and stress. For instance, heat-resistant gloves should be used when handling hot items and cut protection gloves should be used when using sharp knives the likelihood of accidents when employees are fatigue would be largely reduced.

16-12: Do you think Edmund should screen out accident-prone and stress-prone job applicants? Assuming that it is advisable, what can Edmund do to set up a procedure for screening out accident-prone staff?

Some students may think that it is advisable for Edmund to screen out accident-prone and stress-prone job applicants. Edmund can ask applicants to do up a personality test or a questionnaire that would test for accident-prone characteristics to screen out accidentprone staff. However, some may feel that screening out accident-prone and stress-prone job applicants may raise ethical issues.

16-13: Give specific recommendations on what Edmund can do to get his staff to behave more safely at work. In addition, suggest what Edmund can do to reduce stress and burnout among employees.

Edmund could provide safety gear such as aprons, gloves, shoes for all employees to encourage safety at work. In addition, Edmund could organize appropriate training with relevant learning outcomes and incentives promoting safety at work. Edmund could fix the number of working hours for the employees and ensure no one exceeds them.

Edmund could also a supportive environment for his staff to work as a team to manage the stress level in the kitchen.

16-14: Research the Singapore Workplace Safety and Health (WSH) Act and identify the key responsibilities that Edmund has under that act as an employer.

Edmund will be required to carry out risk assessments to identify hazards and implement effective risk control measures and make sure that the work environment is safe. He would also be responsible for ensuring that he has adequate safety measures with regard to machinery, equipment, plant, article or processes used at the workplace in place. He would then be expected to develop and implement systems for dealing with emergencies and make sure that all of his workers are given instructions, training and supervision so they can work safely.

Source: This case is based on personal communications between the author and the café owner.

Continuing Case: Carter Cleaning Company – The New Safety Program 16-15: How should the firm go about identifying hazardous conditions that should be rectified? Use checklists such as those in Figures 16-6 and 16-8 to list at least 10 possible dry-cleaning store hazardous conditions.

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Using the information provided in the case, Internet research, and their personal knowledge, students should be able to list at least ten potential hazards in a dry-cleaning store, if not more. This hazard should not be limited to chemical, but should include physical, mechanical, and electrical hazards as well.

16-16: Would it be advisable for the firm to set up a procedure for screening out accidentprone individuals? How should they do so?

There are a number of issues here. One likely question from students is whether accident-prone behavior can change with training or incentives. In most cases, training and incentives can resolve the problem. Some students may argue that screening out employees who are accident-prone raises ethical issues.

16-17: How would you suggest the Carters get all employees to behave more safely at work? Also, how would you advise them to get those who should be wearing goggles to do so?

The student should suggest that Carter’s management contact OSHA for assistance in developing safety policies and procedures on the job, along with including suggestions discussed in the chapter. They should also make it clear that those who violate the policies will be disciplined, and then follow up by doing it. If employees see that management is serious about it and that they will be disciplined, or even lose their jobs, they will begin to use them.

The Hotel Paris: Improving Performance at the Hotel Paris – The New Safety and Health Program 16-18: Based on what you read in this chapter, what’s the first step you would have advised the Hotel Paris to take as part of its new safety and health program, and why?

According to the text, reducing unsafe conditions is always an employer’s first line of defense. Lisa should work on designing jobs to remove hazards and supervisors, and managers should help identify and remove potential hazards immediately. They can then focus on other aspects of safety awareness and training.

16-19: List 10 specific high-risk areas in a typical hotel you believe Lisa and her team should look at now, including examples of the safety or health hazards that they should look for there.

Answers will vary. The case notes several areas, including the pool, the valet parking area, and chemical storage areas. Additionally, guest areas like bathtubs will be of concern.

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16-20: Give three specific examples of how Hotel Paris can use HR practices to improve its safety efforts.

Workers’ compensation costs have been high, so Lisa can measure a reduction in the number of claims, or in total claim costs, lost time injuries, etc. The hotel can also measure the number and severity of violations that are found on internal safety inspections.

16-21: Write a one-page summary addressing the topic, “How improving safety and health at the Hotel Paris will contribute to us achieving our strategic goals.”

This summary should include reduced costs, employee satisfaction and safety, guest safety and health, and increased revenues.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 16-22: Based on everything you read in this chapter, what is Milliken doing “right” that you believe helps to explain why they have such a good safety record?

16-23: Describe the steps employers can take to reduce workplace violence.

Key Terms: Occupational Safety and Health Act of 1970 – The law passed by Congress in 1970 "to assure so far as possible every working man and woman in the nation safe and healthful working conditions and to preserve our human resources."

Occupational Safety and Health Administration (OSHA) – The agency created within the Department of Labor to set safety and health standards for almost all workers in the United States.

Occupational Illness – Any abnormal condition or disorder caused by exposure to environmental factors associated with employment.

Citation – Summons informing employers and employees of the regulations and standards that have been violated in the workplace.

Unsafe Conditions – The mechanical and physical conditions that cause accidents.

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Job Hazard Analysis – A systematic approach to identifying and eliminating workplace hazards before they occur.

Operational Safety Reviews – Reviews conducted by agencies to ascertain whether units under their jurisdiction are complying with all the applicable safety laws, regulations, orders, and rules.

Behavior-Based Safety – Identifying the worker behaviors that contribute to accidents and then training workers to avoid these behaviors.

Safety Awareness Program – Program that enables trained supervisors to orient new workers arriving at a job site regarding common safety hazards and simple prevention methods.

Burnout – The total depletion of physical and mental resources caused by excessive striving to reach an unrealistic work-related goal.

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Part Five Enrichment Topics in Human Resource Management Chapter 17 Managing Global Human Resources

Lecture Outline: The Manager’s Global Challenge What Is International Human Resource Management?

Adapting Human Resource Activities to Intercountry Differences Cultural Factors Economic Systems HR Abroad Example: The European Union HR Abroad Example: China Improving Performance: HR Practice Around the Globe Staffing the Global Organization International Staffing: Home or Local?

Improving Performance: HR as a Profit Center Trend Shaping HR: Digital and Social Media Management Values and International Staffing Policy Ethics and Codes of Conduct Selecting International Managers Diversity Counts: Sending Women Managers Abroad Avoiding Early Expatriate Returns Improving Performance: HR Tools for Line Managers and Small Businesses Training and Maintaining Employees Abroad Orienting and Training Employees on International Assignment Performance Appraisal of International Managers Compensating Managers Abroad Union Relations Abroad Terrorism, Safety, and Global HR Improving Performance: HR Practices Around the Globe Repatriation: Problems and Solutions Employee Engagement Guide for Managers Engagement Around the Globe Managing HR Locally: How to Put into Practice a Global HR System Improving Performance: The Strategic Context Developing a More Effective Global HR System Making the Global HR System More Acceptable Implementing the Global HR System Chapter Review ..

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Where Are We Now… The purpose of this chapter is to improve your effectiveness at applying your human resource knowledge and skills when global challenges are involved. The topics we’ll discuss include the manager’s global challenge, adapting human resources activities to intercountry differences, staffing the global organization, training and maintaining employees abroad, employee engagement globally, and managing HR locally: how to implement a global HR system.

Interesting Issues: A few years ago the Japanese industrial giant Hitachi embarked on a strategy to streamline its business into six market-based but integrated groups around the world, and to meld these into what is called “One Hitachi.” Its HR group needed a new human resource strategy to support this. We’ll see what they did.

Learning Objects: 17-1: 17-2: 17-3: 17-4:

List the HR challenges of international business.

Illustrate with examples how intercountry differences affect HRM. List and briefly describe the main methods for staffing global organizations.

Discuss some important issues to keep in mind in training, appraising, and compensating international employees.

17-5: Discuss similarities and differences in employee engagement around the globe.

17-6: Explain with examples how to implement a global human resource management program.

Annotated Outline: I. The Manager’s Global Challenge – global challenges include understanding that what may work in one country may not work in another. There is an array of political, social, legal, and cultural differences among countries and people abroad.

A. What Is International Human Resource Management? – employers rely on international human resource management (IHRM) to deal with global HR challenges like these. We can define IHRM as the human resource management concepts and techniques employers use to manage the human resource challenges of their international operations. IHRM generally focuses on three main topics: 1. Managing human resources in global companies (for example, selecting, training, and compensating employees who work abroad).

2. Managing expatriate employees (those the employer sends abroad).

3. Comparing human resource management practices in different countries.

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II. Adapting Human Resource Activities to Intercountry Differences A. Cultural Factors – countries differ widely in their cultures, which are the basic values to which their citizens adhere. Cultural differences from country to country necessitate corresponding differences in management practices among a company’s subsidiaries because local cultural norms can undermine employer’s attempts to have uniform codes of conduct.

