Human Resource Management, 3rd Edition Solution Manual

Human Resource Management, 3rd Edition By Stewart, Brown

Chapter 1 Creating Value Through Human Resources Chapter 1 Learning Objectives 1. Explain how human resource management, from the organizational life-cycle and stakeholder perspectives, can facilitate organizational success.

2. List the core functions of HRM. 3. Explain what human resource professionals do to help create successful organizations.

4. Identify important labor trends that are affecting organizations and their human resource practices.

5. Explain how effective human resource management requires a comnination of strategic and functional perspectives.

Chapter 1 Outline 1.1 Explain how human resource management, from the organizational life-cycle and stakeholder perspectives, can facilitate organizational success.

• How Can Human Resource Management Make an Organization Effective?

✓ Field of study and practice that focuses on people in organizations. (page 4). ✓ HR skills help organizations more effectively hire, manage, and motivate employees so that the organization itself becomes more effective. ✓ A starting point for learning about the field of HRM is to explore the concept of organizational success.

• How Is Organizational Success Determined?

✓ Organizational Life-Cycle: measures of effectiveness change as an organization moves through a series of four distinct stages during its lifetime. (pages 6-9). ➢ Entrepreneurial Stage: effective HRM is very important for development of an organization’s identity and for the survival and growth of newly formed organizations. ➢ Communal Stage: marked by expansion, innovation, cooperation, and in developing and improving organizational processes. ➢ Formalization Stage: focus on improving efficiency and finding new and innovative ways to accomplish the organization’s goals and objectives. ➢ Elaboration Stage: when organizations need to redefine objectives and identify new opportunities. ✓ Success from Stakeholder Perspectives: success is measured by the extent that organizations meet stakeholders’ needs (e.g., employees, customers, owners, society). (pages 9-11). ➢ Stakeholders: Individuals or groups of people who can affect or who are affected by an organization ➢ Employees: HR practices protect the interests of employees by more effectively meeting their needs. ➢ Customers: Research strongly supports the notion that good HRM improves customer satisfaction, largely through customers’ interactions with employees. ➢ Owners: Owners influence organizations by determining who leads and makes decisions; their chief concern is the return and retention of organizational profits.

➢ Society: Organizations that are better community citizens are generally more profitable than organizations that ignore environmental and social concerns. ➢ Employee Turnover: the process in which employees leave the organization and are replaced by other employees. ✓ The Chain of Success (pages 11-12) ➢ Meeting the needs of one group can often help meet the needs of others; each group is referred to as stakeholders. ➢ Properly managing people is therefore a critical part of the chain of excellence for successful organizations. ➢ Obtaining and keeping excellent employees gives an organization an advantage in meeting customer needs, which translates into profitability and thereby provides organizations with resources to further improve HR practices.

CONCEPT CHECK 1. What are the four stages of the organizational life cycle and what is the main goal of

each stage? Entrepreneurial Stage’s main goals are survival and growth; Communal Stage’s main objective is to gain a unique identity and overcome internal conflict; Formalization Stage’s key goal is to make goods and services as efficiently as possible; and Elaboration Stage’s main goals are adaptation and renewal.

2. How does human resource management contribute to success at each stage? Entrepreneurial

Stage: Need to hire and maintain employees; emphasis on creatingplans for measuring performance and deciding pay; Communal Stage: Need to develop clear communication channels; emphasis on building strong loyalty among employees; Formalization Stage: Need to create formalized practices for hiring, training, and compensating; emphasis on continual improvement of employee skills and motivation; and Elaboration Stage: Need to alter practices to meet changing demands; emphasis on new ways of organizing work tasks.

3. What four primary groups make up an organization’s key stakeholders?

Employees,

customers, owners, and society.

1.2 List the Core HR Functions (pages 13-16)

• Core HR Functions: The Society for HRM (SHRM) and its affiliated Certification Institute have identified six broad functional areas of HRM (people management activities). ✓ Business management and strategy works with other parts of the organization to establish and provide quality goods and services ✓ Workforce planning and employment designs jobs and places people in them. ✓ HR development ensures that employees learn the knowledge, skills, and abilities required for current and future performance. ✓ Compensation and benefits paying employees fairly; administering benefits such as insurance ✓ Employee and labor relations build and maintain effective working conditions and relationships. ✓ Risk management promotes the physical and mental well-being of people in the workplace.

• Spreading Knowledge About HR Practices (pages 16-17)

✓ Many of the core HR functions require cooperation between the HR department and other parts of the organization. ✓ Such cooperative efforts are improved and the value of people management increases when leaders throughout the organization know what HR specialists bring to the table. ✓ Another potentially important contribution of human resources is to teach organizational leaders effective practices for attracting and keeping talented workers. ✓ Another aspect of spreading human resource knowledge is building relationships of trust.

CONCEPT CHECK 1. What are the six core HR functions?

Business management and strategy, workforce planning and employment, human resource development, compensation and benefits, employee and labor relations, and risk management.

2. Why is it important for HR professionals to educate others in their organizations about

HR functions? Many of the core human resource functions require cooperation between the human resource department and other parts of the organization. HR inputs about workforce planning must be coordinated with operational plans for increasing or decreasing production. Efforts to develop new employee skills also must be coordinated with strategic and marketing plans. Such cooperative efforts are improved and the value of people management increases when leaders throughout the organization know what human resource specialists bring to the table. An important aspect of spreading knowledge is thus to help managers and others throughout the organization know the special capabilities that human resource specialists provide.

1.3 What do HR Specialists Do?

• Administer compensation, benefits and performance management systems, and safety and recreation programs.

• Identify staff vacancies and recruit, interview, and select applicants.

• Allocate human resources, ensuring appropriate matches between personnel.

• Provide current and prospective employees with information about policies, job duties, working conditions, wages, opportunities for promotion, and employee benefits.

• Perform difficult staffing duties, including dealing with understaffing, refereeing disputes, firing employees, and administering disciplinary procedures.

• Advise managers on organizational policy matters such as equal employment opportunity and sexual harassment and recommend needed changes.

• Analyze and modify compensation and benefits policies to establish competitive programs and ensure compliance with legal requirements.

• Plan and conduct new employee orientation to foster positive attitude toward organizational objectives.

• Serve as a link between management and employees by handling questions, interpreting and administering contracts, and helping resolve work-related problems.

• HR ROLES (pages 18-22)

✓ Short-term activities generally involve day-to-day projects and focus on conducting surveys, maintaining databases, counseling employees. ➢ Functional Expert: focuses on providing technical expertise related to hiring and motivating employees. They do this by helping the organization build systems and practices to ensure that an organization is using state-of-the-art methods to manage people. ➢ Employee Advocate: listens to employees, provides them with the resources they need to be effective, and makes sure the interests of employees are recognized when organizational decisions are made. ✓ Long-term activities are more strategic in nature and include developing organizational strategies, managing change processes, and planning ways to create new skills. ➢ Strategic Partner: works with other organizational leaders to put company strategy into action and to manage organizational change. ➢ Human Capital Developer: adds value by helping employees build and maintain cutting-edge skills.

• HR Competencies represent characteristics and capabilities that human resource professionals need to succeed in their work assignments. There are six basic competencies. ✓ Strategic Positioner (page 22) ➢ Knowledge and skills associated with accurately placing an organization in its business context through understanding finance, strategy, stakeholders, and competitive context. ✓ Credible Activist (page 22) ➢ Knowledge and skills for influencing others through acting with integrity, sharing information, and building trust ✓ Capability Builder (page 22-23) ➢ Knowledge and skills related to understanding what the organization is capable of doing successfully. ✓ Change Champion (page 23-24) ➢ Knowledge and skills necessary to initate and carry out change. ✓ HR Innovator and Integrator (page 24) ➢ Knowledge and skills that ensure HR practices such as work design, staffing, and compensation are aligned in ways to facilitate organizational success. ✓ Technology Proponent (page 24) ➢ Knowledge and skills used to help organizations effectively adopt technology to manage information and connect individuals.

CONCEPT CHECK 1.

What are the four critical HR roles, and what are some key features of each? The functional expert role focuses on providing technical expertise related to hiring and motivating employees. In this role, an effective human resource specialist helps build systems and practices to ensure that an organization is using state-of-the-art methods to manage people. Human resource specialists also serve as consultants who teach managers ways to improve their interactions with employees. Human resource professionals in the employee advocate role listen to employees and provide them with the resources they need to be effective. They help employees who are experiencing personal problems. They make sure the interests of employees are

recognized when decisions are made and that employees are properly informed about organizational policies and procedures. They develop and enforce policies that protect employees from being taken advantage of by more powerful supervisors. In the strategic partner role, HR professionals work with other organizational leaders to put company strategy into action. To do this, they need to know about other business activities (e.g., finance, accounting, and marketing), the organization’s products and services, and how these activities, products, and services fit with the company’s strategic objectives. This builds credibility and trust with other employees. Finally, they apply concepts related to psychological reactions, power and influence, motivation, and group dynamics to facilitating change. The human capital developer role focuses on helping employees improve their skills. They teach formal classes, help employees make individualized plans for the future, and make frequent changes in work processes based on employee input. They add value to the organization by helping employees build and maintain cutting-edge skills.

2.

What is a competency, and what six competencies do HR professionals need to develop? A competency represents the knowledge, skill, and ability needed to perform a desirable behavior. One recent model suggests that human resource professionals need six basic competencies. These competencies are shown in Figure 1.3 and include strategic positioner, credible activist, capability builder, change champion, HR innovator and integrator, and technology proponent.

1.4 How Will Current Trends Affect HRM?

• Population Trends (pages 24-25)

✓ Organizations are interested in population trends for two main reasons: ➢ to determine how the demand for their goods and services might change and ➢ to provide insight into the number and type of workers that are likely to be available in the future. ✓ The U.S. population grew at a rate of about 29 percent for the past ten years, and current projections indicate that the country’s total population will continue to increase at a rate of 25 percent during the next decade. ✓ The balance between young and old people in the U.S. population is also changing. ➢ By 2018 the number of people between the ages of 16 and 24 will increase slightly, ➢ the number between the ages of 35 and 44 will stay about the same, ➢ the number between the ages of 45 and 54 will decrease slightly, and ➢ the number older than age 55 will increase by almost 30 percent. ➢ The demand for goods and services desired by older people will increase. ➢ The workforce will become older with more people nearing the end of their careers.

• Labor Force Trends: (page 25-26)

✓ Labor force trends focus on the number and characteristics of people who will be working or looking for work. ✓ By 2018 trends in overall population will lead to a greater proportion of older people in the workforce. ✓ Racial proportions will also continue to change. ➢ The percentage of non-Hispanic white employees is expected to decrease from 70 to 65 percent of the workforce.

➢ The percentage of Hispanic workers will increase from about 14 to 18 percent of the workforce. ✓ Another important trend concerns women in the workforce. ➢ The number of female employees is expected to continue growing at a rate of 9 percent, faster than the number of male employees, which is at a rate of only 7.5 percent. ➢ Attracting and keeping minority and women employees will become increasingly important. ✓ Organizations will need to find better ways to meet the needs of minority workers. ➢ Create ongoing groups of people with underrepresented backgrounds and needs who can meet together and discuss issues. ➢ These groups provide important feedback and suggestions to help leaders understand the unique perspectives of minority workers.

• Employment Trends (pages 26)

✓ Employment opportunity trends identify the type of work opportunities that will likely be available in the future. ➢ Shift from goods-producing to service-providing employment. ➢ Most new jobs will be in areas that produce services, and the fastest growing industries will be health services, professional services, and education. ➢ The need for health care services will continue to increase as the population ages, and the demand for childcare will grow as more women enter the workforce. ✓ Organizations in growing industries often find it difficult to attract and retain enough quality workers. ➢ Effective recruiting, hiring, and compensation are therefore expected to be particularly critical for high-growth occupations such as nurses, computer programmers, and teachers. ➢ The outlook is bright for occupations such as data analyst and health aides but rather bleak for production workers who make and assemble goods such as clothing and for those in the farming industry.

• Trends in Education and Training (page 27)

✓ Education and training trends tell us about what competencies people will need to perform jobs in the future and how organizations can better focus their recruitment efforts. ➢ Growth is expected for a number of jobs that require college education. ➢ For example, growth is expected in the area of information services, including network analysts, software engineers, and database administrators. ➢ Growth is also expected in the field of health care, so that more jobs will be available for physician assistants, registered nurses, physical therapist assistants, and dental hygienists. ✓ Training sometimes comes on the job rather than from formal education, and some jobs in high-growth areas will require this sort of training. ➢ Healthcare aides, who perform tasks in areas such as physical therapy, home care, and social services, represent such jobs. ➢ Organizations that need employees with these skills must develop on-the-job training programs that will ensure new employees learn the necessary knowledge and skills.

• Globalization Trends (page 27)

✓ Globalization refers in part to a process in which companies move beyond their national borders to do business in other countries.

✓ For global companies, the entire world represents not only their marketplace but also their place of production. ➢ International trade is growing at nearly 10 percent per year, a sure indicator of globalization as an important force. ➢ Numerous large corporations have operations in countries scattered across the globe; even many small companies are purchasing goods and seeking sales from people living in more than one country. ➢ The globalization trend appears to be beneficial for organizations, as companies on average are more profitable when greater portions of their sales, assets, and employees are foreign. ✓ Globalization increases the complexity of HR activities such as fairly compensating employees and in adopting standardized practices.

CONCEPT CHECK How are current population trends and labor force trends likely to affect organizations and their HR practices in the future? Population Trends: The U.S. population grew at a rate of 29 percent over the past ten years and current projections indicate that the country’s total population will grow by about 25 percent during the next decade.

The balance between young and old people in the U.S. population is also changing.

By 2018 the number of people between the ages of 16 and 24 will increase slightly, the number between the ages of 35 and 44 will remain constant, the number between the ages of 45 and 54 will decrease slightly, and the number older than age 55 will increase by almost 30 percent. Labor Force Trends: By 2018 trends in overall population will lead to a greater proportion of older people in the workforce. Racial proportions will also continue to change. The percentage of non-Hispanic white employees is expected to decrease from 70 to 65 percent of the workforce, whereas the percentage of Hispanic workers will increase from about 14 to 18 percent of the workforce. Another important trend concerns women in the workforce. The number of female employees is expected to continue growing 9 percent, faster than the number of male employees, which will grow at 7.5 percent. Attracting and keeping minority and women employees will become increasingly important. Employment Trends: Organizations will also need to find better ways to meet the needs of minority workers. One such way is to create ongoing groups of people with underrepresented backgrounds and needs who can meet together and discuss issues.

This provides important feedback and suggestions for their unique perspectives.

2. What do employment opportunity trends tell us? Employment opportunity trends identify the type of work opportunities that will likely be available in the future. Some trends include a shift from goods-producing to service-providing employment. Most new jobs will be in areas that produce services, and the fastest growing industries will be health services, professional services, and education. The need for health care services will continue to increase as the population ages, and the demand for childcare will grow as more women enter the workforce. Good human resource management is particularly beneficial to organizations in growing industries because it helps them win the war for talent. Effective recruiting, hiring, and compensation are therefore expected to be particularly critical for high-growth occupations such as nurses, computer programmers, and teachers. The outlook is also bright for 1.

occupations such as data analysis and health care but rather bleak for production workers in the clothing industry and for those in farming. Trends in education and training also indicate growth is expected.

3. How does globalization complicate HR management? Globalization increases the complexity of human resource activities. For example, fairly compensating employees who work in foreign countries requires a great deal of expertise, and legal issues across various countries can make it impossible to adopt standardized practices.

1.5 How Do Strategic and Functional Perspectives Combine to Direct HR Practices? (pages 27-29) • Historically, HRM has emphasized functional skills, which represent day-to-day activities such as developing specific hiring methods, conducting pay surveys, and providing training.

• Today, HRM also requires strategic skills, which represent broader aspects of business and include activities such as planning and change management.

• To be effective, HRM must pay attention to both strategic objectives and taking care of people.

CONCEPT CHECK 1. How do the functional perspective and the strategic perspective combine to create success? Historically, HRM has emphasized functional skills, which represent dayto-day activities such as developing specific hiring methods, conducting pay surveys, and providing training. Today, HRM also requires strategic skills, which represent broader aspects of business and include activities such as planning and change management.

Chapter 1 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Learning Objectives The chapter contains five learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- Page 6 Learning objective 2- Page 13 Learning objective 3- Page 17 Learning objective 4- Page 24 Learning objective 5- Page 28

Concept Checks The chapter contains five concept checks. Each is presented at appropriate points in the concept being discussed and can be found on: Concept 1- Page 13 Concept 2- Page 17 Concept 3- Page 24 Concept 4- Page 28 Concept 5- Page 29

Tables and Figures The table and figures presented in the chapter help illustrate the concepts of the chapter.

They should be brought to the attention of the students and perhaps, included in the exams where appropriate.

Table 1.1 Human Resources Across the Organizational Life Cycle- Page 7 Table 1.2 Core Human Resource Functions- Page 13 Table 1.3 Typical Human Resource Specialists Tasks- Page 18 Figure 1.1 The Chain of Success - Page 12 Figure 1.2 What Do Human Resource Specialists Do?- Page 19 Figure 1.3 Human Resource Competencies- Page 22 Figure 1.4 Labor Force by Age- Page 26 Figure 1.5 Trends in Service Industry Jobs Between 2010 and 2020- Pag 27 Figure 1.6 Framework and Chapter Outline- Page 29 A Manager’s Perspective, What do you think?, and A Manager’s Perspective Revisited The chapter starts with a short scenario where Miguel has just finished a job interview and is contemplating the position. Five true/false questions related to this scenario and the chapter topics are noted on page 2 and 3 and answered on page 30.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what additional questions Melissa should ask.

During the discussion of the chapter material, you could refer to these questions at appropriate points. This will add both variety in the instructor’s presentation and more realistic application of the chapter concepts.

For some chapters, you may wish to address the questions at the end of discussing the chapter. In this case, you may want to bring the students’ attention to these questions informing the students that they will be asked to answer the questions near the end of the chapter discussion. At that time, students (individually or in groups) could be asked to explain why the answers are true or false. Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

Building Strength Through HR: Trader Joe’s This special feature (pages 4 and 5) highlights several issues noted in this opening case regarding Trader Joe’s (refer to pages 4-5). This case illustrates how human resource management can help build an organization’s competitive strength.

The inset box (refer to page 5) presents some of the HR practices mentioned in the case but not all. Therefore, you could ask the students what other HR practices appeared to contribute to Trader Joe’s success (e.g., Hawaiian shirts, soliciting employee input, flexible work design, promotion from within). This discussion could be supplemented by students familiar with Trader Joe’s and information found on Trader Joe’s webpage: http://www.traderjoes.com/.

If internet access is available in the classroom, you could access Trader Joe’s webpage at http://www.traderjoes.com/ during class to further illustrate their HR practices. The website is colorful and the “Careers” link has informative links to detailed job descriptions, benefits, career opportunities, detailed profiles of their crew, recruiting events, and fun tidbits about Trader Joe’s (e.g., Hawaiian shirts).

For future chapters, supplemental information also could be provided by a student responsible for updating the case and finding relevant information from the organization’s website or other sources. You should inform the students of any school policies that address contacting organizations.

Because this chapter typically is the first chapter of the school term, it is important that the instructor show the students how these opening cases will be addressed and whether it is important to read them before class. At this point in the term or semester, guided class or group discussion should serve this purpose or briefly mentioned in a mini-lecture to

show relevance of the chapter topics. Additional ways to address the opening cases could include individual students or teams of students presenting the main points and how the case answers the opening question of that section. These opening cases also could be used as topics for a more comprehensive assignment due later in the term.

How Do We Know? Does Effective Human Resource Management Increase Organizational Success?

This inset box (on page 8) is briefly mentioned in the chapter. This gives a good reason to elaborate on the information presented in the box. Rosemary Batt conducted a study to learn about the influence of HR practices on call center performance. As described in the inset box, the findings of her studies revealed that organizations are more successful when they have good HR practices. She concluded that good HR practices result in lower turnover which increase growth in customer sales.

The class could be encouraged to read the details in the inset box or read more by accessing the 2002 article. During the lecture or class discussion of the chapter, the study, conclusions, and recommendations could be summarized. This could be accomplished through your lecture (asking for student input) or by assigning the box to an individual student. You or the student could lead a brief class discussion after presenting the facts.

Regardless of who presents the information, the students could be asked who has experience with call centers, if they agree that these practices might help reduce turnover and increase sales growth, and what other HR practices might appeal to call center employees (e.g., flextime, training others, job titles, employee of the month).

Other ways to address this information could be through a short written assignment or a more in-depth research paper on the topic.

How Do We Know? Why Are Some Organizations more Effective than Others?

The “Chain of Success” section ends with a reference to this inset box (found on page 12). Human resource specialists often claim that differences in employee skill and ability represent a primary source of competitive advantage for firms. In short, having skilled and knowledgeable employees is seen as a valuable resource that firms can draw on to outperform competitors. An important research question is thus whether organizations with better employees— those that have greater human capital—are indeed more effective than their competitors. Russell Crook, Samuel Todd, James Combs, David Woehr, and David Ketchen sought a clear answer to this question by summarizing the results of 66 different existing studies. Human capital was scored as higher when employees have more work experience, higher levels of education, more desirable traits such as greater intelligence, and more knowledge of work processes. Organizational

performance was captured through financial measures such as profitability and return on assets. As predicted, organizations with greater human capital were found to have higher profitability.

Technology in HR: Using Web-Based Information to Manage People This inset box (refer to page 15) briefly addresses some forms of technology that can help HR departments. Some benefits and obstacles are also presented.

The information presented in this box could be referred to during a lecture. Students could be asked for their experiences with online learning or, if no experience, why they have elected not to take online courses. The students could be asked to assess the userfriendliness of their school’s website, registration system, etc., and how that affects their likelihood to fully utilize the website’s potential.

Some students may have experience with online HR systems (e.g., PeopleSoft, Oracle, SuccessFactors). If so, they could talk about their experiences.

The topics in this box could provide topics to be researched by students.

Building Strength Through HR: Edwards Lifesciences The strategic partner role is demonstrated at Edwards Lifesciences (refer to page 21).

You could briefly mention this inset as an example of how the strategic partner role is implemented, or you could ask the students to describe how Edwards Lifesciences benefits from the contributions due to the strategic partner role. You also could ask the students how the other HR roles might be necessary for the HR professional to be successful in the strategic partner role.

Building Strength Through HR: McDonald’s As noted above the inset box (refer to page 23), the HR professionals at McDonald’s are focused on more effectively recruiting, hiring, communicating with, and training employees.

You could briefly mention this inset as an example of how the change management competencies are utilized by HR professionals at McDonald’s and have the students be responsible for reading the inset box. If you want to spend more time on this competency, you could ask the students to describe how change management competencies benefit the employees of McDonald’s and contribute to its success. You also could ask the students how the other competencies and the HR roles might be necessary for the HR professional to be successful in the tasks associated with recruiting,

hiring, communicating with, and training employees.

SUMMARY A short summary of each of the chapter’s five learning objectives is presented on pages 30 – 31. Each learning objective question emphasizes the key points needed to understand each question and concept involved.

KEY TERMS Business management and strategy 14 Capability builder competencies 22 Change champion competencies 23 Communal stage 7 Compensation and benefits 15 competencies 22 Credible activist competencies 22 Education and training trends 27 Elaboration stage 9 Employee advocate role 19 Employee and labor relations 16 Employee turnover 10 Employment opportunity trends 26 Entrepreneurial Stage 6 Formalization Stage 8 Functional Expert 19 Globalizations trends 29 HR innovator and integrator competencies 24 Human capital developer role 21 Human resource development 14 Human resource management 4 Labor force trends 25 Organizational life cycle 6 Population trends 25 Risk management 16 Stakeholders 9 Strategic partner role 20 Strategic positioner competencies 22 Technology proponent competencies 24 Workforce planning and employment 14

DISCUSSION QUESTIONS (page 32) 1. Why might a newly formed organization be considered successful even if it is losing

money? Because survival is a key indicator of success during the entrepreneurial stage. (pages 7).

2. Think of stores where you shop. Do employees of some stores seem happier than

employees of other stores? What human resource practices might explain differences in employee happiness? Student answers may vary.

3. How can socially responsible organizations have high profits even though they spend

money on things like environmental protection? Interestingly, organizations that are better community citizens are generally more profitable than organizations that ignore environmental and social concerns. Although there are exceptions, expending effort to do things such as protect the environment and improve local communities usually lead to improved financial performance for organizations. This is further described by the chain of success. (pages 11-12).

4. Why do managers and human resource specialists often do poorly on tests about the

best ways of hiring and paying employees? Due to common misconceptions about human resources. Many organizational leaders believe that good human resource management is ‘common sense.’ They think, in other words, that hiring and motivating workers requires no special knowledge. Managers generally are unfamiliar with many practices that provide clear direction for improving job performance. For instance, many managers resist using employment tests to select employees, even though evidence strongly shows that such tests can help them to make better hiring decisions. Unfortunately, even HR professionals often have misconceptions about good practices. This is shown by a recent survey that asked human resource leaders a number of questions about specific employment, staffing, and compensation practices. On average, these professionals knew the correct answer only about 60 percent of the time. Those with higher scores had been promoted more often, had received certification as human resource professionals, and read academic studies more frequently. (pages 16-17).

5. What are some specific things that can be done to teach company leaders how human resource management can contribute to organizational success? 1) Help managers and others throughout the organization know the special capabilities that human resource specialists provide. 2) Teach organizational leaders effective practices for attracting and keeping talented workers. 3) Overcome common misconceptions about human resources (e.g., that good human resource management is ‘common sense’). 4) Have knowledge before the HR professionals can share it. 5) Build relationships of trust by listening to and understanding managers’ problems and then providing solutions that work. 6) Need to be capable of doing a wide array of things that help managers do their jobs better. (pages 16-17).

6. Which human resource role do you think is most important? Employee advocate?

Functional expert? Strategic partner? Human capital developer? Explain your answer. Student answers may vary dependent upon which aspects of the role are emphasized.

7. Why do you think change is so difficult for organizations?

What can human resource specialists do to make change easier? Basically, people feel threatened by change that is proposed by others. To be effective in making change easier, HR specialists need to build trust and credibility. In part, they can do so by developing

supportive relationships with many people throughout the organization. Managers of change must be creative, and they benefit from knowing how to encourage creativity in others. Skill in identifying and solving problems is also extremely helpful. (pages 23-24).

8. What are some challenges you might face if you join an organization with a lot of

older workers? Student answers may vary. Text authors mention the following.

More people will be near the ends of their careers and fewer in the middle. As a result, attracting and motivating older workers will become a more important task for human resource departments. (page 25).

9. What are some things an organization could do to better meet the needs of women

and members of minority groups? Student answers may vary. Text authors mention the following. More programs that offer convenience to working mothers, such as flexible working hours and onsite daycare, would help meet the needs of women.

Organizations could find better ways to meet the needs of minority workers. One such approach is to create ongoing groups of people with underrepresented backgrounds and needs who can meet together and discuss issues. These groups can also provide important feedback and suggestions to help leaders understand the unique perspectives of minority workers. (page 25).

10. How do you think the field of human resource management will change in the next 10 years? Student answers may vary. Text authors mention the following. HR departments will need to find ways to meet the needs of older people, women, and members of minorities. Job growth is expected in the fields of health care, education, and HRM. This will result in increased HRM challenges. Globalization will require HR departments to create processes that effectively manage people working in various foreign countries. (pages 25-27).

EXAMPLE CASE: ZAPPOS (page 33) Hollie Delaney is a senior HR manager at Zappos.com, an intense, high energy, unique company. She is responsible for staff members in six HR functions. Delaney was interviewed by HR magazine about her career and how Zappos delivers happieness to its customers and over 3000 employees. During the interview she explains how Zappos is a company where employees are able to be themselves, stating that one of Zappos core values for employees is to have fun. She also explained how Zappos offers new employees $3000 to quit if they don't think Zappos is the right for them, and explains how for most that isnt even thought because everyone is so happy and invested in the company and that Zappos really is something special.

Questions (page 34) 1.

2.

3.

4.

Does Zappos sound like a place you would want to work? Why? Do you think it makes sense to offer new employees a $3000 incentive to quit?

How do you think the role of HR might change as Zappos matures as a company?

How does the role of HR at Zappos differ from typical companies such as the casinos referenced in the article?

DISCUSSION CASE: CURT’S COWBOY CORNER (page 35) Note to instructor: This recurring discussion case is an excellent classroom activity! Each chapter presents a real-life scenario and prompts individual or team discussion concerning the concepts discussed in the chapter. Completion of the discussion questions will generate a better understanding for the students of how the chapter concepts should be applied.

Questions (page 35) 1. What are some specific tasks that a human resource specialist could do for Curt?

Based on the case, an HR specialist or generalist could help with HR planning, recruiting, selection (including doing the initial interviewing), and doing exit interviews. The HR person could establish procedures for complaints and training supervisors in those procedures. This person also could serve as the EEO officer investigating allegations of discrimination and harassment. If lucky, that person also could help with the payroll, especially the benefits side. However, Curt also might want to hire an accountant to do the payroll, bookkeeping, taxes, etc. Other tasks for an HR person are almost unlimited in scope (assuming Curt understands how to delegate more tasks) but could start with job analysis and job evaluation to make sure decisions based on job descriptions are fair and well defined.

2. Are there any financial benefits that might come from hiring a human resource specialist? First, Curt should be focusing on more strategic issues especially with his plans for growth. He has to carefully plan and monitor the growth. Secondly, (theoretically) a specialist’s or generalist’s salary would be less than Curt’s so money could be saved there. In addition, the HR person would have the knowledge that Curt has had to acquire (takes time which translates into money). This should reduce problems with recruiting and selection so that the right people are hired.

Thirdly, lawsuits brought by employees who believe they have been treated wrongly are costly and may bring unwanted publicity that may adversely affect sales. Other financial benefits include higher employee satisfaction which influences customer satisfaction, profits, etc.

3. How might labor trends affect Curt’s ability to continue expanding his stores? He most likely will be employing a more diverse workforce because of the trends associated with older, female, and minority workers. He may find that he needs to offer different benefits (e.g., flextime) to attract quality workers. As noted above, his employees and supervisors might need more training and awareness regarding diversity. A more diverse workforce should help attract and retain customers who also have become more diverse.

4. What benefits and problems might result if Curt hires a human resource specialist to

provide support to all stores? Would it be better to simply delegate all human resource activities to each store manager? Some benefits: Curt and the other managers would have one knowledgeable person to coordinate and advise on HR issues. Curt and the store managers can focus on accomplishing the mission of Curt’s Cowboy Corner. Some problems: The HR person will need to learn about issues that may be specific to each store, spend time traveling to each store, and may feel role conflict and overwhelmed due to the various demands on his/her time and how much needs to be done.

No, it would not be better to simply delegate all human resource activities to the store managers for many reasons. For example, they need to focus on accomplishing the organization’s mission rather than spending time on HR issues. Curt and the managers can still be involved in the various stages of hiring but do not have to do it all themselves. Moreover, Curt and the managers do not have the time to keep abreast of all the HR legal issues.

EXPERIENTIAL EXERCISE: VISIT THE SHRM WEBSITE (page 36) Questions: 1. How many members are there in SHRM? 250,000 members in 157 countries.

As of January 2014, there are over

2. What types of careers are available in the field of human resource management?

SHRM is an individual membership organization and members include HR professionals with the following titles: President, CEO, Chair, Partner, Principal; Chief HR Officer; Vice President of HR; Assistant/Associate Vice President of HR; Director of HR; Assistant/Associate Director of HR; Manager of HR; HR Generalist; HR Supervisor; Specialist; Consultant; and Legal Counsel. The SHRM careers website lists a variety of additional job titles including Benefits Coordinator, Compensation and Benefits Director, Compensation Analyst, Staffing Manager, Recruiting Specialist, HR Business Partner, Employee Relations Specialist, Manager Employee Relations Internal Review and Compliance, Director of Talent Strategy, HR Systems and Process Analyst, Human Resource Specialist (Test Development), HRIS Analyst, and Workforce Planning Division Manager.

3. What is the SHRM Code of Ethics, and how does it guide the efforts of human resource specialists? It describes the professional responsibility of HR Professionals starting with the Core Principle: “As HR professionals, we are responsible for adding value to the organizations we serve and contributing to the ethical success of those organizations. We accept professional responsibility for our individual decisions and actions. We are also advocates for the profession by engaging in activities that enhance its credibility and value.” The code of ethics also outlines ethical conduct in relation to professional development, ethical leadership, fairness and justice, conflicts of interest, and use of information. Disciplinary procedures for

violations of the Code of Ethical and Professional Standards are described in, Article 2, Section 5 of the SHRM Bylaws.

4. What kind of resources does SHRM offer to help people learn new skills? The resources include regional and local professional meetings (with speakers); regional, state, and national conferences; seminars, SHRM learning systems (to prepare for the PHR®/SPHR® and GPHR certification exams), SHRM webcasts, HR Management magazine, and various resources on the SHRM website (e.g., white papers, survey and benchmark findings). Furthermore, SHRM sponsors groups of college students, scholarships, lowered membership fees, etc.

5. What are chapter/member groups? Who can join? As of January 2014, there are more than 575 affiliated SHRM chapters offer local activities. “The purpose of chapters is to provide a local forum for [] personal and professional development; provide an opportunity to develop [] leadership, managerial, public speaking and group decision-making skills; provide a local networking arena; and to provide a focus for legislative attention to local, state, and national human resource management issues. Membership in an SHRM local chapter is separate and apart from membership in SHRM.” Anybody can join.

6. What are some current news issues that relate to human resource management? Of course, the answers to this question will depend on when the students access the website. In the first few weeks in January 2014 news articles relating to HR included: • NLRB Claims Wal-Mart Violated Strikers’ Rights-Wal-Mart has gotten into hot water for threatening to retaliate against some of its store employees in 13 states for going on strike.

• OSHA 300A Forms Due Feb. 1-All employers required to keep Form 300, the Injury and Illness Log, must post Form 300A, the annual summary of jobrelated injuries and illnesses, in a workplace common area by Feb. 1, 2014.

• Employees Unequipped to Seek Lower Health Costs- When it comes to health care costs, four out of five U.S. consumers indicate they would be comfortable approaching their doctor about the cost of services in order to find competitive pricing. Despite this, fewer than half of consumers have actually asked about the price of care.

INTERACTIVE EXPERIENTIAL EXERCISE: Building an HR Department at Mega Manufacturing http://www.wiley.com/colege/stewart Students are encouraged to access the companion Web site in order to test their knowledge by completing a Mega Manufacturing role-play exercise.

ADDITIONAL WEB-BASED ACTIVITIES Overview of activity Students compare some of the HR practices utilized in the top ten companies listed in the 100 Best Companies to Work for in America. This and other chapter topics could be investigated through a review of the companies’ websites.

Exercise: Refer back to the How Do We Know?: Why Are Some Organizations more Effective than Others? inset box on page 12. Students could review two websites of the top ten companies listed as the 100 Best Companies to Work for in America OR compare a top ten company to one not on the list (e.g., Sears, Wal-Mart) or to the organization for which the student works.

The main purpose is to compare and contrast several of the HR practices for which at least one of the organizations was nominated. As noted below, additional chapter topics can be discussed by the students.

For each organization, the students also should explain the relevant life cycle stage(s) and which of the major stakeholders appear to be emphasized or focused upon. They could explain how the HR practices the students are addressing appear to enhance the organization’s success and employee satisfaction. The students also could describe how both organizations appear to be addressing (or not addressing) at least two current trends described in the chapter (i.e., population, labor force, employment, education and training, and globalization). The students should be asked if the HR practices noted on the websites would appeal them so they would want to work (or continue working) for the organizations and why.

Of course, you may select any or all of the above questions depending upon how much time and how many points you want to allocate to this assignment.

Alternate Approaches to the Exercise: A variation of this exercise could include selecting one of the best companies and comparing several of the HR practices to a company not included in the list (e.g., Sears, Wal-Mart) or an organization for which the students work. This could be an individual or group project.

Another variation that would not require a large written report would be to ask each student to report on one or two HR practices found on a different website of the top 100 best companies. In this case, a student only would be responsible for one company and one or two HR practices found on that website. This could be accomplished verbally (with internet access) or a short written report. Ideally, the whole class would hear about the various HR practices for which the organizations were nominated.

Links to relevant information Information about the top ten on the 2014 list and earlier lists of the top 100 companies in America can be found at http://money.cnn.com/magazines/fortune/bestcompanies/2014/snapshots/1.html?iid=BC14_sp_lead .This website includes links to webpages for the top ten on the list, giving easy access to information about the companies.

In 2013, Google was #1. on the list. Extensive information on why Google is #1 is provided via the website noted above. In addition, you and the students can learn more about Google (e.g., their mission, culture, philosophy, social responsibility, HR practices, etc.) via their corporate website: http://www.google.com/corporate/index.html.

Chapter 2 Making Human Resource Management Strategic Chapter 2 Learning Objectives 1. Describe the strategy formulation process.

2. Describe two generic competitive business strategies that organizations use.

3. Explain the universalistic and contingency approaches to human resource (HR) strategy, including key characteristics of the commitment strategy.

4. Describe four HR strategies that organizations commonly use.

5. Explain how HR strategies and competitive business strategies are aligned.

Chapter 2 Outline 2.1 How Can a Strategic Approach to HR Improve an Organization? (pages 40-42)

• Research suggests that a major key for long-term profitability is a clear strategy for being better than competitors.

• Profitability is also the result of a highly effective workforce that carries out that strategy.

2.2 How Is Strategy Formulated? (pages 42-48)

• Strategy is coordinated choices and actions that provide direction for people and organizations. The two types of strategy must work together to ensure high organizational effectiveness. ✓ Competitive business strategy focuses on choices and actions about how to serve the needs of customers. ✓ HR strategy focuses on choices and actions concerning management of people within the organization.

• One way of understanding similarities and differences in these two forms of strategy is to

examine the common elements of strategy formulation: gathering information and analyzing it so decisions can be made.

• Gathering Information (pages 43-46)

✓ Assessing the External Environment (i.e., physical and social factors outside of an organization’s boundaries categorized as Opportunities/favorable conditions and Threats/unfavorable conditions). ➢ Demographic and cultural trends include population growth, age distribution of population, percentage of women in workforce, and changes in sizes of ethnic groups ➢ Economic environment includes interest rates and new job creation. ➢ Political environment includes laws and the positions of elected officials, as well as legal changes related to international trade. ➢ Technological change involves trends such as improving manufacturing technologies and increased availability of information.

➢ Effective strategy formulation begins with information about threats and opportunities outside the organization. ✓ Assessing Internal Capabilities (i.e., organization’s internal resources and capabilities categorized as strengths/areas of high capability and weaknesses/areas of low capability). ➢ Most strengths and weaknesses can be thought of in terms of the resources that an organization has. Some are tangible, such as money and equipment; others are intangible, such as reputation. From a resource-based view of organizations, resources—including human resources—are true strengths when they are both valuable and rare. ➢ Gathering information about HR capabilities is therefore a vital part of an effective assessment of organizational strengths and weaknesses.

• Analyzing Information and Making Decisions (pages 46-48)

✓ Step 1: Build collective intuition occurs when a group of people meet together often to discuss the information that has been gathered. ✓ Step 2: Stimulate conflict occurs when different opinions are considered. ✓ Step 3: Maintain appropriate pace refers to keeping decisions as part of a flexible timeline. ✓ Step 4: Diffuse politics occurs when a group begins with a common goal and no one person dominates the discussion.

CONCEPT CHECK

1. What are the three steps in the strategy formulation process? Gather information, analyze information and make decision, and implement the decision.

2. What are some components of an organization’s external environment? Features of the environment might include the number of businesses hiring people in your field, the number of other new graduates looking for similar jobs, and the geographic location of potential employers. Demographic and cultural trends include population growth, the age distribution of the population, the percentage of women in the workforce, and changes in the relative sizes of ethnic groups. The economic environment includes interest rates and new job creation, whereas the political environment includes laws and the positions of elected officials. Among the potential threats and opportunities in these areas are legal changes related to international trade and changes in inflation and interest rates. An especially important aspect of current organizational environments is technological change. Trends such as improving manufacturing technologies and increased availability of information create opportunities for some organizations and threats for others.

3. Why does HRM represent an important potential strength for organizations? The ability to attract and keep high-quality employees represents a strength for the organization only when high-quality employees are hard to find. Human resource management is critical because high-quality employees are relatively rare. Effective ways to attract and keep employees do, in fact, represent sources of internal strength that can give an organization a competitive advantage. Human resource practices also must provide something that is difficult to imitate and for which there is no substitute.

4. What four steps are necessary for effective decision making? Build collective intuition, stimulate conflict, maintain an appropriate pace, and diffuse politics.

2.3 What Are Common Competitive Business Strategies? (pages 48-52)

• Competitive business strategies involve four types:

✓ Corporate-level strategy concerns the different businesses and diversity of products and services that an organization produces. ✓ Business-level strategy concerns how an organization, or part of an organization, will compete with other organizations that produce similar goods or services. ✓ Cost leadership strategy seeks to produce goods and services inexpensively. The key to the cost-leadership strategy is in controlling expenses. ✓ Differentiation strategy seeks to produce goods and services that are somehow superior to the goods and services provided by competitors; their goal is to create unique value for which customers are willing to pay a higher price. The key to the differentiation strategy is to create value that is perceived as high enough to warrant a higher price. ✓ Combination strategy ➢ Organization can pursue both cost leadership and differentiation but can create cost structure that does not allow them to produce goods and services at lowest cost. ➢ Most organizations must choose one or the other approach and make strategic decisions accordingly. ° Primary cost leadership strategy should seek to differentiate only as long as doing so does not harm its ability to be the lowest-cost producer. ° Primary differentiation strategy should seek to reduce costs wherever possible.

CONCEPT CHECK 1. What are the basic characteristics of the cost leadership strategy? Goal is to become highly efficient, which will allow organization to create value by producing goods and services at lower cost.

2. What are the main features of the differentiation strategy? Seek to produce goods and services that are somehow superior to the goods and services provided by competitors; their goal is to create unique value for which customers are willing to pay a higher price.

2.4 What Are Basic Approaches to HR Strategy? (pages 52-59)

• The continued success of organizations depends on their possessing capabilities that competitors cannot easily copy. ✓ Effective HRM capabilities are difficult to copy because effectiveness comes not from a single practice but from a number of related practices. ✓ Social relationships that arise from HR practices are also extremely difficult to copy. ✓ HR capabilities are sources of potentially sustainable competitive advantage.

• HR practices build capability by encouraging employees to fill certain roles.

✓ A role is a set of behaviors characteristic of a person in a particular setting.

✓ Employee roles are strongly influenced by the cues, or signals, that an organization provides. ➢ Large pay differences are meant to cue competition and innovation among employees whereas other organizations use group rewards to cue cooperative behavior. ➢ Roles become stronger as a variety of HR practices combine to consistently cue the desired behaviors. ➢ The result is a complex process that is difficult for other organizations to duplicate.

• Research has identified consistent patterns of good HRM. Researchers have taken two basic approaches in investigating HR patterns. ✓ The Universalistic Approach (pages 53-55) ➢ Seeks to identify methods of managing people that are effective for all organizations. ➢ HR practices are most effective when bundled together into internally consistent clusters. ° Sets of HR practices that are internally consistent and that reinforce each other are known as HR bundles. ° A single effective HR practice provides only limited benefits unless it is combined with other effective practices.  One bundle is based on control strategy: primary focus of HR practices is standardization and efficiency.  Second bundle is based on commitment strategy: primary focus of practices is to empower workers and build strong sense of loyalty and commitment. ° Strong research conclusion from universalistic approach is that organizations should adopt a commitment strategy. ° Commitment strategy is often summarized as HR bundle that encourages high involvement. ✓ The Contingency Approach (pages 56-59) ➢ Seeks to align people management practices with competitive business strategies. ➢ Two key differences in organizations: cost leadership or a differentiation strategy and whether they have an internal or an external labor orientation. ° Cost Leadership versus Differentiation  Organizations with cost leadership strategy focus their efforts on increasing efficiency and hire generalists who work in a variety of different positions. ➢ Cost leadership strategy with a focus on tightly controlled processes makes sense when organization knows exactly what it wants people to do. ➢ Result is mass production of standardized goods or services at lowest cost.  Organizations using differentiation strategy focus their HR efforts on innovation and quality enhancement. ➢ Employees in these organizations are often specialists. ➢ Rather than seeking to control processes, organization concentrates on outcomes. ➢ Works best when organizations produce customized goods or services. ° Internal Versus External Orientation  Internal labor orientation seeks to make its own talent and keep employees for a long time. The primary goal is to identify people who will have long careers within the organization. ➢ Strengths

▪ ▪

Predict what skills and capabilities will be available to them in future.

Employees build strong relationships with one another, so coordination and cooperation are high.

▪ Save money by reducing expenses for recruiting, interviewing, and hiring employees. ➢ Weaknesses ▪ Long-term commitments make it difficult to adapt.

▪ Changes in strategic direction are complicated because workers have outdated skills and bureaucratic structures are inflexible.  External labor orientation seeks to buy talent. ➢ Hire people who already have the needed skills and in many cases keep them for only short period of time. The primary goal is to identify people who are able to contribute without additional training. ➢ Strengths ▪ Flexibility (organization can respond quickly to changing conditions).

▪ Workers trained by universities or other employers can be quickly added in areas that demand new skills.

▪ Labor costs are not fixed and total number of employees can easily be increased or decreased. ➢ Weaknesses ▪ Lack of consistency.

▪ Employees are essentially shared with other organizations.

▪ Employees do not provide a unique competitive advantage.

CONCEPT CHECK 1. How does the contingency approach to HR management differ from the universalistic approach? The Contingency Approach seeks to align people management practices with competitive business strategies while the Universalistic Approach seeks to identify methods of managing people that are effective for all organizations.

2. What HR practices are associated with cost reduction strategies? Differentiation strategies?

Organizations with a cost leadership strategy focus their efforts on increasing efficiency and hire generalists who work in a variety of different positions. Other practices include control work processes and carefully define employee tasks, specifically prescribe appropriate behaviors, and mass production of standardized goods or services at the lowest possible cost. Organizations using a differentiation strategy focus their human resource efforts on innovation and quality enhancement. Employees in these organizations are often specialists.

They have more choice about how things should be done and are held accountable for the goods and services they produce. Rather than seeking to control processes, the organization concentrates on outcomes. Best process for completing work is often unknown, and employees are expected to continually look for different ways of doing things. Unique customer expectations require employees to change their actions to best serve each client.

3. What are the differences between an internal labor orientation and an external labor

orientation? See Table 2.3. Internal labor orientation seeks to make its own talent and to keep employees for long periods of time while external labor orientation seeks to buy talent.

2.5 What Are Common HR Strategies? (pages 60-63)

• Internal/Cost HR Strategy: The Loyal Soldier (pages 60-61)

✓ Combining an internal orientation with a cost leadership strategy results in a Loyal Soldier HR strategy (emphasis on long-term employees with a focus on reducing costs). ➢ Design work so that employees have broad roles and perform a variety of tasks. ° People are recruited and hired because they fit the organization culture and because of their potential to become loyal employees. ° Efforts are made to satisfy the needs of employees and build a strong bond that reduces the likelihood of employee turnover. ° Hire people early in their careers and provide them with extensive training in a number of different skills. ➢ Careers often include a number of very different positions, with promotions often made into positions that are not closely related to previous experiences. ➢ Performance appraisals are designed to facilitate cooperation rather than competition. ➢ Compensation includes long-term incentives and benefits and is often linked to the overall performance of the organization. ✓ Unions are frequently observed in these organizations.

• External/Cost HR Strategy: The Bargain Laborer (page 61-62)

✓ Combining an external orientation with a cost leadership strategy results in a Bargain Laborer HR strategy (emphasis on short-term employees with a focus on reducing costs). ➢ Emphasis is on obtaining employees who do not demand high wages. ➢ Design work so that managers can tightly control employee efforts. ➢ Each employee is given clearly defined tasks that can be learned easily. ➢ People are recruited and hired to perform simple tasks that do not require clearly developed skills. ➢ Little attention is paid to meeting long-term needs of employees. ➢ Performance appraisal focuses on day-to-day feedback; rarely incorporates formal measures. ➢ Training is mostly limited to on-the-job techniques that teach specific methods for completing particular tasks. ➢ Compensation is frequently based on hours worked, and benefits and long-term incentives are minimal. ✓ The lack of consistency among employees tends to make unions somewhat rare in organizations that pursue cost efficiency through an external labor orientation.

• Internal/Differentiation HR Strategy: The Committed Expert (page 62)

✓ Combining internal orientation with differentiation strategy results in Committed Expert HR strategy (emphasis on long-term employees with focus on producing unique goods and services.) ➢ Hire and retain employees who specialize in performing certain tasks and are a potential fit with the organizational culture.

➢ Design work so that employees have a great deal of freedom to innovate and to improve methods of completing tasks. ➢ Performance appraisals designed to balance cooperation and competition among employees. ➢ Careers generally include numerous promotions into similar jobs with increasing responsibility. ➢ Employees receive long-term training that helps them develop strong expertise. ➢ Compensation is relatively high and usually includes a good benefits package that ties employees to the organization.

• External/Differentiation HR Strategy: The Free Agent (page 62-63)

✓ Combining external orientation with differentiation strategy forms Free Agent HR Strategy (combines emphasis on short-term employees with focus on producing unique goods and services). ➢ Hiring people who have critical skills but who are not necessarily expected to remain with the organization for a long period of time. ➢ Design work so that employees have extensive responsibility within specific areas and substantial freedom to decide how to go about their work. ➢ Long-term commitments are avoided, and no efforts are made to encourage strong attachments between employees and the organization. ➢ They are not led to expect long-term careers in the organization. ➢ Higher-level positions are frequently given to people from outside the organization. ➢ Performance appraisal focuses on outcomes and results. ➢ Training is rare. ➢ Short-term compensation is usually high, which is necessary if the organization is to obtain people with top skills. ➢ Pay is linked specifically to individual performance results, and benefits and longterm compensation packages are avoided. ✓ Rarely see unions in these organizations.

CONCEPT CHECK

1. What two HR strategies are associated with cost leadership strategy? How do these two HR strategies differ? Combining internal orientation with cost leadership strategy results in Loyal Soldier HR strategy (emphasis on long-term employees with a focus on reducing costs.) Combining external orientation with cost leadership strategy results in Bargain Laborer HR strategy (emphasis on short-term employees with a focus on reducing costs.)

2. What two HR strategies are associated with the differentiation strategy? How do these two HR strategies differ? Combining internal orientation with differentiation strategy results in Committed Expert HR strategy (emphasis on long-term employees with focus on producing unique goods and services). Combining external orientation with differentiation strategy forms Free Agent HR Strategy (combines emphasis on short-term employees with focus on producing unique goods and services).

2.6 How Do HR Strategies Align with Competitive Business Strategies? (pages 63-66)

• Organizations with a cost leadership competitive strategy are expected to do best when they have either a Bargain Laborer or Loyal Soldier strategy.

• Organizations with a competitive business strategy of differentiation are expected to do best when they have either a Committed Expert or Free Agent HR strategy.

• Research supporting the contingency perspective (pages 64-65)

✓ Many organizations do have HR strategies that fit their competitive strategies. ✓ Organizations are more successful when they broadly adapt their HR practices to fit their competitive strategies. ✓ Organizations with a cost leadership or differentiation strategy do perform better when they have a matching human resource strategy.

• Putting it all together (pages 66)

✓ Although there are important exceptions, many organizations improve their long-term success when they adopt an internal labor orientation. ➢ Organizations using internal orientation develop strong bonds with employees ➢ Research suggests that organizations with a cost leadership competitive strategy excel when they follow a Loyal Soldier HR strategy. ➢ Similarly, organizations with a differentiation competitive strategy excel when they use a Committed Expert strategy.

CONCEPT CHECK 1. In what ways does research support the contingency approach to HR management?

Although research related to this question does not always use the four human resource strategies, the results are mostly supportive. Firms benefit from having human resource practices that support their overall strategy. For instance, law firms with a competitive strategy of expanding into new markets, which is consistent with a strategy of differentiation, have been shown to perform better when they hire and retain highly skilled lawyers. Call centers with a competitive strategy of customizing responses to customers—also, consistent with differentiation—perform better when their human resource practices ensure good training and high pay. Overall, this line of research confirms that organizations perform better when they use human resource practices that help them secure and motivate employees who have skills that match their approaches for providing value to customers.

2. How does the commitment strategy fit with the contingency approach? The commitment strategy is similar in many ways to the internal labor orientation of the contingency approach.

Chapter 2 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (pages 67-68) Summaries of each of the five learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives: The chapter contains five learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 42 Learning objective 2- page 48 Learning objective 3- page 52 Learning objective 4- page 60 Learning objective 5- page 63

Concept Checks The chapter contains five concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- page 48 Concept 2- page 52 Concept 3- page 59 Concept 4- page 63 Concept 5- page 66

Tables and Figures The tables and figures presented in the chapter help illustrate the concepts of the chapter. They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 2.1- page 54 Table 2.2- page 56 Table 2.3- page 57

Examples of Commitment Strategy Practices Strategic Human Resource Differences Differences in Labor Orientation

Figure 2.1- page 43 Figure 2.2- page 47 Figure 2.3- page 61

Strategy Formulation Process Effective Decision Making Strategic Framework for Human Resources

A Manager’s Perspective (pages 38-39), What do you think? (page 39), and A Manager’s Perspective Revisited (page 66) The chapter beings with Elizabeth, an owner of a small chain of convenicence stores, thinking about effective HR management and how it will be an important asset to her strategic plan if she wants to be able to compete with larger national chain stores.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which statements are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify how Tara should respond to the statements and if she should respond during this first meeting with the new President.

During the discussion of the chapter material, you could refer to these questions at appropriate points. This will add both variety in the instructor’s presentation and more realistic application of the chapter concepts For some chapters, you may wish to address the questions at the end of discussing the chapter.

In this case, you may want to bring the students’ attention to these questions informing the students that they will be asked to answer the questions near the end of the chapter discussion.

At that time, students (individually or in groups) could be asked to explain why the answers are true or false. Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam. The questions could be presented as true/false or as statements to which each student should briefly respond to in an essay answer.

Building Strength Through HR: Southwest Airlines (page 42) This special feature highlights several issues noted in this opening case regarding Southwest Airlines (refer to pages 40-42). This case illustrates how human resource management can help build an organization’s competitive strength.

The inset box (refer to page 42) presents most of the HR practices mentioned in the case but not all. Other HR issues noted in the case include developing a culture of fun, hiring people who have the right attitude and who are willing to work hard, having employees pitch in where needed, and focusing on keeping costs low. It also notes recent management-employee conflict over demands for higher wages.

Most students know of Southwest Airlines and many may have flown with the airline.

Therefore, you could ask the students what other HR practices may help Southwest be a low cost leader with loyal employees and customers. This discussion could be supplemented with information found on Southwest’s webpage: http://www.southwest.com/. Southwest’s website is informative but it takes several clicks to get to details. It is presented mostly in black print on white background so it is not visually stimulating.

Supplemental information also could be provided by a student responsible for updating the case and finding relevant information from the organization’s website or other sources. If you elect to have the students provide information, you should inform the students of any school policies that address contacting organizations.

At this point in the semester, guided class, group discussion, or briefly mentioning the case in a mini-lecture should adequately introduce the chapter topics and establish relevance. Additional ways to address the opening cases could include individual students or teams of students presenting the main points and how the case answers the opening question of that section. These opening cases also could be used as starting points for a more comprehensive assignment due later in the term or semester.

Technology in HR: Twitter as an Opportunity for Business (page 45) This inset box (refer to page 45) briefly addresses some of the opportunities and threats a company can face by using the micro-blogging service Twitter. The last paragraph addresses a few issues related to social networking using a medium like Twitter.

During a mini-lecture, you may want to refer to the information in this box as illustrating some strategic issues related to using Twitter. If a more general discussion is desired, students could be asked in what ways Twitter presents opportunities and threats for a company. Students could be asked how employees and HRM practices could help Twitter be more of an opportunity for their organization than a threat. For example, employees are part of the delivery system noted in the inset box. Students could discuss their experiences with using Twitter and how “tweets” are used as part of a company’s training regime.

The last paragraph of this box discusses specific mistakes companies can make as they get involved in social networking as well as three steps to take to avoid some common pitfalls.

Students could debate each of these mistakes as well as the suggested tips.

How Do We Know? What Differentiates Fast-Food Restaurants? (page 51) This inset box (on page 51) is briefly mentioned above the box. This provides a natural transition to the information presented in the box. The results of the study summarized in this box illustrate how various fast food restaurants have communicated their cost leader or differentiator strategies.

During the lecture or class discussion of the chapter, the study, conclusions, and recommendations could be summarized. This could be accomplished through your lecture (asking for student input) or by assigning the box to an individual student.

Most students will be familiar with most or all of these fast food outlets. Potential questions include: Do they agree with the strategies that the students in the study associated with each restaurant and on what information are they basing their opinions (e.g., advertisements, personal comparisons)? Have they seen fast food employees supporting or demonstrating knowledge of their organization’s strategies? (You may need to specifically address several of the strategies.

For example, you could ask how employees support Subway’s differentiating on the basis of good nutrition.)

Students then could be asked if it is important for the employees to communicate the strategy to customers. A follow-up question could be for them to consider the impact of employees engaging in behaviors that contradict the organization’s strategy. When the students generally agree that employees have some impact on customer perceptions, students could discuss how employees might be prepared and encouraged to do so.

You could summarize the discussion by mentioning that most (if not all) of what they have suggested are HR practices.

How Do We Know? Do Good Human Resource Practices Improve Performance (page 55)?

This inset box (found on page 55) is mentioned in the accompanying text.. The study described in the box notes the benefits of HR practices associated with the commitment strategy. The researcher concludes that the human resource practices of high-involvement organizations should emphasize doing things to keep valuable employees.

The information reported in the inset box could be part of a lecture or class discussion through which a commitment strategy could be defined. Students could be asked to speculate why the specific high-involvement HR practices (e.g., internal promotions, group-based pay, employee stock ownership, training, etc.) might result in high productivity. You may want to ask them to address each practice noted in the box separately.

Students could be asked to discuss the findings related to turnover rates and productivity.

Potential questions include: Are high-involvement work practices the best way for all organizations in various industries? Why might high rates of quitting reduce productivity in organizations with high-involvement work practices yet increase productivity in other organizations? (Note: training and development is given as a reason in the box. You may want to press for other reasons such as more selective recruiting and self-selection). Since highinvolvement work practices tend to be costly and involve more of management’s time, how can an organization justify these costs when employees quitting will multiply those costs (and there is no guarantee that people will remain with the organization)? How might organizations (with high involvement work practices) encourage excellent employees to stay? Do the students think

that many who quit organizations without high-involvement practices had lower productivity (than those who did not quit) because they were frustrated by the lack of high-involvement practices? (Note: this could lead to a discussion of whether all employees prefer highinvolvement work practices. Those employees with low growth needs or more of a Theory X orientation would not.)

Finally, you may want to ask the students if a study of 190 New Zealand organizations generalizes to U.S. employees or employees in other countries. You also could address whether the sample size is adequate and if their answers would depend on the types and sizes of organizations included in the study.

Building Strength Through HR: Fenmarc Produce Ltd (page 58) As noted on page 58 of this chapter, this inset box (refer to page 58) illustrates how Fenmarc Produce has benefited from emphasizing an internal labor orientation. Their website (http://www.fenmarc.com/) is very colorful and illustrates the concepts noted in the box. The “Fenmarc Culture” link lists the six key principles noted in the box. Their website also includes a video, their history and awards, community involvement, map, and pictures of employees.

Their philosophy is found on most pages.

You could show the video (if internet is available in classroom), ask students what appears to be Fenmarc’s strategy (Cost Leadership), how each of the six key principles might help Fenmarc keep costs low and profits high, and which HR strategy appears to be consistent with their six key principles and cost leadership (Loyal Soldier) and why. You could finish by asking the students if these key principles could work in organizations (and for all types of people) in the U.S. and other countries or if they are specific to the United Kingdom. You also could ask if they’d like to work for a company like Fenmarc.

A web-based assignment is described at the end of this chapter found in the Instructors’ Manual.

How Do We Know? Do Human Resource Practices Influence Customer Service? (page 65) This inset box asks the questions: Why is the customer service at some banks better than others?

Is it by chance, or do successful banks encourage specific actions to assure that employees meet the needs of customers?

Samuel Aryee, Fred Walumbwa, Emmanuel Seidu, and Lilian Otaye sought answers to this question by obtaining data from 37 branches of 2 different banks located in Ghana.

Human resource practices that emphasize decentralized decision making, service quality–focused feedback, extensive service training, and performance contingent compensation increase feelings of empowerment. Empowerment results in increased customer service performance for both individuals and bank branches.

The authors concluded that effective human resource practices do indeed represent an effective method for pursuing a strategy of providing excellent service.

SUMMARY (pages 67-68) A short summary of each of the chapter’s five learning objectives is presented on pages 67 – 68.

Each learning objective question emphasizes the key points needed to understand each question and concept involved.

KEY TERMS (page 69) Bargain Laborer HR strategy 61 Business-level strategy 48 Committed Expert HR strategy 53 Commitment strategy 62 Competitive business strategy 42 Contingency approach 53 Control strategy 53 Corporate-level strategy 48 Cost leadership strategy 48 Differentiation strategy 48 External environment 43 External labor orientation 57 Free Agent HR strategy 62 Human resource bundles 53 Human resource strategy 42 Internal labor orientation 57 Loyal Soldier HR strategy 60 Opportunities 43 Strategy 42 Strengths 44 Threats 43 Universalistic approach 53 Weaknesses 44 DISCUSSION QUESTIONS (page 69) 1. Why are effective human resource practices often a better competitive resource than equipment and buildings? Answer: HR practices involve acquiring and motivating employees. A strategy is only effective if an organization has the talent needed to carry it out. Since our focus is on human resource management, we will concentrate on this part of the value chain. Effective management of people can be a source of internal strength.

HRM is critical because high-quality employees are relatively rare.

2. What are some external opportunities and threats that you think organizations will face in the next 10 years? What types of organizations will benefit most? Students’ answers regarding the future may vary. Generally, the organizations that will benefit are those who are effective in monitoring the external and internal environments and meet the needs of current and future customers.

3. Why can groups be more effective than individuals for making decisions? Answer: Various individuals have differing views, insights, information, etc. which (when shared and discussed) should result in decisions that consider as many elements as possible.

Furthermore, one part of effective strategy formulation is to encourage decision makers not to agree with one another too quickly. Making sure that the team of decision makers includes people with different backgrounds can help in this regard. Experienced managers and younger managers, for example, bring different insights to the decision-making process, as do marketing personnel and operations personnel.

4. What are the primary differences between a cost leadership and a differentiation strategy?

Answer: Cost leadership emphasizes efficiency and minimizing costs. This allows the organization to create value by producing goods and services at lower cost. Differentiators seek to produce goods and services that are somehow superior to the goods and services provided by competitors; their goal is to create unique value for which customers are willing to pay a higher price. In contrast to cost leaders, differentiators reward innovation, individual performance, and results and outcomes, which results in some competition among employees.

5. What are the key elements of the commitment strategy from the universalistic approach?

Why does this approach generally contribute to success for organizations? Answer: The primary focus of practices in the commitment strategy is to empower workers and build a strong sense of loyalty and commitment. This strategy typically involves extensive recruiting and careful screening of recruits, employee involvement groups, widespread training, widespread use of incentive pay, and high teamwork. This strategy fosters a strong sense of cooperation between employees and managers, which results in higher productivity and generally higher quality goods and services.

6. What human resource practices might be associated with a cost reduction emphasis? What practices might be associated with a differentiation emphasis? Answer: Organizations with a cost leadership strategy focus their efforts on increasing efficiency and hire generalists who work in a variety of different positions. Other practices include controlling work processes and carefully defining employee tasks, specifically prescribing appropriate behaviors, and mass producing of standardized goods or services at the lowest possible cost. Organizations using a differentiation strategy focus their human resource efforts on innovation and quality enhancement. Employees in these organizations are often specialists. They have more choice about how things should be done and are held accountable for the goods and services they produce. Rather than seeking to control processes, the organization concentrates on outcomes. Best process for completing work is often unknown, and employees are expected to continually look for different ways of doing things. Unique customer expectations require employees to change their actions to best serve each client.

7. What are the strengths and weaknesses of internal and external labor orientations? Answer: Strengths of the Internal Labor Orientation include predicting what skills and capabilities will be available to them in the future; employees building strong relationships with one another (high coordination and cooperation); and saving money by reducing expenses for recruiting, interviewing, and hiring employees. Weaknesses include long-term commitments make it difficult to adapt, changes in strategic direction are complicated because workers have outdated skills, long-term commitments make it difficult for organizations to replace workers whose skills are not up to date, and bureaucratic structures are inflexible. Strengths of the External labor Orientation include flexibility, workers trained by universities or other employers can be quickly added in areas that demand new skills, labor costs are not fixed, and the total number of employees can easily be increased or decreased. Weaknesses include weak relationship between organization and its employees, employees work because they are paid and not necessarily because they are loyal, employees usually do not develop a strong feeling of attachment to the organization, and employees do not provide a unique competitive advantage.

8. Choose a company where someone you know works. Which of the four human resource strategies do you think is most common in the company? Student answers will vary.

9. What are the key elements of the four human resource strategies: Loyal Soldier, Bargain Laborer, Committed Expert, and Free Agent? Answer: Loyal Soldier combines emphasis on long term employees with a focus on reducing costs, Bargain Laborer combines an emphasis on short-term employees with a focus on reducing costs, Committed Expert combines an emphasis on long-term employees with a focus on producing unique goods and services, and Free agent combines an emphasis on short-term employees with a focus on producing unique goods and services.

10. The chapter text pointed out that a majority of organizations have a human resource strategy that fits their competitive strategy. What should an organization do if the strategies don’t match? Answer: Such an organization should consider reassessing its human resource strategy to align with its competitive strategy to optimize its performance.

EXAMPLE CASE: United Parcel Service (page 69-70) Questions 1. How do practices such as internal promotion and assignment of broad job duties help UPS achieve its competitive business strategy? Answer: The managers have to make thousands of decisions in the field to keep things moving. In order to make these decisions in the most efficient and effective manner, they need to know how the system of UPS works together and how one decision will affect other aspects of UPS. The experience with UPS and broad job duties helps reduce the learning curve and the chances of improving the system.

2. How do the human resource practices at UPS help build teamwork? Answer: The HR practices noted in the above question help in that people recognize that their work will be rewarded. The sharing of the wealth, emphasis on fairness, inclusiveness, and coaching also

help in that the employees see the value of working together. Furthermore, they are given the tools (through inclusiveness, coaching, etc) to contribute to the team. Another factor is that managers know a lot of functional areas requiring interaction with people from various orientations, a better understanding of those orientations, and willingness of those in various areas to work with each other.

3. Why are training and experience so important at UPS? Answer: As noted above, training and experience are important for efficiency and effectiveness in a demanding work environment.

Many decisions have to be made quickly with the least amount of negative impact on the UPS system and customers. Knowing one’s job and the organization also allows everyone to make quick, effective decisions, interact with customers and employees with a positive attitude, and help UPS be successful in achieving its strategy.

DISCUSSION CASE: Mountain Bank (page 70-71) Questions 1. What competitive business strategy do you recommend for Mountain Bank?

Differentiation.

Answer:

2. Based on the universalistic approach and commitment strategy, what types of human resource practices do you recommend for Mountain Bank with respect to its tellers? Answer: For any of the following HR practices that Mountain Bank has not already implemented, they should add: broader job responsibilities, meaningful tasks, job rotation, inclusive decision making, high levels of responsibility, building employee confidence, two-way communication, quality-of-life surveys, and encourage suggestions, extensive new employee training, formal training for everyone (full- and part-time), multiple job skill development, pay for performance, higher levels of pay, ownership forms of pay such as stock, highly selective recruiting of full- and part-time tellers, identification of skilled workers, and long-term relationships with employees. They also should consider keeping some of the successful tellers as tellers rather than transferring them to another job. They could give them the opportunity to be lead persons or give them a different title (e.g., Senior Teller, Master Teller) or supervisors of the part-time and floating employees. Perhaps the more experienced tellers should be included as floaters (even if they have been transferred to customer service positions).

3. Which of the four human resource strategies do you recommend for Mountain Bank with respect to its tellers? Why? Answer: Committed Expert HR strategy because they want to hire and retain employees who are specialists and innovators. They also want people who fit their organizational culture (of excellent customer service, cooperation, and coordination) and that have the aptitude for becoming experts in particular areas (e.g., corporate banking).

They typically hire people early in their careers and give them long-term training that helps employees develop strong expertise. The bank will need to make several changes to achieve this strategy, including increasing their base pay and paying for performance.

ADDITIONAL WEB-BASED ACTIVITIES Overview of activity Refer back to the inset box on page 58 describing how Fenmarc Produce has benefited from emphasizing an internal labor orientation. This activity gives students the opportunity to investigate and justify Fenmarc’s practices.

Exercise: As noted previously, Fenmarc’s website (http://www.fenmarc.com/) is very colorful and illustrates the concepts described in the inset box on page 58. Through Fenmarc’s website, students could describe how Fenmarc appears to be implementing each of their six key principles, Cost Leadership strategy, internal labor orientation, and Loyal Soldier HR strategy.

Their philosophy is found on most pages.

Alternate Approaches to the Exercise: Students could compare Fenmarc to an organization found in the top ten of the 100 best companies in America. (refer back to the “How Do We Know” inset box on page 12).

Fenmarc’s six key principles could provide the basis for comparison.

Links to relevant information The organization’s website (http://www.fenmarc.com/) provides the information needed for the students to accomplish this exercise.

Chapter 3 Ensuring Equal Employment Opportunity and Safety Chapter 3 Learning Objectives 1. Explain how Title VII of the Civil Rights Act of 1964 and its amendment by the Civil Rights Act of 1991 protect workers against discrimination.

2. Describe how major laws such as the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Equal Pay Act, and the Family and Medical Leave Act protect workers.

3. Describe different methods for increasing workplace diversity, including opportunity enhancement, equal opportunity, tiebreak, and preferential treatment.

4. Explain the laws and practices concerning employee safety, including (a) the Occupational Safety and Health Act and (b) workers’ compensation.

5. Describe specific practices that can help an organization comply with legal guidelines and promote good health and safety practices.

Chapter 3 Outline 3.1 Why Is It Important to Understand Legal and Safety Issues?

The human resource function can provide important guidance for treating employees fairly and helping organizations comply with laws.

3.2 What is the Main Law Relating to Discrimination and Employment? (pages 79-92)

• Federal Laws: Discrimination is based on immutable characteristics; traits that cannot reasonably be changed (e.g., sex, race, age, and religion). (pages 79-81).

Protection from discrimination comes primarily from specific laws ✓ Title VII of Civil Rights Act of 1964 (i.e., race, color, national origin, religion, sex) ✓ Civil Rights of 1991 (i.e., race, color, national origin, religion, sex) ✓ Age Discrimination in Employment Act (i.e., age: people over 40) ✓ Americans with Disabilities Act (i.e., physical and mental disabilities) ✓ Equal Pay Act (i.e., sex) ✓ Family and Medical Leave Act (e.g., illness and parental status) ✓ Executive Order 11246 (i.e., race and sex)

• State vs. Federal Law (pages 80-81).

✓ Most states have laws against discrimination based on marital status, and a number of states prohibit discrimination based on sexual orientation. ✓ State laws can provide additional guidelines, but they cannot conflict. If a state law does conflict with a federal law, the federal law rules.

• Title VII of the Civil Rights Act of 1964: The most important law affecting HR practices.

(pages 81-87). ✓ The part of act that specifically applies to equal opportunity in employment is Title VII.

➢ Title VII provides protection to people based on five specific traits: race, color, national origin, religion, and sex. These groups are referred to as protected classes. ➢ Most, but not all, companies are required to comply with Title VII. ° Amended to exclude companies with fewer than 15 employees. ° Another exemption is religious institutions. ° A company that has too few employees to come under federal Title VII may still have to comply with similar state law. ➢ Title VII created the Equal Employment Opportunity Commission (EEOC): a federal agency in charge of enforcement of federal civil rights laws. ➢ Discrimination in the context of employment occurs when not all people are given the same opportunity for employment and promotions. In this sense, Title VII requires equal employment opportunity, meaning that people should be given an equal chance to obtain employment regardless of their race, color, national origin, gender, or religion. ➢ Disparate Treatment is the specific practice of treating certain types of people differently than others. ° Exception: bona fide occupational qualification (BFOQ), which applies when a characteristic of a specific group is necessary to perform a certain job. ° Prevention of claims against a company: ensure consistent treatment for all. ➢ Adverse Impact ° Adverse impact occurs when a company’s policies treat all applicants the same but result in different employment opportunities for different groups. ° Problems arise when certain groups are screened out at a higher rate than others. ° Protection from adverse impact claims of discrimination:  Make sure the organization uses valid methods to select employees.  Validity is shown when the measures used to select employees provide assessments that accurately identify the people most likely to succeed.  The courts have adopted the four-fifths rule, which is violated when the percentage of people selected from one group is less than 80 percent of the percentage of people selected from the best-represented group.  Results of all measures must be linked to differences in job performance.  The legal requirement of showing a relationship between selection practices and job performance is consistent with actions that increase profitability. ➢ Harassment occurs when an employee is persistently annoyed or alarmed by improper words or actions of other people in the workplace, such as supervisors or coworkers. ° Most cases of harassment involve behavior directed at an employee because of gender—this is known as sexual harassment.  According to EEOC, sexual harassment is defined as: “Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitute sexual harassment when (1) submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment, (2) submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual, or (3) such conduct has the purpose or effect of unreasonably

interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment.”  Quid pro quo sexual harassment occurs when an employee is told that continued employment or advancement depends on sexual favors.  Hostile environment harassment occurs when comments or behavior in the workplace have the purpose or effect of unreasonably interfering with the individual’s work performance or creating an intimidating, hostile, or offensive working environment.  Protection against claims of sexual harassment: ➢ Sexual harassment is less likely to occur when an organization has a climate of respect. ➢ Formal policies concerning harassment, as well as formal channels to communicate allegations of harassment, are important for demonstrating that the organization is taking reasonable care to eliminate unwanted behavior. ➢ Companies must also aggressively act when allegations are made.

• The Civil Rights Act of 1991 (Created some important extensions of Title VII). (pages 8890). ✓ Shifts burden of proof to companies accused of adverse impact discrimination.

Normally, the burden of proof in a lawsuit is on the plaintiff. ✓ Up until 1991, the Court decided a number of cases that appeared to signal that the burden of proof should not be shifted to companies. The 1991 act directly specifies that the burden of proof rests with the company once the potential victim establishes that adverse impact exists. ➢ Made race-norming illegal. Now individual’s scores must be compared with all other scores, not just with scores of members of his or her group. ➢ Provides for actual damages (e.g., lost wages) and punitive damages (payments designed to punish the company that can be substantially higher than actual damages). ➢ Allows jury trials for employment discrimination cases.

• Application of U.S. Laws to International Employers (pages 90-92).

✓ If a job is located in the U.S and the employer is a U.S. company, then U.S. laws protect the employee holding that job, as long as the employee is authorized to work in the U.S. ➢ Workers in other countries are only protected by U.S. discrimination laws when they are U.S. citizens working for U.S. organizations.

CONCEPT CHECK 1. What is the major law regarding employment discrimination, and who is protected by this law? Title VII of the Civil Rights Act of 1964 protects people based on five specific traits: race, color, national origin, religion, and sex.

2. How are disparate treatment and adverse impact different? Disparate Treatment is the specific practice of treating certain types of people differently than others. Adverse

impact is more subtle and occurs when a company’s policies treat all applicants the same but result in different employment opportunities for different groups.

3. What are the two types of sexual harassment? Quid pro quo sexual harassment (literally, “something for something”), which occurs when an employee is told that continued employment or advancement depends on sexual favors. Hostile environment harassment occurs when comments or behavior in the workplace have the purpose or effect of unreasonably interfering with an individual’s work performance or creating intimidating, hostile, or offensive working environment.

4. What are some major provisions of the Civil Rights Act of 1991? Created important extensions of Title VII including shifted the burden of proof to companies accused of adverse impact discrimination, made race-norming illegal, and changed the kind of damages that could be awarded in discrimination cases (now includes actual and punitive damages).

5. How do U.S. discrimination laws apply to international employers? If a job is located in the U.S and the employer is a U.S. company, then U.S. laws protect an employee holding that job against discrimination, as long as employee is authorized to work in the U.S. Title VII and similar laws do not apply in countries when the employer is not a U.S. company as workers in other countries are only protected by U.S. discrimination laws when they are U.S. citizens working for U.S. organizations.

3.3 What Are Other Important Employment Laws? (pages 92-98)

• The Age Discrimination in Employment Act (pages 92-93)

✓ Specifically, the law as amended applies to everyone over 40. ✓ Some special occupations, such as police officer and firefighter, have been allowed to require people to retire at a specific age. ✓ ADEA doesn’t simply classify people as either younger or older than 40. ➢ When it comes to age, people are compared against others. Thus, discrimination can occur when a worker who is 50 receives better treatment than a worker who is 60. ➢ Companies cannot defend themselves against claims of age discrimination by simply showing that they employ a number of people over 40. ✓ Small employers (20 employees or fewer) are exempt. ✓ ADEA protection has historically been focused mostly on termination decisions, even though the reach of the law includes hiring and promotion.

• The Americans with Disabilities Act (pages 93-96)

✓ Who Is Covered? ➢ The ADA provides protection for individuals with physical and mental disabilities. ° Physical disabilities include conditions such as loss of arm or leg, blindness, and chronic illnesses, such as cancer and diabetes. ° Mental disabilities include depression, learning disorders, and phobias. ➢ To be classified as a disability, the condition must impair or limit major life activity. ➢ Major activities include functions such as caring for oneself, walking, hearing, speaking, performing manual tasks, and learning.

➢ Exclusions ° People are not protected by the ADA if they have sexual behavior disorders, gambling addictions, or if they currently use illegal drugs. ° In addition, a disability must be something that cannot be easily fixed. ➢ The law also protects people in two other categories: ° Those who have a record of having a disability in the past. ° Those who are regarded as having a disability, even if they do not. ✓ What Protection Is Offered? ➢ ADA does not guarantee people with disabilities will be given any job they want. ➢ ADA guidelines apply only when the disabled person has the knowledge, skills, and abilities that are essential for performing the job. ➢ The ADA also may require companies to provide disabled individuals with reasonable accommodation to help them perform the essential duties of their jobs. ➢ Accommodation is any change in work environment or in the way things are customarily done that enables an individual with a disability to enjoy EEO. ➢ An organization may not have to make reasonable accommodations if doing so would create an undue hardship for the organization. ✓ How Do Companies Comply? ➢ The ADA places some important limitations on what organizations can ask and measure during the job application process. ° Asking people whether they have a disability on an application form or in an interview is prohibited. ° Conducting a medical exam to learn of a disability is prohibited, with one important exception: a medical exam can be required after a conditional job offer has been made, as long as the medical exam is required of all job applicants. ➢ Requires employers and employees to work together on accommodating disabilities. ° The ADA does not offer protection to someone who is disabled but does not make requests for accommodation. ° A company can help ensure that it follows the guidelines of the ADA.  Clearly describing the content of jobs.  Developing clear lines of communication so that people with disabilities can comfortably ask for reasonable accommodations.  Making accommodations can help find and keep high-quality employees.

• The Equal Pay Act (1963) (pages 96-97)

✓ Addresses the issue of pay differences for men and women. ✓ Makes it illegal to pay men and women different wages if they are doing equal work. ✓ Does recognize reasons why people in the same job might be paid differently (e.g., seniority, merit, piece-rate system). ✓ Does not require basing pay on comparable worth. ✓ Compliance ➢ Job analysis provides tools for determining when jobs are equal. ➢ Job evaluation uses surveys and statistics to determine how much to pay people. ➢ Performance measures assess the contribution of each employee and ensure that people who contribute more to the organization can be recognized and paid more.

•

The Family and Medical Leave Act (pages 97-98) ✓ The FMLA provides up to 12 weeks of unpaid leave for people in certain situations.

✓ When the employee returns to work, he or she must be restored to the same position or an equivalent position in terms of pay, benefits, and responsibilities. ✓ Male or female employees may request a leave of absence because the employee: ➢ is unable to work because he or she has a serious health condition. ➢ needs to care for an immediate family member with a serious health condition ➢ needs to care for a newborn child. ➢ needs to care for a child just adopted or fostered by the employee. ✓ Not everyone is covered by FMLA. ➢ Only companies with 50 or more employees who live within 75 miles of the workplace are required to grant leave under FMLA. ➢ The employee must have worked for the company for at least 12 months and at least 1,250 hours during the previous 12 months. ✓ Employees who take leave receive no pay while they are not working. ➢ The company is required to continue providing healthcare coverage under a group plan. ➢ Employees who wish to take leave usually provide 30 days’ advance notice, when possible. ➢ The company may also require an employee requesting leave based on a serious health condition to provide certification of the condition. ➢ Courts have ruled that an employee who is fired cannot later claim that absences were caused by medical conditions and thus covered by FMLA. ✓ Goal of FMLA is to help employees balance work demands with their family needs.

CONCEPT CHECK 1. Who is protected by the ADEA, the ADA, the Equal Pay Act, and the FMLA? The Age Discrimination in Employment Act applies to everyone over 40. The Americans with Disabilities Act protects people with physical and mental disabilities. The Equal Pay Act addresses pay differences for men and women. The Family and Medical Leave Act applies to companies with 50 or more employees who live within 75 miles of the workplace. The employee must have worked for company for at least 12 months and at least 1,250 hours during the 12 months prior to leave.

2. How do the concepts of reasonable accommodation and undue hardship guide the application of ADA principles? Accommodation is any change in work environment or in the way things are customarily done that enables an individual with a disability to enjoy EEO. An organization may not have to make reasonable accommodations if doing so would create undue hardship for the organization. In regard to undue hardship, courts generally take into account cost of accommodation, overall financial resources of the organization, size of the business, and nature of what it produces.

3.4 How Can Organizations Increase Diversity? (pages 98-102)

• Executive Order 11246 (1965) (pages 100-101)

✓ Affirmative action goes beyond equal opportunity and gives preferential treatment to members of groups that have been discriminated against in the past. ➢ Supporters argue that such preferences are needed to correct past injustices and provide disadvantaged groups with the opportunity to catch up with rest of society. ➢ Opponents say preferential treatment is nothing more than reverse discrimination. ✓ No law requires affirmative action; the policy is derived from Executive Order 11246. ✓ EO 11246 requires any organization doing business with the federal government to have an affirmative action plan. ✓ Requirements ➢ An affirmative action plan that complies with Executive Order 11246. ➢ Organizations must submit a number of reports to show their progress in providing work opportunities for minorities and women. ° A utilization study compares the percentage of women and minorities currently holding jobs in the company with the percentages of minorities and women in the population of the immediate labor area. ° If still needed, the study results will help to develop goals and timetables for increasing the representation of women and minorities in the company’s work force. ° Organizations must then show a good faith effort to achieve these goals and timetables. ✓ Sanctions for not following affirmative action guidelines. ➢ Canceled contracts and prohibited from doing business with government. ➢ In rare cases, Department of Justice or EEOC may pursue lawsuits for violations of criminal law or Title VII. ➢ In most cases, a company cannot be sued for failing to follow an affirmative action plan.

• Restrictions on Affirmative Action Plans (page 101)

✓ A series of court decisions has placed important restrictions on affirmative actions plans. ➢ Admission to medical schools ➢ Decisions involving layoffs

• Affirmative Action Plans Today (pages 101-102)

➢ Executive Order 11246 versus Title VII ° One basic question is if Title VII is designed to provide equal opportunity for all, then how can Executive Order 11246 require preferential treatment for some? ° In general, the courts have upheld the legality of Executive Order 11246 by ruling that its practices are consistent with the intent of Title VII. ✓ Compliance: In many cases, these procedures can help organizations meet affirmative action goals through practices that are widely accepted.

CONCEPT CHECK 1. What are four approaches to increasing workforce diversity? One: create opportunity enhancement programs that focus on identifying and actively recruiting employees from groups that have historically been targets of discrimination, such as women and minorities. Two: develop equal opportunity programs that emphasize the elimination of biases and forbid unfair treatment toward underrepresented groups. Three: support tiebreak programs which suggest that minority status be considered a plus when deciding between otherwise equally qualified individuals. Four: support preferential treatment programs that give positive weight to being a member of an underrepresented group.

2. What is Executive Order 11246, and what does it require of companies doing business with the federal government? Executive orders are not passed by Congress but rather are issued by the president of the United States. Executive Order 11246 was issued by President Lyndon B. Johnson and requires any organization doing business with the federal government to have an affirmative action plan.

3.5 What Are the Major Laws Relating to Occupational Safety? (pages 102-107)

• Occupational Safety and Health Act

✓ A federal law passed in 1970. ✓ Compliance with this federal law, and general efforts to promote employee well-being, not only reduce workplace accidents but also improve productivity. ✓ Requires employers to keep records about safety practices and incidents, to keep track of illnesses and injuries occurring at work, and to conduct periodic inspections. ✓ Employers that do not follow guidelines of OSHA may be fined. ➢ A material safety data sheet (MSDS) is a paper that specifically describes the nature of a particular chemical and how to prevent injury. ✓ Emergency Plans: Plans for dealing with fires and other emergencies are the main subject of the emergency action plan standard. ✓ Hazardous Chemicals: Organizations must provide information about protective measures that reduce the chance of harm from the chemicals. Each workplace must have a written plan called a hazard communication standard. ✓ Workspace Layout: Emphasizes the need to keep the workplace clean and orderly in order to prevent slips and falls that may result in injury. ✓ Medical and First Aid: Requires employers to make medical personnel and first aid supplies available to workers to treat injuries.

• Workers’ Compensation

➢ Each state has laws and programs governing workers’ compensation, which provides protection for employees who are injured or disabled while working ➢ Employers are required to carry workers’ compensation insurance. ➢ Workers’ compensation programs require employees and employers to record and report workplace accidents. ➢ The HR function is to ensure the accuracy of the relevant records, train workers how to report injuries, and work with medical providers.

CONCEPT CHECK 1. What is OSHA, and how does it affect business organizations? A federal law that includes compliance and general efforts to promote employee well-being, to reduce workplace accidents, and improve productivity. Companies must have records of the information they provide to teach employees about the health concerns and dangers present in the workplace; they must keep track of all illnesses and injuries that occur at work; and they must also conduct periodic inspections to ensure workplace safety.

Employers must provide information and keep employees informed of protections and safety obligations.

2. What protection is provided by state workers’ compensation laws? Provide protection for employees who are injured or disabled while working. In most cases, workers compensation takes the form of an insurance program. Employers are required to carry workers’ compensation insurance, which provides benefits to compensate for injuries suffered during work, no matter how the injuries were caused. Benefits include payment of medical expenses for injured workers, disability benefits to replace income for injured workers unable to return to work, and benefits for family members of workers killed on the job. In most states, workers’ compensation must compensate an injured employee even if the actions of the employee caused the injury, but the employee cannot bring a lawsuit to try to collect more money than what is provided by the insurance policy.

Employees and employers are required to record and report workplace accidents.

3.6 What Specific Practices Increase Fairness and Safety? (Pages 107-110)

• Failure to comply with laws and regulations can be costly to an organization.

• Employees

✓ HRM function is to provide information about laws and guidelines. ✓ Motivation can be increased when organizational leaders help managers and employees see that they have the skills necessary to do what is being asked. ✓ Ongoing training programs are an important aspect of complying with laws and ensuring fair treatment. ✓ Those who work hard to ensure fairness and safety should be rewarded.

• Leadership

✓ Leaders must set a good example and clearly communicate their expectations. ✓ Compliance with regulations is much more likely when leaders develop and carry out programs that emphasize the goals of the regulations, such as diversity and safety. ✓ Leadership can encourage compliance by measuring key results. ✓ Track progress in hiring and recruiting protected classes, disabled workers, etc. ✓ Managers who create fair hiring practices should be rewarded for their efforts.

CONCEPT CHECK 1. What can organizational leaders do to encourage compliance with laws and regulations? Show high commitment to compliance, set a good example and clearly communicate expectations, develop and carry out programs that emphasize the goals of the regulations, carefully develop and communicate to increase employee knowledge and motivation, encourage compliance by measuring key results, reward managers who create fair hiring practices and achieve diversity objectives, reward supervisors’ efforts to communicate the importance of safety, and reward groups of employees who follow guidelines and remain accident-free.

Chapter 3 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (page 111-112) Summaries of each of the five learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives: The chapter contains five learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 79 Learning objective 2- page 92 Learning objective 3- page 98 Learning objective 4- page 102 Learning objective 5- page 107

Concept Checks The chapter contains five concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- page 92 Concept 2- page 98 Concept 3- page 102 Concept 4- page 107 Concept 5- page 110

Tables and Figures The table and figures presented in the chapter help illustrate the concepts of the chapter. They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 3.1- page 80 Table 3.2- page 86 Table 3.3- page 94

Major U.S. Employment Laws Sexual Harassment Guidelines Guidelines for Effective Layoffs

Figure 3.1- page 80 Protected Classes of Employees in Various Countries Figure 3.2- page 84 Adverse Impact Case Proceedings Figure 3.3- page 91 Do U.S. Discrimination Laws Apply to International Employers?

Figure 3.4- page 103 Nonfatal Occupational Injuries and Illnesses with Days Away from Work by the Part of Body Affected.

Figure 3.5- page 106 Sample Materials Safety Data Sheet Figure 3.6- page 107 Encouraging Legal and Safety Compliance A Manager’s Perspective (page 76-77), What do you think? (page 77), and A Manager’s Perspective Revisited (page 110).

The chapter starts with a short scenario where Alex (a supervisor) has just met with one of his best employees. The employee told Alex of a situation that could be sexual harassment by the male members of a team. He also considers other legal issues that He’s learned of in his organization and other organizations. Five true/false questions related to this scenario and the chapter topics are noted on page 77 and answered on page 110.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what additional questions Alex should ask.

During the discussion of the chapter material, you could refer to these questions at appropriate points. This will add both variety in the instructor’s presentation and more realistic application of the chapter concepts

For some chapters, you may wish to address the questions at the end of discussing the chapter.

In this case, you may want to bring the students’ attention to these questions informing the students that they will be asked to answer the questions near the end of the chapter discussion.

At that time, students (individually or in groups) could be asked to explain why the answers are true or false. Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

Building Strength through HR: Responding to Discrimination Claims (page 79) This special feature (page 79) highlights several issues noted in the opening case regarding some organizations that have settled some discrimination-related cases (refer to pages 78-79). This case then focuses on Walmart’s on-going class action lawsuit and the actions Walmart has taken to offset the poor publicity and improve their HR practices.

The inset box (refer to page 79) supplements the opening case by noting three things organizations can do to prevent and quickly respond to allegations of discrimination. You could ask the students what other HR practices could help organizations achieve these goals (e.g., create a culture of inclusiveness and fairness, have leaders demonstrate their commitment to fairness, etc.).

Of course, you could ask a related question of the students that puts the focus back on Walmart.

Most students know about Walmart, and this author’s experience indicates that they are likely to have strong opinions about Walmart’s HR practices. Thus you could ask: If we assume that some of the allegations are true, how could Walmart have prevented the legal action? You should move the students past such answers as “not discriminating in the first place” to more specific answers such as regularly monitoring gender and race differences in pay, promotions, etc. and having a strong, effective process to encourage and investigate such allegations.

You also could ask students to comment on the last sentence of the case (“In the end, it seems safe to conclude that Walmart would prefer that the legal action had never begun.”) Of course, this statement would apply to any organization being sued. One would hope that this statement infers that the organization wishes they’d handled these situations better and had resolved them in-house. However, if it infers that the organization wishes nobody had complained, you could ask what costs can be incurred when nobody brings these issues to the attention of the organization. What costs may result if organizational practices are unfair, diversity is not encouraged or rewarded, employees are unhappy, excellent employees are quitting, etc? You could ask the students which might cost more in the long run: the lawsuit or the continuing of discrimination and other unfair or illegal practices.

Supplemental information also could be provided by a student responsible for updating the case and finding relevant information regarding the lawsuit, organization’s policies, etc. via the organizations’ websites or other sources. While Walmart is the focus of most of the case, insightful information is also available about the progress being made by Coca-Cola, Texaco,

etc. Of course, you should inform the students of any school policies that address contacting organizations.

All of this could be accomplished through guided class or group discussion or by briefly mentioning the case details in a mini-lecture to show the relevance of the chapter topics.

Additional ways to address the opening cases could include individual students or teams of students presenting the main points and how the case answers the opening question of that section. The topics and organizations in this case also could be used as topics for a more comprehensive assignment due later in the term.