1. The Hofstede Study – Professor Geert Hofstede illustrates international cultural differences. Hofstede says societies differ in five values: power distance, individualism, masculinity, uncertainty avoidance, and long-term orientation.

2. Legal Factors – employers expanding abroad must also be familiar with the labor laws in the countries they’re entering.

B. Economic Systems – translate into differences in intercountry HR practices. The three systems are market economies, planned economies, and mixed economies.

C. HR Abroad Example: The European Union – the EU refers to the unification of separate European countries in the 1990s into a common market for goods, services, capital, and labor. EU directives are binding on all member countries, which necessitate adjustments to both EU directives and individual country laws. Variances in HR practices affect minimum EU wages, working hours, and employee representation.

D. HR Abroad Example: China – it implemented a new labor contract which adds numerous new employment protections for employees and makes it correspondingly more expensive for employers to implement certain personnel actions. There are wide variations in how companies in China deal with HR issues such as recruiting, selection, compensation, and labor unions.

E. Improving Performance: HR Practice Around the Globe III. Staffing the Global Organization A. International Staffing: Home or Local? – multinational companies (MNCs) employ several types of international managers. Locals are citizens of the countries where they are working. Expatriates (“expats”) are non-citizens of the countries in which they are working. Home-country nationals are citizens of the country in which the multinational company has its headquarters. Third-country nationals are citizens of a country other than the parent or the host-country. More flexible expatriate assignments involving no formal relocation are becoming increasingly popular and are aided by technological advances.

B. Improving Performance: HR as a Profit Center C. Trending Shaping HR: Digital and Social Media D. Management Values and International Staffing Policy – ethnocentric firms staff foreign subsidiaries with parent-country nationals because they believe that home country attitudes, management styles, and knowledge are superior to anything the host-country would offer. Polycentric-run firms staff foreign subsidiaries with hostcountry nationals because they are the only ones that can really understand the culture and the behavior of the host-country market. Geocentric firms staff foreign subsidiaries with the best people for key jobs regardless of nationality because they

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believe that the best manager for any specific position anywhere on the globe may be in any of the countries in which the firm operates.

E. Ethics and Codes of Conduct – employers should have set policies on things like discrimination, harassment, bribery, and Sarbanes-Oxley.

F. Selecting International Managers – is similar to selecting domestic managers, but firms need to determine whether managers for foreign assignments can cope internationally. Selection criteria include technical/professional skills, expatriates’ willingness to go, experience in the country, personality factors (including flexibility), leadership skills, the ability to work with teams, and previous performance appraisals in the selection process.

G. Diversity Counts: Sending Women Managers Abroad – while women represent about 50% of the middle management talent in U.S. companies, they represent only 20% of managers sent abroad. What accounts for this? Many misperceptions still exist. Line managers make these assignments, and many assume that women don’t want to work abroad, are reluctant to move their families abroad, or can’t get their spouses to move.

In fact, this survey found, women do want international assignments, they are not less inclined to move their families, and their male spouses are not necessarily reluctant.

H. Avoiding Early Expatriate Returns – international assignments fail for various reasons including personality, the person’s intentions, and non-work factors. Family pressures are frequent. Three things help the adjustment: language fluency, having preschool age children rather than school-age or no children, and a strong bond of closeness between spouse and ex-pat partner.

I. Improving Performance: HR Tools for Line Managers and Small Businesses IV. Training and Maintaining Employees Abroad A. Orienting and Training Employees on International Assignment – international assignees do best when they receive special training. Some recommended programs aim to provide the following: (1) the basics of the new country's history, politics, business norms, education system, and demographics; (2) an understanding of how cultural values affect perceptions, values, and communications; and (3) examples of why moving to a new country can be difficult, and how to manage these challenges.

B. Performance Appraisal of International Managers Appraising Managers Abroad – the appraisal process can be improved by: 1. Adapt the performance criteria to the local job and situation.

2. Weighing the evaluation more toward the on-site manager’s appraisal than toward the home-site manager’s.

3. If the home-office manager does the actual written appraisal, having him or her use a former expatriate from the same overseas location for advice.

C. Compensating Managers Abroad – compensation presents some tricky problems due to the question of whether or not to maintain companywide pay scales and policies.

Companies may be faced with three choices: 1) continue paying based on the person’s current home-country, 2) pay based on what locals in the new country are paid, or 3) pay so the person’s home-country standard of living stays the same. The balance sheet approach is the most common approach to formulating expatriate pay and use of incentives.

D. Union Relations Abroad – differ from those in the United States.

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E. Terrorism, Safety, and Global HR – new federal anti-terrorism laws are affecting an employer’s ability to import and export workers.

1. Taking Protective Measures – many firms have instituted more comprehensive safety plans abroad including evacuation plans to get employees to safety.

2. Kidnapping and Ransom (K&R) Insurance – since hiring crisis teams and paying ransoms can be prohibitively expensive, many employers buy kidnapping and ransom insurance. The insurance itself typically covers several costs associated with kidnappings, abductions, or extortion attempts. These costs might include, for instance, hiring a crisis team, the actual cost of the ransom payment to the kidnappers or extortionists, insuring the ransom money in case it’s lost in transit, legal expenses, and employee death or dismemberment.

F. Improving Performance: HR Practices Around the Globe G. Repatriation: Problems and Solutions – some common repatriation problems are fearing that out of sight is out of mind; returning to mediocre or makeshift jobs; returnees are taken aback when the trappings of the overseas job are lost upon return; being overlooked for promotions; and experiencing culture shock. Some possible solutions are written repatriation agreements, sponsors, career counselors, open communications, and reorientation programs.

V. Employee Engagement Guide for Managers A. Engagement Around the Globe – the global average of engaged employees is about 61%. The top drivers of employee engagement around the globe is career opportunities.

VI. Managing HR Locally: How to Put into Practice a Global HR System – global companies seek to be integrated.

A. Improving Performance: The Strategic Context B. Developing a More Effective Global HR System 1. Form global HR networks.

2. Remember that it’s more important to standardize ends and competencies than specific methods.

C. Making the Global HR System More Acceptable 1. Remember global systems are more accepted in truly global organizations.

2. Investigate pressures to differentiate and determine their legitimacy.

3. Try to work within the context of a strong corporate culture.

D. Implementing the Global HR System 1. Remember, “You can’t communicate enough.”

2. Dedicate adequate resources for the global HR effort.

Chapter Review Chapter Section Summaries: 17-1: Dealing with global human resource challenges as a manager isn’t easy.

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17-2: The need for adapting human resources activities to intercountry differences influences employers’ HR processes.

17-3: Staffing the global organization is a major challenge.

17-4: After selecting the employees to send abroad, attention turns to training and maintaining your expatriate employees.

17-5: The worldwide trend is for employee engagement to converge around the current global average of about 61% of employees engaged.

17-6: With employers increasingly relying on local rather than expatriate employees, it’s important for managers to understand how to implement a global HR system.

Discussion Questions: 17-1: You are the president of a small business. What are some of the ways you expect “going international” will affect HR activities in your business?

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

17-2: What are some of the specific, uniquely international activities an international HR manager typically engages in?

Formulating and implementing HR policies and activities in the home-office of a multinational company. This HRM manager would engage in selecting, training, and transferring parent-company personnel abroad and formulating HR policies for the firm as a whole and for its foreign operations. Conducting HR activities in the foreign subsidiary of an MNC is another form. Again, local HR practices are often based on the parent firm's HR policies, fine-tuned for local country practices.

17-3: What intercountry differences affect HRM? Give several examples of how each may affect HRM. 1) Cultural Factors – U.S. managers may be most concerned with getting the job done.

Chinese managers may be most concerned with maintaining a harmonious environment.

Hispanic managers may be more concerned with establishing trusting, friendship relationships. 2) Economic Factors – U.S. economic systems tend to favor policies that value productivity, while more socialistic countries like Sweden would favor policies that prevent unemployment. 3) Labor Cost Factors – Mexican labor costs (low) can allow inefficiencies of labor, while German labor costs (high) might require a focus on efficiency. 4) Industrial Relations Factors – German law requires that workers have a vote in setting policies, while in Japan the employees do not have a say, but the government may have a say in establishing policies. 5) The European Community – The EC will gradually reduce the differences between member countries.

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17-4: You are new to the HR department of a global hotel chain in the Middle East. You note the chain hires French individuals for front-of-house jobs and Italians for their kitchen and waiting staff. In terms of recruitment, what do you think this trend indicates?

This is an example of the recruitment of third country nationals. The chain may have been unable to find the required candidates within their own country and have developed a style and approach over time that focuses on hiring employees of various nationalities to work for them, which is also a selling point for their customers. While this may have proven to be advantageous to the chain, there is a degree of stereotyping in this approach to recruitment.

17-5: As an HR manager, what program would you establish to reduce repatriation problems of returning expatriates and their families?