How Do We Know? Do Courts give Companies Credit for Good HR Practices? (page 85) This inset box (page 85) is referred to prior to the inset box (refer to page 85). This gives a good reason to elaborate on the information presented in the box. Three researchers investigated a scientific method that the courts have accepted for establishing validity of minimum qualifications for a job. As described in the inset box, the findings of their studies revealed that federal courts look favorably on the use of scientific procedures to demonstrate that they properly screen job candidates. The courts accepted the procedures and selection methods even though they resulted in adverse impact.

The class could be encouraged to read the details in the inset box. During the lecture or class discussion of the chapter, the study and conclusions could be summarized. This could be accomplished through your lecture (asking for student input) or by assigning the box to a student.

You or the student could lead a brief class discussion after presenting the facts.

Regardless of who presents the information, the students could be asked to define adverse impact, describe the process that the courts accepted, do they agree with the court (and is the procedure a good enough reason to allow adverse impact), and what can an organization do in the future to increase diversity and hire the affected groups (e.g., recruiting, training)?

Other ways to address this information could be through a short written assignment or a more indepth research paper on the topic.

Technology in HR: Legal Issues with Internet and E-mail Use (page 89) This inset box (refer to page 89) briefly addresses various problems that might arise from using the internet and some suggestions regarding how organizations can protect themselves.

Most likely, the majority of your students will have experience with or, at least, be aware of some of the controls noted in the inset box. Many will have experience through living in the dorms, student computer labs, library, or their workplace. If so, you could encourage them to talk about the specific controls, the affect of those controls on productivity, use of software, goal accomplishment, etc. You also should ask them if they think such controls are justified and fair

and if they thought their privacy had been violated. You also could ask if the students think that the costs of all these controls are justified.

You also could ask the students if they have heard of any incidents where inappropriate e-mails, blogs, or other internet postings have gotten people fired or reprimanded. You may want to be prepared to mention a few examples from recent news reports in case they can’t think of any examples. A quick computer search of your local newspaper, Wall Street Journal, and USA Today most likely will provide some examples to illustrate the prevalence of the issues.

Another approach might be to ask the students if people should be forewarned about the controls (versus just being caught in the act). You could have groups of students write the communiqué (memo, e-mail, speech) that would inform employees of one of the controls noted in the box.

You could assign each group a specific control or, more preferred, allow each group to select which control they’d like to address. In the debriefing, you could ask the groups to address various aspects of their communiqué (e.g., opening statements that introduce the issues, amount of detail provided about the controls, repercussions for violating and/or adhering to the policy, closing statements).

You should emphasize that these memos should be informative and motivational, not accusatory and punitive in nature. The memo should reinforce a cooperative culture rather than a management-versus-employees dysfunctional culture (where employees see how they can fool the system and management). A variation of this exercise could be to have students prepare the memo out of class as a written assignment. When you return scored memos, you could show examples of the different elements of excellent memos. It’s best to show examples from a variety of students in that section so as to surreptitiously reward more students. Although some students may want to take credit if an aspect of their memo is shown to the class, you need to keep such feedback anonymous. Some students are embarrassed by such attention.

The topics in this box could provide topics to be researched by students.

How Do We Know? Who Is Most Likely to Unfairly Discriminate? (page 88) In this inset box (see page 88), Jonathan Ziegert and Paul Hanges investigated implicit racial attitudes and motivation to control prejudice. The researchers concluded that an organization’s culture and leader attitudes toward discrimination can influence subordinates’ tendency to discriminate. People who consciously control their biases are less affected by a leader’s negative attitude about protected classes.

The information reported in the inset box could be part of a lecture and class or small group discussion. Students could be asked if everyone is biased to some extent. Then they could be asked to speculate on the sources of racial attitudes and biases (e.g., family, peers, and experience with one member of a group) and whether a person wishes to control such biases.

The students then could discuss what organizations and leaders can do to encourage a culture of fairness for all. If this discussion is done in small groups, each group could be asked to report

one aspect of their conclusions until time is expired or the topics are adequately addressed. You may want to emphasize that negative attitudes can and should be consciously controlled.

Building Strength Through HR: PepsiCo (page 99) As noted above this inset box (refer to page 99), this box discusses some of PepsiCo’s approaches to and benefit from diversity.

During a mini-lecture, you could briefly mention PepsiCo as an example of effective diversity initiatives. You also could ask students why diversity is important to organizations like PepsiCo. In regard to the affinity groups noted in the box, you could ask: What are the benefits of having a group sponsor who is an executive and is not a member of the group’s race or gender? The box also notes that certain products (i.e., guacamole Doritos and Mountain Dew Code Red) appeal to diverse customers. You could ask students to discuss what consumer groups actually benefit from these products. The same question could be asked about the practices that make PepsiCo one of the best places of employment for minorities; might these practices make PepsiCo a better place for all employees?

The above could be discussed as a class or in smaller groups. A related web-based exercise is described at the end of this chapter in the Instructors’ Manual.

Building Strength Through HR: United Pacific Corporation (page 105) As noted on the page before the inset box found on page 105, the health and safety programs at Union Pacific Corporation are briefly described.

You could mention this inset as an example of how many things such a program can entail and how employees and the organization can benefit. You or students could summarize the main points in the case. Some of the health and safety programs address personal issues (e.g., weight, smoking, etc.). Students could be asked if organizations have the right to try to change people, especially if the only perceived benefits are increased productivity and lower costs. Hopefully, some students will question whether or not these are the only benefits.

Students could be asked what HR practices organizations and managers could use to encourage employees to stop smoking, improve their fitness, lose weight, etc. They also should address how not to penalize those who don’t smoke, are fit, and are the correct weight. In other words, how can everyone benefit from these programs and do it without bankrupting the organization?

You could have the students discuss how these issues might be addressed differently in organizations with a cost leadership or differentiation strategy. The same could be addressed for each HR strategy.

How Do We Know? What Can Organizations Do to Promote Safety? (page 109) In this inset box (see page 109), Wallace and Chen investigated those factors that explained safe behavior. By collecting data from 254 employees organized into 50 work groups, they were able to assess safety climate by measuring the extent to which supervisors emphasized compliance with safety procedures. In summary, they determined that the creation of a strong safety climate increases safe behavior, but the strong safety climate may also reduce productivity.

The information reported in the inset box could be part of a lecture and class or small group discussion. The students could discuss what organizations and leaders can do to encourage a culture of safety within their organizations yet promote consistent productivity. Consider also involving the students in discussing how strong HR hiring can impact organizational safety.

KEY TERMS (page 112) Adverse impact 83 Affirmative action plan 100 Bona fide occupational qualification (BFOQ) 82 Comparable worth 97 Discrimination 82 Disparate treatment 82 Emergency action plan standard 104 Equal employment opportunity 82 Equal Employment Opportunity Commission 81 Four-fifths rule 84 Harassment 86 Hazard communication standard 104 Hostile environment 87 Immutable characteristics 80 Material safety data sheet (MSDS) 104 Medical and first aid standard 105 Mental disabilities 94 Physical disabilities 94 Protected classes 81 Punitive damages 90 Quid pro quo 86 Race-norming 90 Reasonable accommodation 95 Sexual harassment 86 Title VII 81 Undue hardship 95 Utilization study 100 Validity 83

Walking/working surfaces standard 104 Workers’ compensation 106

DISCUSSION QUESTIONS (pages 112-113) 1. How can human resource professionals reduce employment discrimination? Answer: Provide important guidance for treating employees fairly and helping organizations comply with laws.

2. Why do you think the majority of employment and safety laws have been passed in the last 50 years, rather than at an earlier time? Students’ answers will vary. Reasons could include increased diversity in the workforce, globalization, and good people became tired of seeing and hearing unethical and unfair practices, jokes, etc.

3. How is adverse impact different from disparate treatment? Answer: Disparate Treatment is the specific practice of treating certain types of people differently than others. Adverse impact is more subtle and occurs when a company’s policies treat all applicants the same but result in different employment opportunities for different groups.

4. How are Title VII and Executive Order 11246 similar? How are they different? Answer: In general, the courts have upheld the legality of Executive Order 11246 by ruling that its practices are consistent with the intent of Title VII. Affirmative action policies actually derive from Executive Order 11246, which does not have the force of law. Affirmative action goes beyond equal opportunity and gives preferential treatment to members of groups that have been discriminated against in the past. Executive orders are not passed by Congress but rather are issued by the president of the United States. Executive Order 11246 was issued by President Lyndon B. Johnson and requires any organization doing business with the federal government to have an affirmative action plan.

5. What trends in society do you think encouraged the Americans with Disabilities Act and the Family and Medical Leave Act? Student answers may vary. Trends include technology has made it possible for people to overcome mental and physical challenges, need to hire and retain quality employees, large percentage of workforce have challenges, increase of number of older workers (may become disabled or ill), desire to be fair.

6. What are some reasons employees might engage in unsafe acts even when they know they could be harmed? Students’ answers may vary. Reasons include beliefs of invincibility, taking shortcuts to either meet organizational goals, because they think they know better than the organization, stress, exhaustion, time constraints, etc.

7. How do workers’ compensation laws protect both employees and employers? Answer: Provide protection for employees who are injured or disabled while working. Employers are required to carry workers’ compensation insurance. Benefits include payment of medical expenses for injured workers, disability benefits to replace income for injured workers, and benefits for family members of workers killed on the job. Most states make workers’ compensation a no-fault and exclusive remedy for injury. This means that insurance must compensate an injured employee even if the actions of the employee caused the injury, but the employee cannot bring a lawsuit to try to collect more money than what is provided by

the insurance policy. Workers’ compensation programs require employees and employers to record and report workplace incidents.

8. How might efforts to hire more minorities and women result in greater productivity and profits? Answer: Greater variety of ideas, views, experiences, etc. More diverse organizations may be more flexible, accepting of differences, and less bureaucratic to better accommodate differing needs and motivations of their diverse workforce. There might be more mentoring, coaching, and training, helping people become productive more quickly.

Furthermore, customers are more diverse so it behooves the organization to have a workforce that reflects that diversity. These organizations also tend to be more involved in the community and are perceived to be more socially responsible, which employees and customers value.

9. What are some ways in which organizations can motivate employees to follow safety guidelines? Answer: Employees working in hazardous areas must be trained in procedures to protect them from injuries and illnesses.

Motivation can be increased when organizational leaders help managers and employees see that they have the skills necessary to do what is being asked. Individuals who work hard to ensure fairness and safety should be rewarded with higher pay and promotions. Conversely, workers who try to accomplish tasks using shortcuts that compromise safety may need to suffer penalties.

10. Why are the example and actions of top organizational leaders so important for encouraging employees and supervisors to follow laws and guidelines? Answer: Employees generally follow their leaders. They are therefore much more likely to comply with laws and guidelines when leaders show high commitment to compliance. Furthermore, top organizational leaders set the culture and reward structure.

EXAMPLE CASE: Xerox (page 113) Questions 1. How has hiring women and minorities improved Xerox’s profitability? Answer: They are

receptive to change, which most likely extends to their analyzing and reacting to changes in the external environment. Their female CEO cut the workforce, refreshed the product line, and strengthened the balance sheet.

2. What changes did Xerox make to become a more attractive employer for women and

minorities? Answer: They first allowed women to take work home in order to get home in time for supper. Now, no one hesitates to reschedule a meeting to take a child to the pediatrician; and managers are judged and compensated on meeting diversity goals. They also aggressively hire blacks and support a caucus of black employees who meet to network and discuss grievances. And as feminism took hold, Xerox’s progressive attitudes on race made it especially receptive to changes. They also promote women and they find ways to promote people without the typical route of relocating.

3. Do you think the emphasis on hiring and promoting women and minorities has been unfair to white men? Why or why not? Answer: No, men also should benefit from the new, more

flexible policies, especially since more men are becoming actively involved in family and care giving. Furthermore, only about 30% of middle management jobs are held by women, which means about 70% are held by men (a majority of whom are most likely white).

DISCUSSION CASE: Jones Feed and Seed (pages 114-115) Questions 1. What training would you provide to the supervisors who conduct job interviews? Answer: They need to know about relevant employment laws and what issues to avoid (e.g., age, disability, previous worker’s compensation claims). They also need to learn how to ask questions about skills (e.g., lifting, work schedule), safety procedures (including ergonomics), and to only ask questions that are job-related.

2. What are some primary safety concerns that the company should have about the warehouse operation? Answer: Nine of the listed job duties could involve major safety concerns (#2, 4, 5, 6, 9, 10, 11, 12, and 13). In addition, ergonomics and stress are safety concerns.

3. What OSHA guidelines does the company need to follow and communicate to employees?

Answer: OSHA requires employers to keep safety practices and incidents. Companies must have records of the information they provide to teach employees about the health concerns and dangers present in the workplace, they must keep track of all illnesses and injuries that occur at work, and they must also conduct periodic inspections to ensure workplace safety.

In these inspections, they examine and test structures, machines, and materials to guarantee proper operation and not place employees in dangerous situations. Employers must provide information and keep employees informed of protections and safety obligations. An important role of the human resource function is thus to ensure the accuracy of the relevant records. Training workers in how to report injuries is important as well. Human resource professionals in many companies work with medical providers who treat injuries and help determine when employees are ready to return to work.

4. What kind of disabilities do you think could be reasonably accommodated for this job position? Answer: Mental disabilities. The physical disabilities would depend upon what would not cause undue hardship for this organization.

EXPERIENTIAL EXERCISE: Locating Government Resources on the Web (page 115) Visit the Web site that describes workers’ compensation for your state. Links can be found at http://www.workerscompensation.com/workers_comp_by_state.php.

Questions: Student answers will vary depending upon your state.

1. Who can employees contact if they think they have claims?

2. How would an employee go about filing a workers’ compensation claim?

3. How soon after an injury must an employee make a claim?

4. What types of benefits might an injured employee receive?

5. What happens if the employee and employer have a dispute over workers’ compensation?

Visit the OSHA Web site at www.osha.gov. In the compliance assistance section, visit the area called “Quick Start.” Look at the modules that describe guidelines for the construction industry.

Questions.

1. What kind of records should a construction company keep? Answer: Records of workplace injuries and illnesses (unless have 10 or fewer employees), all employers, regardless of size or industry, must report the work-related death of any employee or hospitalizations of three or more employees, and employers generally must maintain employee exposure records for 30 years and medical records for the duration of the employee’s employment plus 30 years.

29 C.F.R. § 1904.

2. What should be included in a jobsite safety program? Answer: Accident prevention programs that provide for frequent and regular inspection of the jobsites, materials, and equipment by competent persons designated by the employers. 29 C.F.R. § 1926.20.

3. What type of training should construction companies offer to employees? Answer: How to recognize and avoid unsafe conditions and train re: the regulations applicable to work environment to control or eliminate any hazards or other exposure to illness or injury.

Employees required to handle or use poisons, caustics, and other harmful substances shall be instructed regarding the safe handling and use, and be made aware of the potential hazards, personal hygiene, and personal protective measures required. In job site areas where harmful plants or animals are present, employees who may be exposed shall be instructed regarding the potential hazards, and how to avoid injury, and the first aid procedures to be used in the event of injury. Employees required to handle or use flammable liquids, gases, or toxic materials shall be instructed in the safe handling and use of these materials and made aware of the specific requirements. All employees required to enter into confined or enclosed spaces shall be instructed as to the nature of the hazards involved, the necessary precautions to be taken, and in the use of protective and emergency equipment required. The employer shall comply with any specific regulations that apply to work in dangerous or potentially dangerous areas. 29 C.F.R. § 1926.21.

What features of the OSHA Web site do you find most helpful? What would you do to improve the Web site? Student answers may vary.

INTERACTIVE EXPERIENTIAL EXERCISE: The Legal Side of HR: Handling Equal Employment Issues at Mega Manufacturing (page 115) This exercise provides a realistic example of a worker’s sexual harassment allegation. Student role-playing is recommended as a class exercise.

ADDITIONAL WEB-BASED ACTIVITIES Overview of activity Please refer back to Building Strength Through HR: PepsiCo on page 99. Students report on the diversity-related information found on the PepsiCo’s website (www.pepsico.com).

Exercise: Compare the aspects of the diversity websites/programs linked to the “Supplier Diversity” link (i.e., Pepsi-Cola Program, Frito-Lay Program, Tropicana Program, and Quaker Program).

Students could generally comment on the purpose(s) of these programs. Then they could contrast and compare the information presented for each program commenting on effectiveness, information, presentation of information, etc. In addition, they could compare the commitment statements of each program and state why they think one is best. Finally, they could review the initial page of Supplier Diversity Partners Registration and who can be a part of their Supplier Diversity Partners program.

Alternate Approach to the Exercise: An alternative approach could be to have the students summarize one or more of the recent entries linked to “Diversity News.” The students should be encouraged to outline some of the major HR practices that were touted as being excellent in regard to promoting diversity.

Please be aware that some of the news releases only provide lists of companies and others provide information about many organizations in addition to PepsiCo. Links to relevant information www.pepsico.com Note: From the main page, select “Responsible and Sustainable Sourcing” from the “Purpose” drop down menu to reach the Supplier Diversity page.

Chapter 4 Designing Productive and Satisfying Work Chapter 4 Learning Objectives 1. Describe how the design of work tasks and roles can align with overall HR strategy.

2. Explain the steps in the process of job analysis and how to translate job analysis results into knowledge, skill, and ability lists that can be used to guide other HR practices.

3. Describe various approaches to job design, including the motivational, biological, mechanistic, and perceptual perspectives.

4. Identify practices that make jobs more compatible with family demands.

Chapter 4 Outline 4.1 How Can Strategic Design of Work Tasks Improve and Organization? (pages 122-124) Work design consists of differentiation, which suggests that workers should be assigned sets of similar tasks so that they can specialize in doing certain things very well, and integration, which is concerned with coordinating the efforts of employees. Strategic work design uses both differentiation and integration to determine who does what. Good differentiation and integration of work helps organizations increase productivity and improve customer service.

4.2 How Is Work Design Strategic? (pages 124-128) The key to making work design strategic is to align the methods used for assigning and coordinating tasks with overall HR strategy.

• Developing Autonomy (pages 124-126)

✓ Autonomy concerns the extent to which individual workers are given the freedom and independence to plan and carry out work tasks. ✓ Greater autonomy provides two potential benefits to organizations. ➢ Information: Those closer to products and customers often able to make rapid changes if something in the production process shifts or if customers’ needs vary. ➢ Increased motivation. ° More autonomous employees are less likely to shirk their responsibilities. ° High-level managers with greater autonomy in both the United States and Europe report greater job satisfaction and less chance of leaving their current employer. ➢ Problems ° High autonomy can create coordination problems. ° An employee with a great deal of freedom to change work processes might make changes that are troublesome when the work process is carefully planned in advance.

• Developing Interdependence (pages 126-127)

✓ Interdependence: extent an individual’s actions and outcomes are influenced by others.

✓ ✓ ✓ ✓

When interdependence is low, people work mostly by themselves.

Greater interdependence often corresponds with improved performance.

Sequential processing takes place when work tasks are organized in an assembly line.

Reciprocal processing requires more interaction and coordination among workers.

Reciprocal interactions occur when people work together in a team without carefully prescribed plans for completing work tasks. ✓ The best type of interdependence depends on the work situation. ✓ Individuals and teams tend to benefit from sequential processes when work activities can be broken into small tasks that do not change. ✓ Reciprocal processes tend to be optimal when activities are complex and require mental rather than physical inputs.

• Linking Autonomy and Interdependence to HR Strategy (pages 127-128)

✓ Efficiency is accomplished by combining low autonomy and sequential processing. ➢ Bargain Laborer: Standardization and specialization. ➢ Loyal Soldier: Sequential interdependence. ✓ HR strategies focusing on innovation—new approaches create new products. ➢ Free Agent: Experimentation and broad responsibilities. ➢ Committed Expert: High autonomy and reciprocal interdependence.

CONCEPT CHECK 1. What is autonomy and how does it influence work performance? Autonomy concerns the extent to which individual workers are given the freedom and independence to plan and carry out work tasks. Employees are more motivated and often able to make rapid changes if something in the production process shifts or if customers’ needs vary.

2. What are the different forms of interdependence? Sequential processing takes place when work tasks are organized in an assembly line. Reciprocal interactions occur when people work together in a team without carefully prescribed plans for completing work tasks.

3. How do autonomy and interdependence link to overall HR strategy? Bargain Laborer: Standardization and specialization; Loyal Soldier: Sequential interdependence; Free Agent: Experimentation and broad responsibilities; Committed Expert: High autonomy and reciprocal interdependence.

4.3 How Are Employee Jobs Determined? (pages 128-139)

• The Job Analysis Process (pages 128-133)

✓ The process of systematically collecting information about work tasks. ✓ The process involves obtaining information from experts to determine: ➢ Tasks workers must perform. ➢ Tools needed to complete tasks. ➢ Conditions required to work. ✓ Importance of job analysis

➢ Knowing what tasks need to be completed helps managers select people with appropriate knowledge and skills. ➢ Provides important information for planning training programs. ➢ Helps guide decisions about pay. ➢ Helps ensure that HR practices comply with legal guidelines. ✓ Steps for good job analysis ➢ Step 1: Getting Organized ° Decide who will do the analysis ° Get support from top management ➢ Step 2: Choosing Jobs ° Assure job is critical for success ° Focus on jobs that many people perform ➢ Step 3: Reviewing Knowledge ° Find out what has been written about the job ° A helpful site is the Occupational Information Network developed by the Department of Labor ➢ Step 4: Selecting Job Agents ° Use incumbents, supervisors, and experts ° Assure a representative mix of people ➢ Step 5: Collecting Job Information ° Use interviews, questionnaires, and observation ° Utilize a job analysis interview to help determine job duties and responsibilities ° Utilize a job analysis questionnaire to help determine tasks performed on the job ° Utilize a job analysis observation to observe and write notes about tasks being performed ➢ Step 6: Creating Job Descriptions ° Make a list of duties by using action words ° Develop a job description, which is a series of task statements that describes the specific duties, responsibilities and actions needed to perform a job ➢ Step 7: Creating Job Specifications ° Develop a list of characteristics needed to do the job ° Develop job specifications that identify the knowledge, skills, and abilities workers need in order to perform the tasks listed in the job description

• Specific Methods of Collecting Job Analysis Information (pages 133-136) ✓ Task Analysis Inventory ➢ Job agents provide ratings concerning a large number of tasks. o Usually require responses for at least 100 different task statements. o Task statements usually begin with an action verb that describes specific activity. o Most task analyses require job agents to rate: frequency and importance. ➢ Yields information consistently across different raters at different times. ➢ Seems to work best when job incumbents relatively new to a position provide ratings

of frequency and importance. ➢ Fairly specific to a particular category of jobs. ✓ Critical-Incidents Technique ➢ Identifies good and bad on-the-job behaviors.

➢

Job agents are asked to generate a number of statements that describe behaviors they consider particularly helpful or harmful for accomplishing work. ➢ Statements are then analyzed to identify common themes. ✓ Position Analysis Questionnaire (PAQ) ➢ Structured questionnaire that assesses work behaviors required for job. ➢ Collects information about characteristics people must have to do job well. ➢ Includes 187 items that relate to job activities or the work environment. o These items assess characteristics along six dimensions:  Information input—where and how a worker obtains needed information.  Mental processes—reasoning and decision-making activities.  Work output—physical actions and tools or devices used.  Relationships with other persons—interactions and social.  Job context—physical and social surroundings.  Other job characteristics—important activities, conditions, or characteristics not contained in other five dimensions. o Questions on the PAQ are rated on scales according to what is being measured. o Items range from “very infrequently” to “very substantial” to determine extent of use. o Items range from “very minor” to “extreme” to determine importance to the job. ➢ Advantage is its usefulness across many different jobs. ➢ Disadvantage is its lack of task information, which limits its usefulness for creating job descriptions or guiding performance appraisal practices.

• How Is Job Description Information Made Useful? (pages 136-137)

✓ The result of most job analysis techniques is a list of duties. ✓ This information must then be translated into job specifications, which are required for purposes such as employee selection. ✓ Translation into job specifications is usually done by job agents highly familiar with the job and what it takes to perform it well. ✓ Job specifications provide a foundation for many other HR practices. ➢ Managers can use the list of worker characteristics as a “shopping list” when they begin identifying the type of workers they want to hire. ➢ Carefully prepared job specifications guide selection practices so that appropriate tests identify who has desirable characteristics. ➢ Areas in which employees lack necessary skills can be established as training priorities.

• Job Analysis and Legal Issues (pages 137-138)

✓ Practices grounded in good analysis are most likely to result in good decisions about how to hire, evaluate, and pay employees. ✓ Legal considerations are good for job analysis. ➢ Court decisions have confirmed importance of using good job analysis procedures. ➢ Help many organizations determine whether they are complying with requirements of the Americans with Disabilities Act (ADA).

• Competency Modeling (pages 138-139)

✓ Describes jobs in terms of competencies—characteristics and capabilities people need in order to succeed at work.

✓ ✓ ✓ ✓

Competencies include knowledge, skills, and abilities.

Competencies also capture things such as motivation, values, and interests.

Competencies include both “can-do” and “will-do” characteristics.

Typical steps for competency modeling: ➢ Step 1: Determine Data Collection Method ° Determine who will collect data ° Use interviews and focus groups ➢ Step 2: Collect Data ° Use open-ended questions, probe for specifics ° Have an agenda and stick to it, ensure that everyone participates ➢ Step 3: Direct Observation of Incumbents ° Watch people as they perform the job ➢ Step 4: Develop an Interim Model ° Identify themes and patterns ° Start with a general idea, be open to new information ➢ Step 5: Test the Interim Model ° Use focus groups and surveys ➢ Step 6: Validate the Model ° Assess correlations with the model and performance ratings ° Eliminate unneeded categories ✓ Goals ➢ Seek to develop links between work activities and organizational strategy. ➢ Tailor solutions to purposes and uses. ° Analysis that will be used for compensation decisions may be different from one used for determining type of job candidate to recruit. ° Competencies tend to be somewhat broader and less specifically defined than the activities assessed in job analysis. ➢ Typical competencies might include skill in presenting speeches, ability to follow through on commitments, proficiency, and persistence. ➢ Competencies can be rated in terms of current importance, future importance, and frequency. ✓ Job analysis v. competency modeling ➢ Competency modeling is more likely to link work analysis procedures and outcomes to business goals and strategies. ➢ Competency modeling procedures are often not documented as clearly as job analysis procedures and may be less rigorous. ✓ Research concluded that combined approach is better than either approach alone.

CONCEPT CHECK 1. What are the seven steps involved in job analysis? Step 1- Getting organized; Step 2Choosing jobs; Step 3- Reviewing knowledge; Step 4- Selecting job agents; Step 5- Collecting job information; Step 6- Creating a job description; Step 7- Creating a job specification.

2. What can an organization do to make sure its job analysis procedures comply with legal

guidelines? Analysis results should be in writing, method used to analyze the job should be clearly described, expert job analysts should collect data from several up-to-date sources; data should be collected from enough people to be sure the results are accurate; tasks, duties, and activities must be identified and included in the job analysis; and degree of competency for entry-level performance must be specified..

3. How is competency modeling different from job analysis? One area of difference is that competency modeling tends to link a broader set of characteristics to work success.

4.4 How Do We Determine the Tasks Associated with Each Job? (pages 140-145)

• Job analysis: provides information about who does what, but not how the tasks were combined into jobs in the first place. ✓ Job design ➢ Focuses on determining what tasks will be grouped together to form employee jobs. ➢ Important when companies are first created and when opening new plants or stores. ➢ Important for existing companies that are looking to improve. ✓ Job redesign ➢ Decide which tasks will be grouped together to define job duties of job position. ➢ Existing companies use job redesign to reorganize tasks so that jobs are changed. ✓ Work Design Methods ➢ Main objective of any work design method is to separate and combine work tasks in the ways that make the most sense. ° Depends on the overall objective of the organization. ° Driven by strategic choices.

Mechanistic Approach ➢ Engineers apply concepts from science and mathematics to design efficient methods for creating goods and services. ° Approach job design from the perspective of creating an efficient machine that transforms labor inputs into goods and services. ° Use principles of scientific management to create jobs that eliminate wasted effort so that organizations can produce goods and services quickly. ➢ Basic goal of mechanistic approach is to simplify work tasks. ° Reduce worker autonomy and create sequential processing. ° Use analyses designed to find the work methods that take the least time. ° Tasks are automated and each job is highly specialized. ➢ Loyal Soldier or Bargain Laborer HR strategies emphasize mechanistic approach. ° Everyone is taught the most efficient methods for completing standardized tasks. ° Helps reduce costs and creates value to customers.

Motivational Approach ➢ Aimed at increasing employees’ enjoyment of work, increasing their effort. ° Organizational psychology emphasizes designing work to fulfill needs of workers. ° Seeks to design work so that it is complex and challenging. ➢ Job characteristics model focuses on building intrinsic motivation. ° Intrinsic motivation exists when employees do work because they enjoy it, not necessarily because they receive pay and other rewards.

° Workers are intrinsically motivated when perceive work to have:  Meaningfulness. ➢ Able to use many different skills. ➢ Their inputs lead to the completion of a specific service or product. ➢ They see tasks as having an important impact on other people.  Responsibility: have autonomy and freedom to make decisions.  Knowledge of results: receive feedback about effectiveness of work.

Perceptual Approach ➢ Job designers using this approach group tasks together in ways that help workers to process information better. ➢ Basic objective is to simplify mental demands on workers and decrease errors. ➢ Most commonly found in Loyal Soldier or Bargain Laborer HR strategies.

Biological Approach ➢ Emphasize the physical stresses and demands placed on workers. ° Ergonomics: methods of designing work to prevent physical injury. ° Task demands are assessed in terms of strength, endurance, and joint stress. ° Work processes designed to eliminate movements that can lead to physical injury or excessive fatigue. ° Workers taught principles regarding good posture and excessive wrist movement. ➢ Basic goal is to eliminate discomfort and injury. ➢ Guides work design specialists so assembly-line processes do not harm workers. ➢ Helps organizations with Bargain Laborer or Loyal Soldier HR strategies. ✓ Combining Work Design Approaches ➢ Research found trade-offs between the motivational and mechanistic approaches. ° Motivational approach increases job satisfaction; may result in reduced efficiency. ° Mechanistic approach improves efficiency; job satisfaction may decline. ➢ Jobs can be designed simultaneously from mechanistic and motivational approaches. ° Combining both sets of principles leads to jobs that are efficient and satisfying. ° In many instances, primary consideration will be either efficiency or motivation. ° Strategic objectives of the organization should drive work design.  Mechanistic approach is most relevant for cost strategies.  Motivational approach provides guidance for differentiation strategy.

CONCEPT CHECK 1. What are four different approaches to designing jobs in organizations?

Motivational, Perceptual, and Biological.

Mechanistic,

2. How does the mechanistic approach differ from the motivational approach? Mechanistic approach involves engineers applying concepts from science and mathematics to design efficient methods for creating goods and services. Use principles of scientific management to create jobs that eliminate wasted effort so that organizations can produce goods and services quickly. Motivational approach is aimed at increasing employees’ enjoyment of work, thereby increasing their effort. Seeks to design work so that it is complex, challenging, and intrinsically satisfying.

4.5 How Can Work Be Designed to Improve Family Life? (pages 145-150)

• One area of increasing importance for job design is conflict between work and family.

✓ Stress encountered at home or work can result in family-to-work and/or work-to-family conflict. ✓ Causes and Solutions ➢ Psychological effort required to cope in one area takes away from resources needed to cope in the other. ➢ Structuring work in ways that help decrease conflict between work and family roles. ° Appears to translate into higher organizational performance. ° Firms perform better when they incorporate family-friendly policies and procedures.

• Flexible Work Scheduling

➢ Flextime provides freedom to decide when to arrive at and leave work. ° Problems  Difficult to coordinate with coworkers on different schedules.  Supervision can be a problem if no supervisor is present. ° Benefits  Higher productivity.  Increased satisfaction among workers.  Lower absenteeism.  Less turnover. ➢ Compressed Workweek enables employees to have full-time positions but work fewer than five days a week—typically four 10-hour days.

• Alternative Work Locations

✓ Many organizations allow employees to work at locations other than company facilities. ✓ Researchers evaluating telework suggest how to improve its effectiveness. ➢ Use care in choosing the employees who are allowed to do telework. ➢ Should be limited to jobs where most appropriate (e.g., word processing, web design). ➢ These jobs have clear performance objectives and methods for measuring outputs. ➢ Telework is consistent with motivational approach to job design.

CONCEPT CHECK 1. How do flextime and compressed work weeks make organizations more family friendly?

Flextime provides freedom to decide when employees arrive at and leave work. Compressed Workweek enables employees to have full-time positions but work fewer than five days a week—typically four 10-hour days.

2. What are advantages and disadvantages of allowing employees to complete their work tasks at alternative locations? Advantages include substantial autonomy, employees work independently to complete meaningful tasks, and appropriate for differentiators.

Disadvantages include difficult to supervise, organizations cannot focus on work processes, and requires clear goals and performance measures (which may be difficult to establish).

Chapter 4 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (pages 151-152) Summaries of each of the four learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives: The chapter contains four learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 124 Learning objective 2- page 128 Learning objective 3- page 139 Learning objective 4- page 145

Concept Checks The chapter contains four concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- page 128 Concept 2- page 139 Concept 3- page 145 Concept 4- page 150

Tables and Figures The table and figures presented in the chapter help illustrate the concepts of the chapter. They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 4.1- page 132 Table 4.2- page 133 Table 4.3- page 135

Job Description for Computer Programmer Job Specifications for Computer Programmer Incident Frequencies of Good and Bad Resident Assistant

Behavior Table 4.4- page 137 Legal Issues and Job Analysis Figure 4.1- page 127 Strategic Framework for Work Design Figure 4.2- page 130 Phases of Job Analysis Figure 4.3- page 136 Comparing Job Descriptions and Job Specifications Figure 4.4- page 137 Steps in Competency Modeling A Manager’s Perspective (page 120-121), What do you think? (page 121), and A Manager’s Perspective Revisited (page 150-151) The chapter starts with a short scenario where Jane (supervisor) is thinking about how she can make work more enjoyable for the telemarketers she supervises. Five true/false questions related to this scenario and the chapter topics are noted on page 121 and answered on pages 150-151.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what additional questions Jane should ask.

During the discussion of the chapter material, you could refer to these questions at appropriate points. This will add both variety in the instructor’s presentation and more realistic application of the chapter concepts For some chapters, you may wish to address the questions at the end of discussing the chapter.

In this case, you may want to bring the students’ attention to these questions, informing the students that they will be asked to answer the questions near the end of the chapter discussion.

At that time, students (individually or in groups) could be asked to explain why the answers are true or false. Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

Building Strength through HR: W.L. Gore & Associates (page 123) This special feature (page 123) highlights several issues noted in this opening case regarding W.L. Gore and Associates (refer to pages 122-123). This case illustrates how strategic work design can benefit a differentiator.

The inset box (refer to page 123) presents some of the HR practices mentioned in the case but not all. Therefore, you could ask the students what else they might do to facilitate the teamwork and motivation (e.g., telecommute, compressed work week). You may want to explore what the students think about everyone being called “associate.” Students could discuss the benefits and risks involved and if that truly would work for everyone. You could have the students comment on the question posed by the authors: Would this evolutionary process be successful elsewhere?

The authors state that few other organizations appear willing to try this process, inferring that this technique might not fit other organizations. What do the students think? For what industries, types of employees and managers, strategies, etc. might this approach work?

A student could be asked/assigned to report on additional information found on the W.L. Gore website (http://www.gore.com/en_xx/). In particular, brief information is found by accessing “About Gore” and “Our Culture.”

The above discussion could be accomplished through guided class or group discussion or briefly mentioned in a mini-lecture to show relevance of the chapter topics. Additional ways to address the opening cases could include individual students or teams of students presenting the main points and how the case answers the opening question of that section. These opening cases also could be used as topics for a more comprehensive assignment due later in the term.

How Do We Know? Do Empowered Teams Have Higher Performance? (page 125) This inset box (on page 125) is briefly mentioned in the chapter. Most students have experience in group work whether through school or work. Therefore, you could ask who of the students has experience in an empowered group. For each type of group (empowered or not empowered) in which the students have experience, you could ask what worked, what went wrong, and for them to speculate as to the reasons for what went right and wrong. Ask the students if their collective experiences (and the discussion) verify what is discussed in the inset box: in other words, did they work better as a team when they felt empowered?

Other ways to address this information could be through a short written assignment or a more indepth research paper on the topic.

Building Strength Through HR: Purolator (page 129) As noted on page 129 of this chapter, this inset box (refer to page 129) illustrates how Purolator uses job analysis to determine the physical demands of job tasks and match job demands to the capabilities of workers.

You could briefly mention this inset as an example of how job analysis provides Purolator with information about jobs that injured workers can do while they are recovering. Because this is the main focus of this inset box, students could be asked how job analysis could help reduce injuries from occurring in the first place. Students could explain how the mechanistic, motivational,

biological, and perceptual approaches could help. You also could ask them what other methods Purolator could use to encourage safety and reduced injuries on the job.

Building Strength Through HR: Leicester Royal Infirmary (page 141) As noted prior to the inset box (refer to page 141), Leicester effectively applies the mechanistic approach to work design.

You could briefly mention how they streamlined their processes, reduced patient waiting times, and improved patient satisfaction. If you want to spend more time on this approach, you could ask the students to list what the infirmary had done and why those methods were effective.

Students also could be asked how nurses benefited and if these outcomes are important when considering the mechanistic approach. You may want to ask the students if the methods used to plan the changes in work design (e.g., involving nurses, clinical teams) influence the success of the changes in work design. You may want to have the students discuss whether this approach to change is typical of the mechanistic approach.

How Do We Know? Do Employees Work Harder When They Think Their Tasks Matter? (page 143) The inset box describes two studies conducted to answer the question “Do employees work harder on tasks when they believe their actions contribute something valuable to society.”

You could ask the students their thoughts about both studies as part of a “compare and contrast” exercise. It is also recommended to use this exercise to prompt real-life discussion by members of the class.

Building Strength Through HR: International Business Machines Corporation (page 147) As noted prior to the inset box (refer to page 147), IBM is an example of organizations that try to minimize work-family conflict. In a mini-lecture, you could bring students’ attention to the inset box (refer to page 147) and encourage them to consider if they would value these programs. Of course, you could ask the students to list what is offered by IBM and why these programs might reduce work-family conflict. You and the students also could explore the reasons why IBM and other organizations might go to all of this trouble to reduce work-family conflict.

Technology in HR: Allowing Employees to Work from Home (page 149) This inset box (refer to page 149) describes how telework is fundamental to the success of many of today’s organizations. Some benefits and obstacles to allowing employees to work from home also are presented.

The brief information presented in this box could be referred to during a lecture. Students can be asked for their experiences with working from home (e.g., what went well and what made it difficult for the employee and/or managers to manage). If nobody has experience, students could be asked what types of jobs, employees, and organizations might allow this work option. You and the students also could address the risks involved in telework and how those risks could be reduced. You may want to personalize the topic more by asking the students if they would want (or not want) a teleworking job.

The topics in this box could provide topics to be researched by students.

KEY TERMS (page 152-153) Autonomy 124 Competencies 138 Competency modeling 138 Compressed workweek 148 Critical-incidents technique 134 Differentiation 122 Ergonomics 144 Family-to-work conflict 146 Flextime 147 Integration 122 Interdependence 126 Job 128 Job analysis 128 Job analysis interview 131 Job analysis observation 132 Job analysis questionnaire 131 Job characteristics model 142 Job description 132 Job design 140 Job redesign 140 Job specifications 132 Occupational Information Network 131 Position Analysis Questionnaire (PAQ) 134 Reciprocal processing 126 Scientific management 141 Sequential processing 126 Task analysis inventory 133 Telework 148 Work design 122 Work-to-family conflict 146

DISCUSSION QUESTIONS (page 153) 1. Why is high autonomy beneficial for organizations pursuing differentiation strategies?

Answer: Employees who are closer to products and customers often are able to make rapid changes if something in the production process shifts or if customers’ needs vary.

Furthermore, more autonomous employees are less likely to shirk their responsibilities and more likely to report greater job satisfaction and more commitment to their current employer.

2. What are the key differences between sequential and reciprocal processes of interdependence? Answer: Sequential processing takes place when work tasks are organized in an assembly line. Reciprocal interactions occur when people work together in a team without carefully prescribed plans for completing work tasks.

3. Why would government officials expend significant resources creating O*Net? What are the benefits of O*Net? Answer: Provides what is already known about similar jobs in organizations and contains information for over a thousand occupations. A visitor to O*Net simply types in a common job title and is presented with a list of tasks that are normally associated with that job, along with other information. This provides a valuable service to employers.

4. Have you ever seen a job description for a work position you have held? If so, do you think the job description was accurate? Students’ answers will vary.

5. Are job descriptions more beneficial for some types of organizations than others? Could having specific job descriptions harm an organization? Answer: They are beneficial for all organizations. Organizations could be harmed if they do not base their HR practices (e.g., hiring, promoting, performance appraisal) on their job descriptions.

6. Would you rather work in an organization using mechanistic job design principles or an organization using motivational principles? Students’ answers will vary.

7. Do you think any of the four job design approaches (mechanistic, motivational, perceptual, biological) will become more important in the future? Why? Do you think any of the approaches will become less important as organizations change? Students’ answers will vary.

8. Would you like to work a compressed work week? Why or why not? Students’ answers will vary.

9. Do you think you would be successful in a job that allowed you to do telework? What challenges do you think you would face? Students’ answers will vary.

10. Identify some specific ways in which strategic work design can guide other human resource

practices, such as selecting employees, determining training needs, and making pay decisions. Answer: Strategic work design should ensure that strategic goals are accomplished by hiring the right employees, providing needed training, and compensating people for accomplishing the work behaviors and results needed for the organization to be successful.

EXAMPLE CASE: Coney Island Hospital (pages 153-154) Questions 1. What are some specific ways in which the new work design improves the satisfaction of patients? Answer: The patients are transitioned to the units, which maintains the continuum of care. Admission delay is minimized which reduces patients’ stress. At the other end of the continuum, patients leave the hospital with few delays in the discharge process. Patients are called the day after discharge to ensure that they understood the instructions, could obtain medications and are taking them properly, get an earlier follow-up appointment if necessary, and were satisfied with their time in the hospital.

2. How do you think the new procedures increase autonomy? Answer: The nurses are responsible for making decisions, developing care plans based on their interview of patients, trying to alleviate patients’ anxiety levels, and calling the patient the day after discharge and discussing various issues.

3. What lessons can be learned from this case about the way to implement effective work redesign? Answer: Part of successful implementation depends on the methods used to investigate and plan the work redesign. The hospital involved nurses from a variety of areas in all aspects of the change. Furthermore, the hospital had the nurses write wish lists for the nursing model of redesign (with input from their peers) and present those lists to the committee. Thus the lessons relate to the importance of involving those who are affected by and who implement the changes.

DISCUSSION CASE: Josh’s Toy Manufacturing (page 155) Questions 1. Do you recommend that the four machine operators continue to switch machines every hour?

Answer: Yes, with some changes that should become evident through a job analysis.

Would you recommend that the operators be permanently assigned to the machines they currently operate during Hour 3? Answer: No. What do you think would be the consequences of any changes you might recommend?

Answer: If the employees are not involved in the change, the results most likely will include resistance, lower morale and organizational commitment, reduced productivity, and higher absenteeism and turnover.

2. How can the principles of the mechanistic approach to job design inform a decision about

how to assign workers to machines? Using the principles of scientific management to find the work methods that eliminate wasted effort, save time, and are the most productive.

What about the principles of the motivational approach? Ask the employees about their perceptions of the aspects of the job characteristics model and whether they want more or less of any of the characteristics. the perceptual approach? Tasks would be grouped together to help employees perform better. Mental demands on employees would be simplified. This most likely would result in more sequential processing and low autonomy. the biological approach? The focus would be on health and physical stresses and demands placed on workers. Task demands would be evaluated on the basis of strength, endurance, and stress put on the joints.

3. How could job analysis be used to improve this assembly line? Job analysis would identify the skills and job tasks necessary for success. Training and hiring would be guided by the job analysis. It also could investigate the working conditions (and how to reduce their negative influence).

Experiential Exercise: Assessing the Accuracy of Job Descriptions (page 156) There are several effective strategies for completion of this exercise, which consists of two sets of questions followed by four team questions. You could assign each of the initial ten questions as an individual chapter assignment or you could assign specific questions to teams for class discussion. The use of the O*Net database (http://online.onetcenter.org) will be necessary for completion.

Individual and team answers will vary.

Interactive Experiential Exercise: Job Design: Creating New Positions at Graphics Design, Inc. (page 156) This exercise involves discussion of a hypothetical situation (access the companion website) involving Graphics Design, Inc. Here you are asked to respond to the CEO’s question regarding the use of job descriptions.

Individual and team answers will vary.

Links to relevant information Websites that have fairly complete job descriptions include: www.costco.com (click on “Employment Opportunities” at bottom of webpage) and https://www.frontierairlines.com/ (click on the “Work with us” link), http://www.gore.com/en_xx/jobsearch.html and https://www.hrapply.com/venetian/setup.app.

These websites provide job descriptions that are more detailed than a single paragraph. The job descriptions listed on Frontier’s website are very extensive. Other websites have detailed job

descriptions but many do not. You may want to define how much job-related information must be provided on the website for that job description to be acceptable.

Some helpful websites that address job stress include: www.osha.gov healthylifestyle.upmc.com/StressWorkplace.htm www.maine.gov/tools/whatsnew/attach.php?id=1173&an=1 www.mindtools.com/stress/pj/StressIntro.htm www.enotalone.com/article/6995.html www.thirdage.com/stress www.helpguide.org/mental/stress_signs.htm www.helpguide.org/mental/work_stress_management.htm www.cdc.gov/niosh/docs/99-101/ www.athealth.com/Consumer/disorders/workstress.html www.usw.org/usw/program/content/513.php

Chapter 5 Recruiting Talented Employees Chapter 5 Learning Objectives 1. Explain how overall HR strategy guides recruiting practices.

2. Describe the key elements of HR planning.

3. Explain important characteristics and search patterns of different types of people looking for jobs.

4. Describe the characteristics of organizations that attract recruits.

5. List various recruiting sources and be able to describe their strengths and weaknesses, as well as their linkage with strategic recruiting practices.

6. Explain various approaches for evaluating the effectiveness of recruiting.

Chapter 5 Outline 5.1 How Can Strategic Recruiting Make an Organization Effective? (pages 162-163)

• Employee Recruiting: process of getting people to apply for work with a specific organization.

5.2 How is Employee Recruiting Strategic? (pages 164-170)

• Recruiting practices are best when they align with overall HR strategies.

• Broad Versus Targeted Skill Scope (pages 164-166)

✓ Broad Scope ➢ Broad skill scope focuses on attracting a large number of applicants. ➢ Most often used by organizations with cost leadership strategies. ➢ Optimal for organizations with internal and external forms of cost strategy. ✓ Targeted Scope ➢ Targeted skill scope seeks to attract a small group of applicants who have a high probability of possessing the characteristics needed to perform the specific job. ➢ Represents a set of skills that only a few people have. ➢ Most often pursued by organizations with a competitive strategy of differentiation. ✓ Skill Scope and Geography ➢ Broad skill scope recruiting can be done in a small geographic area near where new employees will work. ➢ Targeted recruiting frequently covers wide geographic areas because the number of qualified people in a given area may not be large.

• Internal Versus External Sourcing (pages 166-168)

✓ Internal Sourcing ➢ Seeks to fill job openings with current employees. ° Because a lot is known about the motivation and skill of current employees, the risks associated with internal recruiting are relatively low.

° Fundamental part of Loyal Soldier and Committed Expert HR strategies. ➢ Expatriates ° Many organizations use internal sourcing to identify people who can fill international assignments. ° Expatriates move to a foreign country to take a work assignment. ✓ External Sourcing ➢ Seeks to fill job openings with people from outside the organization. ➢ Essential part of recruiting practices for Bargain Laborer or Free Agent HR strategies. ➢ Extreme external sourcing includes temporary workers, who are people actually employed by an outside staffing agency. ➢ Extreme external sourcing also includes independent contractors, who have a relationship with the organization but technically work for themselves. ➢ Temporary workers and independent contractors are examples of contingent workers—people working without either an implicit or an explicit contract for continuing work and who are not required to work a minimum number of hours.

• Realistic Versus Idealistic Messaging (pages 168-170)

✓ Realistic Messaging ➢ Sharing positive information and information about problems and weaknesses. ° Used to increase likelihood that employees will stay with organization. ° Realistic job previews share complete picture of working for organization. ➢ Goal is to help new recruits develop accurate expectations about organization. ➢ HR strategies: Appropriate for Loyal Soldier or Committed Expert HR strategies. ✓ Idealistic Messaging ➢ Excludes negative information and paints positive picture of organization. ➢ Not effective for building a long-term relationship. ➢ HR strategies: Bargain Laborer and Free Agent HR strategies.

CONCEPT CHECK 1. How does broad scope recruiting differ from narrow scope recruiting? Broad scope focuses on attracting a large number of applicants; most often used with cost leadership strategies, and can be done in small geographic areas near where new employees will work. Targeted Scope focuses on a set of skills that only a few people have, most often pursued by differentiators, and frequently covers wide geographic areas.

2. Why would an organization tell job applicants negative information about the position?

Helps new recruits develop accurate expectations about organization and reduces turnover.

5.3 How Does HR Planning Facilitate Recruiting? (pages 170-175)

• Fail to take advantage of available talent when begin recruiting only after job is vacant.

• The Planning Process (pages 170-173) ✓ HR planning is the process of forecasting employment needs. ➢ Basic steps of HR planning ° Step 1: Assess Current Employee Levels  Information commonly available in HR information systems.

 Determine the number of people currently employed in different job categories. ° Step 2: Predict Future Needs  Interact with other strategic planners throughout the organization.  Make predictions based on current trends.  Use expert judgments and statistical models. ° Step 3: Predict Employee Movement  Assess past trends of quitting and promotion.  Determine who has skills and abilities to do other jobs. ° Step 4: Plan External Hiring Needs  Begin with estimates of future needs.  Account for current employee levels and expected movement.  Forecast the number of external hires needed in various job positions. ➢ Information and strategies developed through HR planning process are only estimates and usually not totally accurate.

• Batch and Flow Approaches (pages 173-174)

✓ Batch approach ➢ A batch approach involves engaging in recruiting activities periodically. ➢ Recruiting activities that bring new employees into the organization in groups. ➢ Helpful for tracking career development and training that may be needed.

Flow approach ➢ Sustained recruiting activities to meet ongoing need for new employees. ➢ New employees frequently added even before specific openings. ➢ Continually seeks top recruits and brings them onboard when they are available.

• Centralization of Processes (pages 174-175)

✓ HR department is responsible for recruiting activities. ✓ Benefits ➢ Cost savings. ➢ Recruiting done by members of HR department. ➢ HR professionals develop relationships with other businesses (e.g., newspapers). ✓ Problems ➢ Increases distance between new recruits and people with whom they will work. ➢ Managers blame HR department when new recruits do not become good employees.

CONCEPT CHECK 1. What are the basic steps in human resource planning? Assess current employee levels, predict future needs, predict employee movement, and plan external hiring needs.

2. How do the batch and flow approaches to recruiting differ? The batch approach includes recruiting activities that bring new employees into the organization in groups; whereas the flow approach involves continually seeking top recruits and bringing them onboard when they are available.

3. What benefits and problems are associated with centralization of employee recruiting?

Benefits include reduced costs, recruiting is done by members of HR department who are experienced in recruiting techniques, and HR professionals develop relationships with other businesses (e.g., newspaper advertising departments). Problems include increased distance between new recruits and people with whom they will work and managers might blame HR department when new recruits do not become good employees.

5.3 Who Searches for Jobs? (Pages 175-179) ✓ The things people do to find a job are rather predictable and can be explained by three processes: ➢ Attitude formation, concerns feelings and emotions ➢ Specific intentions, which represent goals and plans for future action ➢ Actual job search behavior, which includes any actions aimed at finding employment

• New Workforce Entrants (pages 176-177)

✓ Most people enter full-time workforce when they graduate from high school or college. ✓ Job search activities of new workforce entrants typically follow a sequence. ➢ Stage One: intense, broad search of formal sources of information about opportunities. ➢ Stage Two: focused on explicit information about a small number of possibilities. ➢ Most appropriate for organizations using Loyal Soldier and Committed Expert HR strategies.

• Unemployed Workers (pages 177-178)

✓ Research shows importance of social support. ✓ Are more successful when they take a proactive approach, set goals, and actively look for jobs. ✓ Helping individuals regain sense of self-worth and confidence can communicate interest and caring. ✓ Organizations with a Bargain Laborer HR strategy may benefit.

• Workers Currently Employed (pages 178-179)

✓ People who search for alternative jobs while employed tend to be intelligent, agreeable, open to new experiences, and less prone to worry. ✓ Dissatisfaction with current job is an important reason for leaving current job. ✓ Organizations can increase success in recruiting people already employed by other firms. ➢ Direct recruiting efforts to those who recently experienced negative work changes. ➢ Recruiters can help potential employees to form positive attitudes about a new job by clearly communicating that the organization provides a superior work environment. ➢ Recruiters can take steps to minimize hassle of changing jobs. ✓ Talent wars ➢ Occur when competitors “poach,” or steal, employees from one another. ➢ Back-and-forth negative tactics often are dysfunctional for both organizations.

CONCEPT CHECK 1. What are three types of jobseekers and how does each type differ from the others? New Workforce Entrants: Most people enter full-time workforce when they graduate from high

school or college. Typically they go through two stages: (1) intense, broad search of formal sources of information about opportunities, and (2) focus on explicit information about small number of possibilities. Unemployed Workers: They get depressed easily. They experience decreased mental and physical health, less life satisfaction, and increased marital and family problems. They are more successful when they take a proactive approach, set goals, and actively look for jobs. Workers Currently Employed: People who search for alternative jobs while employed tend to be intelligent, agreeable, open to new experiences, and less prone to worry. Dissatisfaction with current job is an important reason for leaving current job.

2. What can an organization do to attract new workforce entrants? Because people entering the workforce search broadly in the beginning, organizations can benefit from finding ways to share positive messages that set them apart from other potential employers. The objective is to build positive impressions that influence attitudes and thereby guide future goals and actions. Normal marketing channels such as television and newspaper advertisements are helpful in this way. Organizations seeking to recruit should provide methods of sharing informal information with people who have entered the second stage of the search process.

In this second stage, potential employees benefit from contact with current employees, who can share information that helps them decide whether a specific job is right.

5.4 What Characteristics Make an Organization Attractive? (Pages 179-183)

• Generally Attractive Characteristics (pages 180-182)

✓ Job applicants often base choices on characteristics such as familiarity, compensation, certain organizational traits, and recruiting activities. ✓ Familiarity ➢ Most prefer searching for jobs in companies that are somewhat familiar. ° Much of this familiarity comes from corporate advertising. ° Familiar firms have better reputations because people remember positive things. ° People respond to recruiting efforts by companies with strong reputations. ° Job seekers are more likely to obtain additional information about these organizations and make formal job applications. ➢ Image enhancing activities ° Familiar organizations do not benefit much from image-enhancing activities because people already have a generally positive image of familiar organizations, and such activities are not necessary. ° Less well-known organizations can benefit from sponsorships, advertising, etc. ✓ Compensation and Similar Job Features ➢ Compensation affects people’s attitudes about an organization. ➢ People want to work for organizations that pay more. ➢ People prefer pay to be based primarily on their own work outcomes. ➢ Most people prefer organizations that offer better and more flexible benefits. ➢ Most people prefer greater opportunities for advancement and job security. ✓ Organizational Traits ➢ Organizations have certain traits that make them more desirable employers. ° Friendliness, sincerity, kindness, trust, and family-like atmosphere. ° Innovativeness is also attractive because people think it will be interesting.

° Competence (i.e., people want to work for successful organizations). ✓ Recruiting Activities ➢ Obtain endorsements from people that job recruits trust. ➢ Recruiters’ interpersonal skill influences attitudes about organization. ➢ Long delays tend to decrease organizational attractiveness.

• Fit Between People and Organizations (page 182)

✓ Studies suggest that people with different characteristics are likely to be attracted to different types of organizations. ➢ Some prefer to work for large firms, while others prefer small firms. ➢ Some people care more about money than others. ° People with high need to achieve prefer pay to be based on performance. ° Individuals who have high confidence prefer to work in organizations that base rewards on individual rather than group performance. ➢ Men are more likely to be attracted to innovative and decisive organizations. ➢ Women tend to prefer detail-oriented organizations. ➢ People like organizations whose characteristics are similar to their own. ° Conscientious people seek to work in organizations that are outcome oriented. ° Agreeable people like organizations that are supportive and team-oriented. ° People characterized by openness to experience prefer innovative organizations. ➢ Same desire for similarity is found in the realm of values. ° People who value fairness seek out organizations seen as fair. ° People with high concern for others prefer organizations that show concern. ° People who value high achievement prefer a place with an air of success.

CONCEPT CHECK 1. What characteristics make some organizations more attractive workplaces than others? Job applicants often base their choices on characteristics such as familiarity, compensation, certain organizational traits, and recruiting activities. Organizations also have certain traits that make them more desirable employers: friendliness, sincerity, kindness, trust, family-like atmosphere, innovativeness, and competence.

2. What are some ways that organizations differ, and what type of person prefers which type of organization? Some prefer to work for large firms, while others prefer small firms. People with high need to achieve prefer pay to be based on performance. Individuals who have high confidence prefer to work in organizations that base rewards on individual rather than group performance. Men are more likely to be attracted to innovative and decisive organizations whereas women tend to prefer detail-oriented organizations. People also like organizations whose characteristics and values are similar to their own.

5.4 What Are Common Recruiting Sources? (pages 183-189)

• Job Posting (page 183)

✓ Internal recruiting is normally done through job posting.

➢ Uses company communication channels to share information about job vacancies with current employees. ➢ Effective job posting clearly describes the nature of job duties and needed qualifications. ✓ Job posting is most appropriate when adopting internal recruiting strategies. ✓ For Loyal Soldier HR strategy, job postings should be shared with a large number of people to facilitate movement among a variety of positions. ✓ For Committed Expert HR strategy, posting should be targeted specifically to those who have expertise needed to move into relatively specialized roles.

• Employee Referrals (pages 183-185)

✓ Current employees get friends and acquaintances to apply for positions. ➢ All organizations and job seekers rely on referrals to some extent. ➢ In many organizations, about one-third of new employees are referred. ➢ Majority of HR professionals believe employee referrals are the most effective method of recruiting. ➢ Referrals are thought to have at least four primary strengths: ° Represent a relatively inexpensive method of recruiting. ° Quicker than many other forms of recruiting. ° People hired through referrals tend to become better employees who are less likely to leave the organization. ° Employees become more committed to firm when they successfully refer someone. ✓ Informal nature of referrals makes it an effective method for identifying best candidates. ✓ Current employees generally have accurate, first-hand knowledge of the potential applicant’s skills and motivation. This information can improve hiring decisions. ✓ Feelings of responsibility make it likely that employees will refer people they think will succeed; they don’t want to refer someone who will make them look bad. ✓ Informal information that employees share with people they have referred serves as realistic job preview. ✓ Referrals are effective for organizations pursuing any HR strategy.

• Print Advertising (page 185)

✓ Employment advertisements are a major part of almost all newspapers. ➢ Newspaper advertising can reach large number of people for relatively low cost. ➢ Newspaper advertising works well for broad recruiting associated with Bargain Laborer HR strategy. ➢ General advertising in newspapers can help build positive reputation for organization. ✓ Focused recruiting messages can be placed in more specialized publications. ➢ Openings in technical fields can be advertised in trade journals. ➢ This more focused approach helps reduce the costs associated with sending recruiting messages to people who are obviously unsuitable for the job. ➢ Advertising in specialized journals is potentially most helpful for organizations that pursue Free Agent HR strategy. ✓ Print advertising has decreased in recent years, with many of the advertisements now appearing online.

• Electronic Advertising (pages 185-186)

✓ Electronic advertising uses modern technology to send recruiting messages. ➢ Popular Web sites, such as Monster.com and Careerbuilder.com, include thousands of job postings that can be sorted in a variety of ways. ➢ Job seekers can post their resumes online. ✓ Most large companies have a career website. ° Relatively inexpensive. ° Controlled to provide information that conveys clear recruiting message. ✓ Effectiveness ➢ Some are very basic and provide only a list of job openings. ➢ More advanced websites include search engines for locating particular types of jobs and sending email messages notifying when certain types of jobs appear. ➢ Most sites have information about work environment, benefits, and diversity. ➢ Advantages ° Decreased cost. ° Faster than most other forms of recruiting. ° Information can be changed and updated easily. ° Identification of better job candidates. ° Almost guarantees job candidates are familiar with modern technology. ➢ Disadvantages ° Yields a large number of applicants who are not qualified for advertised jobs. ° Computer screening could eliminate applicants who could do job.

• Employment Agencies (pages 186-188)

✓ Public Agencies ➢ Each state in the U.S. has public employment agency which is a government bureau that helps match job seekers with employers. ° Local offices normally post information about local jobs on bulletin boards. ° Provide testing and other services. ° Many offices help employers screen job applicants. ° Maintain websites for electronic recruiting. ➢ Help people transition from unemployment. ➢ Focus on helping young people move from high school into workforce. ➢ Almost all services are free to both organizations and job seekers. ➢ Most helpful for companies engaged in broad skill recruiting. ✓ Private employment agency ➢ Professional recruiting firm that helps organizations identify recruits for specific job positions for a fee. ➢ Executive recruiters are known for efforts to develop and maintain broad networks of people not actively seeking new jobs but who might be willing to move. ➢ Private agencies target people who have the specific skills for the job. ➢ Makes search process more efficient. ➢ Helpful for Free Agent HR strategy. ➢ Disadvantage is cost.

• Campus Recruiting (page 189)

✓ Campus recruiting usually involves a number of activities. ➢ Organizations work to build strong reputation among students, faculty, and alumni. ➢ Relationships built through talks to student organizations and job fairs.

✓ Most widely recognized aspect of campus recruiting is job posting and interviewing. ✓ Internships represent a major component of most campus recruiting programs. ➢ Give students an opportunity to gain important work experience while in school. ➢ Students who were interns take less time to find their first position, receive higher pay, and generally have greater job satisfaction. ➢ Internships help organizations develop relationships with potential recruits. ➢ Provides realistic preview of job which helps individual and organization to determine whether there is a good fit. ✓ Campus recruiting is well suited for Committed Expert HR strategy

CONCEPT CHECK 1. What are different sources that organizations can use to find job applicants? Sources include job postings, employee referrals, print and electronic advertising, public and private advertising, and campus recruiting.

2. What are some advantages and disadvantages of using electronic communication to recruit employees? Advantages: Decreased cost, faster than most other forms of recruiting, information can be changed and updated easily, identification of better job candidates, and responding through electronic means almost guarantees some level of familiarity with modern technology. Disadvantages: Tendency to yield a large number of applicants who are not qualified for the advertised jobs and could eliminate some applicants who could actually do the job.

5.5 How Is Recruiting Effectiveness Determined? (Pages 190-192)

• Organizations use recruiting as a tool for ensuring they have best possible employees, which in turn improves profitability.

• Effective recruiting is essential part of good HRM. • Common Measures (pages 190-191)

✓ Common measures of recruiting effectiveness include assessments of: ➢ Cost measures include advertising fees, agency fees, referral bonuses, and travel expenses. ➢ Time measures assess the length of the period between the time recruiting begins and the time the new employee is in the position. ° During this period, position and important tasks are not done. ° Performance of other employees suffers because they spend time on activities that new employee would perform if position were filled. ° Important objective of recruiting is to fill positions as quickly as possible. ➢ Quantity measures focus on the number of hires generated through various recruiting activities. ° Measures include number of inquiries, job applicants, and job acceptances. ➢ Quality measures concern the extent to which recruiting activities locate and gain the interest of people who are actually capable of performing the job. ° Measuring quality may be more important than quantity.

° Typical measures  Assessments of how many applicants are qualified for the job.  Measures of turnover and performance of the people hired. ✓ Most frequently used measures of recruiting success combine cost and quantity. ➢ Cost per hire—divide total cost of particular search by number of hires provided. ➢ Cost per applicant—divide cost of method by number of responses. ° Assess the relative value of different methods of recruiting. ° Are efficiency measures. ➢ More advanced methods of evaluation. ° Assessments of quality. ° Proportion of interviewees who were offered a job. ° Proportion who accepted a job if it was offered. ➢ Quality measures do a better job of determining whether the right kinds of people are being identified through recruiting.

• Differences Among Recruiting Sources (pages 191-192)

✓ Some methods are considered better than others because different methods attract different people. ✓ Some methods may provide better information about job and organization. ✓ Research does not support the idea that some methods are superior to others. ✓ Some methods are more appropriate in various situations. ✓ Recruiting practices are most successful when aligned with an organization’s HR strategy. ➢ Bargain Laborer HR strategy identifies large number of job candidates. ➢ Loyal Soldier HR strategy recruits those who fit culture and will stay for long time. ➢ Committed Expert HR strategy recruits people with specialized skills who will stay a long time. ➢ Free Agent HR strategy seeks employees with specialized skills with less interest in length of employment.

CONCEPT CHECK 1. How can an organization assess the effectiveness of recruiting sources? Common measures of recruiting effectiveness include assessments of cost, time, quantity, and quality.

2. Why might using the least expensive recruiting sources actually cost an organization money?

Reasons include that least expensive sources might not attract qualified candidates or be aligned with the HR strategy.

Chapter 5 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (pages 193-194) Summaries of each of the six learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives: The chapter contains six learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 164 Learning objective 2- page 170 Learning objective 3- page 175 Learning objective 4- page 179 Learning objective 5- page 183 Learning objective 6- page 190

Concept Checks The chapter contains six concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- page 170 Concept 2- page 175 Concept 3- page 179 Concept 4- page 183 Concept 5- page 189 Concept 6- page 192

Tables and Figures The table and figures presented in the chapter help illustrate the concepts of the chapter. They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 5.1- page 182 Table 5.2- page 184 Table 5.3- page 186

Factors That Influence Job Recruits How to Increase Employee Referrals Effective Online Recruiting

Figure 5.1- page 164 Strategic Framework for Employee Recruiting Figure 5.2- page 171 Human Resource Planning Figure 5.3- page 173 Planning Process Example A Manager’s Perspective (pages 160-161), Manager’s Perspective Revisited (page 192)

What do you think? (page 161), and A

The chapter starts with Sanjiv thinking about recruiting. He remembers the process through which he was recruited and why he decided on this organization. He wants to learn more about recruiting employees so that he can contribute to his team, which will be recommending better ways to recruit new employees. Five true/false questions related to this scenario and the chapter topics are noted on page 161 and answered on page 192.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what additional questions Sanjiv should ask.

For some chapters, you may wish to address the questions at the end of discussing the chapter.

In this case, you may want to bring the students’ attention to these questions, informing the students that they will be asked to answer the questions near the end of the chapter discussion.

At that time, students (individually or in groups) could be asked to explain why the answers are true or false. Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

Building Strength through HR: Google (page 163) This special feature (page 163) highlights several issues noted in this opening case regarding Google (refer to pages 162-163). This case describes how Google engages in strategic recruiting.

The inset box (refer to page 163) presents some of the recruiting practices noted in the case but not all. Therefore, you could ask the students what other recruiting practices appeared to contribute to Google’s recruiting success (e.g., a fun and supportive working environment,

freedom to be themselves, encouragement to dedicate 20 percent of work time to new projects).

Most students will be familiar with Google and can comment on what comprises the innovativelike atmosphere that helps make Google an attractive place to work. Furthermore, they can discuss other things Google does to attract the type of employees they need to be successful.

This discussion could be supplemented with information found on Google’s webpage: www.google.com.

How Do We Know? Do Realistic Job Previews Reduce Employee Turnover? (page 169) This inset box is briefly mentioned in the text before the box (refer to page 168). Several researchers conducted a study to learn whether realistic job previews reduce the likelihood that nurses will quit a job. As described in the inset box, the findings of their studies revealed that nurses who received a realistic preview were less likely to quit than those who received the traditional brochure (9% vs. 21%, respectively). They also found that the realistic preview worked because it indicated the organization was honest and was concerned for the nurses.

The class could be encouraged to read the details in the inset box. During the lecture or class discussion of the chapter, the study and conclusions could be summarized. This could be accomplished through your lecture (asking for student input) or by assigning the box to an individual student. You or the student could lead a brief class discussion after presenting the facts.

Regardless of who presents the information, the students could discuss how one could prepare a realistic job preview for nurses or some other job. Guide the students to address who should be involved, what should be included, how should it be done, and what should be the result or medium (book, video, verbal, etc.). The students also could discuss whether realistic job previews are appropriate for all types of jobs, organizations, industries, etc. (For example, a formal form is more appropriate for more complex jobs and informal forms such as a conversation are appropriate for small businesses.) Students could be asked if realistic previews presented in written or video form are more effective than more informal methods (e.g., conversation).

Other ways to address this information could be through a short written assignment or a more indepth research paper on the topic.

Building Strength Through HR: WellPoint Health Networks (page 174) As noted on page 174 of this chapter, this inset box illustrates how WellPoint builds competitive strength through their database of employee skills and abilities, filling job openings internally, and predicting future job vacancies.

You could ask if anyone has experience with a database. Most students will not have experience but may be aware of their use. You could ask the following questions: what types of information should be included for the database to be useful and what should not be included for legal and ethical purposes; can too much information be included; how can the information be gathered;

and who should have access to the database and why.

How Do We Know? Who Succeeds in a Job Search? (page 177) This article starts by asking why college graduates are not equally successful in finding jobs and why some get more job offers than others. 180 graduating students were interviewed and the students with a proactive personality or “job search behaviors” seemed to have more success, but why? Through individual or team discussion, students are encouraged to discuss their feelings about job recruitment and job search strategies.

How Do We Know: Are Early Job Offers Better? (page 181) The inset box on page 181 asks the question, “Does it really matter how long after the job interview before the organization makes a job offer?” This question was examined in a study by William Becker, Terry Connolly, and Jerel Slaughter who collected data from 3,012 job candidates at a Fortune 500 engineering technology firm. They tracked the time between a final interviews and the company’s formal offer of a job. The average time for the company to offer positions to students was 23 days for students and 15 days for experienced candidates. On average students took 21 days to respond, whereas experienced candidates took only 3 days.

Quicker offers were more likely to be accepted by both students and experienced employees.

Speed of the offer was not clearly associated with speed of candidate responses.

Technology in HR: Staying in Touch with Recruits (page 187) This inset box briefly addresses how two organizations (Shell Oil and the New York City Police Department) effectively use email during recruiting.

The brief information presented in this box could be mentioned during a mini-lecture encouraging students to read the information on their own. You may want to address some of the issues in more detail. For example, is email the most effective way to keep in touch with all potential job candidates, what are other ways to keep in touch with potential job applicants, and how would an organization determine what is appropriate content for such communications?

You could address the measures mentioned in the box by asking the students whether the percent of people who open the Shell Oil newsletter and whether visits to the NYPD website are appropriate measures of effectiveness, and what might be (additional) ways to measure the effectiveness of these methods.

The topics in this box could provide topics to be researched by students.

KEY TERMS (page 194) Batch approach 173 Broad skill scope 165

Contingent workers 167 Cost measures 190 Cost per applicant 191 Cost per hire 190 Electronic advertising 185 Employee recruiting 162 External sourcing 167 Flow approach 173 Human resource planning 170 Idealistic messaging 168 Independent contractors 167 Internal sourcing 166 Job posting 183 Private employment agency 188 Public employment agency 186 Quality measures 190 Quantity measures 190 Realistic job previews 168 Realistic messaging 168 Talent wars 179 Targeted skill scope 165 Temporary workers 167 Time measures 190 Key Terms DISCUSSION QUESTIONS (page 195) 1. Why do organizations with differentiation strategies benefit from targeted recruiting approaches? Answer: Differentiation HR strategies rely on specific contributions from a select group of employees. People are hired because they have rare skills and abilities, and only a small number of people actually have what it takes to succeed.

2. What makes people react positively when organizations share negative information during the recruiting process? Answer: Organizations are seen as being truthful, and people make commitments with full knowledge of the strengths and weaknesses of the other party. This increases the likelihood that their expectations will be met in the future and they will have made a good choice accepting the job.

3. What can organizations do to improve their human resource planning process? What types of information improve forecasts? Answer: The information and strategies developed through the HR planning process are only estimates and usually not totally accurate.

Nevertheless, careful planning allows organizations to act strategically rather than simply react to changes. Furthermore, many organizations benefit from combining elements of centralized and decentralized procedures. Helpful information includes available talent (internal and external), movements of internal talent, and future needs based on such things as demand for products and services.

4. What are some primary differences between new workforce entrants, unemployed workers, and currently employed workers? How can organizations best recruit these different types of job seekers? Answer: New Workforce Entrants: Most people enter full-time workforce when they graduate from high school or college. Typically they go through two stages: (1) intense, broad search of formal sources of information about opportunities, and (2) focus on explicit information about a small number of possibilities. Organizations need to share positive messages that set them apart from other potential employers, and current employees should contact potential employees and share information that helps job candidates decide whether a specific job is right. Unemployed Workers: They get depressed easily. They experience decreased mental and physical health, less life satisfaction, and increased marital and family problems. Organizations should actively seek out and encourage people who have been laid off from other jobs and help individuals regain a sense of self-worth and confidence.

Workers Currently Employed: People who search for jobs while employed tend to be intelligent, agreeable, open to new experiences, and less prone to worry. Organizations should direct recruiting messages to employees who have recently experienced negative changes in their work roles and try to minimize the hassle of changing jobs.

5. What characteristics make an organization attractive to you? List some specific companies that you think have those characteristics. What factors have influenced your perceptions about these companies? Student answers will vary.

6. Why are employee referrals a good recruiting source? What might keep you from referring friends and acquaintances for a position at an organization where you work? Answer: Referrals are thought to have at least four primary strengths in that they represent a relatively inexpensive method of recruiting, are quicker than many other forms of recruiting, tend to identify better employees who are less likely to leave the organization, and result in current employees becoming more committed to the organization when they successfully refer someone. Student answers to second part of question will vary. Textbook suggests that a sense of responsibility might keep an employee from referring someone if they have a concern that the individual might make the employee look bad.

7. What features increase the attractiveness of company websites? Answer: More advanced websites include search engines for locating particular types of jobs, as well as services that send e-mail messages notifying users when certain types of jobs appear. Most sites also provide information about the work environment, benefits, and employee diversity.

8. For what positions might a company want to recruit through private employment agencies?

Why are the services of a private agency worth their high cost for these positions? Answer: Professional recruiting firms have helped organizations identify recruits that have specific job skills for job positions in areas including office services, accounting, engineering, information technology, law, science, marketing, light industrial, education, health care, home care, and top level executives.

9. Which companies do a good job of recruiting students from your college or university? List some of their recruiting activities on your campus. Student answers will vary.

10. What are some recruiting sources and practices that might be seen as effective in terms of quantity but not in terms of quality? Answer: Newspaper and electronic advertisements provide high quantity but not necessarily high quality. The practice of broad targeting strategy focuses on identifying a large quantity of workers.

EXAMPLE CASE: MITRE (pages 195-197) Questions 1. What overall HR strategy do you think MITRE is pursuing? Is its recruiting focus broad or

targeted? Does it primarily use internal or external sources? Answer: An argument could be made for Free Agent HR Strategy or Committed Expert HR Strategy. Its recruiting focus is targeted, and it is focused on external recruiting.

2. What characteristics of MITRE make it particularly attractive to older workers? Answer:

MITRE’s excellent reputation in operating its FFRDCs is very attractive to many mid- and late-career people who view their employees as respected subject matter experts. Older engineers and scientists appreciate the kind and quality of work done at MITRE and how it affects at an early stage the high-level decisions made at the government agencies they support.

3. Why is the referral program at MITRE so successful? What are some elements of success that could be copied by other organizations? What success factors do you think would be hard to duplicate elsewhere? Answer: The referral program is so successful because MITRE employees are motivated by their desire to fulfill their sponsors’ mission expectations and to work in collaboration with other equally talented individuals. The referral program pays employees a bonus of $2,000 for technical staff hires, $1,000 for non-technical staff hires, and $500 for nonexempt hires. Some of the elements of successful referrals that could be copied include: bonuses, frequently communicating urgent recruiting needs to employees, (if employees attend conferences or professional meetings) employees collecting business cards of qualified people, and utilizing HR in the recruiting process. Some of the success factors that might be difficult to duplicate include: contacting potential candidates when they attend symposia or meetings on organization’s property, potential candidates talking to “an engaged cadre” of organizational members, and employees knowing enough to hand out networking cards to those who express interest in the organization.

DISCUSSION CASE: Friendly Financial Works (pages 197-198) Questions 1. What aspects of the recruiting process increase the likelihood that territory managers will

leave once they have been hired? Answer: Only three to four days recruiting in an area hiring best candidate available at that time, idealistic messages, job candidates are sold on the job, and only using local newspaper advertisements.

2. Should Friendly Financial use other methods to recruit territory managers? Which methods?

Answer: Yes, they should add private employment agencies, headhunters, and electronic

advertising (including extensive information on their own website). They might consider adding some centralization to their recruiting and establishing a strong brand image (including characteristics) that attracts the desired type of managers.

3. Is the recruiting process at Friendly Financial efficient? What are some things that might be done to reduce recruiting costs? Answer: No, it is not efficient (e.g., 200% annual turnover).

Some things that could be done include using flow process recruiting and/or more careful planning, giving realistic job previews, training managers in effective recruiting techniques, or providing financial incentive for managers who hire territory managers that stay a year or more.

Experiential Exercise: Learning about Your Career Center (page 198) Questions: Student answers to the following will vary.

Visit the career center at your school. Meet with a career counselor. As you learn about the services offered through the career center, try to find answers to the following questions: 1. What services does the career center offer?

2. How can the career center help you find a job? When should you start working with the career center? Are there things you can do long before graduation to improve the effectiveness of your job search?

3. What companies have good relationships with your school? Which of these companies hire people in your field of study? What characteristics do they look for in employees?

4. How do you go about using the career center to locate job openings? Does the career center support a website? Can you apply for as many jobs as you want?

5. Does the career center maintain a list of alumni that currently work for specific companies?

Can you use this list to network with potential employers?

6. What other services, such as interview training, are provided through the career center?

Interactive Experiential Exercise: Strategic Recruitment: Finding the Right People for Graphics Design, Inc. (page 198) Overview of activity Access the companion website to test your knowledge by completing a Graphics Design, Inc. interactive role play.

Chapter 6 Selecting Employees Who Fit Chapter 6 Learning Objectives 1. Describe how employee selection practices can strategically align with overall HR strategy.

2. Explain what makes a selection method good; be able to apply the concepts of reliability, validity, utility, legality and fairness, and acceptability to appropriately evaluate different employee selection methods.

3. Describe several commonly used selection methods, evaluate their strengths and weaknesses, and explain how they link with particular employee selection strategies.

4. Explain how to combine scores from several different selection methods to arrive at a final selection decision.

Chapter 6 Outline 6.1 How Can Strategic Employee Selection Improve an Organization? (pages 204-205)

• Employee selection is the process of choosing people to bring into an organization.

• Effective selection provides many benefits in that it can improve effectiveness of other human resource practices, reduce disciplinary problems, and diminish costs related to replacing employees.

6.2 How Is Employee Selection Strategic? When it ensures the right people are in the right places at the right times (pages 205-210)

• HR strategies vary by internal or external labor orientation and compete through cost or differentiation

• Aligning Talent and HR Strategy

✓ Four general categories: ➢ Short-term generalists: hired to produce general labor inputs for a short time period. ➢ Long-term generalists: hired to perform a variety of jobs over long time period. ➢ Long-term specialists: hired to develop specific expertise and establish a lengthy career within organization. ➢ Short-term specialists: hired to provide specific labor inputs for a short time period.

• Making Strategic Selection Decisions

✓ Balancing Job Fit and Organization Fit ➢ Job-based fit is when the organization seeks to match an individual’s abilities and interests with the demands of a specific job. ➢ Organization-fit is concerned with how well the individual’s characteristics match the broader culture, values, and norms of the firm. ➢ Bargain Laborer HR strategies: seek short-term generalists and neither form nor fit. ➢ Loyal Soldier HR strategy: seek long-term generalists and require organization fit.

➢ Committed Expert HR strategy: seek long-term specialists and require both joband organization-based fit. ➢ Free Agent HR Strategy: seek short-term specialists and require job fit. ✓ Balancing Achievement and Potential ➢ Achievement emphasizes existing skills and past accomplishments ➢ Potential emphasizes broad characteristics that foreshadow capability to develop future knowledge and skill, which is critical for organizations with long-term staffing strategies ➢ Bargain Laborer HR Strategies seek short-term generalists and hire for potential. ➢ Loyal Soldier HR Strategies focus on ability, motivation, and willingness to work in a large variety of jobs. ➢ Committed Expert HR Strategy focuses on assessing potential to become highly skilled in a particular area. ➢ Free Agent HR Strategies focus on achievement in similar positions. ✓ Gaining Competitive Advantage from Alignment ➢ Organizations with closer alignment between their overall HR strategies and specific selection practices tend to be more effective. ➢ A key for effective staffing is to balance job fit and organization fit, as well as achievement and potential, in ways that align staffing practices with HR strategy.

CONCEPT CHECK 1. What are the four types of talent, and how do they fit with the four approaches to overall HR

strategy? Short-term generalists are hired to produce general labor inputs for a relatively short period of time (organizations with Bargain Laborer HR Strategy); Long-term generalists are hired to perform a variety of different jobs over a relatively long period of time (organizations with Loyal Soldier HR Strategy); Long-term specialists are hired to develop specific expertise and establish a lengthy career within an organization (organizations with Committed Expert HR Strategy); and Short-term specialists are hired to provide specific labor inputs for a relatively short period of time (organizations with Free Agent HR Strategy).

2. What is the difference between organization fit and job fit, and which type of fit is most critical

for each of the HR strategies? Organization-based fit is concerned with how well the individual’s characteristics match the broader culture, values, and norms of the firm.

Organization-based fit depends less on technical skills than on an individual’s personality, values, and goals. Organization-based fit is more important for long-term than for shortterm employees (i.e., Loyal Solder HR Strategy).

With job-based fit the organization seeks to match an individual’s abilities and interests with the demands of a specific job. T his type of fit is highly dependent on a person’s technical skills. Job-based fit is more important in organizations that seek to hire specialists than in those that seek generalists (i.e., Free Agent HR Strategy). Committed Expert HR Strategy needs both organization and job fit.

3. How do achievement and potential fit with strategic selection? Organizations seeking shortterm specialists focus on achievement (i.e., Free Agent HR Strategies). Potential is critical for long-term staffing strategies (i.e., Loyal Soldier and Committed Expert HR Strategies) and short-term generalists (i.e., Bargain Laborer HR Strategies).

6.3 What Makes a Selection Method Good? (pages 211-219) ✓ Reliability is the degree to which a selection method yields consistent results. (pages 211-213) ✓ Test-retest method: a process of estimating reliability that compares scores on a single selection assessment obtained at different times. ✓ Alternate-forms method: a process of estimating reliability that compares scores on different versions of a selection assessment. ✓ Split-halves method: a process of estimating reliability that compares scores on two parts of a selection assessment. ✓ Inter-rater method: a process of estimating reliability that compares assessment scores provided by different raters. ✓ All four methods rely on the correlation coefficient, which is a numerical indicator of the strength of the relationship between two sets of scores. ➢ Correlation coefficients range from a low of 0, which indicates no relationship, to a high of 1, which indicates a perfect relationship. ➢ Correlation coefficients can be negative, which indicates that high scores on one measure are related to low scores on the other measure. ➢ Good rule of thumb is that a correlation coefficient of .85 or higher suggests adequate reliability for test-retest, alternate-forms, and split-halves estimates. ➢ Inter-rater reliability estimates are often lower because they incorporate subjective judgment. ✓ The first question to ask about any selection procedure is whether it is reliable. ✓ Information about reliability should be available from vendors.

• Validity refers to the quality of being justifiable. To be valid, a method of selecting

employees must accurately predict who will perform the job well. (pages 213-215). ✓ Once reliability has been established, turn to a selection method’s validity. ✓ Content validation strategy: a process of estimating validity that uses expert raters to determine if a test assesses skills needed to perform a certain job. ✓ Criterion-related validation strategy: a process of estimating validity that uses a correlation coefficient to determine whether scores on tests predict job performance. ➢ Predictive validation strategy: a form of criterion-related validity estimation in which selection assessments are obtained from applicants before they are hired. ➢ Concurrent validation strategy: a form of criterion-related validity estimation in which selection assessments are obtained from people who are already employees. ➢ Neither predictive nor concurrent strategy is optimal in all conditions. ✓ Validity coefficients are lower than reliability coefficients. ✓ Generalizability ➢ Situational specificity: the condition in which evidence of validity in one setting does not support validity in other settings. ➢ Validity generalization: the condition in which evidence of validity in one setting can be evidence of validity in other settings.

• Utility addresses the method’s cost effectiveness. All other things being equal, selection methods with higher validity also have higher utility. (pages 215-217). ✓ Can generate more money when hiring procedures improve for jobs filled frequently.

✓ ✓ ✓ ✓ ✓ ✓

Higher when people remain in their jobs for long periods of time.

Increases when there is a lot of variation in how well people do the job.

Increases when a smaller proportion of applicants are hired.

Increases when both fixed and variable costs are low.

Decreases when the test is given to many people and the cost for each test given is high.

Estimates are more likely to be accepted by managers when they are presented in a less complex manner and framed as opportunity costs.

• Legality and Fairness (pages 217-218)

✓ Fairness: a characteristic of selection methods that reflects individuals’ perceptions concerning potential bias and discrimination in the selection methods. ✓ Fairness goes beyond legality and includes an assessment of potential bias or discrimination associated with a given selection method. ✓ The number of people who are unfairly eliminated decreases as validity increases, meaning that more valid tests are usually more fair.

• Acceptability concerns how applicants perceive the technique. (pages 218-219).

✓ Acceptability: a characteristic of selection methods that reflects applicants’ beliefs about the appropriateness of the selection methods. ✓ Applicants see selection methods as indicators of an organization’s culture, which can influence decisions to join the firm and subsequent feelings of job satisfaction and commitment. ✓ Applicants have negative reactions to assessment techniques when they believe that the organization does not need the information being gathered or that the information is not job related. ✓ Perceptions of fairness differ among countries. ✓ Some evidence suggests that applicants react more positively to a particular assessment when they believe they will do well on it.

CONCEPT CHECK 1. What criteria are used to determine whether employee selection methods are good?

Reliability, validity, utility, legality and fairness, and acceptability.

2. What are the ways to assess selection method validity? To be valid, a method of selecting employees must accurately predict who will perform the job well. Content validity is supported when experts agree that the content of the assessment reflects the knowledge needed to perform well on the job. Criterion-related validity strategy differs from the content validation strategy in that the former uses correlation coefficients to show that test or interview scores are related to measures of job performance.

3. What influences the cost effectiveness of a selection method? Validity, number of people selected, length of time that people stay employed, performance variability, ratio of applicants to hires for a particular position, and fixed and variable costs.

6.4 What Selection Methods Are Commonly Used? (pages 219-235)

• Testing (pages 219-229)

✓ Cognitive ability testing assesses a person’s capability to learn and solve problems. ➢ Sometimes referred to as “intelligence” or “mental ability” tests. ➢ Research suggests that general mental ability, which is represented by a summation of the specific measures, is the best predictor of performance in work contexts. ➢ Cognitive ability tests have high reliability; people tend to score similarly at different times and on different test forms. ➢ Validity is higher for cognitive ability tests than for any other selection methods, resulting in substantial utility when combined with relatively low cost.

▪ High validity generalization: predict performance across jobs and cultures.

▪ A concern is that people from different racial groups score differently ▪ Because of their strong link with job performance, cognitive tests can be used legally in most settings. ➢ Beneficial for organizations seeking long-term generalists and specialists. ➢ Acceptability: managers see cognitive ability as one of the most important predictors of work performance. ➢ Utility: Cognitive ability tests are good, inexpensive predictors of job performance. ✓ Personality testing assesses traits that show consistency in behavior. ➢ Personality testing measures patterns of thought, emotion, and behavior and is now seen as a relatively effective method of selection. ➢ The five personality dimensions can be accurately measured in numerous languages and cultures, making the tests useful for global firms. Patterns of relationships with work performance are similar across national boundaries. ➢ Agreeableness is important for interpersonal relationships and corresponds with high performance in teams and service jobs with frequent interaction with customers. ➢ Conscientiousness: Conscientious employees set goals, work hard to accomplish tasks, and tend to be absent from work less frequently. Conscientiousness exhibits validity generalization, meaning it predicts performance regardless of work type. ➢ Emotional stability does not relate as strongly to performance as conscientiousness, but captures aspects of motivation and demonstrates validity generalization. ➢ Extraversion corresponds with a desire to get ahead and receive rewards, making it a useful predictor for performance in sales and leadership positions. ➢ Openness to experience is seldom related to performance, but recent research suggests it can increase performance in jobs requiring creativity and adaptation to change. ➢ People with personality traits that fit an organization’s culture and work demands are more likely to remain with an organization adopting Committed Expert or Loyal Soldier HR strategy. ✓ Situational judgment tests are assessments that ask job applicants what they would do, or should do, in a hypothetical situation. ➢ Have good reliability and validity and predict job performance in most jobs. ✓ Physical ability testing assesses muscular strength, cardiovascular endurance, and coordination.

➢ These tests are useful for predicting performance in many manual labor positions and in jobs that require physical strength. ➢ Physical ability tests can be particularly important in relation to the Americans with Disabilities Act. ➢ Physical ability tests have high reliability. ➢ Validity and utility are high for positions that require physical inputs, such as police officer, firefighter, utility repair operator, and construction worker. ➢ Validity generalization is supported for positions where job analysis has shown work requirements to be physically demanding. ➢ As long as job analysis has identified need for physical inputs, physical ability testing presents few legal problems except they demonstrate adverse impact for gender. ✓ Integrity testing assesses the likelihood that applicants will be dishonest or engage in illegal activity. ➢ Two types of integrity tests: overt and covert. Overt tests ask questions about attitudes towards theft and other illegal activities while covert tests are more personality-based and seek to predict dishonesty by assessing attitudes and tendencies toward antisocial behaviors such as violence and substance abuse. ➢ Assessment uses ▪ Likelihood that an individual will be dishonest.

▪ Useful for organizations seeking short-term generalists.

▪ Predict counterproductive behavior, absenteeism, and overall performance. ➢ Research evidence generally supports the reliability and validity of integrity tests. ➢ Integrity tests show no adverse impact for minorities and provide relatively inexpensive screening method. ✓ Drug testing ➢ Drug testing normally requires a urine sample that is tested for illegal substances. ➢ Testing is quite common in the United States (14% of workforce use illegal drugs, with as many as 3% of workers actually using drugs while at work). ➢ Illegal drug use linked to absenteeism, accidents, and likelihood of quitting ➢ Reliable and valid. ➢ Administration costs can be high; basic tests are modestly priced (moderate utility). ➢ Drug testing can be useful for firms that hire most types of talent. ✓ Work sample testing assesses performance on tasks that represent specific job actions. ➢ In most cases, these tests have excellent reliability and validity, are relatively inexpensive, and involve few legal problems. ➢ Assessment center—work sample test for the complex job of manager that includes multiple measures obtained from multiple applicants across multiple days.

▪ Assessment centers have good reliability and validity.

▪ Validity improves when evaluators are trained and exercises are specifically tailored to fit relevant job activities, but can be very expensive.

▪ Most common in organizations with long-term staffing strategies, particularly with companies adopting a Committed Expert HR strategy.

• Information gathering (pages 229-232)

✓ Application forms and resumes are required for many entry-level jobs. ➢ Frequently used as early screening devices because generally inexpensive.

➢ In terms of legality and fairness, measures of education and experience have some adverse impact. ✓ Biographical data focuses on previous events and experiences in an applicant’s life. ➢ Questions address historical events that have shaped a person’s behavior and identity. ➢ Objective scoring methods improve the reliability and validity of biodata (adequate reliability and good validity, but validity generalization is questionable). ➢ Some human resource specialists express concern about legality and fairness issues. ➢ Biodata measures can benefit organizations whatever their staffing strategies. ✓ Reference checking involves contacting an applicant’s previous employers, teachers, or friends. ➢ One of the most common selection methods, but may not be generally valid. ➢ Legal issues of defamation of character and negligent hiring make reference checking particularly troublesome and affect validity. ➢ Defamation of character occurs when something untrue and harmful is said about someone. ➢ Negligent hiring occurs when an organization hires someone who harms another person and the organization could reasonably have determined that the employee was unfit.

• Interviewing is the most frequently used selection method.

✓ Assessing Interview Effectiveness ➢ Validity varies for different types of interviews. ➢ Determine whether people “fit” with the job, workgroup, or organization. ➢ Time spent interviewing can be costly and interviews can be discriminatory. ✓ Using Structured Interviews ➢ Incorporates multiple raters, common questions, and standardized evaluation.

Situational questions address what applicant would do in a hypothetical situation.