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

Individual and Group Activities: 17-6: Imagine that you are an HR advisor for a business based in your country, which is not based in the EU. Advise the business on how EU law and directives impact HR. EU laws and directives are very comprehensive in respect of employment and HR policies, procedures and practices. They are, arguably, the most complex and wide ranging in the world. The key considerations should include: minimum wages, working hours, and termination of contracts.

17-7: The Hofstede study illustrates cultural differences that exist in various countries.

Professor Geert Hofstede contends that societies differ in five values: power distance, individualism, masculinity, uncertainty avoidance, and long-term orientation. Go to www.geerthofstede.com/hofstede_dimensions.php, and comment on his findings for your country. How do these cultural differences influence HR policies and practices?

Hofstede’s website offers a comprehensive view of most countries. It is a fascinating insight into different cultures and could prove to be the basis for further research and comparisons in the field of HRM. A full description of his dimensions should also be investigated in order to contextualize the information on each of the specific countries.

17-8: As the HR manager of an international business you have been asked to prepare a briefing for other HR professionals in the business. You need to outline HR’s role in facilitating future offshoring operations planned by the business. Prepare a short brief covering the main issues.

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HR plays a pivotal role in offshoring operations. They are involved at various different levels. The student will be able to identify the following: helping to choose the site like incorporating total labor costs, understanding of the local labor market, assessing the businesses employment related reputation, and how to integrate the local workforce; recruitment and selection, like dealing with skills shortages, handling bulk hiring programs and screening; and handling retention including setting target attrition rates and identifying strategies to reduce attrition.

17-9: Use a library or Internet source to determine the relative cost of living in five countries as of this year, and explain the implications of such differences for drafting a pay plan for managers being sent to each country.

The most common approach is to equalize purchasing power across the countries, a technique known as the balance sheet approach. The basic idea is that each expatriate should enjoy the same standard of living he or she would have had at home.

17-10: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

The material from this chapter that is applicable to the HRCI certification exam would include: the HR challenges of international business, how intercountry differences affect HRM, global differences and similarities in HR practice, how to implement a global HR system, staffing the global organization, and training and maintaining expatriate employees.

17-11: An issue of HR Magazine contained an article titled “Aftershocks of War,” which said that soldiers returning to their jobs from Iraq would likely require HR’s assistance in coping with “delayed emotional trauma.” The term delayed emotional trauma refers to the personality changes such as anger, anxiety, or irritability that exposure to the traumatic events of war sometimes triggers in returning veterans.

Assume you are the HR manager for the employer of John Smith, who is returning to work next week after 1 year in Iraq. Based on what you read in this chapter, what steps would you take to help smooth John’s reintegration into your workforce?

There are several suggestions in the section “Repatriation: Problems and Solutions.” At minimum, you should arrange for a sponsor/mentor, career counseling, and a reorientation program. You need to also make sure that there are clear and open doors

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for him to communicate with you. It would be a good idea to have some counseling available as well.

Experiential Exercise: A Taxing Problem for Expatriate Employees Purpose: The purpose of this exercise is to give you practice identifying and analyzing some of the factors that influence expatriates’ pay.

Required Understanding: You should be thoroughly familiar with this chapter and with the Web site www.irs.gov.

How to Set up the Exercise/Instructions: Divide the class into teams of four or five students.

Each team member should read the following: One of the trickiest aspects of calculating expatriates’ pay relates to the question of the expatriate’s U.S. federal income tax liabilities. Go to the Internal Revenue Service’s Web site, www.irs.gov. Scroll down to Individuals, and go to Overseas Taxpayers. Your team is the expatriate-employee compensation task force for your company, and your firm is about to send several managers and engineers to Japan, England, and Hong Kong. What information did you find on the site that will help your team formulate expat tax and compensation policies? Based on that, what are the three most important things your firm should keep in mind in formulating a compensation policy for employees you’re about to send to Japan, England, and Hong Kong?

Application Case: Europe—It’s All About Perspectives 17-12: What do you think Aldo should do to increase retention in the Italian shop?

Aldo should consider the following: Improve selection: • Investigate headquarters’ selection techniques.

• Check established job-specific skills requirements and person specifications.

• Implement any relevant corrective action.

• Ensure selection techniques include questions on the candidate’s personal circumstances.

• Ensure potential job incumbents are eagerly mobile • Investigate the appropriateness of the performance appraisal system used in Italy.

Training & development: Train candidates in Italian culture using research-based information – use a bi-lingual Italian-English trainer.

Pay incentives: • Ensure pay schemes are competitive in Italy (eg. use of benchmarking) – don’t assume the French compensation packages will be directly transferable.

• Pay monthly bonuses for requisite skills to entice the more highly-skilled.

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Transfers: • Provide career guidance for employees.

• Implement an appropriate career pathway for individuals within the organization.

17-13: To what extent do you think that cultural differences can be resolved through training and development programs?

Students with little or no international experience will find this a difficult question but it will definitely provide food for thought. The starting point for perceiving the way cultural differences impact behaviors at the workplace is a person’s perception of one’s own culture, known as the self-reference criterion (Lee, 1966) so by looking at one’s culture and thinking about what may appear ‘strange’ to foreigners would get the ball rolling. In terms of training, a variety of techniques are suggested in the text and these would enable any class discussion. However, the ‘can’t do/won’t’ do dichotomy mentioned in Chapter 8 would need to be taken into serious consideration. In that case, there would need to be a system which addresses individual motivation rather than training and development per se.

17-14: Assuming that the Swedish and the Irish employees left the organization, what alternatives should have been offered to them?

This assumption supposes that the HR system is sufficiently sophisticated to pick up on problems before an employee chooses to leave the organization, and that there are processes in place to handle situations as they develop. Students will question whether the two employees were worth retaining in the first place, since their lack of willingness to remain in post or try to adapt to change suggests that they were not of the highest calibre. On the other hand, if they were indeed valuable employees then the organization should have offered them an alternative post in another location.

Continuing Case: Carter Cleaning Company – Going Abroad 17-15: Assuming they began by opening just one or two stores in Mexico, what do you see as the main HR-related challenges Jack and Jennifer would have to address?

The students will not only need to incorporate their learnings from this chapter to answer this question, they should also include information from all the chapters in the text to come up with the main HR-related implications and challenges Carter Cleaning Company will face as a result of opening the Mexican stores.

17-16: How would you go about choosing a manager for a new Mexican store if you were Jack or Jennifer? For instance, would you hire someone locally or send someone from one of your existing stores? Why? The students should use the information in the chapter on selecting international managers. The students are likely to differ in their choices as to which type of

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international manager they would suggest for the London operation; just look for them to justify their responses.

17-17: The cost of living in Mexico is substantially below that of where Carter is now located: How would you go about developing a pay plan for your new manager if you decided to send an expatriate to Mexico?

The students should use information from Chapters 11, 12, and 13, and the Internet sources presented in those chapters to formulate their response to this question.

17-18: Present a detailed explanation of the factors you would look for in your candidate for expatriate manager to run the stores in Mexico.

The students should include information presented in Chapters 1 through 15, in addition to the information presented in this chapter, to develop their list of HR-related functions that Carter Cleaning Company needs to do in selecting their expatriate employee for Mexico.

Hotel Paris: Improving Performance at the Hotel Paris: Managing Global Human Resources 17-19: Provide a one-page summary of what individual hotel managers should know in order to make it more likely incoming employees from abroad will adapt to their new surroundings.

Hotel managers need to know all the issues facing ex-pats and be prepared to assess the job fit and other items required to make a foreign assignment successful. Figure 17-1 will be helpful in developing answers.

17-20: In previous chapters you recommended various human resource practices Hotel Paris should use. Choose one of these, and explain why you believe they could take this program abroad, and how you suggest they do so.

Answers will vary widely. Instructors should look for solid, text-based justification of answers given.

17-21: Choose one Hotel Paris human resources practice that you believe is essential to the company specifically for achieving its high-quality-service goal, and explain how you would implement that practice in the firm’s various hotels worldwide.

Answers will vary widely. Instructors should look for solid, text-based justification of answers given.

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My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 17-22: What special training do overseas candidates need? In what ways is such training similar to and different from traditional diversity training?

17-23: Your boss wants you to transfer from headquarters in Columbus, Ohio to the firm’s Moscow, Russia office. You’re pretty sure you’re suited to work abroad, but to be sure you decide to write a short essay based on what you learned in this chapter titled “Why I think I would be successful in an overseas assignment.” What would you say in your essay?

Key Terms: International Human Resource Management (IHRM) – The human resource management concepts and techniques employers use to manage the human resource challenges of their international operations.

Works Councils – Formal, employee-elected groups of worker representatives.

Codetermination – Employees have the legal right to a voice in setting company policies.

Expatriates (expats) – Non-citizens of the countries in which employees are working.