Behavioral questions focus on past behavior. ✓ Linking Interviews to Strategy ➢ Organizations seeking Free Agents focus on assessing achievement. ➢ Organizations seeking Loyal Soldiers focus on assessing fit. ➢ Organizations seeking Committed Experts use a combination approach that assesses both potential and fit.

CONCEPT CHECK 1. What are common methods of testing? Cognitive ability tests, personality tests, physical ability, integrity tests, drug testing, biodata, work sample testing, reference checking, and interviewing.

2. What information can be obtained from application blanks and résumés? Application forms and résumés include information such as address and phone number, education, work experience, and special training.

3. How can the reliability and validity of employment interviews be improved? Structure them by using a list of predetermined questions based on knowledge and skills identified as critical for success. This ensures that all applicants are asked the same questions.

Typically conducted by a panel of interviewers.

6.5 How Are Final Selection Decisions Made? (pages 235-237)

• Predictor weighting: multiplying scores on selection assessments by different values to give more important means greater weight.

• Minimum cutoffs approach is the process of eliminating applicants who do not achieve an acceptable score on each selection assessment. ✓ In practice, many organizations use minimum cutoffs to identify a pool of people who meet at least the minimum requirements in a number of areas. ✓ Once this pool of people is identified, then weighted predictors are used to make the final hiring decision.

• Multiple hurdles approach: only allow those who achieve at least a minimum score on any one test to take the next assessment. This approach can increase utility of the overall process.

• Banding approach: process of treating people as doing equally well when they have similar scores on a selection test. This approach can help meet affirmative action goals, but could have decreased utility.

CONCEPT CHECK 1. How can scores from different selection measures be combined to make a final hiring decision? Common decision strategies include weighting the predictors, using minimum cutoffs, establishing multiple hurdles, and banding.

2. How is the multiple hurdles method different from the minimum cutoffs method? Minimum

cutoffs approach involves eliminating applicants who do not achieve an acceptable score on each selection assessment. In practice, many organizations use minimum cutoffs to identify a pool of people who meet at least the minimum requirements in a number of areas. Multiple hurdles approach is the process of obtaining scores on a selection method and only allowing those who achieve a minimum score to take the next assessment. Using minimum cutoffs in a number of areas in progressive order can increase the utility of the overall selection process.

Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (pages 238-239) Summaries of each of the four learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives: The chapter contains four learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 205 Learning objective 2- page 211 Learning objective 3- page 219 Learning objective 4- page 235

Concept Checks The chapter contains four concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- page 210 Concept 2- page 219 Concept 3- page 235 Concept 4- page 237

Tables and Figures The table and figures presented in the chapter help illustrate the concepts of the chapter. They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 6.1- page 217 Table 6.2- page 220 Table 6.3- page 222 Table 6.4- page 222 Table 6.5- page 235

Factors Influencing Utility of Selection Methods Wonderlic Personnel Test Sample Questions Summary of Personality Testing Research Use of Selection Methods Around the World Types of Employment Interview Questions

Figure 6.1- page 206 Strategic Framework for Employee Selection Figure 6.2- page 211 What Makes a Selection Method Good?

Figure 6.3- page 212 Graphical Illustrations of Correlations Figure 6.4- page 235 Creating Structured Interview Questions A Manager’s Perspective (pages 202-203), What Do You Think? (page 203), and A Manager’s Perspective Revisited (page 238) The chapter starts with a short scenario where Javier has been authorized to hire a new member

for his customer service team. Five true/false questions are asked on page 203 and answered on page 238.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions.

The instructor could refer to the questions during the discussion of the chapter material noting that a certain section or discussion point addresses one or more of the questions.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what additional questions Javier should ask.

Of course, one or more of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

How Do We Know? Which Type of Fit is Most Important? (page 209) This section begins by asking three questions: Do managers making selection decisions pay more attention to job fit or organization fit? Are candidates who have average fit on both dimensions preferred to candidates who are high on one and low on the other? Does it depend on the nature of the job?

Tomoki Sekiguchi and Vandra Huber attempted to answer these questions byconducting two studies. One study of 120 and a second study of 92 middle- and senior-level executives completed evaluations of candidate profiles that assessed how they would evaluate the credentials of potential job applicants for positions such as management, attorney, nurse, and nurse assistant.

They found that The executives were most likely to reject applicants who had very poor job fit.

They were more tolerant of poor organization fit. However, individuals with very poor fit for either the organization or the job were more likely to be rejected than individuals with average fit in both areas. Therefore Sekiguchi and Huber thus concluded that characteristics of the position do indeed influence the balance between job and organization fit.

How Do We Know? Is It Better to Be Smart or Beautiful? (page 221) The section on Testing starts with a reference to this inset box (found on page 221). This study

by Judge, Hurst, and Simon sought to answer three questions relating to a person’s attractiveness and their potential for becoming rich. The results of the 2009 study showed a positive effect on income for both intelligence and beauty.

The information reported in the inset box could be part of a lecture or class discussion. Students could be asked if these are universal characteristics that are needed for all levels and types of

jobs. They also could discuss the implications for managers not knowing on what criteria they are basing their hiring decisions.

Technology in HR: Administering Tests on the Internet (page 225) This inset box describes a large study that compared responses of a paper-and-pencil and webbased versions of the same test. The computer test had higher reliability and less evidence of faking. This supports results of other studies. Furthermore, in many instances, computer-based tests have less adverse impact and are seen as more fair by applicants from minority groups.

The brief information presented in this box could be referred to during a lecture. Students could give their experiences with computer-based tests and why they think computerization might lead to higher reliability and reduce faking. The information in this box could provide a topic to be researched by students. The extensive reference list found in the box provides the students with some of the sources that they could use to write a longer research paper.

Building Strength Through HR: Target? (page 228) This section discusses the various selection tools used by Target. Target uses a variety of selection tools to help assure identify job candidates who are friendly and have an upbeat attitude. Specific methods include Personality tests, Behavioral interviews, Drug tests,and Background checks. Using such selection tools has helped Target develop a reputation as having excellent customer service. The process also seems to be acceptable to most candidates, as two stores opening in Los Angeles recently reported having over 4,000 applicants for 250 positions.

The selection tools do, however, sometimes generate controversy from people believing the tests and information gathering discriminate unfairly. A more recent controversy focuses on background checks that are being challenged because they screen out workers with criminal records.

Target’s response is that the background check is necessary to provide a safe and secure environment, and that the process is not designed to screen out everyone with a criminal background but only those who present an unreasonable risk to safety.

How Do We Know? Does It Matter How You Shake Hands in An Interview? (page 233) This 2008 survey by Stewart, Dustin, Barrick and Darnold sought to determine if a job candidate’s handshake influenced the outcome of the interview. Results indicated that people with a better handshake (firm and complete grip with eye contact) were more likely to receive job offers.

Instructors are encouraged to allow students to conduct “mock” interviews where the emphasis is

on the candidate introduction and hand shake. Allow the students to practice their handshakes and eye contact, and allow time for team or participant discussion and feedback.

KEY TERMS (pages 239-240) Acceptability 218 Achievement 209 Alternate-forms method 212 Assessment center 228 Banding approach 237 Behavioral Interview 234 Biographical data 230 Cognitive ability testing 219 Concurrent validation strategy 214 Content validation strategy 213 Correlation coefficient 212 Criterion-related validation strategy 213 Defamation of character 231 Employee selection 204 Fairness 217 Integrity testing 226 Inter-rater method 212 Job-based fit 208 Long-term generalists 207 Long-term specialists 207 Minimum cutoffs approach 236 Multiple hurdles approach 237 Negligent hiring 231 Organization-based fit 208 Personality testing 221 Potential 210 Predictive validation strategy 214 Predictor weighting 236 Reliability 211 Short-term generalists 206 Short-term specialists 207 Situational interview 234 Situational judgment test 224 Situational specificity 215 Split-halves method 212 Structured interview 234 Test-retest method 211 Utility 215 Validity 213 Validity generalization 215

Work sample testing 227

DISCUSSION QUESTIONS (page 240) 1. How do the concepts of long- and short-term talent and generalist and specialist talent fit

with overall HR strategy? Answer: Short-term generalists are hired to produce general labor inputs for a relatively short period of time (organizations with Bargain Laborer HR Strategy); Long-term generalists are hired to perform a variety of different jobs over a relatively long period of time (organizations with Loyal Soldier HR Strategy); Long-term specialists are hired to develop specific expertise and establish a lengthy career within an organization (organizations with Committed Expert HR Strategy); and Short-term specialists are hired to provide specific labor inputs for a relatively short period of time (organizations with Free Agent HR Strategy).

2. For what type of HR strategy is organization fit most important? When is job fit most needed? Answer: Organization-based fit is more important for long-term than for shortterm employee (i.e., Loyal Solder HR Strategy). Job-based fit is more important in organizations that seek to hire specialists than in those that seek generalists (i.e., Free Agent HR Strategy). Committed Expert HR Strategy needs both organization and job fit.

What type of organization should base hiring on achievement? What type should hire based on potential? Answer: Organizations seeking short-term specialists focus on measuring achievement (i.e., Free Agent HR Strategies). Potential is critical for organizations with long-term staffing strategies (i.e., Loyal Soldier and Committed Expert HR Strategies) and short-term generalists (i.e., Bargain Laborer HR Strategies).

3. What is reliability? How is it estimated? Answer: Reliability is the degree to which a selection method yields consistent results. All four methods rely on the correlation coefficient.

4. What is validity? How is it estimated? Answer: To be valid, a method of selecting employees must accurately predict who will perform the job well. Content validity is supported when experts agree that the content of the assessment reflects the knowledge needed to perform well on the job. Criterion-related validity strategy differs from the content validation strategy in that it uses correlation coefficients to show that test or interview scores are related to measures of job performance.

5. What factors affect the utility of selection methods? Answer: Validity, number of people selected into a position, length of time that people stay employed, performance variability, ratio of applicants to hires for a particular position, and fixed and variable costs.

6. What is the difference between fairness and legality? Answer: High validity may make it legal for an organization to use a test but not everyone may agree that the test is fair and should be used. Fairness goes beyond legality and includes an assessment of potential bias or discrimination associated with a given selection method.

7. Why do people sometimes react negatively to certain selection methods? Answer: Candidates have negative reactions to assessment techniques when they believe that the organization does not need the information being gathered—that the information is not job related (e.g., family and childhood experiences)—and when candidates believe that test results cannot be evaluated correctly (e.g., handwriting analysis and psychological assessment). Perceptions of fairness differ among countries.

8. What are the strengths and weakness associated with the following selection methods: Answer: Cognitive ability testing: Strengths: best predictor of performance, high reliability, difficult to fake, valid, high utility, legal in most settings, and high acceptability among hiring managers; Weakness: can result in adverse impact on minority groups.

Personality testing: Strengths: relatively effective selection method, useful for global firms, adequate reliability, overall criterion validity for teams, conscientiousness exhibits validity generalization, and simple to administer via internet; Weaknesses: validity depends on personality dimension, prohibited by some state laws, has adverse impact for women and minorities, people can fake answers, and faking can lead to unfair hiring decisions.

Physical ability testing: Strengths: high validity and utility for many manual labor positions and in jobs that require physical strength, important in relation to the Americans with Disabilities Act, high reliability, and few legal problems when tests are based on job analysis; Weakness: demonstrates adverse impact.

Integrity testing: Strengths: reliable; valid; no adverse impact for minorities; can have utility; integrity test scores correlated with personality test scores (especially for conscientiousness); and predicts counterproductive behavior, absenteeism, and overall performance; Weaknesses: illegal to use polygraph tests for hiring decisions, there is potential for faking answers.

Drug testing: Strengths: reliable and valid; Weaknesses: low acceptability with those who use illicit drugs and moderate utility because administrative costs can be high.

Application forms and resumes: Strengths: high utility and information about work experience correlates with performance; Weaknesses: reliability and validity depend upon information collected and some adverse impact (i.e., education and experience) Biodata: Strengths: Objective scoring methods improve reliability and validity; Weaknesses: poor validity generalization, high initial cost of creating measures, concerns about legality and fairness, and faking is likely because information is difficult to verify.

Work sample testing: Strengths: reliable, valid, high utility, and few legal problems; Weaknesses: not all jobs lend themselves to this sort of testing and assessment centers can be very expensive (low utility).

Reference checking: Strength: most common selection technique; Weaknesses: competing legal issues of defamation of character and negligent hiring make reference checking particularly troublesome and negatively affect its validity.

Interviewing: Strengths: structured interviews have higher reliability and validity than unstructured; valuable in determining whether people “fit” with the job, workgroup, or organization; and effective format for obtaining information about background credentials, education, and experience; Weaknesses: can be discriminatory, low utility, and reliability and validity of unstructured interviews can be low

9. Which selection methods are best for organizations with the various employee selection

strategies? Answer: Cognitive ability tests are beneficial for organizations seeking shortterm generalists and long-term generalists and specialists. Personality tests are beneficial for organizations seeking long-term generalists and specialists. Physical ability tests are not limited to a particular HR strategy. Integrity tests can be useful for organizations seeking short-term generalists. Drug testing can be useful for firms that hire most types of talent. Application forms and resumes are most valuable for organizations seeking shortterm employees and are used mostly in organizations hiring generalists. However, they also are used in organizations seeking long-term employees. Biodata can benefit organizations whatever their staffing strategies. In regard to work sample testing, assessment centers are most common in organizations needing long-term specialists while other types of work sample tests are useful for organizations pursuing any of the staffing strategies. Reference checking can be used with any strategy, but legal issues limit it usefulness. Safety concerns make a background check mandatory for many jobs. Although interviewing is used by organizations with all of the HR strategies, the focus of the interview questions depends on strategy.

10. What are the methods for combining scores from different selection methods? Answer: Common decision strategies include weighting the predictors, using minimum cutoffs, establishing multiple hurdles, and banding.

Example Case: Outback Steakhouse (pages 240-241) QUESTIONS 1. How do the employee selection methods at Outback Steakhouse help achieve competitive

advantage? Answer: They have a rigorous selection process that is rooted in and communicates their Principles and Beliefs. Thus, they strive to hire the right people who accept and can accomplish the organization’s commitment to their customers and who will stay with Outback Steakhouse a long time. They use the Multiple Hurdles Approach; give applicants realistic job previews, share a document (Dimension of Performance) that details examples of the kinds of behaviors expected of Outbackers; and assess them for cognitive ability, personality, and judgment, which are important job-related behaviors and attitudes.

Finally, candidates are interviewed to determine their orientation toward aspects of Outback’s culture.

2. How important is organization fit for Outback Steakhouse? Answer: It appears that they are

looking to hire long term employees who will stay with the organization for a long time and develop a deep understanding of company practices and operations. As a result, organization-fit is very important to Outback Steakhouse.

3. Why does Outback Steakhouse order the selection methods such that applicants first

complete an application, then complete tests, and then participate in an interview? Answer: Using minimum cutoffs in a number of areas in progressive order (i.e., Multiple Hurdles Approach) increases the utility of their overall selection process.

4. Why do you think these selection methods are valid? Answer: They are related to the job

and organizational needs.

Discussion Case: Stringtown Iron Works (pages 241-242) QUESTIONS 1. Which of the overall HR strategies would be best for Stringtown Iron Works? Answer: Free

Agent HR Strategy looking to hire Short Term Specialist.

2. Should Stringtown focus on job fit or organization fit? Answer: Job fit 3. Should Stringtown hire based on achievement or potential? Answer: Achievement 4. What selection methods would you recommend for Stringtown? Why? Answer: All of the

following measure achievement and job-based fit: physical ability testing (page 226), drug testing (page 227), work sample testing (pages 227-229), application form (pages 229-230 ), reference checking (pages 231-232 ), and structured interview (pages 232-234).

Experiential Exercise: Learning Through Interviewing (pages 242-243) This practical exercise encourages students to interview family members, friends, or admired associates so they can learn of specific hiring practices. Five interview-related questions and learning outcomes are submitted for discussion or as a written assignment

Interactive Experiential Exercise: Employee Selection: Choosing the Best of the Best for Graphics Design, Inc. (page 243) Overview of Activity Access the companion website to test your knowledge by completing a Graphics Design, Inc. interactive role play.

Before assigning this activity, you should read the associated links to Sarah Gales’ featured article located at http://www.workforce.com/section/06/feature/23/42/11/index.html. The three links describe other information related to the selection decisions of the three organizations included in the inset box.

Overview of Activity. The careers or job links on the websites listed below provide additional information regarding the duties related to the jobs.. The general information and duties listed for each position would help students identify other selection techniques that might be

appropriate.

Students could explain how 2 – 3 additional selection techniques could help identify job candidates who have the potential to provide excellent customer service. The students should explain why each technique appears appropriate and how at least one technique would fare on the criteria for selection techniques (i.e., reliability, validity, utility, legality and fairness, and acceptability).

Careers and Jobs Websites. Relevant job-related information may be found at the following links.

Outsourcing Solutions, Inc.: http://www.osi.to/careers.asp.

The link to short descriptions of job duties is located at

Spectrum Stores: No website was found for Spectrum Stores because they became Circle K stores. On April 11, 2006, Convenience Store Decisions reported that the 90-store chain of U.S. Spectrum Stores had been purchased by Alimentation Couche-Tard, (North America's third largest convenience store operator) through its subsidiary, Circle K Stores Inc., Source: http://www.lexdon.com/article/Couche-Tard_acquires_Spectrum_Stores_a/43912.html; accessed July 24, 2010).

This transaction was finalized on June 12, 2006 (Source: http://www.cspnet.com/ME2/Audiences/dirmod.asp?sid=&nm=&type=Publishing&mod=Public ations::Article&mid=8F3A7027421841978F18BE895F87F791&tier=4&id=B5EC983453AE4A 6D9D437F19497B6E04&AudID=7763DA803CBE410A893CD5C4ED7C9205; accessed July 24, 2010). The stores are primarily operated under the Circle K® banner. Thus, the Circle K jobs website provides relevant information. Full job descriptions for a variety of Corporate and Field Jobs that could be used for this purpose: (http://www.circlek.com/CircleK/Jobs/ default.htm).

American Residential Services, L.L.C.: A short list of general duties for a variety of jobs may be found at (http://www.jobswithars.com/careers.php). Although any of the jobs listed would be appropriate, the job duties listed for the HVAC Tech – Entry Level and Electrical Services Tech jobs may be the most similar to the service technician job noted in the box.

Overview of More In-Depth Activity. For a more in-depth analysis of the strategic nature of the selection decisions, students could refer to the main feature noted above (http://www.workforce.com/section/06/feature/23/42/11/index.html) and the three associated links related to the organizations described in the box. These articles should be combined with information from the relevant corporate level websites noted below.

[Note: At the time of publication, no helpful strategic information was found on the website for American Residential Services, L.L.C. (http://www.ars.com/). Thus, the activity should focus on Outsourcing Solutions, Inc., Circle K Stores, or both.]

For Outsourcing Solutions, Circle K Stores, or both, students could write a paper that explains how the selection techniques fit aspects of the organization’s mission or purpose, main goals,

SWOT, and the organization’s general business level strategy, and HR Strategy (discussed in Chapter 2). (Note: You may need to review the concept of mission or purpose of the organization for the students’ benefit.)

For one of the organizations, the students also could explain how the organization’s recruiting and selection techniques support each other. A variation would be to compare and contrast the recruiting and selection techniques for the two organizations. Several of the differences could be explained in term of strategic differences.

Because this is a more in-depth assignment, students should be forewarned of the assignment at the start of the semester and given several weeks to prepare the paper.

Links to Relevant Strategic Information. Strategic information may be found for Outsourcing Solutions, Inc. through their Corporate Brochure: http://www.ositranscription.com/assets/ images/downloads/SALES_BROCHURE0609.pdf. Strategic information for Circle K retail stores may be found at a variety of links to http://www.circlek.com (such as links to Franchisees, Fleet Owners, and About Us). Strategic information about the parent and purchaser of Spectrum Stores, Alimentation Couche-Tard, http://www.couche-tard.com/ corporatif/home.html. The following links may be helpful: Our Company, Investor Relations, and FAQ.

Chapter 7 Managing Employee Retention and Separation Chapter 7 Learning Objectives 1. Explain how employee retention and separation align with overall HR strategy.

2. Explain the employee turnover process and describe methods that an organization can use to reduce undesirable turnover.

3. Discuss the potential benefits and problems associated with employee layoffs.

4. Describe effective methods of employee discipline, including the principles of due process and the actions of progressive discipline.

5. Describe effective methods for dismissing employees from an organization.

Chapter 7 Outline 7.1 How Can Strategic Employee Retention and Separation Make an Organization Effective? (pages 252-254)

• Employees are a primary asset of almost every organization.

✓ Replacing an employee who quits costs an organization between one and two times the annual salary of the position. ✓ Employee retention is a set of actions designed to keep good employees. ➢ Ensuring that nonproductive employees don’t continue with the organization is often just as important as retaining productive workers. ➢ Changes in economic conditions and product demand sometimes force organizations to reduce size of workforce. ✓ Employee separation is the process of efficiently and fairly terminating workers.

7.2 How Are Employee Retention and Separation Strategic? (pages 254-256)

• Strategic Emphasis on Employee Retention (pages 254-255)

✓ Retaining good employees is the essence of internal labor orientation. ➢ Competitive advantage comes from developing loyal workforce that consistently excels at satisfying customer demands. ➢ Loyal Soldier HR strategy: Internal labor orientation and cost reduction strategy. ➢ Committed Expert HR strategy: Internal labor orientation and differentiation strategy. ➢ Employee retention is not as critical for external labor orientation. ➢ For Bargain Laborer HR strategy, separations are seen as a necessary consequence of combining entry-level work with relatively low wages. ➢ For Free Agent HR strategy, those who leave can be replaced by individuals with more up-to-date knowledge and skills.

• Strategic Emphasis on Employee Separation (page 255-256)

✓ Employee separations are an important part of differentiation strategy.

➢ Differentiators rely on highly skilled employees. ➢ Committed Expert HR strategy focuses on terminating low performers. ➢ Free Agent HR strategy benefits from frequently replacing employees with others who bring new skills and a fresh perspective. ✓ Managing employee separation is not as important as cost reduction strategies: Loyal Soldier HR and Bargain Laborer HR strategies.

CONCEPT CHECK 1. Retaining good employees is most critical for which of the HR strategies? Loyal Soldier and Committed Expert HR Strategies.

2. Which of the HR strategies might encourage some employee separation? Committed Expert (where the necessary skills are not developed) and Free Agent HR strategies (to keep skills up to date).

7.3 How Can Undesirable Employee Turnover Be Reduced? (pages 256-268)

• From the organization’s standpoint, the effect of an employee’s departure depends on whether the employee is a high or a low performer. ✓ Voluntary turnover: employee decides to leave. ✓ Involuntary turnover: organization terminates the employment. ✓ Functional retention: high-performing employees remain employed. ✓ Functional turnover: low-performing employees voluntarily quit. ✓ Dysfunctional retention: low-performing employees remain with the organization. ✓ Dysfunctional Turnover: adequate or better performing employee voluntarily quits.

• Recognizing Paths to Voluntary Turnover (pages 257-259)

✓ Quick Decision to Leave: begins with an external event that causes the employee to rethink the employment relationship, and the employee quits without much thought. ✓ Calculated Decision to Leave: an event causes an individual to begin thinking about leaving the organization. Interestingly, the decision is not influenced by alternative job opportunities but rather the decision is simply whether to stay or leave. ✓ Comparison with Other Alternatives: some external event initiates thoughts about leaving the organization, such as a job offer from another firm, and the individual begins to look at alternative opportunities. ✓ Sense of Dissatisfaction: caused by a general sense of dissatisfaction with the job over time and no specific event can be identified as causing the employee to begin thinking about quitting. This leads the employee to either make a calculated decision or compare alternative opportunities.

• Understanding Decisions to Quit (pages 259-262)

✓ Important part of each path to turnover is lack of satisfaction with the current state. ✓ Low Job Satisfaction ➢ Job satisfaction represents a person’s emotional feelings about his or her work. ➢ Employees often make an overall assessment of their job satisfaction, but it can be divided into six dimensions:

° Empowerment ° Job fulfillment ° Pay ° Work group ° Security ° Work facilitation. ➢ Different values and perceptions mean that job satisfaction represents a complicated mix of feelings. ° Employee who is satisfied with one aspect of the job may not be satisfied with others. ° Not every aspect of job satisfaction is equally important to every employee. ° Some people may value empowerment more than security, whereas others will place greater value on security. ➢ Satisfaction with compensation is often the dimension most strongly related to overall perceptions of job satisfaction. ➢ Overall job satisfaction varies among organizations as well as among individuals. ✓ Withdrawal from the Organization ➢ Withdrawal is a progressive process whereby an employee who is dissatisfied pulls away from the organization over time. ➢ Early signs of withdrawal include ° increased lateness and absenteeism; ° giving less input to the organization; ° being less helpful toward coworkers. ✓ Exit from the Organization ➢ One important factor that determines whether workers continue in undesirable jobs is the availability and desirability of alternative jobs. ° Dissatisfied employees are likely to stay with an organization when they perceive that it will be difficult to find another job. ° People are also more likely to stay with their current jobs when they perceive that switching will have high economic and psychological costs. ➢ Some people are predisposed toward either high or low levels of satisfaction regardless of the work environment. ° Some are dissatisfied no matter how good a job is. ° People with chronically low job satisfaction tend to experience negative moods in all aspects of their lives. ° Some people tend to have dysfunctional characteristics such as perfectionism that undermine their feelings of self-worth. ° Individuals who are low on agreeableness often leave a job because they like doing things their own way. ° Individuals who are highly open to experience tend to leave to seek out new adventures

• Organizational Practices That Reduce Turnover (page 262-263)

✓ Work to ensure that employees’ needs are being met continuously. ✓ Need good HRM practices related to staffing, career planning, training, compensation, and workforce governance. ✓ Effective organizations develop ongoing procedures to find out why individuals leave.

✓ Each employee who leaves should have an exit interview where the interviewer tries to determine why the employee decided to quit.

• Assessing Employee Satisfaction (pages 263-264)

✓ Organizations seek to reduce turnover by frequently measuring employees’ job satisfaction. ➢ Done through surveys that ask employees about facets of work experience. ➢ Common survey is Job Descriptive Index, which assesses satisfaction with work tasks, pay, promotions, co-workers, supervision, demographic characteristics, work positions, and locations. ➢ Job satisfaction surveys are best when they ask interesting questions. ° Topics expected to be most important to employees should be placed at the beginning of the survey. ° Routine questions such as length of time worked and department should be placed at the end. ° Value of employee surveys can be increased by including items measuring how well the organization is meeting its strategic objectives. ✓ One problem with job satisfaction surveys is that the least satisfied employees are not likely to respond to the survey. ➢ These employees have already started to withdraw from the organization. ➢ They see little personal benefit in completing the survey. ➢ They see things as too negative to fix. ➢ They no longer care about the work environment of the company they are planning to leave.

• Socializing New Employees (page 264)

✓ Process of acquiring knowledge and behaviors needed to be member of organization. ✓ A key to effective socialization is interacting with coworkers and leaders.

• Building Perceptions of Organizational Support (pages 264-266)

✓ Those who feel supported reciprocate with feeling of obligation toward organization. ✓ Obligation results from actions of organizational leaders, better compensation practices, better designed jobs, fairness of procedures, and absence of politics.

• Selecting Employees Who Are Likely to Stay (page 266)

✓ Employees who have more realistic expectations about the job are less likely to quit. ✓ Can reduce turnover by directly assessing individual differences related to turnover.

• Promoting Employee Embeddedness (page 268)

✓ Embeddedness is the extent to which an employee is tied to the organization and the surrounding community. ✓ Can reduce dysfunctional turnover by insulating employees against shocks. ✓ People are more embedded when: ➢ they have strong connections to others, ➢ they have values and goals that fit with their environment, and ➢ they feel that leaving would result in monetary or psychological losses. ✓ Organizations promote embeddedness by providing: ➢ Enjoyable work, ➢ Desirable work schedules, ➢ Good promotional opportunities,

➢ ➢ ➢ ➢

Good benefits, Encouraging employees to build positive social relationships with coworkers, Encouraging employees to work in teams.

Company sponsored service projects and athletic teams build similar relationships.

CONCEPT CHECK 1. What are four common paths to voluntary employee turnover? Quick Decision to Leave, Calculated Decision to Leave, Comparison with Other Alternatives, and Sense of Dissatisfaction.

2. What perceptions and choices explain the process whereby low job satisfaction translates into a specific action of quitting? Dissatisfied employees will quit when they perceive that it will not be difficult to find another job. People are also more likely to quit their current jobs when they perceive that switching will have low economic and psychological costs.

3. What can an organization do to reduce voluntary employee turnover? Ensure that employees’ needs are being met continuously; have good human resource management practices related to staffing, career planning, training, compensation, and workforce governance; and have ongoing procedures to find out why individuals leave (e.g., exit interviews).

7.4 How Do Layoffs Affect Individuals and Organizations? (pages 269-274)

• Large scale terminations of employment (unrelated to job performance) are known as layoffs.

• The Effect of Layoffs on Organizations (pages 269-270)

✓ Many organizations lay off employees as part of an overall change effort. ✓ Downsizing: widespread layoffs intended to permanently reduce size of workforce. ➢ Effects of downsizing on organizations are not altogether clear. ° Financial performance of organizations that downsized is similar to performance of those that have not downsized. ° Effect of downsizing is not the same for all organizations. ° Most problems occur when an organization reduces its workforce by more than 10 percent and makes numerous announcements of additional layoffs. ° Firms that downsize to change before problems become serious are generally valued more by investors. ➢ Effective strategic planning can help an organization avoid layoffs.

• The Effects of Layoffs on Individuals (pages 270-272)

✓ The impact of downsizing goes beyond those who lose their jobs. ✓ Widespread layoffs can have a negative effect on employees who remain. ➢ Layoff victims—individuals who lose jobs—experience problems. ° Layoff victims are likely to suffer declines in mental health and psychological well-being, as well as physical health.

° Individuals with work-role centrality—the extent to which work is a central aspect of life—suffer more from job loss than do individuals for whom work is less important. ° Individuals who have more resources cope better. ° Individuals with a positive perception of their abilities to obtain a new job also cope better. ➢ Consequences for Layoff Survivors: individuals who continue to work for an organization when their coworkers are laid off react similarly to victims. ° An important factor in determining whether survivors will react positively or negatively is the fairness that they perceive in the layoff procedures.

• Reducing the Negative Impact of Layoffs (pages 273-274)

✓ Best method for reducing the negative impact of layoffs is to avoid them. ✓ Have clear plan and accurately forecast labor needs. ➢ Laying off low performers is generally more effective than laying off employees across the board. ➢ Encourage early retirement and/or reduce or eliminate overtime. ➢ Ask employees to share jobs. ➢ Employees might be transferred to other parts of organization experiencing growth. ➢ Organizations can have their employees perform tasks that were previously contracted to outside firms. ✓ Effective communication of downsizing decisions and plans is critical. ✓ Understanding legal issues is also important for successful downsizing.

CONCEPT CHECK 1. How does downsizing affect organizations in the short term? in the long term? The effects of downsizing on organizations are not altogether clear. Research suggests that the financial performance of organizations that have downsized is similar to the performance of organizations that have not downsized. The effect of downsizing is not the same for all organizations. Some organizations appear to benefit more than others. About half the firms that downsize report some benefit, whereas half report no improvement in profits or quality.

2. What are the common reactions of downsizing victims? Job loss begins a chain of negative feelings and events including worry, uncertainty, financial difficulties, declines in mental health and psychological well-being, physical health, and satisfaction with other aspects of life, such as marriage and family life.

3. How do employees who remain with an organization react when they see their coworkers being laid off? In some ways survivors’ reactions are similar to victims’ reactions.

Negative reactions include anger at the loss experienced by coworkers and insecurity concerning the future of their own jobs. Positive reactions include relief that their jobs were spared, job satisfaction, commitment to the organization, and work performance. Survivors suffer less stress and fewer negative reactions when they believe the layoff procedure was fair.

7.5 What Are Common Steps in Disciplining Employees? (pages 274-277)

• Sometimes employees fail to carry out their duties in an acceptable manner.

✓ Usually wrong to terminate problem employees without giving chance to improve. ✓ Discipline: process whereby management takes steps to help an employee overcome problem behavior

• Principles of Due Process (page 275)

✓ Due process: A set of procedures carried out in accordance with established rules and principles aimed at ensuring fairness. ➢ Employees have a right to know expectations and what will happen if they fail to meet them. ➢ Discipline must be based on facts. ➢ Employees should also have a right to present their side of the story. ➢ Any punishment should be consistent with the nature of the offense.

• The Process Of Progressive Discipline (pages 275-277)

✓ Some forms of misconduct are so serious that they result in immediate termination. ✓ Most offenses not serious enough to warrant immediate dismissal, and in these cases, due process requires the organization to allow employees to correct misbehavior. ➢ Progressive discipline process: Management provides successively more severe punishment for each occurrence of negative behavior. ° A supervisor meets and discusses company policy with an employee the first time an unacceptable behavior occurs. ° No further action is taken if misbehavior is not repeated. ° Subsequent instances of misbehavior are met with harsher punishment that eventually results in termination. ➢ Although the number of steps and actions differ by organization, most progressive discipline systems include at least four steps. ° Step 1: Verbal Warning ° Step 2: Written Warning ° Step 3: Suspension ° Step 4: Dismissal ✓ Supervisors are sometimes unwilling to take the first step in the process. ➢ Many supervisors seek to avoid conflict and so often ignore misbehavior. ➢ Managers reluctant to discipline when they perceive disciplinary process as unfair. ➢ Managers are most likely to discipline employees when ° they know they will be supported by leaders above them in organization. ° they have been trained to deliver discipline properly. ° there is a pattern of constructive discipline within organization.

CONCEPT CHECK

1. What are the four principles of due process? Employees have a right to know what is expected of them and what will happen if they fail to meet expectations; discipline must be based on facts; employees should have a right to present their side of the story; and any punishment should be consistent with the nature of the offense.

2. What are the steps for progressive discipline? Verbal Warning, Written Warning, Suspension, and Dismissal.

7.6 How Should Employee Dismissals Be Carried Out? (pages 277-279)

• Having to dismiss employees is one of the most difficult tasks that a manager faces.

• Outplacement Services provide assistance in helping dismissed employees find jobs.

• The Dismissal Meeting (pages 278-279)

✓ Managing this event in the right way is critical if the organization is to show respect for employees and maintain a good reputation. ➢ Face-to-face meetings are best and employees should not be dismissed on Fridays. ➢ Key principles should guide communication during a dismissal meeting. ° Best to have third person present to serve as witness. ° Tell employee directly that he or she is being dismissed. ° Meeting should be brief. ° If principles of due process have been followed, the employee should already know why he or she is being fired. ° Once the bad news is delivered, the manager should listen to the dismissed employee. ° There is no need to argue or defend the action. ° Present a written summary of the meeting to the dismissed employee. ➢ Dismissal meeting should include discussion of severance compensation if offered. ✓ Safety of supervisor and other workers is an important consideration. ➢ When possible, security personnel should be alerted. ➢ Security can provide assistance if a person becomes violent or makes threats. ➢ Dismissed employee may need to be escorted from the work site if the organization works with highly sensitive information or if the employee is being terminated for offenses such as theft or violence with coworkers.

CONCEPT CHECK 1. How can an outplacement firm help an organization manage employee dismissals? The firms are often in a better position to work with dismissed employees to help them find a new job, since these employees may feel some resentment toward the organization that dismissed them. Outplacement services normally include testing and assessments; employment counselors guidance to improve job search skills; financial planning advice; psychological counseling to deal with grief, anger, and anxiety; and some outplacement firms provide actual job leads.

2. What should a manager do and say when she tells an employee he is being fired? Because of the emotional nature of dismissal, face-to-face meetings are usually best on a day other than a Friday. In most cases, it is best to have a third person present to serve as a witness. It is important to state clearly that the person’s employment is being terminated in a brief meeting. Once the bad news has been delivered, the manager should listen to the employee who is being dismissed. Finally, it is usually best to present a written summary of the meeting to the employee being dismissed. The summary should include information like when the last day of employment will be, how to return company equipment such as keys and computers, and what will happen to health insurance and other benefits. The dismissal meeting should include a discussion of severance compensation if it is being offered.

Chapter 7 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (pages 280-281) Summaries of each of the four learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives: The chapter contains five learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 264 Learning objective 2- page 256 Learning objective 3- page 269 Learning objective 4- page 274 Learning objective 5- page 277

Concept Checks The chapter contains five concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- page 256 Concept 2- page 268 Concept 3- page 274 Concept 4- page 277 Concept 5- page 279

Tables and Figures The table and figures presented in the chapter help illustrate the concepts of the chapter. They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 7.1- page 261 Table 7.2- page 263 Table 7.3- page 272

Dimensions of Job Satisfaction Human Resource Practices That Reduce Turnover Alternatives to Layoffs

Table 7.4- page 273

Minimizing the Negative Effects of Layoffs

Figure 7.1- page 255 Strategic Retention and Separation of Employees Figure 7.2- page 257 Types of Employee Turnover and Retention Figure 7.3- page 259 Paths to Decisions to Quit Figure 7.4- page 260 How Job Satisfaction Leads to Quitting Figure 7.5- page 271 Coping with Job Loss and Unemployment Figure 7.6- page 272 Responses of Layoff Survivors Figure 7.7- page 276 Steps for Progressive Discipline A Manager’s Perspective (page 250-251), What do you think? (page 251), and A Manager’s Perspective Revisited (page 279-280) The chapter starts with a short scenario where Angela is thinking about her position as restaurant manager. She recalls how three people in two months have quit with little or no advance notice. She is also dreading a discipline meeting that might result in her firing a worker. Five true/false questions related to this scenario and the chapter topics are noted on page 251 and answered on page 279.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what additional questions Rithica should ask.

During the discussion of the chapter material, you could refer to the questions noting that a certain section or discussion point addresses one or more of the questions.

For some chapters, you may wish to address the questions at the end of discussing the chapter.

In this case, you may want to bring the students’ attention to these questions informing the students that they will be asked to answer the questions near the end of the chapter discussion.

At that time, students (individually or in groups) could be asked to explain why the answers are true or false. Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

Building Strength Through HR: SAS Institute, Inc. This special feature (pages 251-254) highlights several issues noted in this opening case regarding SAS Institute, Inc. (refer to pages 252-254). This case illustrates how HRM can help build an organization’s competitive strength by retaining productive employees.

The inset box (refer to page 254) presents some of the HR practices mentioned in the case but not all. Therefore, you could ask the students what other HR practices SAS employs to retain productive workers (e.g., all professional workers have private offices, employees are encouraged to spend dinnertime with families, etc.). You also could ask if these are HR practices that most organizations could or would do and what other HR practices a different organization could implement to retain their productive employees.

This discussion could be supplemented by students familiar with the SAS organization.

Additional information may be found on SAS Institute’s webpage that briefly describes their philosophy regarding work-life balance: http://www.sas.com/company/sasfamily/index.html. In addition, there is a link to a short article from Fortune Magazine describing why SAS has been listed as one of the Best Companies. http://www.sas.com/news/preleases/ 2010fortuneranking.html Supplemental information could be provided by a student responsible for updating the case and finding relevant information from the organization’s website or other sources. You should inform the students of any school policies that address contacting organizations.

Building Strength through HR: Convergys Corporation (page 258) This inset box is briefly mentioned on the same page in the chapter (refer to page 258).

Convergys uses an “early warning system” in which team leaders provide weekly assessments of each employee’s probability of quitting. These employees are offered alternative work schedules and many are referred to health and benefit programs.

The students could be encouraged to read the details in the inset box and read more by accessing the 2006 article. The website is listed in the inset box to facilitate this.

During the lecture or class discussion of the chapter, the brief information presented in the inset box could be summarized. You also may want to pose the following questions: (1) Why might the company ask for a weekly assessment? (2) Is a weekly assessment realistic for most organizations? If not, what might be a more reasonable timeframe? (3) Is it fair for those receiving a “red rating” to be offered alternative work schedules? If we can assume that this is valued by the employees, should Convergys make this alternative scheduling available to all employees? Do you think that the offer of alternative work schedules to all employees might reduce the percentage of employees who receive a red rating? Why or why not?

Overview of Activity Identify HR practices utilized by Convergys Corporation that could reduce turnover of productive workers. Note: Convergys Corporation has been consistently listed by Fortune as one of the “The 100 Best Companies to Work for in America.” Thus, the organization’s website presents adequate information regarding relevant HR practices.

Exercise: Refer to the inset box Building Strength through HR: Convergys Corporation found on page 258. Convergys uses an “early warning system” in which team leaders provide weekly assessments of each employee’s probability of quitting. These employees are offered alternative work schedules and many are referred to health and benefit programs.

The students could be encouraged to read the details in the inset box and read more by accessing the 2006 article.

The website is http://money.cnn.com/magazines/fortune/ mostadmired/. Then they can identify various HR practices that the text authors have identified as potentially helpful to reduce turnover of productive workers. You should encourage the students to consider such practices as the organization’s culture, recruiting and selection techniques, benefits, etc.

Alternate Approaches to the Exercise: Students could compare and contrast HR practices utilized in various organizations that could be used to retain productive workers. Many of the organizations listed in Fortune’s top 20 of “The 100 Best Companies to Work for in America” have helpful websites.

Links to relevant information http://money.cnn.com/magazines/fortune/mostadmired/ http://www.convergys.com/company/company-overview.php http://money.cnn.com/magazines/fortune/bestcompanies/2007/

Technology in HR: Computerized Orientation Programs (page 265) This inset box briefly addresses costs and benefits of computerized orientation programs.

The brief information presented in this box could be referred to during a lecture. Students can be asked for their experiences with online orientation or training. The students could be asked to speculate on reasons for the lower job satisfaction and organizational commitment of those employees who received the computer-based orientation and how these negative outcomes could be reduced.

The effectiveness of orientation programs (e.g., computerized, live, hybrid) could be researched by students.

Building Strength Through HR: FreshDirect (page 266) This inset box briefly addresses how FreshDirect (an online grocer) reduced their turnover rate of over 200 percent to 75 percent.

After summarizing the information from the inset box, the students could be asked the following questions: (1) Is it realistic to tie a portion of the managers’ pay to turnover rates in their departments? (2) What behaviors might FreshDirect be expecting from managers when a portion of their pay is linked to turnover rates in their departments? (3) Should managers be held responsible for turnover that is not directly attributable to organizational factors (e.g., family moves, illness, internal transfers, etc.)? (4) How could employee reasons for turnover be tracked if some types of turnover will not be affected by managers?

How Do We Know? Are Coworkers Contagious? (page 267) This inset box is mentioned on the same page of the text (refer to page 267). Researchers Felps, Mitchell, Hekman, Lee, Holtom, and Harman conducted two studies to answer two questions; 1) does having embedded coworkers make an employee more likely to be an embedded worker, and 2) does working with people who are looking for other jobs also influence other workers to also look for new jobs.

The researchers found that in the first study, an individual employee was less likely to quit if his coworkers were embedded in their jobs and in the second study, coworkers who were less embedded were more active in searching for other jobs.

The information reported in the inset box could be part of a lecture or class discussion. Students could be asked to speculate about their own coworkers’ perceived embeddedness or about the embeddedness of coworkers at previous jobs. Every effort should be made to discuss the situations without mentioning individual names.

Other ways to address this information could be through a short written assignment or a more in-depth research paper on embeddedness and its impact on employee and organizational performance.

How Do We Know? Do Managers Think Discipline Is Fair? (page 277) This inset box is mentioned on the same page of the text (refer to page 277). Researchers asked 62 experienced HR managers to rate whether instances of discipline familiar to the managers were fair. The researchers concluded that managers perceive discipline as fair when the employee knew the offending behavior was wrong and expected punishment. The managers also felt that the discipline was fair when the consequence was appropriate.

One way to address this information could be through a discussion, short written assignment, or a more in-depth research paper on disciplining and its impact on employee and organizational performance. One written assignment could involve the students contrasting and comparing

progressive discipline and positive discipline approaches. Among other differences, positive discipline advocates replacing the term “warning” with “reminder” and having the supervisor counsel the employee during the first three steps. The final step (termination) is the same as progressive discipline. Sources include: D. Grote, “Discipline without Punishment,” Across the Board, September 2001), pp. 52-57, and J. Kay, “Vantage Point,” Nursing Management, UK, (June 2004), p. 8.

KEY TERMS (pages 281-282) Discipline 274 Downsizing 269 Due process 274 Dysfunctional turnover 257 Embeddedness 267 Employee retention 252 Employee separation 252 Exit interview 263 Involuntary turnover 257 Job satisfaction 260 Layoffs 268 Layoff survivors 271 Layoff victims 270 Outplacement services 277 Perceived organizational support 264 Progressive discipline 275 Severance compensation 278 Socialization 264 Voluntary turnover 257 Withdrawal 261 Work-role centrality 270 DISCUSSION QUESTIONS (page 282) 1. How can SAS compete with other software firms when its employees appear to work less than the employees at competing firms? Answer: They could identify the lower performers and try to learn why they are less productive. SAS also could benchmark best practices in regard to HR practices that might identify higher performing job candidates and that encourage higher productivity.

2. Do you think a fast-food restaurant such as Arby’s would benefit from reducing turnover of cooks and cashiers? Answer: Perhaps. Arguments could be made either way. What could the company reasonably do to encourage employees to stay? Answer: Some of what they do might depend on what they learn from the employees. Arby’s may find that their workers want some job enrichment, flex-time, opportunities to do community work on company time, etc. What problems might occur if employees stayed for longer periods of time? Problems might include: low morale, low productivity, high absenteeism, low job satisfaction, low customer

service, etc.

3. Do you think the university you attend makes a concerted effort to dismiss lowperforming workers? Students’ answers will vary. How does the university’s approach to dismissing low performers affect overall services for students? Student answers might include low morale, poorly taught classes, poor advising, etc.

4. What are some specific events that might cause you to leave an organization without having found a different job? Students’ answers will vary.

5. Which dimensions of job satisfaction are most important to you? Would you accept less pay to work in a job with better coworkers? How important is doing work that you find enjoyable? Students’ answers will vary.

6. What things keep you embedded in your current situation? Are there personal and family factors that encourage you to keep your life as it is? Can you identify social relationships that might influence you to avoid moving to another university or a different job? Students’ answers will vary.

7. Why do you think organizations that lay off workers frequently fail to improve their long term performance? Answer: A main reason most likely is that they are doing a poor job of strategic planning and HR planning.

8. Some people who have been layoff victims look back on the experience as one of the best things in their lives. Why might a victim say such a thing several years after the layoff? Answers will vary. They might include that they found a better job that was less stressful and more rewarding with, perhaps, better job security. They also may have gained valuable experience in termination meetings that they can share with their new companies.