Home-Country Nationals – Citizens of the country in which the multinational company has its headquarters.

Locals – Citizens of the countries in which employees are working; also called host-country nationals.

Third-Country Nationals – Citizens of a country other than the parent or the host-country.

Virtual Teams – Groups of geographically dispersed coworkers who interact using a combination of telecommunications and information technologies to accomplish an organizational task.

Ethnocentric – The notion that home-country attitudes, management style, knowledge, evaluation criteria, and managers are superior to anything the host-country has to offer.

Polycentric – A conscious belief that only the host-country managers can ever really understand the culture and behavior of the host-country market.

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Geocentric – The belief that the firm’s whole management staff must be scoured on a global basis, on the assumption that the best manager of a specific position anywhere may be in any of the countries in which the firm operates.

Adaptability Screening – A process that aims to assess the assignee’s (and spouse’s) probable success in handling a foreign transfer.

Foreign Service Premiums – Financial payments over and above regular base pay, typically ranging between 10% and 30% of base pay.

Hardship Allowances – Payments that compensate expatriates for exceptionally hard living and working conditions at certain locations.

Mobility Premiums – Typically, lump-sum payments to reward employees for moving from one assignment to another.

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Part Five Enrichment Topics in Human Resource Management Chapter 18 Managing Human Resources in Small and Entrepreneurial Firms

Lecture Outline: The Small Business Challenge How Small Business Human Resource Management Is Different Diversity Counts: Necessity and the Entrepreneur Why HRM Is Important to Small Business Using Internet and Government Tools to Support the HR Effort Complying with Employment Laws Employment Planning and Recruiting Trends Shaping HR: Digital and Social Media Employment Selection Employment Training Employment Appraisal and Compensation Employment Safety and Health Leveraging Small Size with Familiarity, Flexibility, Fairness and Informality Simple, Informal Employee Selection Procedures Improving Performance: HR Tools for Line Managers and Small Businesses Flexibility in Training Flexibility in Benefits and Rewards Fairness and the Family Business Using Professional Employer Organizations How Do PEOs Work?

Why Use a PEO? Caveats Managing HR Systems, Procedures, and Paperwork Introduction Improving Performance: The Strategic Context Basic Components of Manual HR Systems Automating Individual HR Tasks Human Resource Information Systems (HRIS) Improved Transaction Processing Online Self-Processing Improved Reporting Capability HR System Integration ..

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HRIS Vendors Trending Shaping HR: Digital and Social Media Chapter Review

Where Are We Now… The main purpose of this chapter is to help you apply what you know about human resource management to running a small business. The main topics we’ll address include the small business challenge; using Internet and government tools to support the HR effort; leveraging small size with familiarity, flexibility, fairness, and informality; using professional employer organizations; and managing HR systems, procedures, and paperwork.

Interesting Issues: City Garage is an expanding auto servicing company in Texas. One way they distinguish themselves is with a strategy based on letting customers interact directly with City Garage’s mechanics in what it calls its “open service area” – as they say, “We are all about customers.”

But fast growth and hiring sociable employees require effective hiring. We’ll see what they did.

Learning Objectives: 18-1: Explain why HRM is important to small businesses and how small business HRM is different from that in large businesses.

18-2: Give four examples of how entrepreneurs can use Internet and government tools to support the HR effort.

18-3: List five ways entrepreneurs can use their small size to improve their HR processes.

18-4: Discuss how you would choose and deal with a professional employee organization.

18-5: Describe how you would create a start-up human resource system for a new small business.

Annotated Outline: I. The Small Business Challenge A. How Small Business Human Resource Management Is Different – managing human resources in small firms is different for four main reasons: size, priorities, informality, and the nature of the entrepreneur.

1. Size – the general guideline is that it’s not until a company reaches the 100-employee milestone that it can afford a human resource specialist.

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However, even five- to six-employee organizations must recruit, select, train, compensate, and retain qualified staff.

2. Priorities – it is not just size but business realities of the entrepreneur’s situation that drive them to focus their time on non-HR issues.

3. Informality – human resources management activities tend to be more informal in smaller firms. Entrepreneurs must be able to react quickly to changes in competitive conditions.

4. The Entrepreneur – entrepreneurs are people who create businesses under risky conditions, and starting new businesses from scratch is always risky. Entrepreneurs therefore need to be highly dedicated and visionary.

5. Implications – the differences listed above result in potential implications: 1) Small business owners run the risk that their relatively rudimentary human resource practices will put them at a competitive disadvantage. 2) There is a lack of specialized HR expertise as compared with larger firms that have a full range of HR functions. 3) The smaller firm is probably not adequately addressing potential workplace litigation. Most small business owners are well aware of the threat of employment-related litigation. 4) The small business owner may not be fully complying with compensation regulations and laws. 5) Duplication and paperwork leads to inefficiencies and data entry errors. For small businesses, employee data often appears on multiple human resource management forms.

B. Diversity Counts: Necessity and the Entrepreneur – more men than women start new businesses, but according to one study, about 100 million women in 59 countries still started new businesses in one recent year. Interestingly, most of the women who did start businesses were not in the developed world. The most likely countries for women to start businesses were in Latin America and sub-Saharan Africa. This may be because in developed economies, women have more career options. In developing economies such as Ghana, necessity infuses a confidence that drives more women to make it on their own.

C. Why HRM Is Important to Small Business – entrepreneurs need all the advantages they can get, and for them, effective human resource management is a competitive necessity. Small firms with effective HR practices perform better than those with less effective practices. For small firms, effective human resource management is also required for getting and keeping big customers.

II. Using Internet and Government Tools to Support the HR Effort A. Complying with Employment Laws – small business owners spend much of their time tackling issues related to employment laws. These owners can quickly find the answers to many such questions online at federal agencies’ Web sites such as the following: 1. The DOL – the U.S. Department of Labor’s First Step Employment Law Advisor (www.DOL.gov/elaw/firststep); helps small employers determine which laws apply to their business.

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2. The EEOC – the U.S. Equal Employment Opportunity Commission (www.EEOC.gov/employers); guides small employers on all laws pertaining to employment discrimination.

3. OSHA – the DOL’s Occupational Safety and Health Administration site (www.OSHA.gov); supplies guidance for small business owners on practical information including industry-specific safety and accident checklists.

B. Employment Planning and Recruiting – Internet resources such as the Department of Labor O*NET (http://online.onetcenter.org) can make small business owners as effective as their large competitors at writing job descriptions and building applicant pools. Small business owners can use the online recruiting tools to post positions on popular Internet job boards.

C. Trends Shaping HR: Digital and Social Media D. Employment Selection – for the small business, one or two hiring mistakes could wreak havoc. Some tests are so easy to use they are particularly good for smaller firms. One example of such a test is the Wonderlic Personnel Test, which measures general mental ability, and the Predictive Index, which measures work-related personality traits, drives, and behaviors – in particular, dominance, extroversion, patience, and blame avoidance.

E. Employment Training – although small companies can’t compete with the training resources of larger organizations, Internet training can provide, at a relatively low cost, the kinds of professional employee training that was formerly beyond most small employers’ reach.

1. Private Vendors – the small business owner can tap hundreds of suppliers of prepackaged training solutions.

2. The SBA – the federal government’s Small Business Administration (www.SBA.gov) provides a virtual campus that offers online courses, workshops, publications, and learning tools aimed toward supporting entrepreneurs.

3. NAM – the National Association of Manufacturers (NAM) is the largest industrial organization in the United States. NAM’s Virtual University (www.namvu.com) helps employees maintain and upgrade their work skills and continue their professional development.

F. Employment Appraisal and Compensation – even small employers now have easy access to computerized and online appraisal and compensation services. Lack of easy access to salary surveys once made it difficult and time consuming for smaller businesses to fine tune their pay scales.

G. Employment Safety and Health – without human resource managers or safety departments, small businesses often don’t know where to turn to for advice on promoting employee safety. OSHA provides free on-site safety and health services for small businesses. The OSHA Sharp program is a certification process through which OSHA certifies that small employers have achieved commendable levels of safety awareness.

III. Leveraging Small Size with Familiarity, Flexibility, Fairness, and Informality A. Simple Informal Employee Selection Procedures – in general, small firms tend to rely on more informal employee selection and recruitment practices, such as

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employee referrals and unstructured interviews, than do large firms. Work sampling tests require candidates to perform actual samples of the job in question.

This can also be a very simple way to select employees.

B. Improving Performance: HR Tools for Line Managers and Small Businesses C. Flexibility in Training – small companies typically take a more informal approach to training and development. Smaller firms also tend to focus any management development training on learning specific firm-related competencies.

D. Flexibility in Benefits and Rewards – The Family and Work Institute surveyed the benefits practices of about 1,000 small and large companies. They found that large firms offer more extensive benefit packages than small ones do. However, many small firms seemed to overcome their bigger competitors by offering more flexibility.

1. Simple Retirement Benefits – there are several ways for small firms to provide retirement plans. The SIMPLE (savings incentive match plan for employees) IRA plan is inexpensive and simple.

E. Fairness and the Family Business – most small businesses are family businesses, in that the owner and one or more managers are family members. Being a nonfamily employee here isn’t always easy. They sometimes feel like outsiders.

Some best practices to avoid partiality include setting ground rules, treating people fairly, confront family issues, and erase privilege.

IV. Using Professional Employer Organizations A. How Do PEO’s Work? – these vendors range from payroll companies to those that handle all of an employer’s human resource management requirements. PEOs basically are your “HR office,” but your employees still work for you.

B. Why Use a PEO? – employers turn to PEO’s for several reasons.

1. Lack of Specialized HR Support – up to 100 or so employees, small firms typically have no dedicated HR managers, and even larger ones may have few specialists.

2. Paperwork – The Small Business Administration estimates that small business owners spend up to 25% of their time on personnel-related paperwork. This includes background checks, benefits sign-ups, and so on.

3. Liability – to help ensure the small business fulfills its Title VII, OSHA, COBRA, and the Fair Labor Standards Act responsibilities.

4. Benefits – insurance and benefits are often the PEO attraction. Obtaining health and other insurance is often more challenging for smaller firms.

5. Performance – the professionalism that the PEO brings to recruiting, screening, training, compensating, and maintaining employee safety and welfare will hopefully translate into improved employee and business results.

C. Caveats – many employers view their human resource management processes as a strategic advantage, and they are not inclined to turn over strategy-sensitive tasks like screening and training to third-party firms.

V. Managing HR Systems, Procedures, and Paperwork A. Introduction – recruiting and hiring an employee might require a help wanted advertising listing, an employment application, an interviewing checklist, and the

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verification of education and immigration status. Much is required to run the human resources management part of the business.

B. Improving Performance: The Strategic Context C. Basic Components of Manual HR Systems – very small employers will probably start with a manual human resource management system. This would include obtaining and organizing a set of standardized personnel forms covering each important aspect of HR. 1. Basic Forms – forms that should be considered include an application, reference check, employee record, performance evaluation, vacation request, corrective counseling, and exit interview. One simple way to obtain the basic forms of a manual HR system is from Web sites (www.hr.com/en/free_forms) or books, or CDs. 2. Other Forms – several direct-mail catalog companies offer a variety of HR Materials. Firms such as HRdirect (www.hrdirect.com), or G. Neil Company (www.gneil.com) can provide a comprehensive source of all needed HR forms.

D. Automating Individual HR Tasks – as the small business grows, it becomes impractical to rely on manual HR systems. It is as this point that most small- to medium-sized firms should consider computerizing individual human resource management tasks.

1. Packaged Systems – there are a variety of resources available. At the Web site of the International Association for Human Resource Information Management (www.ihrim.org), a categorical list of HR software vendors can be found.

E. Human Resource Information Systems (HRIS) – the term information system refers to the interrelated people, data, technology, and organizational procedures a company uses to collect, process, store, and disseminate information.

F. Improved Transaction Processing – HRIS packages substitute powerful computerized processing for a wide range of the firm’s HR transactions.

G. Online Self-Processing – HR information systems make it possible to make the company’s employee part of the HRIS. For example, an organization can allow employees to self-enroll in all desired benefit programs.

H. Improved Reporting Capability – the HRIS system integrates numerous individual HR tasks, thereby increasing HR’s reporting capabilities.

I. HR System Integration – when the HRIS software components, such as payroll record keeping, appraisals, and so forth, are integrated, the employer can dramatically reengineer its HR function.

J. HRIS Vendors – the Web site for the International Association for Human Resource Information Management (www.ihrim.org) provides a comprehensive list of HR vendors.

K. Trends Shaping HR: Digital and Social Media

Chapter Review

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Chapter Section Summaries: 18-1: Many people reading this book will work for or own their own small business, so it’s important to understand the small business challenge.

18-2: Being small, small businesses can particularly capitalize on freely available Internet and government tools to support their HR efforts.

18-3: Small businesses need to capitalize on their strengths, and in this case, it means capitalizing on familiarity, flexibility, and informality.

18-4: After reviewing all the challenges of managing human resources, many small business owners turn to using professional employer organizations.

18-5: Small business managers need to understand how their HR systems, procedures, and paperwork will evolve.

Discussion Questions: 18-1: Discuss and explain the ways in which social media can help small firms in improving their hiring process.

Recruiting, nowadays, is shifting from online job boards to social networking sites such as Facebook, LinkedIn, and Twitter. A majority of companies, both large and small, make use of social media recruiting tools for recruiting employees and managers. Online recruiting generates more responses, quicker and for a longer time at lesser cost than just about any other method. Small firms can particularly capitalize on freely available internet and government tools to support their hiring process.

18-2: Explain why HRM is important to small businesses.

This item can be assigned as a Discussion Question in MyManagementLab. Student responses will vary.

18-3: Explain and give at least five examples of ways entrepreneurs can use small size— familiarity, flexibility, and informality—to improve their HR processes.

Small business owners spend much of their time tackling legal issues. These small business owners can quickly find answers to many such questions online at the following: The Department of Labor or DOL.gov, the EEOC or EEOC.gov, the Occupational Safety and Health Administration or OSHA.gov, and the Society of Human Resource Management or SHRM.org.

18-4: List the services offered by PEO. Why should small firms make use of these services?

There are several reasons why small firms turn to professional employer organizations (PEO). They are:

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1. Lack of Specialized HR Support – With up to 100 or so employees, small firms typically have no dedicated HR managers, and even larger ones may have few specialists.

2. Paperwork – To avoid huge expenditures, both in terms of time and money, on personnel-related paperworkincluding background checks, benefits sign-ups, and so on.

3. Liability – Staying in compliance with compensation and pension plan rules, fair labour standards, and other relevant personnel-related national and international laws.

4. Benefits – Insurance and benefits are often the primary selling points for any PEO, since obtaining health and other insurance is often more challenging for smaller firms.

5. Performance – The professionalism that the PEO brings to recruiting, screening, training, compensating, and maintaining employee safety and welfare will hopefully translate into improved employee and business results.

Individual and Group Activities: 18-5: A sole proprietor of a business has organized and carried out all of the work and other aspects of the business himself. His firm now has the potential to expand, and he needs to carry out recruitment and selection interviews for the first time. Advise the sole proprietor on how this should be done.

They need to create a simple and streamlined interview process. This should include considering the following steps: focusing on the key requirement for the job role (this will eliminate unsuitable candidates); organizing interviews with a set of key questions for candidates (they should roughly be the same for each candidate to serve as a comparison tool); having a clear way of being able to match the right candidate to the job role. The chapter detail contains some very useful advice in the “A Streamlined Interviewing Process” section.

18-6: You own a small business, and you are confused about which of your employees is eligible for overtime pay. The employees in question include your secretary, two accounting clerks, one engineer, and two inside salespeople. Individually or in groups of four or five students, use the DOL’s Overtime Security Advisor and DOL’s Calculator to determine who gets overtime pay.

The secretary and two accounting clerks should be classified as non-exempt, and the engineer and two inside salespeople should be classified as exempt.

18-7: You have about 32 employees working in your factory. Working individually or in teams of four or five students, find and create a list of five online sources you could use to provide training to them, at no cost to you or to them.

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Here are 5 to start: www.DOL.gov, www.strategichr.com, www.ASTD.org, www.legalworkplace.com, and www.articlebased.com.

18-8: Appendices A and B at the end of this book list the knowledge someone studying for the HRCI (Appendix A) or SHRM (Appendix B) certification exam needs to have in each area of human resource management (such as in Strategic Management and Workforce Planning). In groups of several students, do four things: (1) review Appendix A and/or B; (2) identify the material in this chapter that relates to the Appendix A and/or B required knowledge lists; (3) write four multiple-choice exam questions on this material that you believe would be suitable for inclusion in the HRCI exam; and (4) if time permits, have someone from your team post your team’s questions in front of the class, so that students in all teams can answer the exam questions created by the other teams.

The material from this chapter that is applicable to the certification exams would include: the HR challenges of small businesses, how small organizational differences affect HRM, how to implement a small business, HR system, staffing the small organization, and training and maintaining employees of small businesses.

Experiential Exercise: Workshop on Managing Change for Innovation in Solar Installation and Repair SMEs Based in Cape Town South Africa Purpose: The purpose of this exercise is to give you practice in creating a training workshop on change management for SME owners/managers.

Required Understanding: You should be fully acquainted with the material in this chapter.

How to Set up the Exercise/Instructions: Divide the class into teams of several students. Each team will need access to the Internet.