9. Can you identify a time when a low-performing individual has not been disciplined by a leader? How did the lack of discipline affect the poor performer? How did it affect other workers or team members? Students’ answers will vary.

10. As a manager, what would you say to a person whom you were firing? Answer: Get right to the point, telling the person that she or he has been dismissed. Then, listen to her or him. Also you would explain the termination process (what happens next), outplacement firm services, and severance pay.

EXAMPLE CASE: Apparel Inc. (pages 282-283) Questions 1. What are some ways that managers might cope with negative emotions when they are forced to lay off employees? Answer: Training the managers in proper discipline techniques, developing fair procedures, and making sure the organization has a constructive discipline structure, including that the managers know that they will be supported by leaders). Students may also mention stress management techniques or talking to HR professionals or other managers about their feelings.

2. Why might someone argue that it is a good thing for managers to feel such negative emotions? Answer: Managers are more likely to follow due process procedures before terminating someone. Managers also are more likely to do everything in their power to prevent layoffs such as effective HR planning.

3. How do you think you would personally react to the task of laying off workers?

Students’ answers will vary.

DISCUSSION CASE: County General Hospital (pages 283-284) Questions 1. Turnover is high at almost every facility where nurses are employed. What aspects of nursing make turnover for nurses higher than for many other jobs? Answers include: low pay, lack of respect, high stress jobs, micro-managing supervisors, poor treatment by doctors, and not able to meet and socialize with others their age.

2. What programs do you suggest County General might implement to decrease nurse turnover? Be specific. Answer: One thing that County General could do is review the job duties and see if any should be redistributed to non-medical staff or nurse interns.

They also could give a retention bonus for nurses that stay with the hospital for various ranges of months and years and have recognition ceremonies.

3. How might County General work with other hospitals to reduce nurse turnover?

Answer: They could benchmark best practices in health and other industries. They also could work together to address some of the issues (e.g., have social events with nurses of different hospitals).

Experiential Exercise: Learning about Discipline Procedures (page284) Questions: Students’ answers will vary.

Examine the Web site for your university to locate information that guides the disciplinary actions of supervisors. If you can’t locate this information for your university, visit a few websites for other universities. Examine the supervisor guidelines and answer the following questions: 1. What does the university do to ensure due process?

2. How many steps are in the university plan for progressive discipline? Are the steps similar

to the four steps outlined in this chapter?

3. What involvement does the human resource department have in cases of employee

discipline?

4. Does the site offer guidance for how to deal with specific instances of employee

misbehavior?

5. What steps can an employee take to appeal a disciplinary action?

6. Are any unions involved in disciplinary procedures?

7. Based on your experiences with the university, do you think supervisors actually follow the

steps of progressive discipline?

Interactive Experiential Exercise: Turnover: Dealing with the Good, the Bad, and the Ugly at Global Telecommunications (page285) Access the companion website to test your knowledge by completing a Graphics Design, Inc. interactive role play.

Chapter 8 Measuring Performance and Providing Feedback Chapter 8 Learning Objectives 1. Describe how merit-based and parity-based performance management systems relate to overall HR and competitive strategy.

2. Describe the three dimensions of job performance.

3. Explain differences among and common problems with various types of performance measures.

4. Explain the value of using multiple sources to obtain performance appraisal ratings.

5. Describe effective methods for providing feedback to employees.

Chapter 8 Outline 8.1 How Can Performance Management Make an Organization Effective? (page 294) Performance management is the process of measuring and providing feedback about employee contributions to the organization. ➢ Measuring performance and providing feedback does indeed improve employee performance. ➢ Improvements in individual performance translate into better organizational performance. ➢ Organizations have higher productivity when top management encourages supervisors to set goals, assess performance, and provide feedback to employees.

One reason is that trust in management increases when performance is accurately measured and adequately rewarded. Another reason is that appraisals that allow employee participation have also been linked to higher levels of job satisfaction.

8.2 How Is Performance Management Strategic? (pages 296-299) •

Emphasizing Either Merit or Parity (pages 296-297) ✓ Merit-Based Systems ➢ Basic objective is to recognize high performance in order to achieve superior outcomes. ➢ Relative measures are performance ratings that assess an employee’s contributions through comparison with the contributions of other employees. ➢ Success at work is defined as doing better than others. ➢ Managers are also frequently required to place a certain percentage of employees in each rating category, which is called a forced distribution. ✓ Parity-Based Systems ➢ Basic objective is to encourage cooperation and allow everyone who meets a certain standard to be classified as a high performer.

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Parity-based performance measures frequently focus on processes rather than outcomes. ➢ High performance is defined as following guidelines and performing behaviors assigned by supervisors. ➢ Usually involves absolute measures that compare employees with an established benchmark rather than with each other. ➢ Most parity-based systems also adopt a free distribution: o Allows any percentage of employees to be placed in a particular category. o Does not separate people into categories of high and low performance; encourages all employees to perform above a certain standard.

Linking Merit and Parity Systems to HR Strategy (pages 297-299) ✓ Merit Systems and Differentiation Strategies are most beneficial for Free Agent and Committed Expert HR strategies. ✓ Parity Systems and Cost Strategies are most beneficial for Loyal Soldier and Bargain Laborer HR strategies.

CONCEPT CHECK 1. How does a merit-based performance system differ from a parity-based performance system?

Answer: Merit-based performance management systems specifically seek to identify and recognize the contributions of high performers.

Parity-based performance management systems seek to recognize contributions from all employees without necessarily elevating some above others.

2. Which HR strategies best align with a merit-based system? Which are best for a parity-based

system? Answer: Free Agent and Committed Expert HR strategies align best with a meritbased system. Loyal Soldier and Bargain Laborer HR strategies align best with a parity-based system.

8.3 What Is Performance? (pages 299-302) •

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Job performance represents the contribution that individuals make to the organization. ✓ A general performance factor is a broad factor of performance that represents an employee’s overall contribution to the organization.

Task Performance (page 299-300) ✓ Task performance occurs when employees perform actions that transform raw materials into goods and services and is the most obvious form of contribution to an organization. ✓ Employees are most likely to make significant contributions when they have appropriate procedural knowledge, skill, appropriate declarative knowledge, and motivation ➢ Declarative knowledge is an understanding of what needs to be done to perform certain tasks.

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Procedural knowledge and skill concerns the ability to perform the prescribed tasks.

Citizenship Performance (pages 300-301) ✓ Citizenship behavior contributes by building a positive organizational environment. ✓ Organizational citizenship behavior is what is done to benefit the organization. ✓ Employees are good citizens when they willingly go beyond minimum expectations to cooperate and help others. ✓ Citizenship performance can be pursued to help organizations or specific individuals. ✓ Interpersonal citizenship behavior is the effect of benefiting specific people. ✓ Likelihood that employees will engage in helpful behavior differs depending on whether behavior is intended to aid overall organization or some individual. ✓ Employees engage in more organizational citizenship behavior when they feel that they receive reasonable pay, are praised for doing good job, and have pleasant working conditions. ✓ Employees are most likely to engage in citizenship performance when they perceive a long-term work relationship, suggesting that citizenship contributions are higher in organizations with Loyal Soldier and Committed Expert HR strategies.

Counterproductive Performance (pages 301-302) ✓ Organizations whose employees engage in counterproductive behavior have been found to have lower productivity. ✓ Counterproductive behavior can be directed toward the organization or specific individuals. ➢ Negative actions directed toward the organization include production and property deviance. ➢ Counterproductive behaviors targeted toward specific individuals include political deviance and personal aggression. ➢ Organizations can reduce counterproductive behavior by communicating an interest in well-being of employees and providing developmental opportunities. ➢ More conscientious, more agreeable, and less anxious employees do not indulge in counterproductive behavior, even if they do not feel support from organization.

CONCEPT CHECK 1. What are 3 different types of performance that fall directly under the general performance factor? Answer: The three main performance dimensions are task, citizenship, and counterproductive performance.

2. How

is citizenship performance different from task performance? Answer: Task performance contributes to actual production of goods or services. Citizenship performance is behavior that contributes to social and psychological environment of the organization.

3. What are four types of counterproductive performance behavior? Answer: Production deviance, property deviance, political deviance, and personal aggression.

8.4 How Is Performance Measured? (pages 302-313) • The process of measuring what each employee contributes is called a performance appraisal.

• A starting point for thinking about performance measures is to consider ways in which evaluations can be inaccurate.

• Contamination and Deficiency as Sources of Inaccuracy (page 304) ✓ Contamination: things that should not be measured are included in employee’s performance evaluation ✓ Deficiency: things that should be included in employee’s performance evaluation are not measured. ✓ A good appraisal system minimizes contamination and deficiency.

• General Types of Performance Measures (pages 304-306) ✓ Objective Versus Subjective Measures ✓ Objective performance measures: numerical and based on counts of behaviors or outcomes. o Most people believe that objective measures are best. o Objective measures seem more consistent and fair. o Objective measures also have problems. ➢ Subjective performance measures: judgments made by raters. ➢ Assessments of performance should include objective and subjective measures. ✓ Outcome versus Behavioral Measures ➢ Outcome measures assess end results. o Most common for Committed Expert and Free Agent HR strategies. o High-performing employees are expected to use unique knowledge and skills to produce the desired outcome of delivering superior goods and services. ➢ Behavioral measures place more emphasis on the actions of employees. o Behavioral measures are most often linked with Loyal Soldier and Bargain Laborer HR strategies. o Desirable outcomes will result when representatives follow prescribed procedures. ➢ Outcome and behavioral measures can suffer from deficiency and contamination, suggesting that both should be assessed in most situations.

• Common Problems with Performance Measures (pages 306-311) ✓ For subjective measures, bias can be introduced when humans provide ratings; ratings based on human judgments are often contaminated and deficient. ✓ Objective and outcome measures hold employees accountable for things they cannot control. ✓ Finally, all types of performance ratings can suffer from inconsistency because performance at one point in time is likely different from performance at another time. ✓ Rater Errors ➢ Central tendency error – pattern of placing almost everyone in the middle of the scale. ➢ Contrast error – raters compare people with one another. ➢ Halo error – assessment is based on general impression of the employee rather than on the employee’s specific contributions. ➢ Recency error –too much emphasis placed on recent behaviors and outcomes.

Primacy error –too much emphasis placed on behavior that is first observed.

Frame of reference training – training that focuses on building consistency in the way different raters observe and evaluate employee behaviors and outcomes and is considered the most effective method for increasing rating accuracy. ✓ Rater Bias – rater unfairly provides lower ratings to certain groups of people, such as women and minorities. ➢ Raters may give higher ratings to employees whose race is the same as theirs. ➢ Ratings can vary for men and women. Stereotypes about who should perform the job seem to sway rater evaluations. ➢ Citizenship performance has different effects for men and women. o When women engage in citizenship behavior by helping others, performance ratings don’t necessarily improve, but ratings go down when they withhold help. o In contrast, men don’t get lower ratings when they withhold help, but get higher ratings when they engage in citizenship behavior. ✓ Situational Influences – factors that affect performance but are outside the control of employee being rated. ➢ Research suggests that subjective ratings are frequently contaminated and deficient because raters fail to account for situational influences. ➢ Raters can adjust subjective evaluations to control for situational factors. ➢ Situational influences present a greater problem for objective, outcome-oriented performance measures. ➢ Steps can be taken to minimize the biases outside influences create. o Raters can be trained to take situational influences into account. o Consistent biases can be identified and assessed to get clearer picture of impact on objective, outcome-oriented measures. o Combining information from a number of different measures reduces the contamination present in any single measure. ✓ Changes over Time – performance can vary over time because of differences in motivation. ➢ The most common pattern for someone new to a job is a period of rapidly increasing performance followed by a fairly stable plateau. ➢ Performance for people with certain characteristics, such as conscientiousness, tends to increase more rapidly than performance of others. ➢ Differences in performance across time have the potential to decrease the accuracy of the appraisal process, which causes problems in other areas of HRM. o Changes in performance across time may reduce the effectiveness of selection measures. o The benefits of hiring people with high cognitive ability might go away after people have been on the job for a certain period of time. o Using appraisal results to determine training needs. o Poor decisions about training may be made if the performance measure fails to capture aspects of performance that change over time. ➢ Organizations can deal with appraisal issues related to variability of performance over time by: o Obtaining performance measures at many different times. ➢ ➢

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Using measures that reflects what is most important to organization.

Rating Formats (pages 311-313) ✓ Rating format concerns the type of instrument used to obtain ratings. ✓ The key to a successful appraisal is to choose the format that best accomplishes the purpose of the appraisal. ✓ Narrative ratings – raters provide a written description of the employee’s performance. ➢ A benefit is that they can be tailored to describe specific, and perhaps unique, aspects of performance. ➢ Lack of consistent measurement makes it difficult to determine which employees are high and low performers and creates problems for training and compensation. ✓ Graphic ratings – raters provide numerical score for the employee on each of several dimensions of work performance. ➢ Most common rating format uses these graphic scales. ➢ Graphical ratings can be designed to measure either outcomes or behaviors. ➢ Common dimensions of performance include quality of output, quantity of output, cooperation with others, and skill development. o For each performance dimension, the rater is asked to place the employee in a specific rating category. o Most scales have between three and seven numerical rating categories. ➢ Benefit is that all employees are rated on a common set of dimensions, which makes it easy to compare employees. ➢ Problems: o Performance dimensions may not apply to some employees. o Raters who use graphical scales are prone to rater errors. o In many cases, raters end up giving most employees similar score (central tendency error) ➢ Best suited for organizations pursuing cost-reduction strategies and encouraging employee parity. ✓ Forced rankings – raters directly compare contribution of an employee with contribution of other employees. ➢ Eliminates central tendency error and provides clear guidance for organizations that want to give promotions and pay raises to top performers. ➢ Many supervisors are uncomfortable with rankings because a high proportion of employees perform at essentially the same level. ➢ Best for organizations that encourage competition among employees and when using merit-based performance management to pursue differentiation strategies. ✓ Forced Distributions – format that combines the graphic rating with the forced rating. ➢ Allows rater to give groups of employees same rating but also forces separation of the employees into categories. ➢ Represents compromise between the graphical format and forced ranking format. ➢ Emphasizes merit; most suitable for differentiation strategies.

CONCEPT CHECK 1. How do contamination and deficiency affect performance ratings? Answer: Contamination occurs when things that should not be included in measurement are included.

Deficiency occurs when things that should be included in measurement are not included.

2. What is the difference between objective and subjective measures? How do outcome and behavioral measures differ? Answer: While objective performance measures are numerical and based on counts of behaviors or outcomes, subjective performance measures represent judgments made by raters. Outcome performance measures assess end results.

Behavioral performance measures emphasize the actions of employees.

3. What are three common problems that affect performance ratings? Answer: The common problems with performance appraisal measures are rater errors and bias, situational influences, and changes over time.

4. What are the strengths and weaknesses of various rating formats? Answer: Narrative ratings: Strength – can be tailored to describe specific, and perhaps unique, aspects of performance.

Weaknesses – Inconsistent measurement makes it difficult to determine which employees are high and low performers, which in turn creates problems for training and compensation.

Graphic ratings: Strength – all employees are rated on a common set of dimensions, which makes it easy to compare employees with one another. Weaknesses – some performance dimensions may not apply to some employees; raters who use graphical scales are prone to rater errors and bias. Forced rankings: Strengths – eliminates central tendency error and provides clear guidance for organizations that want to give promotions and pay raises to top performers. Weakness – Many supervisors are uncomfortable with rankings. Forced distributions: represents a compromise between the graphical format and the forced ranking format.

8.5 Who Should Measure Performance? (pages 313-316) • Multisource Performance Ratings (pages 313-314) ✓ Employee ratings usually come from supervisors. ➢ Supervisors are in a good position to evaluate what tasks need to be done, whether an employee is performing the right tasks, and how well tasks are being performed. ➢ However, supervisors may not see the complete picture: o May have biases that can unfairly influence ratings. o Ratings can suffer from deficiency and contamination. ✓ Gathering information and ratings from multiple sources is key to effective performance appraisal. ➢ Process of obtaining performance ratings from multiple sources is known as multisource ratings or 360-degree appraisal.

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Multisource performance ratings seek to evaluate performance by obtaining information from multiple raters who have different perspectives.

Rating Source Differences (pages 314-316) ✓ Measures from different sources often do not agree. ➢ Self assessments tend to differ from ratings provided by others. o In some cases, self-ratings can be lower than ratings by others. o In most cases, self-ratings are higher than ratings provided by supervisors and peers. o Self-ratings are more similar to ratings provided by others for women, as well as for employees who are younger, less experienced, more educated, and white. o Ratings from others tend to be lower for older and less educated employees. ➢ Self-ratings and ratings from others differ for several reasons: o People generally have a self-serving bias. o They have more opportunities to observe their own work contributions. o There may be disagreement over standards. ➢ Ratings from peers and supervisors tend to be quite similar. o The one exception occurs when the person being rated performs very poorly. o Many peers are not willing to give low ratings to people with whom they work closely, even when those people might deserve low ratings.

CONCEPT CHECK 1. Who usually provides evaluations for multisource performance ratings? Answer:

Performance ratings are obtained from a variety of raters such as customers, coworkers, supervisors, and self.

2. How are self-ratings of performance different from ratings provided by others? Answer:

In most cases, self-ratings are higher than ratings provided by supervisors and peers.

8.6 How Should Feedback Be Provided? (pages 316-322) • Feedback refers to information given to employees to communicate how well they are performing.

• Effective performance management requires more than simply measuring employee contributions. ✓ Employees must receive information about how well they are performing.

• Providing Positive and Negative Feedback (pages 318-319) ✓ Messages communicating high performance convey positive feedback. ➢ Positive feedback leads to higher motivation when employees expect to receive benefits from continued high performance. ➢ This suggests positive feedback increases motivation when linked to future goals. ✓ Messages communicating low performance and need to improve convey negative feedback.

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Influence of negative feedback on performance is somewhat less clear.

Employees who perceive negative feedback as criticism become less motivated Employees are more likely to experience conflict with others.

The basic problem is that people become defensive when they hear that they are not performing as well as expected. ➢ Negative feedback only improves performance when people are confident that they can do what is necessary to improve. ✓ Effectively Communicating Methods For Improvement (pages 319-321) ➢ Feedback should thus be communicated in ways that increase the likelihood that employees will actually change their behavior. o People are most likely to accept and act on feedback when they perceive that it is accurate, suggesting that the person giving the feedback must be seen as credible. o The first key to effectively communicating feedback is thus to build a relationship so that the receiver has confidence in the supervisor’s ability to provide advice. o Feedback is also improved when supervisors clarify the behaviors they are looking for when they evaluate employees. o Supervisors also communicate effectively when they continue to build relationships by treating employees as individuals and taking into account personal circumstances. ➢ The importance of providing clear direction is captured in the principle of feedback specificity, which concerns the level of detail in the message. o Specific feedback provides detailed descriptions of actions and outcomes and is good for communicating what someone has done to achieve success. o Specific feedback is not always optimal, however.  Less specific feedback encourages people to explore and try alternative methods for accomplishing tasks.  In some cases, giving very specific feedback can inhibit learning. o Specific feedback is best for communicating how to do clearly defined tasks that do not change. However, specific feedback may discourage employees from learning that extends beyond knowing how to follow prescribed procedures. ➢ Another factor that influences whether someone benefits from feedback is the extent to which the receiver can do what is necessary to improve. o Feedback is more likely to be accepted when it focuses on things that an individual can actually change. o Focusing on factors outside the control of the employee increases frustration and does not provide a path for improving future performance. o Supervisors are most effective when they communicate about issues the employee can control.

Reducing Negative Emotional Responses (page 321) ✓ People who receive feedback experience a wide range of emotions. ✓ Feedback channeled through positive emotions generally improves performance; feedback channeled through negative emotions often causes worse performance.

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Feedback is most likely to lead to better performance when presented in ways that do not bring out negative emotions. ✓ Effective leaders who have good relationships with employees are able to give feedback that doesn’t make recipients feel negative. ✓ Positive emotions that accompany feedback generally focus on learning and skill development. ✓ Feedback that teaches new skills can be effective for showing employees what they can do to improve future performance. ✓ Organizations that develop a culture of providing ongoing feedback that emphasizes improvement rather than criticism are most effective in communicating methods for enhancing performance. ✓ Individuals who approach life with an orientation toward learning and improving themselves benefit most from receiving feedback. ✓ People with positive self-concepts are more likely to react positively to feedback. ✓ Hiring skilled workers who have a desire to continuously improve is one way to ensure successful performance management.

Building High Expectations (page 322) ✓ Pygmalion effect – high expectations lead to better performance. ✓ Studies show that Pygmalion effect operates in organizations, where high expectations translate into improved job performance. ✓ Supervisors who perceive their employees as having exceptional ability communicate greater confidence which, in turn, raises employees’ performance.

CONCEPT CHECK 1. What are keys to effectively giving positive feedback? Answer: Keys to giving positive feedback include putting employee at ease with small talk; encouraging the employee to share his or her perspective before you share yours; being positive and using action-oriented behavioral terms; using specific and measurable expressions; avoiding comparing the employee to yourself or others; balancing negatives with positives; starting with a positive; and spending time planning for improvement.

How should negative feedback be given? Answer: Present negative feedback in such a way as to build employees’ confidence and help people see that they have the skills necessary to improve.

2. What can be done to reduce negative emotional reactions to feedback? Answer: Focus comments on the task rather than the person; combine feedback with goals for improvement; describe behaviors in an unemotional manner; focus on what is observed rather than underlying causes; remain nonjudgmental; and provide clear examples to support points.

Chapter 8 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (pages 323-324) Summaries of each of the five learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives: The chapter contains five learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 296 Learning objective 2- page 299 Learning objective 3- page 302 Learning objective 4- page 313 Learning objective 5- page 316

Concept Checks The chapter contains five concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- page 299 Concept 2- page 302 Concept 3- page 313 Concept 4- page 316 Concept 5- page 322

Tables and Figures The tables and figures presented in the chapter help illustrate the concepts of the chapter. They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 8.1- page 309 Table 8.2- page 320 Table 8.3- page 321

Situational Factors Influencing Performance Conducting Appraisal Interviews Giving Employee Feedback

Figure 8.1- page 298 Strategic Framework for Performance Management Figure 8.2- page 299 Elements of Job-Performance Figure 8.3- page 304 Sources of Inaccuracy in Performance Measurement Figure 8.4- page 312 Graphic Rating Scale Figure 8.5- page 314 360-Degree Performance Appraisal Figure 8.6- page 319 Effects of Positive and Negative Feedback A Manager’s Perspective (pages 292-293), What do you think? (page 293), and A Manager’s Perspective Revisited (pages 322-323) The chapter starts with a short scenario where Tyrone is thinking about the performance reviews he will be giving as a manager. He has mixed emotions and thoughts on the upcoming reviews.

Five true/false questions related to this scenario and the chapter topics are noted on page 293 and answered on pages 322-323.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what additional questions Tyrone should ask.

During the discussion of the chapter material, you could refer to the questions noting that a certain section or discussion point addresses one or more of the questions.

For some chapters, you may wish to address the questions at the end of discussing the chapter.

In this case, you may want to bring the students’ attention to these questions, informing the students that they will be asked to answer the questions near the end of the chapter discussion.

At that time, students (individually or in groups) could be asked to explain why the answers are true or false. Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

Building Strength Through HR: General Electric (page 296) This special feature (page 294-295) highlights several issues noted in this opening case regarding General Electric (GE; pages 294-295). This case outlines GE’s performance management system, and the inset box (refer to page 296) presents most of the highlights of the performance

management system that are mentioned in the case. (NOTE: GE’s website provides only general information that does not add much to the case.)

If you wished to discuss various aspects of this case, you could ask the students the following questions: (1) Is it possible that every year GE has exactly 10% of their employees who are low performers who need to leave or improve? Is it possible that a smaller percent actually might fit this category? If so, is it fair to put people in this category just because GE has mandated that 10% of the employees must be categorized as low performers? (2) Is it possible that once one is categorized in the lowest category that managers will not recognize performance improvement or have the managers properly categorized these 10% as poor performers? What could managers do so that they do not doom a person who is in this category one year but improves his or her performance in future years? (3) Would you want your performance to be rated in this performance management system? Why or why not?

You also could ask if any of the students set goals in their jobs and if their performance is measured by those goals. Some of the students may have experience in this forced distribution that they want to discuss.

Technology in HR: Monitoring Electronic Activity (page 303) This inset box briefly addresses software that is able to monitor cyberloafing. Suggestions are provided that should improve the chances of employee acceptance of such monitoring.

The brief information presented in this box could be referred to during a lecture. Students can be asked for their experiences with monitoring of their internet activities at home, office, school, etc. You could ask them if it is fair and ethical for an organization to monitor their surfing of the net during work hours. You also could ask if it should be acceptable if one is surfing the net or e-mailing friends who do not work for the company if one is on break.

The author suggests using monitoring to show employees how they can improve rather than to wield punishment. You could ask the students how this could be accomplished.

Overview of activity Investigate the ethics, legality, approaches, and employee responses to monitoring employees’ use of the internet using organizational computers during working hours, also known as cyberloafing.

Exercise: Refer back to the Technology in HR: Monitoring Electronic Activity inset box found on page 303 0f the text. Students could prepare for a point-counterpoint type of in-class debate on the pros and cons of monitoring cyberloafing. A written summary or outline of the main points that are planned for the debate could be turned in. The debate can be done in multiple groups, or two groups debating with the other students serving as the audience. You also could split the class into thirds: pros, cons, and observers/judges. To involve the whole class in one debate, students

could vote who “won” the debate. You may want to have some kind of reward for that group (e.g., pencils with logo, scantron sheets if your organization does not provide them to the students for exams, candy, or a small amount of points).

Alternate Approaches to the Exercise: Students could report on the user friendliness and different aspects of several cyberloafing softwares.

Links to relevant information Search engines (e.g., Yahoo!, Google) provide a list of articles and other information regarding cyberloafing when searching for that term or phrases including that term. One helpful website that came out of such a search is “Testing a Measure of Cyberloafing,” http://findarticles.com/ p/articles/mi_qa4040/is_200604/ai_n17181517

How Do We Know? Who is most likely to provide error free ratings? (page 310) This inset box asks the questions: Do some people provide better performance measures than others? If so, who are the best raters?

Kok-Yee Ng, Christine Koh, Soon Any, Jeffrey Kennedy, and Kim-Yan Chan explored ratings in the Singapore Armed Forces to answer such questions. Military officers received ratings from supervisors, peers, and subordinates. The ratings were then examined for differences in halo and leniency (giving everyone a high score). Subordinates were more likely than peers or superiors to provide ratings with halo and leniency, and peers were more likely than supervisors to demonstrate leniency.

Their findings shown that some raters are more prone to errors than others. In particular, subordinates and peers appear to provide ratings with error.

Technology in HR: Feedback Through Twitter and Facebook (page 317) This inset box briefly addresses using online social networking sites such as Twitter and Facebook to obtain immediate feedback from peers or co-workers.

The brief information presented in this box could be referred to during a lecture. Students can be asked for their experiences with using online networks for the purposes of receiving or providing feedback.

How Do We Know? Is performace management the same around the world? (page 315)

This inset box asks the questions: Are methods of managing employee performance

the same everywhere? Are companies located in different countries likely to have the same processes? Do these processes have the same effect on outcomes such as employee attendance and turnover? Hilla Peretz and Yizhak Fried sought to answer these questions by exploring the performance management practices with two samples of companies. One set of responses came from 5,991 organizations located in 21 different countries, and the other sample came from 4,878 organizations located in 16 countries.

The most senior human resource manager in each company was asked to complete a questionnaire focused on issues such as whether a formal performance management system was being used, what percentage of employees was evaluated, the number of raters who provided ratings, and whether the appraisal was used to make decisions about individuals (e.g., compensation decisions) or the broader organization (e.g., broad training needs) The desire for planning and control results in greater use of formal performance assessments in countries with higher future orientation and uncertainty avoidance. Companies are most likely to use multisource ratings when they are located in countries with lower power distance, higher future orientation, and a greater sense of individualism.

Their findings showed that practices are not the same around the world, and companies with practices more congruent with the culture of their countries reported lower absenteeism and turnover. Professors Peretz and Fried thus conclude that human resource practices should be aligned with broader cultural and strategic objectives.

Building Strength Through HR: Whirlpool Corporation (page 318) As noted in the inset box, Whirlpool found that it was ineffective to provide performance feedback through e-mails. Thus, they revised their performance feedback process to include more face-to-face interactions.

You or a student could briefly mention the highlights of this box. Then the students could be asked to discuss the following questions: (1) Why do they think the e-mailed feedback exchanges were so ineffective? (2) If not addressed in earlier answers: Why might face-to-face feedback be more effective? (3) How does a manager determine whether or not an employee’s personal goal is a stretch for exceptional performance? How might the manager and organization reconcile different levels of difficulty among employees’ stretch goals when it comes time for merit increases? (4) Whirlpool managers are required to formally provide feedback to employees at least four times a year. Do four or more times a year seem to be a reasonable use of every manager’s and employee’s time? (5) Do you think that managers put the same amount of effort and time into each of these feedback sessions? Why or why not? (6) Would you want to be involved in this type of performance management system as a manager documenting and giving feedback? As an employee receiving formal feedback? Why or why not?

KEY TERMS Page 325 Absolute measures 297 Central tendency error 307

Citizenship performance 300 Contamination 304 Contrast error 307 Counterproductive performance 301 Declarative knowledge 300 Deficiency 304 Feedback 317 Feedback specificity 320 Forced distribution 297 Forced ranking 312 Frame-of-reference training 307 Free distribution 297 General performance factor 299 Graphic ratings 311 Halo error 307 Interpersonal citizenship behavior 300 Job performance 299 Merit-based system 296 Multisource performance ratings 314 Narrative ratings 311 Negative feedback 318 Objective performance measures 305 Organizational citizenship behavior 300 Parity-based system 297 Performance appraisal 302 Performance management 294 Personal aggression 302 Political deviance 302 Positive feedback 318 Primacy error 307 Procedural knowledge and skill 300 Production deviance 301 Property deviance 302 Pygmalion effect 322 Rater bias 308 Recency error 307 Relative measures 296 Situational influences 309 Subjective performance measures 305 Task performance 299 DISCUSSION QUESTIONS (page 325) 1. Would you prefer working under a merit-based or parity-based performance management system? Students’ answers will vary.

2. How do you think employees might react to a change from a parity system to a merit

system? How about a change from a merit system to a parity system? Answer: In either type of change, employees will be uncertain as to how to perform and may express displeasure about the change. A change from a parity system most likely will cause anxiety and could affect the collegiality of the organization. A change from a merit to a parity system will upset the top performers who regularly received merit pay but should satisfy those who had not regularly received merit pay. Cooperation among the various levels of performers may need to be strongly encouraged and carefully monitored.

3. Which do you think is most important: task performance, citizenship performance, or counterproductive performance? Why? Students’ answers will vary.

4. Have you ever observed an employee with high task performance but low citizenship performance? If so, describe that situation. If not, describe a scenario in which you think such performance might occur. Students’ answers will vary.

5. Why do you think instances of counterproductive performance are rising? What do you think should be done to decrease counterproductive performance? Is teaching ethics in management classes a good solution? Students’ answers will vary.

6. What are typical sources of contamination and deficiency in objective measures of job performance? Answer: Holding employees accountable for things they cannot control.

All types of performance ratings can suffer from inconsistency because performance may vary over time.

7. What are some situational influences that affect your performance as a student? Would it be fair for professors to take into account situational influences when assigning grades? Students’ answers will vary.

8. What factors might explain differences between co-worker and supervisor ratings?

Answer: Co-workers might see more of a complete picture of an employee’s performance and co-workers might be more relaxed around each other. Coworkers also might be biased and comparing their performance with the employee being evaluated.

9. How do you react to negative feedback? What might you do to help yourself and others benefit more from negative feedback? Students’ answers will vary.

10. Why do we treat people we think have high ability differently than people we think have low ability? Answer: Many times those perceived to have high ability have more potential and have been successful in the past (obtaining high ability). We might even perceive that they are more motivated to learn. Mainly we treat them differently because of the belief that if those with high ability are not learning or excelling then the problem must be us. Therefore, we persist in our beliefs of their high ability and work harder to show that we are capable.

EXAMPLE CASE: Medical Center (pages 326-327) Questions 1. Do you think the new system is really more objective? Answer: No. There is no counting of behaviors, number of patients, etc. The system is standardized, but subjective (human) judgments are still being made.

2. Why do you think the organization requires documentation for certain ratings? Answer: Due to the subjectivity of the judgments. The justification not only enables some comparisons, it requires the raters to actually think about and justify the ratings. This also could help the organization (and rater) determine if the rater is biased or committing rater errors.

3. What strengths do you see in the new system? What weaknesses do you see in the process?

Answer: Some of the strengths include the self-appraisal and supervisory appraisal addressing the same questions and meeting to discuss their perceptions of the employee’s performance. Other strengths include the performance appraisals being based on the organizational standards, justification of ratings, the improved consistency of the appraisal process, and the requirement that a method of learning be designed for those not meeting expectations. Some of the weaknesses are the scale being very general, versus defining different levels of each area or competency; the time involved in filling out the self-appraisal forms; and the appraisal being used for administrative purposes (annual raises) versus developmental purposes.

DISCUSSION CASE: Reliable Underwriters (page 327) Questions 1. Do you predict that the forced distribution will increase customer satisfaction? Why or why not? Answer: No. The forced distribution system does not appear to be directly tied to customer satisfaction. Moreover, it does not identify what behaviors are necessary to improve one’s performance if ranked lower than outstanding.

2. Which clerical workers do you think will most strongly oppose the change? Answer: The ones who currently are not adequately meeting clients’ needs.

3. How do you think supervisors will react to the proposed change? Answer: They will oppose it because it is difficult to explain to people why they are ranked lower than outstanding and it does not communicate what is needed to improve. In addition, it forces what might be a higher (or lower) percentage of poor workers. It is a poor communication tool whose main purpose is to better manage the budget.

4. What problems with contamination and deficiency could occur with the forced distribution ratings? Answer: This format requires that a certain percentage of employees be placed in each rating category which may not reflect reality. In general, contamination will occur when things that should not be included in the measurement are included and deficiency occurs when things that should be included in the measurement are not included. Both of these relate to the outcome of forced distribution ratings.

APPLICATION EXERCISE: Assessing Performance in Sports (pages 328) Questions: Students’ answers will vary.

Visit an Internet site containing performance data for professional athletes. Examples include the following: National Football League: www.nfl.com/stats Major League Baseball: http://sports.espn.go.com/mlb/statistics National Hockey League: http://www.nhl.com/ice/statshome.htm#?navid=nav-stsmain National Basketball Association: www.nba.com/statistics Examine the statistics for individual players and teams, and answer the following questions.

1. How are these measures of performance deficient and contaminated?

2. Do the statistical measures capture behaviors or outcomes?

3. What statistics might you add to measure citizenship performance?

4. Choose five players and look at their statistics across multiple years. How stable is their performance?

5. Does high individual performance equate with high team performance? Can you identify individual players with good personal statistics whose teams are unsuccessful?

Interactive Experiential Exercise: Performance Appraisal: Delivering Positive and Negative Feedback at Global Telecommunications (page 328) Access the companion website to test your knowledge by completing a Graphics Design, Inc. interactive role play exercise.

Chapter 9 Training for Improved Performance Chapter 9 Learning Objectives

• Explain how employee training practices can be aligned with an organization’s competitive strategy.

• Describe how partnering and using a systematic process for developing training helps an organization benefit from training.

• Discuss the different ways organizations determine their training needs.

• Describe various training methods and explain how to make each more effective.

• Explain why the purpose of a training evaluation should be used to guide the evaluation process.

Chapter 9 Outline 9.1 How Can Strategic Employee Training Improve an Organization? (pages 336338)

• Training is a planned effort by a company to help employees learn job-related knowledge, skills, and attitudes. The common element that defines training is that employees go through a structured experience that helps them to learn something they can use to improve their performance at work. ➢ Imbedded in training are the following components: ▪ Knowledge – memory of facts and principles.

▪ Skills – proficiency at performing a particular act.

▪ Attitudes – an evaluative reaction to particular categories of people, issues, objects, or events.

▪ Learning – a change in knowledge, skill, or attitude that results from experience. ➢ Most organizations regardless of size and industry, offer at least some formal or informal training to help employees learn.

▪ Informal learning methods consist of natural learning that is neither planned nor organized. ➢ Training when designed and delivered properly, can improve the overall effectiveness of an organization in three ways: ▪ It can boost employees’ commitment and motivation.

▪ It helps employees perform their work more effectively and efficiently so the organization is able to function better on a day-to-day basis.

▪ It helps organizations meet their strategic objectives by providing employees with the specific knowledge, skills, and attitudes necessary to make strategic initiatives a reality.

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9.2 How is Employee Training Strategic? (pages 339-342)

• Differentiation versus Cost Leadership Strategy

✓ Cost leadership strategy (e.g., Bargain Laborer and Loyal Soldier strategies) ➢ Requires employees to have knowledge, skills, and attitudes that help reduce costs and improve efficiency. ➢ Training employees on quality control principles and practices allows companies to become more efficient. ✓ Differentiation strategy (e.g., Free Agent and Committed Expert strategies) ➢ Requires employees to be able to deliver services or make products that are superior to the services or products offered by competitors. ➢ Teamwork training is useful to help employees.

• Internal versus External Labor Orientation

✓ A company with an internal labor orientation seeks to make its own talent, whereas a company with external labor orientation seeks to buy talent.

Companies with internal labor orientation spend time and money to train current employees whereas companies with external orientation tend to hire new employees to fill their needs.

Concept Check

1. What is the key focus of training for a company pursuing a differentiation strategy? A cost leadership strategy? Answer: In regard to a differentiation strategy, training focuses on providing superior service and innovation. Training in a cost leadership strategy focuses on the knowledge, skills, and attitudes that help reduce costs and improve efficiency.

2. How does training differ between companies that pursue an internal versus an external labor orientation? Answer: Training for those pursuing an internal labor orientation have an emphasis on training existing employees, while those pursuing an external labor orientation have more emphasis on hiring new employees with desired skills than on training existing employees.

9.3 What are Key Principles for Getting Benefits from Training? (pages 342-345)

• Three benefits an organization can gain from training its employees: ✓ Increase employees’ commitment and motivation. ✓ Enable employees to perform better. ✓ Help the organization meet its strategic objectives.

• To achieve these three benefits, training must result in learning and transfer of training (i.e., trainees apply what they learn in training to their jobs). ✓ Two fundamental practices help HR professionals meet this transfer of training: ➢ Managers, employees, and HR professionals must work in partnership. ➢ Use systematic process for designing and developing training.

• Partnership (pages 343-344) 2

✓ Operate training as a partnership among employees, their managers, and HR professionals through managing six factors: ➢ Managers set clear expectations about employees’ performance ➢ Managers provide appropriate support (e.g., equipment, supplies, etc.) ➢ Managers provide feedback indicating whether employees are exceeding, meeting, or failing to meet expectations. ➢ Managers set appropriate consequences, which means rewarding effective performance and, if necessary, punishing ineffective performance. ➢ Managers and HR professional recruit and select those with individual capacity. ➢ Managers and HR professional determine knowledge and skills required and provide appropriate training.

• Systematic Process. (pages 344-345)

✓ Most ways to develop training have three fundamental components: ➢ Needs assessment to determine who should be trained and what the training should include. ➢ Design and delivery to ensure that training maximizes learning and transfer. ➢ Evaluation to determine how training can be improved, whether it worked as intended, and whether it should be continued. ✓ Traditional model of instructional design ➢ Begin with needs assessment followed by design, delivery, and evaluation. ➢ Process is never complete because training needs are always changing. ✓ Rapid model of instructional design ➢ Organizations may use this version of process when need to speed up time from identified need to delivery of training. ➢ Training design begins while needs assessment continues. ➢ Training begins before the program design is completely finished, and evaluation is used to modify training as it is developed. ✓ Whether traditional or rapid model is appropriate depends on nature of the training; training that must be right the first time should not use the rapid model.

Concept Check 1. What is transfer of training? Answer: Transfer of training occurs when trainees apply what they have learned in training to their jobs.

2. What are the two different systematic approaches to designing and developing training programs? How are they similar, and how are they different? Answer: Traditional model of instructional design is a process used to create training programs in which needs assessment is followed by design and delivery and then by evaluation. Rapid model of instructional design is a process used to create training programs in which assessment, design and delivery, and evaluation overlap in time.

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9.4 How are training needs determined? (pages 345-353)

• Needs assessment – determines what training to offer and for whom and occurs in two different ways: ➢ On a regular basis as training programs are planned and budgets are set. ➢ In a reactive fashion in response to requests for particular training programs. ✓ Proactive needs assessment is a systematic process for determining and prioritizing the training programs to be developed and delivered by an organization. (pages 345-349). ➢ Three distinct steps.

▪ Organization analysis requires information about the organization’s strategic goals, environment, resources, and characteristics.  Organization analysis requires an understanding of the environment within which the organization functions.  Organizations that support training are considered to have a positive training climate.

▪ Task analysis – form of job analysis that involves identifying tasks performed by trainees and knowledge and skill needed.  Most common process: ➢ Groups of job incumbents develop lists of tasks performed. ➢ HR professionals group tasks into clusters based on similarity. ➢ Groups of managers generate knowledge and skill statements for each task cluster. ➢ Surveys verify task, task cluster, knowledge, and skill lists.  Three common variations of task analysis: ➢ Competency modeling is similar to task analysis but results in a broader, more worker-focused (as opposed to work-focused) list of training needs.

▪ Most frequently used with managerial jobs.

▪ Benefit is lower cost.

▪ Related drawback is result may not have sufficient detail to guide training for any one particular job. ➢ Cognitive task analysis examines employees’ goals, decisions, and judgments. ➢ Team task analysis examines task and coordination requirements of a group of individuals working together toward a common goal.

▪ Use where performance of interest to an organization is largely determined by coordinated efforts.

▪ Identifies knowledge and skills that underlie these exchanges.

▪ Person analysis involves answering three questions:  Is training necessary to ensure that employees can perform tasks effectively?  If training is needed, who needs the training?  Are potential trainees ready for training? ✓ Reactive needs assessment is a problem solving process that defines the

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problem, identifies the root cause of the problem, and designs an intervention to solve it. (pages 349-351) ➢ Some organizations follow a three-step process conducted by an HR professional: ▪ Problem definition  Begins with the identification of a business need.  State problem as a gap between desired and actual performance.

▪ Causal Analysis  Determine why the gap exists.  To determine the underlying cause of poor performance, organizational leaders explore what employees are doing and why.

▪ Solution Implementation – selecting and implementing the appropriate solution or solutions. ✓ Prioritizing and Setting Objectives (pages 351-353) ➢ Determining Priorities ▪ Different training needs – usually more than can be covered given training budget and time employees can be away from work.

▪ Ways to prioritize include ratings and interviews; but no one best method ▪ Once all ratings are collected, they are summed to create a composite rating.  Then the list is rank-ordered from highest to lowest.  The needs that come to the top are most relevant to the organization’s strategy and required early on job. ➢ Creating Objectives ▪ Two most critical types of objectives are learning objectives and organizational objectives.  Learning objectives are the intended individual learning outcomes. ➢ Performance identifies what the trainee is expected to do. ➢ Conditions describe important circumstances of performance. ➢ Criteria describe acceptable performance in quantifiable and objective ways.  Organizational objectives are intended results of training for company. ➢ Help ensure that training provides value to the organization as a whole and each program is linked to firm’s strategy. ➢ Setting organizational objectives can help in prioritizing.

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Concept Check 1. What are the steps in a reactive needs assessment? A proactive needs assessment?

Answer: Reactive needs assessments involve problem definition, causal analysis, and solution implementation. Proactive needs assessments involve organization analysis, task analysis, and person analysis.

2. What components do effective learning objectives include? Answer: Effective learning objectives have three components: performance identifies what the trainee is expected to do or produce; conditions describe important circumstances under which performance is to occur; and criteria describe acceptable performance in a quantifiable and objective way.

9.5 How is Effective Training Designed and Delivered? (pages 353-364)

• Content is material covered in training. (pages 349-351).

✓ Training objectives are used to determine what content is needed. ✓ Person responsible for training can select content in several ways: ➢ Create it from scratch ➢ Consult with subject matter experts ➢ Examine theory and research in the literature ➢ Purchase off-the-shelf materials ➢ Contract with a training vendor ✓ Training vendors – companies whose business is to design and deliver training programs. Management should ask prospective vendors questions.

• Training Methods – ways of organizing content and encouraging trainees to learn. (pages 355-358). ✓ More passive methods can be useful but are seldom used without addition of at least one more active method. ➢ Selected based on usefulness in helping achieve training program’s objectives.

▪ Presentation – primary passive method of instruction.  Lectures are an efficient way for many learners to receive the same content and knowledge.  Disadvantage is learners are not given a formal opportunity to apply skills learned. (Thus, seldom help trainees gain skills.)

▪ Discussions – represent a more active training method.  Increase trainees’ involvement through two-way communication.  Can be used to build knowledge and critical-thinking skills.  Best used to help improve motivation and change attitudes.  Must be facilitated by a trainer to allow all to participate.

▪ Case Analysis – active training method in which trainees discuss, analyze, and solve problems based on real or hypothetical situations.  Develops skill in analysis, communication, and problem solving.

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▪

▪

▪

▪

▪

 Used to teach basic principles and improve motivation.

Discovery – active method that involves presenting trainees with a task that offers rich opportunities to learn new skills.  Experimentation in a controlled training environment.  Can be highly motivating for trainees.  Without any guidance from the instructor it has serious drawbacks.  A more efficient approach is discovery coupled with guidance.

Role Play – participants act out parts in a simulated situation.  Offers opportunity to practice new skills  Used to help trainees acquire interpersonal and human relations skills.  Role playing typically has three phases: ➢ Development involves preparing and explaining the roles and the situation that will be used in role playing. ➢ Enactment involves the time that trainees take to become familiar with the details of the role and then act them out. ➢ Debriefing – trainees discuss their experiences.

Simulations – active methods that reproduce events, processes, and circumstances that occur in trainee’s job.  Gives trainees the opportunity to experience some aspects of the job in a safe and controlled environment  Can involve role playing with actors or interactive technology.  Design to replicate physical and psychological job conditions.

Behavior Modeling – draws together principles of learning from many different areas.  Trainer lectures and performs tasks while trainees observe.  Trainees practice performance while trainer observes.  Trainer provides feedback to trainees.  Works well when model is someone trainees see as credible and when model shows both positive and negative behavioral examples.

On-the-Job Methods – Inexperienced employees watch and learn from experienced employees.