The specific focus of this exercise is to develop a training program to help SME owners manage change that results in innovation and growth and helps to introduce new products and services.

Training and development sessions are ideal settings for promoting values and strengthening an innovation culture in organizations. The problem is, most small firms usually lack in the specialized staff or the required time for such education and training.

Generally, SMEs approach change with the adoption of standard initiatives, unsystematic planning and monitoring of projects, and by using “chaotic” change management. Working in groups, students should design a one day workshop for SME owners to enable them to approach change with a new perspective. Such a workshop should focus on aspects such as taking a proactive stance, systematic monitoring of change management and innovation projects, and balancing between adaptive and generative learning. Remember not only should SMEs be prepared for change, but they ought to learn how to identify the need for change and, ultimately, to manage change successfully in order to innovate.

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Application Case: Netflix Breaks the Rules In many respects, the Netflix HR strategy seems like a dream come true for small businesses.

You don’t need a pay plan; instead, you just update each person’s pay every few months based on market surveys. You offer no training and development. And you don’t track vacation time, more or less. If someone’s not doing well, you just pay him or her to leave, with no hassles.

Netflix seems to have hit upon its own version of “Netflix High-Performance Work Practices.”

Given that, answer the following questions (please be specific).

18-9: What (if anything) is it about Netflix that makes its HR practices work for it?

Student answers will vary and may include a discussion of the company’s culture. The culture is such that people are treated as adults and are able to “police themselves.”

Everyone understands that not performing up to the company’s expectations will result in termination. Frequent pay raises and the constant updating to stay competitive with the market helps to keep motivation high.

18-10: Would you suggest using similar practices in other businesses, such as a new restaurant? Why? Students’ answers will vary, but look for their arguments to be grounded in logical arguments to support their viewpoint.

18-11: List the criteria you would use for deciding whether another company is right for Netflix-type HR practices.

Criteria may include looking at the following areas: the current compensation system (Does the company pay at or above market wages?), the strength of the corporate ethical culture (Companies who are to be successful at this type of HR system must be highly ethical and as they must, to a certain degree, be honest and open about the work they are doing.), and the organization needs to be one where individuals can work independently of one another so to maintain workflow and quality while dealing with such extreme flexibility in the scheduling.

18-12: What argument would you make in response to the following: “Netflix just lucked out; they would have done even better with conventional HR practices?”

Students’ answers will vary. Either side is debatable, so look for students to defend their arguments with logical arguments from the book.

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Continuing Case: Carter Cleaning Company – Cleaning in Challenging Times 18-13: Assume that we don’t want to terminate any of our employees. What workscheduling related changes could we make that would reduce our payrolls by, say, 20% per week but still keep all our employees on board?

One of the benefits of a small employer is the ability to adapt to changing market conditions. Therefore, flexible work scheduling could be easily implemented to cover all required costs while keeping staffing costs at a minimum. Even offering the staff the option to take time without pay could prove beneficial to the employer while maintaining current staffing levels.

18-14: We are currently handling most of our personnel-related activities, such as sign-ons, benefits administration, and appraisals, manually. What specific suggestions would you have for us in terms of using software systems to automate our HR processes?

A packaged system would probably prove cost effective for this size employer. These types of systems offer programs for controlling attendance, maintaining employee records, writing job descriptions, and other HR-related requirements.

18-15: Suggest at least five free Internet-based sources we could turn to for helping us to lower our total employment costs.

The International Association for Human Resource Information Management (www.ihrim.org), the Small Business Administration (www.sba.gov), the U.S. Department of Labor’s – First Step Law Advisor (www.dol.gov/elaws/firstep), OSHA’s Small Business Handbook (www.osha.gov), and the National Association of Manufacturers (www.namvu.com).

Hotel Paris: Improving Performance at the Hotel Paris – The New HRIS 18-16: Using any benchmark data that you can find, including information from this textbook, what are some benchmark metrics that Lisa could be using to assess the efficiency of her human resource management operations? To what extent does the Hotel Paris’s quality service orientation enter into how Lisa’s metrics should compare?

Lisa should consider looking at benchmarking data on the following HR activities: benefits, work schedules/locations, compensation options, workforce demographics, training, development, and technology. Lisa should review carefully the Hotel Paris’s quality service orientation as it compares to Lisa’s metrics to determine the cost effectiveness of each activity.

18-17: Throughout this textbook, we’ve discussed various specific examples of how human resource management departments have been reducing the cost of delivering their

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services. Keeping in mind the Hotel Paris’s service quality orientation, please list and explain with examples how Lisa Cruz could use at least five of these.

Information technology could greatly help Lisa reduce the human resource administration’s current costs; in addition, Lisa could look at the resources available from the Small Business Administration as well as the Department of Labor. Also, Lisa could consider outsourcing some of the more costly HR activities to a PEO. 18-18: Focusing only on human resource information systems for a moment, which systems would you suggest Lisa consider recommending for the Hotel Paris? Why? A packaged program would prove the most cost effective for the Hotel Paris. Online selfprocessing should prove especially beneficial to Lisa in order to help improve efficiency, accuracy, and cost reductions.

18-19: Explain with detailed examples how Lisa can use free online and governmental sources to accomplish at least part of what you propose in your previous answers.

Lisa could review the resources offered from the Small Business Administration as well as the Department of Labor.

18-20: Give three examples of fee-based online tools you suggest Lisa use.

Transaction-processing systems, management information systems, and executive support systems 18-21: Do you suggest Lisa use a PEO? Why? Lisa should consider the use of a PEO for at least some of her HR programs. For example, payroll and benefits administration could prove very cost effective for Lisa since her HR costs are currently running 30% higher than comparable organizations.

Very often PEO’s can offer comprehensive services at competitive fees.

My Management Lab Students can find the following assisted-graded writing questions at mymanagementlab.com.

Answers to these questions are graded against rubrics in the MyLab. 18-22: Explain and give at least four examples of how entrepreneurs can use Internet and government tools to support the HR effort.

18-23: This chapter explained that to compete with larger employers, the small business owner should capitalize on familiarity, flexibility, and informality. What does this mean and how as a small business owner would you do that?

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Google Case Notes: This case highlights the human resource management (HR) practices at Google that are integral to the company’s long-term success. The case illustrates specific components of Google’s HR strategy and also provides insights on some of the challenges Google faces as it continues to grow. Specifically the case explores the company’s benefits, pay, hiring, employee development, and employee retention practices. The challenges shared include those related to the need to shift hiring practices as a company grows, maintaining a strong company culture, and internationalization.

Questions: B-12. What do you think of the idea of Google correlating personal traits from the employees’ answers on the survey to their performance, and then using that as the basis for screening job candidates? In other words, is it or is it not a good idea? Please explain your answer.

Hiring practices are clearly integral to Google’s success. Google depends on the talent of its’ employees to maintain the company’s competitiveness and they use their selection process to identify the talent that holds the traits that have helped them succeed. As the company grows, their intensive interview process has become difficult to maintain. Thus, an assessment that can screen candidates based on these important traits will help effectively evaluate candidates.

However, there are legal implications in using tests in hiring, and thus, the company needs to make sure that any test used is reliable and valid. The process of correlating the personal traits that the employees reported to their performance demonstrates the criterion validity of the traits. Thus, this process is a good idea to help develop a reliable and valid test.

B-13. The benefits that Google pays obviously represent an enormous expense. Based on what you know about Google and on what you read in this text, how would you defend all these benefits if you’re making a presentation to the security analysts who were analyzing Google’s performance?

Employee benefits are an important component of the total rewards an organization offers its employees. Google makes a significant investment in benefits and the benefits provided help to create the unique and creative company culture. This company culture is an important component of the company’s overall strategy. Thus, the investment in employee benefits is intended to contribute to the company strategy.

Google can use metrics to demonstrate this value to security analysts. Strategy-based metrics, for example, focus on measuring how activities help achieve organizational goals. In this case, Google might be able to demonstrate how the employee benefits contribute to attracting and retaining top talent.

B-14. If you wanted to hire the brightest people around, how would you go about recruiting and selecting them?

Google has built a reputation as a great place for the brightest people around to work.

This makes their recruiting process a little easier, but brings them selection challenges as they get about one million job applicants a year. Their intensive selection practices have shifted over the years to accommodate screening those candidates.

However, other companies may not have the reputation to attract the brightest and must make strategic recruitment efforts to hire the brightest people. A larger pool of candidates will likely yield the brightest employees. One thing that Google has done effectively is that they have established a brand image as an attractive workplace. Their benefits and work culture are known for inspiring creativity, and this attracts the bright candidates they are seeking.

A company should then use targeted outside sources of candidates to attract the brightest people. For example, a company can recruit on top college campuses, or ask current employees for referrals.

From a selection perspective, a company can use an assessment tool such as a cognitive ability test to select the brightest applicants. A structured interview process that asks job-related questions can also help identify the brightest candidates in the recruitment pool.