• Training Media – means by which content and methods are delivered. (pages 359362). ➢ Many ways to deliver each passive and active training method ▪ Trend is toward using technology to deliver training.

▪ E-learning is training delivered on-line.  No powerful research results suggest that only one or two media work for delivering training ▪ Media Requirements:  Research has demonstrated that carefully designed training can be equally effective whether presented via technology or face to face  Some studies have shown technology-delivered training can be more effective than traditional face-to-face instruction.

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▪

 Training using guided discovery, role playing, simulations, or behavior-modeling exercises requires instructor or sophisticated computer program.

Cost and Accessibility  Different training media have different costs,  Access problems can develop.

• Transfer Enhancement Techniques – means by which content and methods are delivered. (pages 362-364). ➢ Before Training  Managers can build transfer into such things as: ➢ Employees’ performance standards, ➢ Offering rewards to trainees who demonstrate transfer, ➢ Involving employees in planning training, ➢ Briefing trainees on importance of training, ➢ Sending co-workers to training together, ➢ Encouraging trainees to attend and actively participate in all training sessions.  When managers work in partnership with trainers and trainees, transfer is much more likely  Behavior contracts specify what the employee and the managers expect to happen during and after training. ➢ During Training  Trainer can use at least two different approaches to foster transfer. ➢ Structure training in ways that will help trainees to generalize what they learn back on the job. ➢ Relapse prevention training ▪ Add discussion of transfer process to training, including potential obstacles and strategies to overcome them.

▪ Can be beneficial if transfer of training climate is poor.

▪ Downsides are that it requires extra training time. ➢ After Training  Manager and trainee should work together to ensure transfer.  Techniques managers can use include giving positive reinforcement for using trained skills, arranging for practice sessions, supporting trainee reunions, and publicizing successes in the use of trained skills.  Consider reducing job pressures for a few days after training ➢ Opportunity to perform is essential because, without an opportunity to use the new knowledge or skill, it will decay.

• Putting It All Together (pages 364)

✓ Select objectives, content, methods, media, and transfer enhancements. ✓ Prepare training materials (effective training can take a long time to develop).

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Concept Check 1. What training methods keep learners active during training? Answer: Discussions, case studies, discovery, role plays, simulations, and behavior modeling.

2. What are the benefits and drawbacks of e-learning? Answer: Benefits: it can be a cheap, efficient, customizable, and convenient means of delivering training. Drawbacks: up-front cost can be substantial; limited interaction among peers; noninteractive e-learning can bore trainees and suggest that simply putting written material on a computer makes it training; often puts control of learning into the hands of learners, and not all learners make choices that help them learn; and employees who are not motivated to learn and who have many demands placed on their time are more likely to skip over material.

3. At what points in time can transfer enhancement strategies be used? Answer: A number of techniques can be used before, during, and after training to facilitate transfer of training.

9.6 How do Organizations Determine Whether Training is Effective? (pages 365371)

• Training effectiveness refers to the extent to which trainees (and their organization) benefit as intended from training. ✓ The training evaluation process typically involves four steps: ✓ Purpose ➢ Training content and design (assessed for feedback to designers and trainers), ➢ Changes in learners (measured for feedback and to make training decisions), ➢ Organizational payoffs (can be used for all purposes). ✓ Outcomes ➢ Training outcomes can be roughly divided into four categories: ➢ Reactions – how the trainees felt about training: Did they like it? Did they think it was interesting and useful? ➢ Learning – measure knowledge, skills, or attitudes. ➢ Transfer – application of learning to behavior on job. ➢ Organizational Results – outcomes that accrue to the group or organization.

▪ Organizational results can be made even more informative by taking into account the resources required to achieve those results.  Training efficiency – analyze costs of training along with benefits.  Return on investment (ROI).

▪ Evaluating organizational results  Requires more resources than evaluating reaction and learning outcomes.  Evaluate for most high-profile and expensive programs. ✓ Design ➢ Evaluation designs differ in timing when data are collected and from whom. ➢ Some evaluation designs provide greater certainty about the results of training, but these same designs are more resource intensive. ➢ Post-Test Only is the most commonly used. Training outcomes are measured only at the end of training.

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➢ Pre-Test and Post-Test with Control Group ▪ For greater certainty about whether training was effective, evaluators can test employees at the start and end of training (to look for change).

▪ Can compare trained employees with untrained employees with similar characteristics (to verify that training caused the change). ✓ Results ➢ Data collected must be analyzed and reports generated. ➢ Important to revisit the purpose of evaluation and make sure the right people see the report so information gained from evaluation is used as intended.

Concept Check 1. What are the three purposes for evaluating training? Answer: Most of the reasons to evaluate training fit into three primary categories: provide feedback to designers and trainers that helps improve the training, provide input for decisions about whether to continue or discontinue the training, and provide information that can be used to market the training program.

2. What are the four different outcomes that can be used to evaluate training? Answer: Reactions, learning, transfer, and organizational results.

3. What does ROI stand for? Answer: Return on investment.

Chapter 9 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (page 371) Summaries of each of the five learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives: The chapter contains five learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 339 Learning objective 2- page 342 Learning objective 3- page 345

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Learning objective 4- page 353 Learning objective 5- page 365

Concept Checks The chapter contains five concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- page 342 Concept 2- page 345 Concept 3- page 353 Concept 4- page 364 Concept 5- page 370

Tables and Figures The table and figures presented in the chapter help illustrate the concepts of the chapter.

They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 9.1- page 342 Table 9.2- page 343 Table 9.3- page 348 Table 9.4- page 349 Table 9.5- page 351 Table 9.6- page 353 Table 9.7- page 356

Costs of Training and Tips for Keeping Training Costs Low Factors Affecting Job Performance with Responsible Stakeholders Personal Characteristics Relevant to Training Effectiveness and Implications for Design Reactive Needs Assessment via Training Request Form Potential Solutions to Performance Problems Examples of Ineffective and Effective Learning Objectives Characteristics of Various Training Methods

Figure 9.1- page 339 Strategic Framework for Employee Training Figure 9.2- page 344 Two Approaches to Designing Training Programs Figure 9.3- page 352 Sample Prioritization Worksheet Using Knowledge, Skill, and Attitude Statements Figure 9.4- page 354 Snapshots of Training Practices in the United States Figure 9.5- page 361 Screenshot of a Web Conference Figure 9.6- page 363 Sample Behavior Contract between Trainee and Manager Figure 9.7- page 366 The Three Primary Targets of Evaluation A Manager’s Perspective, (page 334) What do you think? Page 335), and A Manager’s Perspective Revisited (page 370)

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The chapter starts with a short scenario where Charlotte is reflecting on a project management workshop that was to provide training on a special software she had been wanting to implement at her company. After attending the workshop, Charlotte was disappointed to learn that her management did not share the same excitement about using the software. Five true/false questions related to this scenario and the chapter topics are noted on page 334 and answered on page 370.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what additional questions Charlotte should ask.

During the discussion of the chapter material, you could refer to the questions noting that a certain section or discussion point addresses one or more of the questions.

For some chapters, you may wish to address the questions at the end of discussing the chapter. In this case, you may want to bring the students’ attention to these questions, informing the students that they will be asked to answer the questions near the end of the chapter discussion. At that time, students (individually or in groups) could be asked to explain why the answers are true or false. Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

Building Strength Through HR: Rockwell Collins (page 338) This special feature (pages 338) highlights several issues noted in the opening case regarding Rockwell Collins. This example (found in the three paragraphs above the inset box) describes how Rockwell used training to resolve an electromagnetic interference (EMI) problem and save $1 million in annual equipment losses.

The inset box (refer to page 338) mentions the course that Rockwell implemented that resulted in a successful training program. You could ask the students how Rockwell might have done their quick investigation of the problem. If they do not mention selection tests, supervisory observation, performance appraisals, and similar HR practices, probe for these answers. Then you could ask the students what they think of a 12-hour CD-ROM course that the engineers did on their own time. Answers should

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address the length of the course, if CD-ROM is an appropriate medium for this issue, and whether the engineers should be paid for the training that is necessary to do well in their jobs.

Building Strength Through HR: Apple (page 340) Apple is well known for its revolutionary digital products including the iMac, iPod, iPad, and iPhone. To protect its brand image and expand sales, Apple opened its own retail stores in 2001.The stores include a Genius Bar, where experts answer questions about Apple products. The training for Geniuses ensures not only technical knowledge but also customer service knowledge and skill.

You could briefly mention this inset as an example of the importance of training in key areas. You could ask the students the following questions: (1) Why would this type of training be important for a differentiator? (2) Could a cost leader benefit from training on product innovation? Why or why not? (3) On what topics/areas would cost leaders most likely train? (4) If cost leaders wish to train, how can they keep their training costs low yet have highly effective training programs?

How Do We Know? Is There One Best Way to Train for Computer Skills? (page 359) As described in this inset box, Steven Simon and Jon Warner investigated if there is a best way to train computer skills. They concluded that the learning and satisfaction with computer systems was higher when the training utilized behavior modeling.

The class could be encouraged to read the details in the inset box. During the lecture or class discussion of the chapter, the study’s finding could be mentioned by you or a student. Most business students will have had at least one computer skills course.

Therefore, they should be able to relate to this study.

You or the student could lead a brief class discussion after presenting the facts that includes the following questions: (1) Why was behavior modeling more effective than other training techniques? (2) What methods have the students been exposed to when learning computer skills? Which were effective and why? Which were ineffective and why? (Note: recognize that all students might not agree on which methods were effective and ineffective for them.) (3) What impact might the type of training have on the satisfaction with the application of the training (e.g., computer system) on the job?

Other ways to address this information could be through a short written assignment or a more in-depth research paper on effective ways to train for computer and other skills.

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Technology in HR: Benefits and Drawbacks of e-Learning (page 360) This inset box briefly addresses some of the costs and benefits of e-learning.

The information presented in this box could be referred to during a lecture. Students can be asked for their experiences with e-learning, including online courses. If few have experience, you could ask why not and whether it is due to unavailability of such training opportunities or other more personal reasons. Students also could discuss the benefits and obstacles they have experienced and whether (or when) e-learning is effective and useful for their needs. They also could be asked to identify which purposes, knowledge, and skills are better suited to e-learning.

E-learning could be further researched by the students and orally presented to the class or in a written assignment. The web-based exercise noted at the end of this Instructor’s Manual chapter could be focused on e-learning.

How Do We Know? How Can Transfer Be Enhanced? (Page 365) As described in the inset box, Michael Tews and Bruce Tracey investigated whether it was possible to enhance transfer of trained skills through self-coaching, upward feedback, or a combination of both. The researchers concluded that both self-coaching and upward feedback could be useful for boosting transfer following a training course The information reported in the inset box could be part of a lecture or class discussion.

Students could be asked to describe the factors that can make a work environment unsupportive to transfer of training. Then they could discuss whether it would be better and more cost effective to address those factors and not bother with relapse prevention.

This is a concern because relapse prevention has a negative effect in positive work environments. You may want the students to address which aspects of a negative work environment might be more easily changed than others. Finally, the students could speculate on why relapse prevention hinders transfer of training in more positive work environments.

KEY TERMS (page 372) Attitude 336 Behavioral contract 362 Causal analysis 350 e-learning 359 Informal learning methods 337 Knowledge 336 Learning 336 Learning objective 352

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Needs assessment 345 Opportunity to perform 364 Organizational objective 352 Organization analysis 345 Person analysis 347 Proactive needs assessment 345 Problem definition 350 Rapid model of instructional design 344 Reactive needs assessment 349 Relapse prevention training 363 Return on investment (ROI) 368 Skill 336 Task analysis 346 Traditional model of instructional design 344 Training 336 Training climate 346 Training effectiveness 365 Training efficiency 368 Training media 359 Training methods 355 Training vendors 355 Transfer of training 342 DISCUSSION QUESTIONS (page 372) 1. What kinds of training contents are most important for organizations using cost strategies? Differentiation strategies? Answer: Training in organizations using a cost leadership strategy focuses on the knowledge, skills, and attitudes that help reduce costs and improve efficiency. Training in organizations using a differentiation strategy focuses on providing superior service and innovation.

2. Why do organizations following an internal labor orientation generally offer more training than organizations with an external labor orientation? Answer: Training for those pursuing an internal labor orientation has an emphasis on training existing employees while those pursuing an external labor orientation emphasize hiring new employees with desired skills rather than on training existing employees. The former requires more training by the organization and the latter expects employees to come to the organization with the desired skills.

3. What are the key differences between the proactive and reactive needs assessment approaches? Answer: Proactive needs assessment generally has three distinct steps: organization analysis, task analysis, and person analysis. Reactive needs assessment involves problem definition, causal analysis, and solution implementation.

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4. How are learning and organizational objectives used in the training design and development process? Answer: Learning objectives are the intended individual learning outcomes from training.

Effective learning objectives have three components: performance identifies what the trainee is expected to do or produce, conditions describe important circumstances under which performance is to occur, and criteria describe acceptable performance in a quantifiable and objective way.

Thus, the learning objectives define the training. Organizational objectives capture the intended results of training for the company. These may include increased productivity, decreased waste, or better customer service. Specifying the intended organizational result of training programs helps to ensure that the training provides value to the organization as a whole and that each program is linked to the strategy of the firm. Setting organizational objectives can thus help in prioritizing.

5. It is often easy to confuse training methods and training media. Consider the human resources course you are currently taking. What are the methods and what are the media being used? Students’ answers will vary.

6. What are the strengths and weakness associated with the following training methods: presentation, discovery, simulation, and behavior modeling? How can each method be made more effective? Answer: Presentation: Strengths: efficient way for many learners to receive same content and knowledge; Weaknesses: passive, learners not given formal opportunity to test or apply new information; More effective: break training into several units; combine with other methods; Discovery: Strengths: active, offers rich opportunities to learn new skills, can be highly motivating; Weaknesses: without guidance from instructor, is highly inefficient and can result in learning the wrong things; More effective: discover coupled with guidance; Simulation: Strengths: active, gives opportunity to experience and build skills for some aspects of job; Weaknesses: trainees do not experience the reality of actual job; More effective: designed to replicate as closely as possible both physical and psychological job conditions; Behavior modeling: Strengths: powerful, draws together principles of learning from many different areas, Weaknesses: not effective unless includes the whole basic process; More effective: role model must be seen as credible and need to show both positive and negative examples of task performance.

7. Consider the classes you have taken throughout school. Which classes were the most beneficial for you? Do you attribute that to the classes’ content, methods, media, or some other factor? Students’ answers will vary.

8. Have you ever taken an online course or another form of distance education, such as a correspondence course? How was the experience different from a traditional face-to-face class? Students’ answers will vary.

9. Consider the classes you have taken throughout school. How have they been evaluated? What purpose or purposes do you think these evaluations have served? Students’ answers will vary.

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10. What is transfer enhancement and why is it helpful for employees? Answer: Transfer enhancement includes a number of techniques that can be used before, during, and after training to facilitate transfer of training. It helps employees apply their new skills to their jobs.

EXAMPLE CASE: Northwest Memorial Hospital (pages 372-374) Questions 1. What is the strategy pursued by NMH? Answer: They have adopted a mixture of HR strategies. Can it be easily classified as differentiation or cost reduction? Answer: No. As internal or external labor orientation? Answer: No. They implement a mixture of all of these.

2. Describe the various ways in which NMH is delivering training and other related learning opportunities to its employees. Answer: The Academy provides an online catalog and registration system for all the hospital’s education programs, which total over 200 courses ranging from communications, project management, information services, and budgeting to an array of health-care specialties, some of which have been designed by internal instructional staff in cooperation with employees who are subject matter experts. Area community colleges and universities are also brought on-site to deliver high-demand, credit-based courses. In addition, the Academy delivered over 3,000 hours of management training to higher level staff, including human resources best practices, diversity education, building collaborative workplaces, and delivering/receiving constructive performance feedback. The Academy also hosts skill development “Lunch and Learn” sessions where managers and employees learn, for example, flexible scheduling strategies, personal development planning, and interviewing techniques. But what many staff members are most proud of are the three “schools” the Academy developed for Nuclear Medicine, Radiation Therapy, and Diagnostic Medical Sonography. The schools offer onsite programs that are open to both employees and community members.

3. What benefits did NMH gain by developing the Academy and its associated schools?

Answer: They addressed skill shortages, eliminated staff overtime and agency usage, and hired many of their students, eliminating all hospital vacancies for the first time in five years. Also should improve relations with community members.

4. If the NMH School of Nuclear Medicine cost the organization $200,000, what was the return on investment for this particular Academy program?

Answer: ROI=benefits of training ($800,000 cost savings) divided by investment ($200,000) times 100, equaling 400% DISCUSSION CASE: Hypothetical Telecommunications (pages 374-375) Questions 1. Outline the key decisions made from the beginning to the end of this case. Who made each of those decisions, and why? Answer: (1) Management decided they

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needed to improve training of sales force in order to improve sales; (2) Although Training Department wanted to update their needs analysis and develop new training strategies based on that, they used older needs assessment for expediency; (3) Management pressured training department to purchase generic, off-the-shelf package so they could do something quickly; (4) When web-based training failed, Management asked training department for answers; (5) Training department questioned sales force to see if they could determine why the training was not working.

2. Describe the ideal process for handling the concern about declining sales, ignoring for now the pressure from management. Answer: The last decision noted above (needs assessment) should be first and training (if needed) is based on that.

3. What arguments could be made to convince management that working with an outdated needs assessment is not wise? Answer: For one, they could be reminded that the problem with sales is a lot more recent than the needs assessment. In addition, the older needs assessment may have been focused on a whole different set of issues. Thus the older needs assessment does not provide information needed to make decision re: need for training. Also could be told that an inexpensive or no cost, needs assessment could be done quickly (like it finally was). Finally, they really did not know if training was the answer and assuming that may cost the organization the loyalty of the now offended sales force, cost time off the job to do the training, and the cost of the unnecessary training program.

4. If you were asked to develop a training program for these sales agents, what content, method, and media would you choose? Explain your answers as best you can given the limited information provided. Students’ answers will vary.

EXPERIENTIAL EXERCISE: Finding an Off-the-Shelf Training Product (page 375) Students are encouraged to visit the following websites called “learning portals”: www.sumtotalsystems.com www.elementk.com www.skillsoft.com Overview of activity Become more aware of online resources related to training.

Exercise: The students access one training-related website (e.g., American Society for Training & Development, Society for Human Resource Management, OSHA’s training webpage) and report on what they’ve found. They should also comment on the

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effectiveness of the site in presenting clear information about training and suggest what might make the site more effective.

Alternate Approaches to the Exercise: Students access more than one website and compare the training related information in regard to variety of methods or skill/topic areas and appropriateness of each.

Links to relevant information http://www.astd.org/ http://www.astd.org/TD http://www.shrm.org http://www.osha.gov/dcsp/ote/index.html

Interactive Experiential Exercise: The Art of Training: Finding the Right Program for Global Telecommunications (page 375) Access the companion website to test your knowledge by completing a Graphics Design, Inc. interactive role play exercise.

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Chapter 10 Developing Employees and Their Careers

Chapter 10 Learning Objectives 1. Explain why employee development practices are useful for organizations.

2. Describe how employee development practices can strategically align with overall HR strategy.

3. Explain the typical career pattern in organizations today as well as the various perspectives on career success.

4. Describe several commonly used development methods.

5. Identify critical career development challenges facing organizations and describe how organizations can meet these challenges.

Chapter 10 Outline 10.1 How Can Strategic Employee Development Make an Organization Effective? (pages 380-381) ✓ Employee development involves activities that influence personal and professional growth. ✓ Career development includes activities that help people manage the progression of their work experiences across their lives. ✓ For organizations, the primary benefit of providing development opportunities is that it enhances their ability to respond to changing environmental forces in two ways: ➢ By increasing the range of skills that employees possess ➢ By increasing the chances that the most capable employees will be attracted and remain committed to the organization.

10.2 How is Employee Development Strategic? (pages 382-384)

• Development practices are strategic when they help the organization maintain a continual supply of talented and committed employees. ✓ Research suggests that most organizations use certain basic development programs. ✓ Organizations that do not use them are at a disadvantage in recruiting and retaining employees. ✓ Specific development practices used by organizations differ depending on HR strategy.

• External Versus Internal Labor Orientation (pages 382-383)

✓ Free Agent and Bargain Laborer HR strategies rely on external labor market for talent ➢ Bargain Laborer strategy unlikely to invest in employees’ long-term development. ➢ Free Agent strategy invests more in development to ensure development efforts look attractive to employees willing to make job transitions.

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✓ Loyal Soldier and Committed Expert HR strategies rely on internal supplies of labor. ➢ Such companies must have more extensive development programs. ➢ Typically offer support for formal education and additional programs including assessment and feedback, developmental relationships, and job experiences.

• Differentiation Versus Cost Strategy (pages 383-384)

✓ Employee development is important for firms with differentiation and cost strategies. ➢ Cost strategy needs to focus on keeping development costs low.

▪ Many development efforts are not expensive and come from the work itself.

▪ Useful for Loyal Soldier and Bargain Laborer HR strategies. ➢ Differentiation strategy use development to foster high-quality service and innovation. Include opportunities for learning from work, formal education, feedback from bosses and colleagues, and developmental relationships (e.g., mentors).

CONCEPT CHECK 1. What are some development programs that fit with internal strategies? With external strategies? Answer: Internal Strategies: Organizations pursuing internal strategies typically offer support for formal education and have additional programs such as assessment and feedback, developmental relationships, and job experiences.

External strategies: Organizations pursuing a Bargain Laborer strategy are unlikely to invest heavily in employees’ long-term development but they may offer development that supports job skills training. Organizations pursuing a Free Agent strategy must offer formal education, particularly support for professional licensing and/or certification and other long-term development.

2. How should a company adjust its development offerings if it pursues a cost strategy?

Answer: They adopt development efforts that are not expensive. For example, inexpensive online career assessment tests (and discussing results with supervisor), job enrichment, and other work experiences. For that reason, work experiences as a developmental program should be particularly useful for organizations concerned with costs, such as those using the Loyal Soldier and Bargain Laborer HR strategies.

3. How should a company adjust its development offerings if it pursues a differentiation strategy? Answer: To ensure that innovation occurs, development in these organizations must be far-reaching and must include opportunities not only for learning from work but also for learning from formal education, feedback from bosses and colleagues, and developmental relationships, such as relationships with mentors.

10.3 What Are Careers Like Today? (pages 384-386)

• Career – changes in pattern of work experiences people have over lifetimes. Historically: ✓ Typical career involved going to school and joining and staying with company until retirement.

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✓ Particularly in large companies, workforce needs were predictable. ✓ Employees could be relatively certain that, given adequate performance, they could stay with company for long time. ✓ Progression from position to position through promotions that involved more pay and responsibility (commonly referred to as career ladder).

• Today’s careers

✓ Do not typically progress in a hierarchical, step-by-step process. ✓ Typical pattern of work experiences includes ➢ Lateral movement within a company, ➢ Hierarchical movement within a company, ➢ Movement from company to company, ➢ Work experiences spent as a contract employee or small business owner. ✓ Protean career ➢ Protean generally means varied and versatile. ➢ Characteristics of new career include: ▪ Shift in emphasis toward psychological success.

▪ Emphasis on development that is continuous, self-directed, relational, and found in work challenges.

▪ Employees are increasingly responsible for selecting and pursuing development.

▪ Organizations are primarily responsible for development opportunities. ✓ Shift in the emphasis to different types of success. ➢ Emphasis has shifted from objective perspective to subjective. ➢ Employees increasingly concerned with psychological success, such as quality of day-to-day work and home life. ✓ Career path ➢ Organizations communicate expectations about how employees will progress from job to job. ➢ Some companies identify a series of work experiences that are likely to prepare the employee for high-level jobs (e.g., general manager, vice-president, CEO). ➢ Internal Career Paths ▪ Organizations identify internal career paths, communicate information to employees, and make opportunities clear to help employees achieve career goals.

▪ Employees are likely to reciprocate with greater commitment and job performance.

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CONCEPT CHECK 1. What is the difference between a career ladder and a career path? Answer: Career ladder: Progression from position to position generally occurs in the form of promotions that involve more pay and more responsibility. Career path: identify a series of work experiences that are likely to prepare the employee for high-level jobs, such as general manager, vicepresident, and CEO. Which is a more accurate description of typical careers today? Answer: Career path. Today, a more typical pattern of work experiences includes lateral as well as hierarchical movement within a company, along with movement from company to company.

In addition, it is much more common today for work experiences to include time spent as a contract employee or small business owner.

2. What are the characteristics of a Protean career? Answer: Protean generally means varied and versatile. Characteristics of the new career include a shift in emphasis toward psychological success and an emphasis in development that is continuous, self-directed, relational, and found in work challenges. A career characterized by personal responsibility, continuous and self-directed development, and an emphasis on psychological success.

3. What dimensions of performance, attitudes, identity, and adaptability are becoming more common today? Answer: Important performance dimensions -- Psychological success; Important attitude dimensions -- Work satisfaction, professional commitment; Important identity dimensions -- Self-esteem, self-awareness; Important adaptability dimensions -Work-related flexibility (measure: marketability).

10.4 How Can Organizations Help Employees Develop? (pages 386-394)

• Formal Education is a category of development that includes formal learning experiences such as training courses designed to help employees learn a particular skill or skills that are likely to be relevant in their future work. ✓ Courses ➢ May be designed specifically for the company or offered by a third party. ➢ Some companies provide simple and broad-based tuition assistance programs. ✓ Certification and Licensing ➢ Earn by demonstrating competence in a particular area of professional practice. ➢ Licenses ▪ Regulated by state governments.

▪ In many fields, individuals must obtain licenses in order to conduct business. ➢ Certification ▪ No legal requirement for people to obtain certification.

▪ Person who holds a certificate has demonstrated a general knowledge of, and competence to do work in, the area being certified. ➢ Providing support to gain and maintain such certification is one way in which organizations can be attractive to current and prospective employees.

• Assessments and Feedback (pages 387-391)

✓ Using assessments and feedback for development involves collecting information and

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providing feedback to employees about interests, personality, behaviors, skills, etc. ✓ Feedback ➢ Helps employees understand what type of work they should choose so they experience a good fit among interests, skills, and work demands. ➢ Helps employees better understand strengths and weaknesses, plan developmental activities, and manage careers. ✓ Career Assessment ➢ The Holland typology identifies six different personality types that correspond with six different job environments. ➢ The World of Work Map simplifies Holland typology into preferring working with data or ideas and preferring working with people or things. ➢ Encouraging employees to take assessments, and helping interpret results, can be useful for providing guidance concerning what careers and jobs they are likely to enjoy. ✓ Multisource Assessments. ➢ Typical process involves employee’s managers, peers, subordinates, and customers answering questions about employee. ➢ ManagerView360 is an instrument that measures 20 managerial competencies clustered into four major areas: task/leadership, interpersonal, communication, and problem solving. ➢ Multisource feedback systems work best when: ▪ Reliable ratings are provided and raters’ confidentiality is maintained.

▪ System is easy to use and behaviors assessed are job-relevant.

• Work Experiences (pages 391-393)

✓ Using work experiences can be very effective and are relatively low cost. ✓ Job enrichment involves adding challenges or new responsibilities to employees’ jobs. ✓ A lateral move is a job change that involves a change in duties without an increase in pay, responsibility, or status. ✓ Lateral moves include: ➢ Job rotations are temporary work assignments in which employees are expected to move through multiple jobs within a set period of time. ➢ Job transfers are permanent lateral moves made for the purposes of developing new knowledge and skill. ✓ Upward or downward moves include: ➢ Upward move is typically called a promotion and involves an increase in responsibility, pay, and status. ➢ Downward move or demotion involves taking a job with less responsibility and authority. ✓ Not every job experience results in learning and growth. ➢ Adding more work or changing job title does not promote employee development. ➢ Greatest learning occurs when job experiences provide greater authority, require skill at creating change, and require use of persuasion to get things done.

• Developmental Relationships (pages 393-394)

✓ Provide support and encouragement for personal or professional growth. ✓ Coaching

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➢ Equips people with tools, knowledge, and opportunities to become more effective. ➢ Coaches can be professionals who work outside the company or they can be employees who are responsible for improving another’s performance. ➢ Good coaching process: contracting, opening, practicing, planning, and evaluating. ✓ Mentoring ➢ One-on-one relationship between less experienced and more experienced person.

▪ Can be formal or informal.

▪ Generally benefits employees in two ways. May provide:  Career benefits by offering challenging work experiences, advice, political protection, and sponsoring the employee in contests for promotions, etc.  Psychological and social benefits. ➢ Successful mentoring ▪ Helpful for mentors and protégés to perceive themselves as similar in some way.

▪ Encourages proximity, providing orientation, offering guidelines, and encouraging protégés to set goals.

CONCEPT CHECK 1. What is the difference between a certificate and a license? Answer: A license is a required designation of competence within a professional field. Certification is an optional designation of competence within a professional field.

2. What distinguishes successful and unsuccessful multisource feedback programs? Answer: Multisource feedback systems work best when reliable ratings are provided, raters’ confidentiality is maintained, the system is easy to use, the behaviors assessed are jobrelevant, and managers act on the feedback received. In unsuccessful programs, some employees may not change as a result of the feedback, and other employees may be frustrated if the feedback is overly negative and not constructive.

3. What are some types of job experiences that can help employees learn and grow? Answer: Job enrichment, lateral moves (including rotations and transfers), and upward moves.

4. What are key characteristics of a successful mentoring program? Answer: Match employees and mentors who are similar in their outlook or perspective, or allow employees and mentors to select their own pairings. Other characteristics of good programs include encouraging proximity, providing an orientation, offering guidelines, encouraging protégés to set goals, and pairing protégés with mentors who are successful in their jobs.

10.4 How do Organizations Integrate Development Efforts? (pages 395-399)

• Companies with Effective HR practices use development programs in systematic and strategic fashion.

• Competency Model (pages 395-396) 6

✓ Allows the organization to strategically staff important positions with people who have the right characteristics. ✓ Allows firm to develop those characteristics by identifying current employees’ strengths and weaknesses and encouraging development using one or more types of development.

• Career Development Process (pages 396-398)

✓ Forward-looking companies help employees to manage development. ✓ The career development process includes four steps to identify and pursue career goals and appropriate developmental goals. ➢ Self-assessment ▪ Employees determine interests, values, personalities, and skills.

▪ Can include exercises that ask employees to consider where they are today and where they want to be in the future. ➢ Reality check ▪ Employees gather information to see if self-assessments are realistic and how assessments fit with job opportunities and current employer’s future labor needs.

▪ Employees can talk with current supervisors as one way to obtain reality check.

▪ Other sources of information about labor market opportunities include career centers of colleges and universities.

▪ Information interviewing  Contacting current incumbents gives an insider view of a job or profession.  Meeting someone at work can test assumptions about what work is like. ➢ Goal setting – involves setting milestones or achievements for the future, such as positions, skills, and development efforts to pursue. ➢ In Action planning, employees make plans for how they will accomplish their goals.

• Technology (pages 398-399)

✓ Companies with effective HR practices make use of technology to ensure employees have ready access to a variety of developmental opportunities. ✓ Technology can be used to integrate various programs so that a common database of competencies and associated learning experiences can be used to make and track development plans.

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CONCEPT CHECK 1. What role do competency models play in career development? Answer: Competency models can be developed to indicate what types of knowledge, skills, and behaviors will help the organization accomplish its strategy. Based on this information, the organization can strategically staff important positions with people who have the right characteristics. It can also develop those characteristics in others by first identifying current employees’ strengths and weaknesses and then encouraging development using one or more of the types of development presented in this chapter. This model is depicted graphically in Figure 10.5.

2. What role does technology play in career development? Answer: It ensures that employees have ready access to a variety of developmental opportunities. Technology can also be used to integrate various programs so that a common database of competencies and associated learning experiences can be used to make and track development plans.

3. What are the major steps in the career development process? Answer: Self-assessment, reality check, goal setting, and action planning.

10.5 What Are Some Important Career Development Challenges? (pages 399-404)

• Organizations and HR departments face several major challenges in career development.

✓ Challenges represent how firms can help employees learn and grow within an organization. ✓ Organizations with programs to address challenges are more attractive to potential hires.

• Orienting New Employees (pages 399-400)

✓ New employees need to be helped through transition from being loosely connected with the organization to being knowledgeable and comfortable in their role within organization. ✓ New employee orientation is process of bringing people into the organization and helping them adjust so they can perform work effectively. ➢ Also known as onboarding, induction, and socialization. ➢ Often a single event, it is best to think about orientation as an ongoing process that helps employees adjust and ensures success. ➢ One way in which organizations help employees succeed in careers. ➢ Typical orientation program might involve lectures and discussions, supplemented with tours of physical space, team-building activities, and opportunities to practice skills critical to success in organization. ➢ To make orientation an ongoing process, ▪ Structure meetings between new employees and managers, as well as other important employees in the organization.

▪ New employees can meet again informally to share successes and challenges. ➢ Employees who attend orientation training have significantly higher levels of affective organizational commitment. ➢ An effective orientation program should be guided by five principles: ▪ Present realistic information about the company and the new employees’ role.

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▪ Provide support and reassurance to alleviate anxiety and fear.

▪ Have successful employee demonstrate how employees can use coping skills to ▪ ▪

succeed at work, allow for discussion, and encourage practice.

Teach self-control of thoughts and feelings to help employees manage negative thoughts and feelings that arise because of challenges in adjusting.

Give the new employees information specific to their new jobs and new bosses.

• Reducing Burnout (pages 400-401)

✓ Burnout is a psychological phenomenon involving emotional exhaustion, cynicism, and a decline in feelings of competence about work. ✓ Employees who experience burnout exhibit the following symptoms: ➢ Feelings of being overextended and emotionally drained. ➢ Indifference or a distant attitude toward work. ➢ Reduced expectations of continued effectiveness. ✓ High levels of burnout are associated with low levels of commitment and high turnover intentions. ✓ Burnout is related to workload, pressure, stress, conflict, and unmet expectations. ✓ Supervisors can play a key role by being clear about expectations, offering support, and providing employees with opportunities to help make decisions about work. ✓ Organizations that do not keep an eye out for symptoms of burnout may waste their investments in employee development.

• Helping Employees Balance Work with Personal Lives (page 401)

✓ The strain of balancing the demands of work and personal life can cause dissatisfaction that leads employees to quit their jobs. ✓ Organizations can do something about it. ➢ Develop programs that allow flexible work hours, provide assistance with child care, and offer time off to deal with family illnesses. ➢ Employees perceive such programs show organization cares about employees. ➢ Employees are more committed to organizations that have family-friendly policies.

• Developing a Diverse Workforce (pages 402)

✓ Increased workforce diversity requires different development needs of employees. ➢ Give employees access to developmental programs. ➢ Organize one or more affinity groups. ➢ Additional challenges for older workers (e.g., encourage to update skills, provide challenging assignments, reward learning, and encourage information sharing).

• Managing International Assignments (pages 402-404)

✓ Employee who goes to another country for a time to work is called an expatriate. ➢ Turnover of expatriates can be very high and costly. ➢ Organizations can help employees prepare and make them less likely to leave early.

▪ Pre-departure Resources  Pre-departure resources include a variety of activities that vary from selfdirected research to field trips to the host country.  Training programs involve lectures and activities to prepare employees and reduce culture shock, which is a stress that stems from the uncertainty and confusion that people sometimes experience when they must deal with an 9

▪

▪

▪

unfamiliar culture.

Onsite Resources  Opportunity to have conversations with people who understand culture and the work the expatriate is doing.  Access to a local mentor.  Organization-sponsored coach or more experienced expatriate.

After-Return Resources (Repatriation) ➢ After living in a new culture, people often have difficulty readjusting. ➢ Following an international assignment, employees have valuable knowledge and skills that the organization does not want to lose.

Other Issues  Family members should be invited to participate in each phase.  Offering assistance to family members increases likelihood they will adjust to the new culture, reducing chances that family dissatisfaction will become a factor.  Failure of family to adjust is common reason for terminating assignments early.  Organizations should offer the same support to employees from other countries who come to U.S. as they give to U.S.-based employees working abroad.

CONCEPT CHECK 1. What are some common career-development challenges that organizations face? Answer: These challenges include effectively orienting new employees, preventing employee burnout, helping employees to balance their work with their personal lives, developing a diverse workforce, and assisting employees to manage international assignments.

2. What can an organization do to make sure employees are oriented effectively? Answer: An effective orientation program should be guided by five principles: 1. Present realistic information about the company and the new employees’ role in it. 2. Provide support and reassurance to alleviate anxiety and fear. 3. Have a successful employee demonstrate how employees can use coping skills to succeed at work, allow for discussion, and encourage practice. 4. Teach self-control of thoughts and feelings to help employees manage negative thoughts and feelings that arise because of challenges in adjusting. 5. Give the new employees information specific to their new jobs and new bosses.

3. What can an organization do to help an employee prepare for an international assignment?

Answer: Provide support in the form of pre-departure, on-site, and after-return resources.

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Chapter 10 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (page. 405-406) Summaries of each of the five learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives The chapter contains five learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 382 Learning objective 2- page 384 Learning objective 3- page 386 Learning objective 4- page 345 Learning objective 5- page 399

Concept Checks The chapter contains five concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- page 384 Concept 2- page 386 Concept 3- page 394 Concept 4- page 399 Concept 5- page 404

Tables and Figures The table and figures presented in the chapter help illustrate the concepts of the chapter. They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 10.1- page 385 Differences Between the Traditional and Protean Career Table 10.2- page 388 Holland Typology Table 10.3- page 393 Types of Developmental Relationships

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Figure 10.1- page 382 Strategic Framework for Employee Development Figure 10.2- page 389 The World of Work Map Figure 10.3- page 390 Sample Multisource Feedback for Four Categories of Managerial Competence Figure 10.4- page 392 Types of Developmental Job Experiences Figure 10.5- page 396 Model of Strategic Career Development Figure 10.6- page 401 Changing Earnings Structure of Families A Manager’s Perspective (pages 378-379), What Do You Think? (page 379), and A Manager’s Perspective Revisited (page 404-405) The chapter starts with a short scenario where Alejandro is thinking about why he is no longer being challenged at work. Five true/false questions related to this scenario and the chapter topics are noted on page 378 and answered on page 405.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what additional questions Alejandro should ask.

During the discussion of the chapter material, you could refer to the questions noting that a certain section or discussion point addresses one or more of the questions.

You may wish to address the questions at the end of discussing the chapter. If so, you may want to bring the students’ attention to these questions informing them that they will be asked to answer the questions near the end of the chapter discussion. At that time, students (individually or in groups) could be asked to explain why the answers are true or false. Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

Building Strength Through HR: Aflac (page 381) This special feature (page 381) highlights several issues noted in a brief introduction to Aflac’s career development program noted above this inset box. This case illustrates how career development can help build and maintain an organization’s competitive strength.

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If internet access is available in the classroom, you could access Aflac’s career development webpage http://www.aflac.com/us/en/careers/careerdevelopment.aspx during class to further illustrate their HR practices. The webpage provides a brief overview of various career development programs including technical training, job specific training, industry education, and personal growth related development opportunities.

You could ask the students: (1) Why does this strategic employee development appear to be so successful? (2) Why might this program help Aflac recruit employees? How does it encourage current employees to stay and be productive? (3) Should organizations be involved teaching life skills (such as how to buy a home and be a great grandparent)?

Another approach could be to compare Aflac’s career development webpage and offerings to those of Nokia. Nokia’s success in utilizing career development after a merger is briefly discussed in the paragraph above the introduction to Aflac. Nokia’s webpage provides multiple links to their career development opportunities. You are able to access lists of courses they offer in various areas. The “e-learning” link accessed through the “training” link found at the left of the page provides a listing of the various courses available. The “developer training” link gives you access to brochures, training schedules, Nokia Training Centers, and course roadmaps that clearly present the typical sequence of courses. You could ask the students if Aflac might benefit from a more detailed website versus inferring that people need to phone for more information on career development opportunities and which would be a better recruiting tool.

(Please keep in mind that Aflac may have more information available on an internal webpage that only Aflac employees can access.) Nevertheless, Nokia illustrates how much career development information can be provided in a clear manner and is easily accessible.

The following webpages are noted above: http://www.nokia.com/corporate-responsibility/cr-report-2007/employees/training-anddevelopment http://www.aflac.com/careers/corporate_employment/benefits_and_training.aspx How Do We Know? Can a Feedback Program Really Improve Performance? (page 391) This inset box (on page 387) is briefly mentioned on the page before the box. Alan Walker and James Smither tracked the performance of 252 bank managers who received upward feedback.

They found that managers who were initially rated poor or moderate showed significant improvement in upward feedback ratings over a five year period. They also found that managers who met with their subordinates to discuss feedback improved more than other managers.

The class could be encouraged to read the details in the inset box. During the lecture or class discussion of the chapter, the study, conclusions, and recommendations could be summarized.

This could be accomplished through your lecture (asking for student input) or by assigning the box to an individual student. You or the student could lead a brief class discussion after presenting the facts.

Regardless of who presents the information, the students could be asked the following questions: (1) What might be bank manager-related job skills and behaviors on which subordinates could

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provide helpful feedback? (2) Why might the meetings with subordinates to discuss their feedback be so instrumental in future improvement relative to that feedback? (3) Why might it be important that people publicly commit on what and how they plan to improve their performance? What affect will their failure to improve have on the subordinates (in addition to lower feedback ratings)? (4) On what job behaviors and skills might students provide upward feedback to their current college professors/instructors? (5) Would it be beneficial to both parties for them to meet to discuss the feedback before grades are determined (e.g., midterm evaluations)? (6) What are the possible pitfalls that could occur from such discussions in an educational or organizational setting? How is this type of discussion typically handled in Survey Feedback as part of an organization development intervention? (7) Would you (as a student or employee) feel comfortable discussing the group’s feedback with the professor or supervisor?

Why or why not?

How Do We Know? How Do We Maximize the Return on Mentoring? (page 395) This study on head coaches is briefly mentioned just above the inset box found on page 390.

Three researchers investigated the effects three types of mentoring had on the future performance of the assistant coaches after they themselves became head coaches. The researchers found that those mentored by successful head coaches had the best records. Thus, they concluded that successful mentors will be most beneficial for their mentees’ success.

You could ask the following questions of the students: (1) Why might successful mentors have more success in helping their mentees be successful? (2) Is it possible that some assistant coaches learned what not to do from their less successful coaches and just need time to translate that learning to their own success? (3) Are the conclusions of this study relevant to business and other non-sports-related organizations? (4) Do any of the students have experience with mentoring either at work or school or through another organization? If so, did they see the same outcome that mentees benefited more from successful mentors? Why or why not? (5) Would peer (i.e., students mentoring students) or instructor mentoring of students re: college expectations and appropriate behaviors help? Would you benefit more from a student who has been successful in college than one who has not? Why?

Building Strength Through HR: LG Electronics (page 397) This inset box on page 397 talks about LG Electronics, a South Korean company that designs and manufactures a wide variety of consumer electronics including smartphones, refrigerators, air conditioners, and televisions. To help fuel its growth, LG makes substantial investments in leadership development. In recent year they have sought to build a single standard Global Leadership Framework that connects to the company’s vision and values and guides leadership development practices. To further development their skills, participants are given work assignments that help improve particular skills. Finally, the consulting firm offered coaching to help participants practice behaviors on the job.

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Technology in HR: National Aeronautical and Space Association (NASA) (page 394) This inset box (refer to page 394) briefly addresses NASA’s career development program.

Additional information introducing the SATERN system is discussed below the box. Both sets of information are necessary to understand the system.

Either you or the students could provide more information about the system by accessing the Frequently Asked Questions (FAQ) linked to https://saterninfo.nasa.gov/faq.html. The questions on the FAQ website include: What is eTraining? What is SATERN? What are the objectives of the SATERN Project? Who benefits from SATERN? Why are we implementing SATERN? Then the potential effectiveness of the system could be discussed.

KEY TERMS (pages 406) Action planning 397 Affinity group 402 Burnout 400 Career 384 Career development 380 Career development process 396 Career ladder 384 Career path 385 Certification 387 Coaching 393 Culture shock 403 Downward move 392 Employee development 380 Expatriate 402 Goal setting 397 Holland typology 388 Job enrichment 391 Job rotation 392 Job transfer 392 License 387 Mentoring 394 Multisource assessments and feedback 388 New employee orientation 399 Protean career 385 Reality check 396 Repatriation 403 Self-assessment 396

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Talent management 380 Upward move 392

DISCUSSION QUESTIONS (page 406-407) 1. What types of development efforts are most appropriate for companies with an internal labor orientation? an external labor orientation? Answer: Internal Strategies: Organizations pursuing internal strategies typically offer support for formal education and have additional programs such as assessment and feedback, developmental relationships, and job experiences. External strategies: Organizations pursuing a Bargain Laborer strategy are unlikely to invest heavily in employees’ long-term development but they may offer development that supports job skills training. Organizations pursuing a Free Agent strategy must offer formal education, particularly support for professional licensing and/or certification and other long-term development.

Can you think of examples of how companies with these different orientations develop their employees? Students’ answers will vary.

2. What impact should differentiation versus cost strategies have on employee development?

Answer: Differentiators want to ensure that innovation occurs. Development must be farreaching and must include opportunities not only for learning from work but also for learning from formal education, feedback from bosses and colleagues, and developmental relationships, such as relationships with mentors. Cost leaders adopt development efforts that are not expensive. For example, inexpensive online career assessment tests (and discussing results with supervisor), job enrichment, and other work experiences. For that reason, work experiences as a developmental program should be particularly useful for organizations concerned with costs, such as those using the Loyal Soldier and Bargain Laborer HR strategies.

3. Consider the difference between a traditional career and a Protean career. Does one sound more appealing to you? If so, why? If you choose traditional career, can you think of industries and companies where such a career still exists? Students’ answers will vary.

4. Choose a particular job in which you are interested. Research the job to see if licenses are required or certificates are offered. If so, why do you think this is the case? If not, what does that tell you about the job? Students’ answers will vary.

5. Brainstorm a list of jobs in which you might be interested. Classify these according to the World of Work map. Is there a pattern to these jobs? Does the placement on the map give you other ideas for jobs you might consider? Students’ answers will vary.

6. What are the various types of developmental relationships, and when might each be useful for you? Answer: Developmental relationships include feedback from bosses and colleagues, coaching, and mentoring. Students’ answers will vary on the second part of the question.

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7. What are different types of developmental work experiences, and when might each be useful for you? Answer: Typical patterns of work experiences include lateral movement within a company, hierarchical movement within a company, movement from company to company, and work experiences spent as a contract employee or small and business owner. Students’ answers will vary on the second part of the question.