B-15. To support its growth and expansion strategy, Google wants (among other traits) people who are super-bright and who work hard, often round-the-clock, and who are flexible and maintain a decent work–life balance. List five specific HR policies or practices that you think Google has implemented or should implement to support its strategy, and explain your answer.

There are many HR policies or practices that can support its strategy to grow and expand with the support of super-bright, hardworking employees. Some examples include: • Workplace policies that support a flexible and supportive work environment, such as flexible work hours and convenience services such as on-site cafeterias.

• Employee benefits such as paid time-off, comprehensive healthcare insurance, and generous retirement benefits that help employees relieve stress.

• Recruitment and selection practices that attract and select hard-working and smart employees.

• Performance management systems that provide employees with valuable and developmental feedback.

• Base and incentive pay plans that provide appropriate rewards to retain workers.

B-16. What sorts of factors do you think Google will have to take into consideration as it tries transferring its culture and reward systems and way of doing business to its operations abroad?

The first challenge Google will face is transferring its company culture to an international context. The creative and flexible work environment may not be as accepted in different national cultures. Further, incentives and rewards may not be effective in different cultural contexts. For example, some cultures are less individualistic than the U.S., and

thus, our individual incentive awards may not be as effective. Wide variances in the cost-of-living around the world also create challenges in establishing appropriate pay levels.

B-17. Given the sorts of values and culture Google cherishes, briefly describe four specific activities you suggest they pursue during new-employee orientation.

Just hiring the right employees will not ensure Google is successful. The onboarding or new-employee orientation process is important to socialize the employee into the organization’s culture and help them understand what workplace behaviors will help them be successful. Given Google’s values and culture, the following are examples of specific activities that could be included in the new-employee orientation: • A review of Google’s policies, including the Employee Handbook, so that the employee is aware of the benefits available, such as flexible work schedules.

• A tour of the facility so that the new employee knows of all the facilities and benefits available.

• An introduction to the employee’s new team and possibly some team-building activities to help them begin working with the team.

• A review of incentive pay plans or other reward programs so that the employee understands what is rewarded.

Muffler Magic Case Notes: Muffler Magic examines some of the challenges of a growing company that has multiple locations. As a company expands, the human resource management (HR) practices need to adapt to the changing work environment. Growth for Muffler Magic has resulted in challenges such as poorer quality and lower productivity. As a result, the case provides an illustrative example on the relationship between HR practices and business profitability. In this case, expansion includes opening new locations, and thus, the process to ensure consistency in hiring and training practices becomes even more important. This case also examines the influence a compensation structure can have on the quality and quantity of work produced.

Questions: B-18. Write a one-page summary outline listing three or four recommendations you would make with respect to each HR function (recruiting, selection, training, and so on) that you think Ron Brown should be addressing with his HR manager.

As a growing organization with several management challenges, there are a wide range of recommendations that could be addressed. Some examples include: • Develop written job descriptions for each technician position.

• Identify new recruitment sources for candidates such as trade schools or an employee referral program to find quality candidates.

• Develop a more extensive selection process including work sample tests where the candidate could demonstrate their ability to complete a repair. Could also develop a structured interview guide that asks behavior-based questions.

• Develop a new hire orientation process that provides a consistent orientation to company procedures.

• Provide safety training to avoid accidents and injuries.

• Improve on-the-job training and look for outside training programs to help build the skills of the technicians.

• Implement a performance appraisal process to provide employees with developmental feedback.

• Administer an attitude survey to understand reasons why employees leave to support the development of retention plans.

• Implement incentive pay plans similar to those that the professor recommended.

• Conduct a market analysis to examine the external competitiveness of the pay the company offers.

B-19. Develop a 10-question structured interview form Ron Brown’s service center managers can use to interview experienced technicians.

Students could provide a wide variety of interview questions in response to this question. Some of the questions could be introductory to establish rapport. Others may

be situational or behavior-based questions. All questions should correspond to the job description of a technician.

B-20.If you were Ron Brown, would you implement the professor’s recommendation addressing the presenteeism problem—in other words, start paying for sick days?

Why or why not?

Providing compensation for sick days is a valuable benefit for employees. Ron argues that a sick employee is at least somewhat productive. However, if the employee takes the day off to recover from his or her illness, the employee will likely return the next day at full productivity. If the employee works while he or she is sick, he or she is likely to be less productive for several days. Further, when employees comes to work while they are sick, they are likely to spread their illness to other workers which then leads to less productivity amongst others. However, if Ron does offer sick days, he should implement specific guidelines on the use of sick days to ensure that they are only used when an employee is actually sick.

B-21.If you were advising Ron Brown, would you recommend that he implement the professor’s skill-based pay and incentive pay plan as is? Why? Would you implement it with modifications? If you would modify it, please be specific about what you think those modifications should be, and why.

Overall the skill-based pay and incentive pay plans appear to be a good way to tie pay to performance and provide some incentive for employees to work productively. Skillbased pay can help avoid narrowing the job duties for the technicians through paying them for the skills they are able to demonstrate. The incentive pay system seems to target improving overall team productivity. However, Ron may also want to consider individual incentive pay opportunities. For example, a standard hour pay plan could provide an incentive to complete jobs more efficiently.

Angelo’s Pizza Case Notes: Angleo’s Pizza explores the importance of establishing human resource (HR) practices as an organization expands. After success with one store, Angelo opens two new stores and is considering opening more stores or franchising. However, the case shares some of the HR challenges including high turnover and other staffing problems.

The case explores the need for structured orientation and training programs, as well as better recruitment and selection practices.

Questions: B-8. My strategy is to (hopefully) expand the number of stores and eventually franchise, while focusing on serving only high-quality fresh ingredients. What are three specific human resource management implications of my strategy (including specific policies and practices)?

There are several important HR implications of Angelo’s growth plans. The three most important include: • Consistent recruiting and selection practices. Angelo needs to establish new sources of candidates, such as employee referrals. He also needs to implement formal selection processes beyond informal interviews. An assessment test to identify specific skills and/or a structured interview process will benefit Angelo’s Pizza.

• A structured orientation and new hire training process. Much of Angelo’s turnover is caused by good workers who leave in frustration due to lack of training. Better training will lead to better quality pizza and better retention of staff.

• Established management practices and training to support store managers.

Angelo needs some consistency to ensure each store is meeting his expectations in all aspects of hiring and managing workers. A structured management training program can help support this need.

B-9. Identify and briefly discuss five specific human resource management errors that I’m currently making.

There are several errors that Angelo is making, including: • Failing to carefully evaluate applicants and basically hiring anyone that applies.

The poor selection process leads to poor hires that don’t work out for a variety of reasons.

• Providing very little training to new hires. New hires either will not do their work properly, leading to poor quality products, or they will quit in frustration because they did not receive proper training.

• Not providing training to those that move into management positions. Managers are the key in opening new stores. Managers must be equipped with training on how to operate the stores and also on how to manage people.

• Using generic human resource employment application forms and no other forms or procedures. Angelo needs to use forms that ask relevant questions about working at his stores, such as schedule availability.

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Not providing feedback to employees about their performance. Providing formal feedback to employees is an important component in training employees on proper procedures to ensure quality.

B-10. Develop a structured interview form that we can use for hiring (1) store managers, (2) wait staff, and (3) counter people/pizza makers.

There are several interview questions that would be beneficial to the hiring process of each of these categories of workers. All interview questions should be related to the specific job and include questions that are based on job knowledge, situational or behavioral. Some sample questions for each category: Store Managers Store managers are responsible for hiring and training their own staff. Some potential questions for a store manager include: - Tell me about a time you had to address an employee problem.

- How would you organize the training of your new employees?

Wait Staff The wait staff needs to have strong customer service skills and be able to manage in a fast-paced environment. Some potential questions for the wait staff include: - Tell me about a time you had to deal with a difficult customer.

- Give me an example of a time you had to complete several tasks at the same time; how did you decide what to do first?

Counter People/Pizza Makers These employees need to also be customer-oriented and focused on quality. Some potential questions for counter people/pizza makers include: - Tell me about a time when you found a problem with a product, what did you do?

- If a customer returned a pizza and said it didn’t taste right, what would you do?

B-11. Based on what you know about Angelo’s, and what you know from having visited pizza restaurants, write a one-page outline showing specifically how you think Angelo’s should go about selecting employees.

There are many different strategies that a student could recommend. First, they should identify several recruiting strategies. As Angelo notes, it is important to cast a wide net to yield better candidates. In addition to “Help Wanted” signs at the stores to attract local applicants, he may want to also consider advertising with local high schools and colleges. If he does have some valuable employees, he could also provide bonus payments for employee referrals.

Careful screening of the applicants is important. He first should create a custom employment application that asks relevant questions such as scheduling availability. A next step might include an assessment test to measure honesty or integrity, or possibly a personality test to assess ability to interact with customers. One or more interviews should be part of the process and they should use a structured interview format.

Finally, he should outline a background check process that includes verifying education, past employment, and speaking to references.

BP Texas City Case Notes: This case emphasizes the importance of health and safety in the workplace. The case shares insights on several safety failures at BP, and in particular at the Texas City facility. In addition to discussing safety programs, the case explores the role company leadership plays in creating a safety culture. The case emphasizes the importance of all aspects of safety from policies and practices to organizational commitment to creating a safe work environment. The case also introduces the ethical implications of safety efforts at an organization.

Questions: B-22. The text defines ethics as “the principles of conduct governing an individual or a group,” and specifically as the standards one uses to decide what his or her conduct should be. To what extent do you believe that what happened at BP is as much a breakdown in the company’s ethical systems as it is in its safety systems, and how would you defend your conclusion?

The case explores both the safety systems as well as the management practices that led to the problems at BP. An effective safety policy starts with top management.

Management must not only implement policies to comply with the law, but also create a safety culture.

This case does raise concerns of the ethical systems at BP. The principles guiding the conduct of BP’s top management were focused more on cost cutting than on safety.

While cutting costs is important for a large company, doing so without regard to the impact on safety does create some ethical questions. Students could cite several examples from the case of deficiencies in safety practices that BP management was aware of but did not address.

B-23. Are the Occupational Safety and Health Administration’s standards, policies, and rules aimed at addressing problems like the ones that apparently existed at the Texas City plant? If so, how would you explain the fact that problems like these could have continued for so many years?

OSHA’s standards, policies, and rules are aimed at creating a safe and healthy work environment. OSHA has worked closely with BP to abate their safety concerns through inspections and fines for safety violations. However, the problems at BP are complex and not easily fixed. OSHA also is faced with limited resources to get involved enough with the BP operations to address all issues. While OSHA did issue the highest fines in its history to BP, it is clearly not enough. BP needs to go beyond complying with safety regulations and create a safety culture by making safety a management priority.

B-24. Since there were apparently at least three deaths in the year prior to the major explosion, and an average of about one employee death per 16 months for the previous 10 years, how would you account for the fact that mandatory OSHA inspections missed these glaring sources of potential catastrophic events?

There are a variety of challenges that OSHA faces in trying to enforce safety laws in a large organization such as BP. The primary challenge for OSHA is a limited number of

inspectors available to conduct complete inspections. Often inspections are done in response to accidents and as a result, are relatively narrow in scope. Such inspections may not explore all of the potential hazards. Further, OSHA inspections do not look at the safety culture or management decision-making processes that have led to many of BP’s problems.

B-25. The text lists numerous suggestions for “how to prevent accidents.” Based on what you know about the Texas City explosion, what do you say Texas City tells you about the most important three steps an employer can take to prevent accidents?

All of the suggestions in the text are important and a student might include any of them.

However, creating a safety culture is clearly a priority as noted in BP’s case. Creating a supportive environment is also important. A company can have the right equipment and train employees in safe behaviors, but if managers and supervisors are not supportive of creating a safe workplace, then policies may not be followed. Finally, conducting internal inspections helps identify safety concerns and demonstrates the importance of safety.

B-26. Based on what you learned in Chapter 14, would you make any additional recommendations to BP over and above those recommendations made by the Baker panel and the CSB? If so, what would those recommendations be?

Students might come up with a variety of ideas. As the suggestions provided by these panels are thorough, students are likely to come up with more specific ideas. For example, while the panel suggested involving stakeholders in safety, a more practical suggestion would be to use employee-run safety committees. Company leadership should make safety a priority by investing significant financial resources into safety programs. The company should also upgrade all of their equipment to the newer and/or safer models.

B-27. Explain specifically how strategic human resource management at BP seems to have supported the company’s broader strategic aims. What does this say about the advisability of always linking human resource strategy to a company’s strategic aims?

Overall BP has been successful in supporting its strategic aims of cutting costs and becoming more efficient through streamlining processes and making sites more efficient. However, this alignment took the focus away off of safety. While it is important to link HR strategy to a company’s strategic aims, it is also important for HR to take leadership on ensuring compliance. This is particularly important if the strategic direction of the organization creates concerns in meeting basic workplace obligations.

Bandag Automotive Case Notes: This case highlights some of the challenges a growing company faces, in particular when there is a change in leadership. Bandag Automotive is a family-owned business that has recently shifted leadership from Jim’s father to Jim. Jim’s focus on the bottomline ignores some of the long-term costs of poor human resource (HR) management practices. In the absence of a leader with HR expertise, Jim faces several employmentrelated legal challenges including those involving the Americans with Disabilities Act and the Family Medical Leave Act. Jim also cut benefit offerings in the interest of cost savings without exploring the impact on the organizational culture and employee performance.

Questions: B-1. Given Bandag Automotive’s size, and anything else you know about it, should we reorganize the human resource management function, and if so, why and how?

With over 300 employees, Bandag Automotive should have one or more full-time HR professionals to manage HR practices. Many of the organization’s legal challenges have occurred because of a lack of expertise in understanding potential liability issues.

Further, some expertise in employee benefits could assist Bandag in evaluating the value and utilization of employee benefits and making appropriate recommendations.

Compensation expertise could also contribute to cost efficiency in salary administration.

Finally, if employees had an HR professional to share concerns with, the company might be able to avoid some potential challenges. Students may come up with a variety of structures that involve the additions of 2 or 3 professionals. Hiring internal HR staff will likely provide significant cost savings over the current outsourcing of practices.

B-2. What, if anything, would you do to change and/or improve upon the current HR systems, forms, and practices that we now use?

There are several opportunities for change or improvement in the company’s current HR processes. Some possible examples: • Customizing the HR forms used to Bandag’s needs instead of using generic forms.

• A more formalized process to evaluate the external competitiveness of salary.

The company could establish formal salary grades to ensure more effective salary administration.

• A formal review of benefits offered to ensure benefits, such as time-off and flexibility, are meeting employee needs without unnecessary costs to the company.

• A centralized HR manager to review HR-related decisions for consistency and to reduce legal liability.

B-3. Do you think that the employee whom Jim fired for creating what the manager called a poisonous relationship has a legitimate claim against us, and if so, why and what should we do about it?

It was noted that the employee possibly had a mental illness, and thus, could have a claim under the Americans with Disabilities Act (ADA). The company should have determined if the employee’s illness would be considered a disability under the ADA. If it was a disability, then Jim should have determined if they could reasonably accommodate the disability. There is the possibility that the company would not be able to reasonably accommodate the employee’s disability if it did result in the mistreatment of co-workers. Allowing the behavior to continue if it disrupts the workplace significantly could be considered an undue hardship. If the company were to have carefully evaluated the situation before terminating the employee, the company could have reduced the possibility of the employing taking legal action.

B-4. Is it true that we really had to put Gavin back into an equivalent position, or was it adequate to just bring him back into a job at the same salary, bonuses, and benefits as he had before his leave?

The Family Medical Leave Act (FMLA) requires that employees be returned to the same or equivalent positon. The courts have generally held that an equivalent position does include the same pay and benefits, but also has the same terms and conditions of employment. Generally this has been interpreted to include the prestige or the responsibility of the position. While pay is important, other components of the job should be the same as well.

B-5. Miriam, the controller, is basically claiming that the company is retaliating against her for being pregnant, and that the fact that we raised performance issues was just a smokescreen. Do you think the EEOC and/or courts would agree with her, and, in any case, what should we do now?

The case does not note if Miriam had any history of performance problems, but it suggests that she did not. If she was terminated without any warning about her performance, there is a strong likelihood that the EEOC and the courts may agree with her given the timing of her termination after her leave and request for a flexible work schedule. For defense against this claim, the company should be ready to provide documentation on the performance deficiencies that led to her termination. However, it is important to establish and follow a progressive disciplinary system in order to defend the company against future claims.

B-6. An employee who is deaf has asked us to be one of our delivery people and we turned him down. He’s now threatening to sue. What should we do, and why?

The company needs to go through a process of considering the employee for the position. While the employee does have protection under the ADA because he is deaf, the company needs to determine if he is qualified to do the job with or without a reasonable accommodation. The company cannot automatically bar the candidate because he is deaf. They need to evaluate him individually to see if his hearing impairment would create an undue hardship for the company by creating a safety concern.

B-7. In the previous 10 years, we’ve had only one equal employment complaint, and now in the last few years we’ve had four or five. What should I do about it? Why? Clearly Jim’s new approach to management is creating some of the legal problems the company is now facing. Implementing more formal HR policies and practices will help the company avoid future legal liability. Further, hiring a trained HR professional will ensure that decisions are made with appropriate consideration of legal liabilities.