8. In multisource assessments, the ratings assigned by supervisors, peers, and employees do not always agree with one another. Why do you think that is the case? What should be done to help the person being rated to reconcile the differences? Answer: Two reasons might be each source has different opportunities to observe a person’s performance and each may focus on different priorities in regard to what is important or good performance. These differences might be reconciled discussing his or her performance with each group of raters.

9. Have you ever attended an orientation program for work or for school? How useful was the orientation? Did the orientation cover everything it should have covered? What things were left out that you would like to have had included? Students’ answers will vary.

10. Would you be interested in working in another country for an extended period of time? Pick a country where you would consider working, and discuss the positives and negatives that you would expect to come from living and working there. Students’ answers will vary.

EXAMPLE CASE: Expanding into Switzerland (pages 407-408) Questions 1. What challenges to employee recruiting, retention, and career management will your company face in Switzerland? Answer: Some of the challenges are cultural (attitudes re: women staying in the home). Other challenges also are system-wide such as irregular primary-school hours, acute shortage of childcare centers, and 60% of women typically temporarily leave the workforce after the birth of their second child.

2. What development programs could be put in place to address these challenges? Answer: Development programs need to be far-reaching not just in organizations. The women could be taught how to address such things as the biases regarding needing to be home for the children, how to handle organizational politics, etc. Most of the programs need to have support from government, education system, etc.

3. What other human resource policies and programs would support the development programs you intend to offer? Answer: As noted in the case, child care centers or other assistance with child care could be established. Other HR policies and programs could include increasing the number of hours women work in the work place and addressing the many issues related to their current high percentage of foreign workers.

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DISCUSSION CASE: First Day on the Job (page 409) Questions 1. What might be the factors that are causing this employee’s dissatisfaction? Answer: The students can speculate but it would be better to concentrate on what is known from the case and emphasize the need to ask the employees what exactly are the problems. All that is currently known is that “the work seems to be at once too much and too little.” The current complaints include that the employee feels overworked and no excitement about the work.

The employee also does not feel that she is being challenges to learn skills that will help her own her own business in the future. Again, asking for more details from this and other employees is imperative to solve the problems.

2. Which of these factors could be addressed with improvements in the way the organization handles development as described in this chapter? Answer: To answer this question, one would need to know what is possible given the organization’s HR strategy. We also would need to know what aspects of the work are “too much and too little” to know if job enrichment and other job experiences would be helpful.

3. What should Malik do tomorrow with regard to this employee? Answer: As noted above, talk further to the employee about her specific problems and frustrations. Also he could ask her what she thinks might help.

4. What long-term changes should Malik suggest for this organization, if it appears that this employee is not the only one with these complaints? Answer: Do a job analysis on these and other jobs or review the current job descriptions. Employees could be asked how to redistribute duties and/or add challenge to their jobs. Again, the long term changes should depend on what is learned through this and other data gathering about the problems.

EXPERIENTIAL EXERCISE: Creating a Personal Development Plan (page 409-410) Students are encouraged to complete the four steps either through individual review or as a team building exercise.

INTERACTIVE EXPERIENTIAL EXERCISE: Career Development: Building a Workforce for Long-Term Success at Global Telecommunications (page 410) Access the companion website to test your knowledge by completing a Global Telecommunications interactive role play exercise.

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Chapter 11 Motivating Employees Through Compensation Chapter 11 Learning Objectives 1. Describe how employee compensation practices strategically align with overall HR strategy.

2. Use the concepts of reinforcement theory, goal setting theory, equity theory, expectancy theory, and agency theory to explain how people react to compensation practices.

3. Describe how pay surveys are conducted and used to create compensation-level strategies.

4. Explain job-based pay and skill-based pay approaches to compensation structure.

5. Describe the major protections provided by the Fair Labor Standards Act, as well as state and local regulations.

Chapter 11 Outline 11.1 How Can Strategic Employee Compensation Make an Organization Effective? (pages 416-418)

• Employee compensation is the process of paying and rewarding people for the contributions they make to an organization.

• Compensation includes benefits such as insurance, retirement savings, paid time off from work, and represents the total package of rewards—both monetary and psychological—that an employee obtains from an organization.

• A market-based pay approach determines how much to pay employees by assessing how much they could make working for other organizations in a specific geographic area.

11.2 How Is Employee Compensation Strategic? (page 418-422)

• Compensation practices are strategic when they encourage employees to put forth best effort and perform to help the company produce its particular goods and services.

• External Versus Internal Labor (page 419) ✓

Organizations with external labor orientation frequently hire new employees. ➢ Employees not expected to form long-term attachment to organization. ➢ External equity concerns fairness of what the company pays compared with what the employee could earn elsewhere.

✓

Firms with internal labor orientation seek to retain employees for long periods of time. ➢ Encourage employees to stay by providing security and good working conditions, which are emphasized more than money.

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➢

Internal equity involves beliefs concerning fairness of what the organization pays compared with what it pays other employees.

• Differentiation Versus Cost Strategy (pages 419-420) ✓ ✓

Differentiators seek high-performing employees who create superior goods and services.

Cost leaders adopt compensation practices that reduce labor expenses.

• Aligning Compensation with HR Strategy (pages 420) ✓

A Variable rewards system pays some employees substantially more than other in order to emphasize differences between high and low performers, and is associated with differentiation HR strategy.

✓

A Uniform rewards system minimizes differences among workers and offers similar compensation to all employees, and is associated with cost reduction strategy.

✓

Relational commitment is based primarily on social ties rather than monetary incentives.

✓

Transactional commitment is based primarily on financial incentives.

✓

Uniform Transactional Compensation associated with Bargain Laborer HR strategy. ➢ There is little difference in pay to high and low performing employees. ➢ Must develop fair and uniform practices that increase perceptions of fairness.

✓

Uniform Relational Compensation associated with Loyal Soldier HR strategy. ➢ Provides similar rewards to all employees while building sense of commitment. ➢ Pay increases usually linked to time with organization. ➢ Long-term forms of compensation other than salary are helpful.

✓

Variable Transactional Compensation associated with a Free Agent HR strategy. ➢ Compensation is primary source of motivation for employees. ➢ Salary compression occurs when new employees are paid much more than employees who have been working at organization for years in similar position.

✓

Variable Relational Compensation associated with Committed Expert HR strategy. ➢ Uses compensation to reward high performers. ➢ Strives to build long-term commitment.

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CONCEPT CHECK 1. How are variable rewards different from uniform rewards? Answer: Differentiation HR strategy is associated with variable rewards, which have overall goal of spreading out compensation so high performers are paid more than low performers. Cost reduction strategy is associated with uniform rewards and aimed at providing consistent compensation so employees are treated same regardless of differences in performance.

2. What is major emphasis of relational commitment? What is the emphasis of transactional commitment? Answer: Relational commitment is a sense of loyalty to organization that is based not only on financial incentives but also on social ties. Transactional commitment is a sense of obligation to the organization that is created primarily by financial incentives.

3. How do compensation differences align with basic HR strategies? Answer: Uniform transactional compensation often is associated with Bargain Laborer HR strategy. Little difference in amount paid to high- and low-performers. Uniform relational compensation supports Loyal Soldier HR strategy because it provides similar rewards to all employees while building a sense of commitment to organization. Pay increases usually linked to time with organization. Long-term forms of compensation other than salary, such as health insurance and retirement benefits, are helpful. Organizations with Free Agent HR strategy use variable transactional compensation because it provides strong monetary incentives for high performers with somewhat rare skills. Short-term salary and bonuses are emphasized more than future rewards. Organizations pursuing a Committed Expert HR strategy use compensation to reward high performers, but also strive to build long-term commitment.

Variable relational compensation; management sets high goals for employees, and those who reach goals are paid more than those who do not. To reduce turnover, such organizations offer long-term incentives such as retirement benefits and stock options.

11.3 How Does Compensation Motivate People? (pages 422-432) • Assumption of all compensation strategies is that pay can be used to motivate employees.

• Motivation is a force that causes people to engage in one behavior rather than others. ✓ More specifically, motivation is represented by three elements. ➢ Behavioral choice involves deciding whether to perform particular action. ➢ Intensity concerns deciding how much effort to put into behavior. ➢ Persistence involves deciding how long to keep working at behavior.

• Theories of Motivation (pages 423-429) ✓ Reinforcement Theory ➢ Behavior is caused by chains of antecedents and consequents. ➢ Antecedent causes people to think about consequents. ➢ People engage in behaviors for which they are rewarded. ➢ Contingency o Consequent motivates behavior only when it is contingent (i.e., it depends on occurrence of behavior). o Reward should be given if, and only if, desired behavior occurs.

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o

•

Key principle from reinforcement theory is compensation should be based on performance so better performers receive higher pay.  Known as pay-for-performance.  Linking pay to performance can be beneficial when part of an overall program of performance assessment, goal setting, and feedback. ✓ Goal-Setting Theory o Goal-setting theory is grounded in cognitive psychology and holds that behavior is motivated by conscious choices. o Goals improve performance through four specific motivational processes:  Goals focus attention away from other activities toward desired behavior.  Goals get people excited about accomplishing something worthwhile.  People work on tasks longer when they have specific goals.  Goals encourage the discovery and use of knowledge. o Goal setting can be combined with compensation in a number of ways.  Provide a bonus for achieving a difficult goal.  Provide incremental rewards for people who achieve progressively higher goals.  Decide on reward after goal has been achieved. ✓ Justice Theory o Motivation depends on beliefs about fairness. o Early form of justice theory was equity theory.  People compare inputs and outcomes to inputs and outcomes of others.  If they perceive inequity, might try number of things to make pay seem fairer. o Distributive justice: concerned with the fairness of outcomes. o Procedural justice: concerned with the fairness of procedures to allocate outcomes. o Employees who see organization as more fair tend to have higher levels of satisfaction and commitment and higher individual performance. ✓ Expectancy Theory o Motivation based on beliefs about valence, instrumentality, and expectancy.  Valence: belief that certain reward is valuable.  Instrumentality: belief that desirable reward will be given if appropriate behavior or outcome is produced.  Expectancy: belief that can achieve desired level of performance. o All three desirable beliefs must be present for motivation to occur. o People are motivated when believe receive reward for higher performance. ✓ Agency Theory o Agents act on behalf of principals(s) who are owners and/or shareholders. o Wage rates are higher when employees bear risk. o Pay for performance effective when can earn more than with fixed wages. o Compensation practices must be structured so employees are rewarded when they do things that would be most desirable from the owners’ perspective. o Pay should be structured so managers and employees receive higher rewards when they do things that increase value for owners and shareholders.

Linking Motivation with Strategy (pages 429-432)

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✓

Basic principles based on motivational theories. ➢ Guide for best ways to motivate employees through compensation practices. ➢ Can be linked to compensation strategies discussed earlier in chapter. o Differentiators tend to use variable compensation. o Cost leaders tend to use uniform compensation. o Variable compensation systems have greater need for high motivation than uniform compensation practices. o Uniform compensation practices can make use of key motivational principles. ✓ Variable Compensation and Motivation ➢ Linking pay to performance can reduce joy of performing naturally interesting tasks. ➢ Performance increases when high performers are paid more than low performers. ➢ Organizations using variable compensation benefit from making rewards contingent on achieving goals. o As part of a Free Agent HR strategy, organization can encourage exceptionally high performance by rewarding only individuals who reach highest level of goal achievement. o Organizations with variable relational compensation pursue a Committed Expert HR strategy can benefit from providing rewards to everyone who attains at least some level of goal achievement. o Because employees working under variable compensation tend to assume greater risk, overall level of compensation should be higher for Free Agent and Committed Expert HR strategies. ➢ Must understand what reference group employees use in assessing fairness of pay. o Primary reference group for Committed Expert HR strategy is people working in same organization. o Primary reference group With a Free Agent HR strategy is people working in similar jobs at other companies. ➢ Organizations with Committed Expert HR strategy o Procedural fairness is particularly important for organizations. o Employees need to develop trust and feel that organization supports them. ➢ Problems o Fail to motivate because reward is not large enough to influence behavior. o Amount of difference between a raise for high and low performers too small. ✓ Uniform Compensation and Motivation ➢ Not as effective as variable compensation for encouraging high motivation. ➢ Organizations with Loyal Soldier HR strategy: o Employees tend to compare themselves with employees in same organization. o Usually seek competitive advantage through cost reduction. o Develop skills that have little value to other organizations, which decreases likelihood that other organizations would be willing to offer employees higher salaries. ➢ Organizations with a Bargain Laborer HR strategy: o Seek to pay lowest possible wages. o Employees in organizations are likely to move from organization to organization depending on which organization is willing to pay most.

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o

Low skill level of employees suggests wage rate will be near minimum wage.

CONCEPT CHECK 1. What are three elements of motivation? persistence.

Answer: Behavioral choice, intensity, and

2. How do different theories explain motivational processes? Answer: Reinforcement theory suggests that people are motivated by antecedents (environmental cues) and consequents (rewards and punishments). Goal-setting theory suggests that individual’s conscious choices explain motivation. Justice theory suggests that motivation is driven by beliefs about fairness. Equity theory suggests that people determine fairness of pay by comparing what they give to and receive from an organization with what others give and receive. Expectancy theory suggests that people are motivated by a combination of three beliefs: valence, instrumentality, and expectancy. Agency theory uses differences in interests of principles (owners) and agents (employees) to describe reactions to compensation.

3. What compensation guidelines can be derived from motivational theories? Answer: A key principle from reinforcement theory and expectancy theory is that compensation should be based on performance so that better performers receive higher pay. Practice of allocating pay so that high performers receive more than low performers is known as pay-for performance. Linking pay to performance can be particularly beneficial when it is part of an overall program of performance assessment, goal setting, and feedback. Goal setting in work organizations can be combined with compensation in many ways. One method is to offer a difficult goal and provide a bonus only to those who achieve it. Another method of linking goals and compensation is to provide incremental rewards for people who achieve progressively higher goals. In this case, employees who achieve an initial, easy goal receive small rewards. Those who go on to achieve more difficult goals receive somewhat larger rewards, and those who accomplish stretch goals receive rewards that are still larger. A third method of combining goals with compensation is to establish a difficult goal and then decide on amount of reward after performance has occurred.

11.4 How Is Compensation Level Determined? (pages 432-438)

• Pay level – amount of overall pay that employees earn in that organization relative to what employees earn in other organizations. ✓ Pay-level strategy organization chooses depends largely on its competitive strategy. ✓ First step in process of determining pay level is to gain information to understand compensation packages being provided by other organizations.

• Pay Surveys (pages 432-436)

✓ To determine appropriate pay level, organization must identify a comparison group. ✓ Obtain data about compensation in organizations that make up the comparison group.

• Pay-Level Strategies (page 436-437)

✓ Next step is to develop pay strategy that determines how high pay should be.

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✓ Meet-the-market strategy establishes pay in middle of pay range for selected group of organizations. ✓ Lag-the-market strategy establishes pay in the level lower than average in the comparison group. ✓ Lead-the-market strategy establishes pay in the level higher than average in the comparison group.

• Linking Compensation Level and Strategy (pages 437-438)

✓ Differences in pay level can be linked to strategic decisions. ➢ Bargain Laborer HR strategies tend to use uniform transactional compensation, which focuses on reducing labor costs. ➢ Free Agent HR strategies use variable transactional compensation to attract top performers. ➢ Internal labor strategies emphasize development of long-term relationships rather than focusing on money. ➢ Committed Expert HR strategy has more of lead-the-market orientation than those pursuing a Bargain Laborer HR strategy.

CONCEPT CHECK 1. How do organizations use results of pay surveys? Answer: Pay surveys provide information about how much other organizations are paying employees.

2. What is key difference between meet-the-market, lag-the-market, and lead-the-market pay level strategies? Answer: Meet-the-market strategy establishes pay that is in average or middle of pay range for selected groups of organizations. Organizations that adopt a meetthe-market strategy seek to attract and retain quality employees but do not necessarily use compensation as a tool for maintaining a superior workforce. Lag-the-market strategy establishes a pay level that is lower than average in comparison groups of organizations.

Lead-the-market strategy suggests that organizations seek to pay most employees more than they would be able to earn in a similar position in another organization. Labor cost for each employee may be higher in organizations, but they expect higher cost to be offset by higher performance and lower turnover.

11.5 How Is Compensation Structure Determined? (page 438-441)

• Pay level is concerned with how compensation differs across organizations.

• Pay structure focuses on how compensation differs for people working in an organization.

• Job-Based Pay ✓ Focuses on evaluating differences in tasks and duties associated with various positions. ✓ People who have more difficult jobs will be paid more. ✓ A skill-based pay system focuses on directly evaluating differences in the skills and abilities of employees and pays for those specific set of skills. ✓ Approach typically uses point system that assigns a numerical value to each job.

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➢ Hay System evaluates jobs in terms of four characteristics: know-how, problem solving, accountability, and working conditions.

▪ Points assigned on each dimension are added together to create a numerical score that represents the value of the job.

▪ Jobs are arranged along a continuum from positions assigned low to high point values.

▪ Jobs with similar point values grouped together into categories (pay grades).

▪ A range is created around each midpoint so pay for everyone performing jobs worth a certain number of points falls within the range.

▪ Individuals’ level of compensation within the range is determined by things such as experience and performance level. ➢ Some organizations adopt narrow categories so each pay grade includes a few jobs. ➢ Broadbanding has fewer categories; each category includes a broader range of jobs. ✓ Job-based pay systems advantages: ➢ Use of point system provides a clear method for controlling and administering pay. ➢ Centralized HR personnel conduct surveys and establish guidelines for determining how much to pay each employee. ➢ Pay practices that are job-based appear to be very objective. ✓ Job-based pay systems disadvantages: ➢ Centralized control. ➢ Employees at the top of a pay range can only receive higher compensation if they are promoted into a position worth more points. ➢ Individuals try to get current positions reevaluated and valued with higher points, so they will receive higher pay, even though tasks performing have not changed. ➢ Inflexibility and resistance to change. ➢ Difficult to hire new employees who require a wage that is above established range. ➢ Little incentive for employees to learn new skills not part of formal job duties.

• Skill-Based Pay (441-442)

✓ Focuses on directly evaluating differences in skills and abilities of employees. ✓ Employees might be paid for having certain set of skills, even if tasks an employee normally performs do not require those skills. ✓ System shifts emphasis away from jobs and focuses on skills that workers possess. ✓ Primary objective is tying pay increases to development of skills useful to organization. ✓ Skill-based pay disadvantages: ➢ Payroll costs tend to be higher. ➢ When employees master highest skill set they have no room for advancement. ✓ Skill-based pay benefits: ➢ Increased emphasis on skill development provides better-trained workforce. ➢ Greater flexibility in production processes. ➢ Helps to build culture that supports participation and employee self-management. ➢ Skill-based pay linked to higher organizational productivity.

• Linking Compensation Structure to Strategy (page 442)

✓ Free Agent HR strategies use variable transactional compensation. ✓ Loyal Soldier HR strategy uses uniform relational compensation. ✓ Committed Expert HR strategy uses variable relational compensation.

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✓ Bargain Laborer HR strategies uses job-based pay.

CONCEPT CHECK 1. How does job-based pay use points to decide how much to pay each employee? Answer: Point system assigns numerical values to each job in order to compare value of contributions within and across organizations.

2. What factors do organizations using skill-based pay use to determine how much to pay each employee? Answer: A skill-based pay system shifts emphasis away from jobs and focuses on skills that workers possess. In essence, this system pays people relative to their value rather than relative to value of current position. Employees are paid more when they develop more skills. Primary objective is to encourage development of skills linked to overall strategic direction of organization.

3. How do job-based pay and skill-based pay fit with HR strategies? Answer: Skill-based is useful for many organizations pursuing Free Agent HR strategies. Internal equity is not critical, and people with better skills are paid substantially more than people with limited skills. Skill-based pay also can be beneficial for those pursuing a Loyal Soldier HR strategy.

Giving everyone an opportunity to learn new skills and advance to higher pay levels builds a sense of teamwork. Linking pay to skills needed by an organization also forms stronger ties between employees and the organization, which creates uniformity. Job-based pay is most closely aligned with Committed Expert HR. Emphasis is on long-term employment relationships, making internal equity and opportunity for promotion important in these organizations. Compensation is based on length of time with the organization and type of input contributed, but a sense of equity is retained. Job-based pay is also beneficial for organizations with Bargain Laborer HR strategies. Overall objective is to minimize labor cost by paying people only for contributions or skills they provide and not for skills in other areas.

11.6 How do Government Regulations Influence Compensation? (pages 443-447)

• Fair Labor Standards Act (FLSA) (pages 443-447)

✓ Law establishes national minimum wage, regulates overtime, requires equal pay for men and women, and establishes guidelines for employing children. ✓ Exempt and Nonexempt Employees ➢ Exempt employees not covered by FLSA regulations.

▪ Paid a salary and not required to keep track of actual hours they work.

▪ Executive exemption (primary duties are managing business and supervising).

▪ Administrative exemption (perform office or work directly related to management).

▪ Professional exemption (perform tasks that require special skills and advanced knowledge learned through specialized study).

▪ Outside sales exemption (salespeople who work away from place of business).

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▪ In any of these cases, employees must spend at least 80 percent of workday doing ✓ ✓ ✓ ✓

work activities that qualify them for exemption. ➢ Nonexempt employees are covered by FLSA regulations (paid hourly wage).

Minimum Wage establishes a minimum hourly wage rate.

Overtime (defined as number of hours over 40 during a one-week period) Child Labor (protects those under age of 18 from unsafe and excessive work) Equal Pay ➢ Requires organizations to pay equal wages for equal work. ➢ Applies to executives, administrative professionals, and sales positions that are exempt from minimum wage and overtime rules. ➢ Male and female employees can be paid at unequal rates if basis for difference is seniority or performance.

• State and Local Regulations (page 447)

✓ Regulations cannot contradict federal rules. ✓ Large number of state and local regulations can make it difficult for organizations to keep track of all applicable compensation guidelines. ✓ At a minimum, organizations need to conduct research to determine which federal, state, and local regulations apply to them.

CONCEPT CHECK 1. What types of workers are exempt from FLSA regulations? Answer: Executive exemption applies to workers whose primary duties are managing a business and supervising others.

Administrative exemption applies to workers who perform office or non-manual work that is directly related to management. They must exercise substantial discretion and judgment in work. Professional exemption applies to employees who perform tasks that require special skills and advanced knowledge learned through specialized study. Workers may be exempt from FLSA through outside sales exemption.

2. What compensation issues are covered by FLSA? Answer: Law establishes a national minimum wage, regulates overtime, requires equal pay for men and women, and establishes guidelines for employing children.

3. How do state and local compensation laws relate to federal laws? Answer: State and local governments also create regulations that affect compensation. Under federal law, regulations cannot contradict federal rules. For example, some states have minimum wage laws that have not been updated since last time the federal rate was raised, so that minimum rate they prescribe is below federal rate. When lower than the federal law, the state laws are meaningless because employers must pay higher federal rate. In contrast, other state and local governments have minimum wage rates higher than federal minimum wage.

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Chapter 11 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (pages 448-450) Summaries of each of the five learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives The chapter contains five learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 418 Learning objective 2- page 422 Learning objective 3- page 432 Learning objective 4- page 438 Learning objective 5- page 443

Concept Checks The chapter contains five concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- page 422 Concept 2- page 432 Concept 3- page 438 Concept 4- page 443 Concept 5- page 447

Tables and Figures The table and figures presented in the chapter help illustrate the concepts of the chapter. They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 11.1- page 430 Principles for Increasing Motivation through Compensation Table 11.2- page 444 Common Exemptions to the Fair Labor Standards Act

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Figure 11.1- page 420 Strategic Framework for Employee Selection Figure 11.2- page 426 Equity Theory Figure 11.3- page 427 Expectancy Theory Figure 11.4- page 433 Sample BLS Pay Survey Results Figure 11.5- page 435 Pay Survey Results for Training Professionals Figure 11.6- page 439 Job-Based Pay for Management Accountants Figure 11.7- page 441 Skill-Based Pay A Manager’s Perspective (pages 414-415), What do you think? (page 415), and A Manager’s Perspective Revisited (page 447-448) The chapter starts with a short scenario where Lynette is thinking about the new changes in pay decisions. Five true/false questions related to this scenario and the chapter topics are noted on page 415 and answered on page 448.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what additional questions Lynette should ask.

During the discussion of the chapter material, you could refer to the questions noting that a certain section or discussion point addresses one or more of the questions.

You may wish to address the questions at the end of discussing the chapter. You may want to bring the students’ attention to these questions, informing the students that they will be asked to answer the questions near the end of the chapter discussion. At that time, students (individually or in groups) could be asked to explain why the answers are true or false. Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

Building Strength Through HR: Marriott International, Inc. (page 418) This special feature highlights several issues noted in this opening case regarding Marriott (refer to pages 416-418). This case illustrates the benefits of effective compensation.

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The inset box (refer to page 418) presents some of the compensation practices mentioned in the case but not all. Therefore, you could ask the students what other HR practices appear to contribute to Marriott’s success (e.g., earlier eligibility for benefits, market-based pay for specific geographic areas). The discussion should address what they did and why specific compensation techniques appear to be working. The students also should be encouraged to discuss the effectiveness of obtaining and analyzing a great deal of data to determine why employees leave. Much of the changes in compensation has been based on these and similar analyses. The discussion could be supplemented by students familiar with the Marriott.

Supplemental information also could be provided by a student responsible for updating the case and finding relevant information from the organization’s website or other sources. You should inform the students of any school policies that address contacting organizations.

A discussion of the case could be accomplished through guided class or group discussion or briefly mentioned in a mini-lecture to show relevance to the chapter topics. Additional ways to address the opening case could include individual students or teams of students presenting the main points and how the case answers the opening question of that section. This opening case also could be used as a topic for a more comprehensive assignment due later in the term.

How Do We Know? Do Contingent Rewards Really Improve Performance? (page 424 ) This inset box is briefly mentioned in the chapter. Suzanne Peterson and Fred Luthans investigated whether compensation can be used as a tool to increase the performance of fast-food workers. Some of the fast-food restaurant managers were trained to use contingent rewards for employees. The researchers found that the restaurants that used contingent rewards had faster drive-through times and higher profits.

The class could be encouraged to read the details in the inset box. During the lecture or class discussion of the chapter, the study, conclusions, and recommendations could be summarized.

This could be accomplished through your lecture (asking for student input) or by assigning the box to an individual student. You or the student could lead a brief class discussion after presenting the facts.

Regardless of who presents the information, the students could be asked who has experience with fast food restaurants or similar type work and asked if they agree that contingent rewards would be more motivational than rewarding all employees the same merit pay. They also could discuss why the contingent rewards improved performance of the employees and why the positive effects of contingent rewards appeared to have a long term positive effect on performance. The students also could be asked what other rewards might appeal to people in fast food restaurants or similar types of work who are performing at high levels (e.g., flextime, time off work, discount coupons, employee of the month).

Other ways to address this information could be through a short written assignment or a more indepth research paper on the topic.

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Technology in HR: Be Careful When Obtaining Information (page 434) This inset box is briefly referenced on the next page of the chapter (refer to page 435). This box summarizes advantages and disadvantages of the availability of salary information on the Internet. These are discussed from the standpoint of managers and employees. Organizations are advised to communicate the sources of their salary data and explain why free Internet data may provide an inaccurate picture of compensation.

The brief information presented in this box could be referred to during a lecture. Students could be asked to outline a written communication to employees that addresses the above-noted advice to employers. This could be done in in-class groups or as an individual out-of-class assignment.

The students could compare their written communications to those of others on the basis of topics covered, introduction to the sensitive topic, tone of communications, conclusions, etc.

They also could be asked to suggest how best to deliver this written communication to the employees (e.g., e-mail, newsletter, paper memo, blog).

A web-based activity is described at the end of this chapter in the Instructor’s Manual.

Building Strength Through HR: The Container Store (page 437) As noted on the next page of this chapter, this inset box illustrates how The Container Store utilizes above-average pay rates and payroll technology to encourage high levels of performance and lower turnover.

You could briefly mention this inset as an example in your mini-lecture or ask the students to briefly describe the main points presented in the box. You could ask the students if any of them are employed by The Container Store and, if so, they could discuss their experiences with the compensation system. Then you could ask the students to discuss the following questions: (1) Is The Container Store a cost leader or differentiator? (2) Is external or internal equity (or a mix) a more important consideration when designing the pay rates? Would the answer to this depend upon the level and type of job? (3) How does The Container Store keep its prices competitive when they pay 50-100 percent above the average wage and have generous benefits? (4) What other HR practices might be necessary for the compensation and access to payroll technology to be effective?

How Do We Know? Do People Lose Sleep Over Pay? (page 446) This inset box discusses the stress factors involved when someone’s pay is cut. Using a research base of 625 nurses throughout four hospitals, Jerald Greenberg investigated the effects of adding responsibilities to the nurses and reclassifying their positions as exempt, which meant the nurses were no longer able to receive overtime. Greenberg then studied the resulting sleep habits within each of the four nursing groups. His findings indicate that a reduction in pay can cause stress that leads to undesirable consequences such as poor sleep.

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The information reported in the inset box could be part of a lecture or class discussion. You could ask the following questions of the students: (1) Why might a pay cut cause loss of sleep for nurses? (2) Are the conclusions of this study relevant to business and other non-medical-related organizations? (3) What about college students?

KEY TERMS (page 450) Agency theory 428 Broadbanding 440 Contingency 424 Distributive justice 427 Employee compensation 416 Equity theory 426 Exempt employees 443 Expectancy 428 Expectancy theory 427 External equity 419 Fair Labor Standards Act (FLSA) 443 Goal-setting theory 425 Instrumentality 428 Internal equity 419 Job-based pay 438 Justice theory 426 Lag-the-market strategy 436 Lead-the-market strategy 436 Market-based pay 417 Meet-the-market strategy 436 Minimum wage 445 Motivation 423 Nonexempt employees 443 Overtime 445 Pay-for-performance 424 Pay level 432 Pay survey 432 Point system 438 Procedural justice 427 Reinforcement theory 423 Relational commitment 420 Salary compression 422 Skill-based pay 438

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Transactional commitment 420 Uniform rewards 420 Valence 428 Variable rewards 420 DISCUSSION QUESTIONS (page 450) 1. Why would an organization such as Marriott choose to pay wages that are higher than the wages paid by competitors? Answer: To attract, retain, and motivate their employees.

2. How might you react if you learned that a co-worker who is new to the organization makes more money than you, even though you have five years’ experience? What theoretical perspectives explain your reactions? Students’ answers will vary.

3. In organizations where you work, or will work, would you prefer compensation to be variable or uniform? Why? Students’ answers will vary.

4. What things other than compensation might encourage you to have a long career with a specific organization? Students’ answers will vary.

5. How would you react if you learned that your professor was going to pay $100 to the two individuals with the highest scores on the next exam? Would your study effort change?

Would your enjoyment of the class change? Students’ answers will vary.

6. Under what conditions might an organization choose a lag-the-market pay strategy? One answer is an organization might choose this strategy when they are trying to keep costs low.

7. Which do you think is most fair: job-based pay or skill-based pay? Why? Students’ answers will vary.

8. Do you think child labor laws are really necessary in modern countries like the United States? Students’ answers will vary.

9. Do minimum wage laws help society? Why or why not? Do you think the current minimum wage is set at the right level? If not, what do you think a fair rate might be? Students’ answers will vary.

10. What specific aspects of compensation are most appropriate for an organization with a Loyal Soldier HR strategy? Answer: Uniform relational compensation supports the Loyal Soldier HR strategy because it provides similar rewards to all employees while building a sense of commitment to the organization. With uniform relational compensation, pay increases are usually linked to time with the organization. Employees are rewarded for remaining loyal and not leaving to accept positions with competitors. Long-term forms of compensation other than salary, such as health insurance and retirement benefits, are particularly helpful in building the employee commitment that is necessary for success with the Loyal Soldier HR strategy. What characteristics are most closely aligned with a Free Agent HR strategy?

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Answer: Organizations with a Free Agent HR strategy use variable transactional compensation because it provides strong monetary incentives for high performers with somewhat rare skills. Short-term salary and bonuses are emphasized more than future rewards, such as retirement savings. Top performers are paid well, and individuals who succeed at risky ventures receive substantial rewards.

EXAMPLE CASE: Delphi Corporation (pages 451) Questions: 1. How does equity theory explain the UAW’s reactions to the proposed compensation plan?

Answer: In regard to distributive justice the workers might believe their outcomes for their hard work prior to the job cuts are unfair (i.e., loss of jobs or wage cuts from an average of $26 to about $12.50 per hour). This perception would be exacerbated if the top executives (who made the decision to cut wages and jobs) receive cash and bonuses valued at more than $500 million.

How does equity theory explain Delphi leadership’s defense of the compensation proposal?

Answer: Delphi wants to promote high levels of future performance (by top executives) by offering what they believe is a fair reward for the complicated task (inputs) of bringing the organization out of bankruptcy.

2. What type of competitive strategy does the proposed compensation plan best fit? Answer: Free agent. How would the proposal affect pay structure within Delphi? Answer: They would have a variable transactional structure paying for the top executives’ skills in accomplishing the task of bringing Delphi out of bankruptcy.

3. Based on concepts from agency theory and expectancy theory, how might the compensation proposal motivate executives? Answer: According to Agency Theory the owners are trying to encourage the top executives to take on the risk of trying to bring Delphi out of bankruptcy and receive higher rewards when they do the things that increase value for owners and shareholders. According to Expectancy Theory, the executives would maximize their efforts in bringing Delphi out of bankruptcy because the rewards are greater for that level of performance (additional $87.9 million for 486 US executives).

4. What procedural justice issues have been violated by Delphi’s proposal? Answer: It may be perceived that favoritism is being given to top executives. Delphi did not appear to ask for employee participation in decisions about how rewards will be allocated, and they might not allow for appeal from the workers who believe they are being mistreated.

What would you recommend for a compensation plan at Delphi? Students’ answers will vary.

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DISCUSSION CASE: Joe’s Hamburger Grill (pages 451-453) Questions: 1. What are some suggestions that might help Joe as he thinks about changing the way he pays someone to manage the Grill? Answer: He should consider applying the concepts of the various motivational theories described in the chapter (e.g., Agency, Expectancy, and Goal Setting Theories). He also needs to decide which HR strategy would be appropriate for this situation and his long term plans of selling to a loyal, high-performing manager.

2. Do you think Joe’s approach to determining how much to pay a manager was successful?

Answer: No. Would you recommend that he do something different? Answer: He could locate salary survey data relevant to restaurants and could access some online salary data bases (e.g., Occupational Outlook Handbook, Salary.com, O*NET on-line).

3. How might agency theory guide Joe as he thinks about finding a manager who might someday become the owner of the Grill? Answer: It sounds like Joe wants the new manager to bear some of the risk for the success of the restaurant. That person would most likely only be willing to assume that risk if he or she thought there was a chance to become the owner of the (successful) Grill. A general principal of agency theory is thus that wage rates should be higher when employees bear risk. For this reason, incentive plans that pay for performance are only effective when they give employees the opportunity to earn more than they could earn with fixed wages, such as hourly pay. In this case, Joe might want to think how to include in the compensation plan something that addresses the possibility of future ownership contingent upon the manager’s high performance and “loyalty.”

4. How can the concepts of equity theory guide Joe’s decisions concerning comparisons with pay in other cities and for other jobs? Answer: Basically, Joe needs to determine a fair compensation package that rewards high levels of performance and loyalty (inputs). He should be willing to explain the process and his thinking when communicating the pay package to a manager and, if feasible, encourage the manager’s input to what he or she thinks would be a fair compensation package. Employees (and managers) who see the organization as more fair tend to have higher levels of satisfaction and commitment, as well as higher individual performance.

5. How might FLSA standards apply to Joe’s compensation decisions? Answer: The manager would be classified under the executive exemption which applies to workers whose primary duties are managing a business and supervising others. Exempt employee can be paid a salary and, in most cases, are not required to keep track of the actual hours they work. To qualify for this exemption, this manager must spend at least 80 percent of his or her workday doing work activities that qualify the manager for the exemption. Of course, he should keep the ideals of the Equal Pay Act in mind.

EXPERIENTIAL EXERCISE: Conduct a Pay Survey Using BLS Data (page 453) Questions: Students’ answers to the following will vary.

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1. Which job has pay that is most similar across the geographic areas?

2. Which geographic area has the highest pay level?

3. What do you think accounts for differences in pay level across geographic areas?

4. Why is pay higher in a geographic area for some jobs but not others?

5. What concerns would you have about using these data to actually determine how much to pay employees in the jobs you identified?

INTERACTIVE EXPERIENTIAL EXERCISE: How Much to Pay: Finding the Right Balance at SuperFoods (page 453-454) Access the companion website to test your knowledge by completing a SuperFoods interactive role play exercise.

ADDITIONAL WEB-BASED ACTIVITIES Overview of activity Compare various sources of online salary information.

Exercise: Students should select a common job and compare compensation data related to the job that is presented on 2 or more online compensation websites. The comparisons could address the types of information presented, similarity/differences of the salary information presented, whether the sources are credible, and which website they prefer (and why).

Links to relevant information Caution the students that some of the following or other salary related websites might charge a fee. You may want to encourage them to not access those websites that would cost.

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salary.com wageweb.com O*NET (online.onetcenter.org) Occupational Outlook Handbook (www.bls.gov/oco) wetfeet.com

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Chapter 12 Designing Compensation and Benefit Packages Chapter 12 Learning Objectives 1. Describe basic elements of a compensation package.

2. Explain different features of base pay and employee benefit plans.

3. Explain various types of individual incentives, including strengths and weaknesses of each form of incentive.

4. Explain various types of group and organizational incentives, including strengths and weaknesses of each form of incentive.

5. Create compensation packages that align mix of individual, group, and organizational incentives with HR strategy.

Chapter 12 Outline 12.1 How Can a Strategic Compensation Package Make an Organization Effective? (pages 458-460) ✓ A compensation package represents the mix of rewards employees receive from the organization. ✓ Money paid as wages or salary is the largest component of most compensation packages. ✓ Employee benefits such as health insurance and retirement savings also are part of a compensation package.

12.2 How Do Compensation Packages Align with Strategy? (pages 460-464) •

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Compensation practices help reduce labor costs, which can help organizations produce and sell goods at lowest possible price. ✓ Practices that best support this low-cost strategy may be different from practices that are best for a company pursuing another strategy. ✓ Must carefully consider strategic objectives when designing a package of wages and benefits.

At-Risk Compensation (pages 460-461) ✓ At-risk pay is compensation that can vary from pay period to pay period. ➢ Employee earns at-risk pay if performance objectives are met. ➢ Relates to motivational theory. o Reinforcement theory and expectancy theory suggest motivation is higher when pay is at risk. o Most compensation packages include some at-risk and guaranteed rewards.  Differentiators seek to hire and retain high performers. ➢ Succeed by encouraging employees to exceed minimum expectations. ➢ Typically place high proportion of pay at risk.

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Cost leaders prefer employees make consistent contributions. ➢ Consistency is encouraged by rewarding employees who loyally complete basic tasks. ➢ Relatively low percentage of at-risk pay is common.

Line of Sight (pages 461-462) ✓ Another element of strategic compensation packages concerns employees’ perceptions of ability to influence important outcomes. ➢ Motivation increases when rewarded for outcomes within their line of sight. ➢ More distant for group projects. ➢ Expectancy theory suggests people are motivated only when they believe efforts results in higher performance. ➢ Justice theory points out that motivation is higher when people believe individuals with greater inputs receive better rewards. ✓ Effective compensation packages incorporate the principle of line of sight. ✓ Line of sight does not relate consistently to basic HR strategies.

Common Elements of Compensation Packages (pages 463-464) ✓ Compensation packages should be adapted to fit unique needs of organization. ➢ Common compensation elements across organizations: o Base pay is compensation not at risk and may consist of hourly wage or annual salary.  Gives sense of security and provides minimum guaranteed reward for joining organization.  Not contingent upon performance. o Employee benefits are rewards other than monetary salary and wages.  Organizations are required by laws and tax regulations to provide similar benefits to all employees.  Represent long-term compensation that builds loyalty.  Valuable for organizations with internal labor orientation. o Individual incentive based on personal performance of employee.  Can easily be linked to performance behaviors and outcomes.  Have a clear line of sight which makes them powerful motivators.  Must be carefully structured to encourage personal effort without destroying group cooperation. o Group incentive based on collective performance of team or organization.  Encourages cooperative effort.  Must encourage individuals to contribute maximum effort. ✓ Decide how much of overall compensation will be guaranteed and at risk.

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CONCEPT CHECK 1. How do guaranteed and at-risk compensation differ? Answer: At-risk pay is compensation that can vary from pay period to pay period. The money is at risk because the employee will not earn it unless performance objectives are met. Guaranteed compensation is not contingent upon performance.

2. What is meant by the compensation term line of sight? Answer: The extent to which employees can see that their actions influence the outcomes used to determine whether they receive a particular reward.

12.3 What Are Common Approaches to Base Pay? (pages 464-466) • Base pay is compensation provided for time worked and is not contingent on individual performance. ✓ Provides employees with stability. ✓ Base pay is simple to calculate. ✓ Most organizations combine base pay with other incentives.

• Two basic methods for allocating base pay: ✓ Job-based analysis. ➢ Each job is evaluated with a point system; higher level jobs worth more points. ➢ Appear less biased and provide employees with higher compensation when tasks require more knowledge and skill. ✓ Skill-based analysis: ➢ Skill sets defined by number of tasks employee can perform. ➢ Those able to perform more tasks paid higher base wage. ➢ Provide employees incentives to learn new skills.

• Regardless of which method, organizations must establish a base pay rate. ✓ Lead-the-market strategies establish higher compensation level than lag-the-market. ➢ Organizations that seek innovation and higher individual performance place a larger percentage of compensation at risk. ➢ Base pay usually higher percentage of overall compensation when pursuing Bargain Laborer and Loyal Soldier HR strategies.

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CONCEPT CHECK 1. How do the strategic pay-level concepts of lead-the-market and meet-the-market influence base pay decisions? Answer: Organizations with lead-the-market strategies will need to establish a higher compensation level than organizations with meet- and lag-the-market strategies.

2. How does the amount of base pay in organizations with a Loyal Soldier HR strategy compare with the amount of base pay in organizations with a Free Agent HR strategy? Answer: In general, organizations that seek innovation and higher individual performance place a larger percentage of total compensation at risk. This means that base pay is usually a higher percentage of overall compensation in organizations that pursue Bargain Laborer and Loyal Soldier HR strategies.

12.4 What Are Common Employee Benefit Plans? (pages 466-475) • Two broad categories: 1) benefits required by law and 2) benefits that organizations voluntarily provide to employees.

• Benefits represent approximately 30 percent of organization’s labor costs. ✓ Favorable tax rules explain most of trend toward increased employee benefits. ✓ Providing good benefits helps organization attract and retain quality employees.

• Legally Required Benefits (pages 467-471) ✓ Designed to protect people from hardship associated with not being able to work and earn a living. ✓ In most cases, must be given to all workers in specified amounts. ✓ Social Security ➢ The Social Security Act created a social security system in which workers pay into a fund and then draw from fund when they retire. ➢ Upon retirement, participants receive a monthly payment. ➢ Original age of eligibility was 65; now eligible for partial benefits at age 62. ➢ Spouses & dependent children receive benefits if worker dies before retirement. ➢ Disability insurance created Medicare (provides health insurance to beneficiaries). ✓ Unemployment Insurance ➢ Created incentives to states to provide workers with unemployment insurance. ➢ Presence of federal guidelines means state programs are highly similar. ➢ To qualify o Employed for minimum amount of time (usually a year). o Discharged from job for reason outside his or her control. o Not available if quit voluntarily or if fired because of things such as theft or failure to follow organizational rules. o Must demonstrate actively seeking employment. ➢ Benefits o Normally receive weekly sum equal to half amount paid weekly while employed. o Recipients must file frequent claims documenting any earnings or job offers.

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Last for 26 weeks but can be extended when overall rate of unemployment is high enough to suggest it is particularly difficult to find a job. ➢ Funding o With few exceptions in states where employees pay small portion, unemployment insurance is funded entirely by contributions from employers. o Organizations with frequent layoffs (vs. stable) assessed higher rate. ✓ Worker’s Compensation ➢ All states have worker’s compensation programs that provide workers with compensation when they suffer work-related injuries; is no-fault insurance. o A percentage of weekly wages is paid to employees during the time when they are unable to work because of an accident. o Medical expenses and rehabilitation costs paid to injured workers. o Funds are paid to permanently disabled, or to families of workers who die because of a work-related accident. ➢ Amount organizations pay to obtain worker’s compensation insurance depends on nature of industry and accident history of employer. ✓ Health Care Plans ➢ Most large organizations, and many small employers, offer health care plans. ➢ Provide access to medical services. ➢ Majority of company executives believe a good health care plan improves employee health and increases worker productivity. o Historically, companies provided basic insurance that covered expenses for major medical conditions. o Over time, plans evolved to provide coverage for major medical conditions and routine health care. o Escalating medical costs are a crucial concern of most modern organizations, as healthcare represents the largest benefit cost for most organizations. ➢ Health maintenance organizations (HMOs) o Prepaid health plan with a specific health care provider that supplies health services to clients for a fixed rate. o Approximately 30 percent of U.S. population is enrolled in some type of HMO. o Mostly, employers contracts with HMOs to pay fixed amount per person.  Employees must receive care from approved providers only.  HMOs are sometimes accused of rationing services so people do not receive treatments needed.  Many medical providers refuse to participate in HMOs because they receive a lower rate of reimbursement for services. ➢ Health savings accounts (HSAs) o Personal accounts people use to pay for health services. o Money placed into HSA not subject to taxes and used only to pay for approved medical services. o Similar to flexible spending accounts. o Money can be carried over and used in subsequent years. o Usually combined with high-deductible health insurance plans. o Downside:

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Higher insurance/ medical costs, similar to the costs for those enrolled in traditional insurance.  Difficult for people with severe health problems to obtain health care. o In March 2010 legislation significantly altered healthcare in six key areas: 1) By 2014, all individuals, except those with very low incomes, will be required to have health insurance or pay a fine.

2) To help people obtain affordable coverage, health care exchanges will be established within states by 2014.

3) Small businesses with less than 50 employees will receive tax credits when they provide health coverage to their employees.

4) Companies with more than 50 employees must pay a fine unless they provide health insurance coverage to all.

5) Insurance companies cannot cancel or deny coverage to someone who is ill.

6) Children can remain on their parents’ health insurance policy until the age of 26.

Discretionary Benefits (pages 471-474) ✓ Most organizations offer benefit packages beyond the legal requirement. ➢ Offering more than what is legally required provides benefits as a tool for attracting and retaining employees. ➢ Amount of benefits provided as a percentage of compensation must be same at top and bottom of pay scale. ➢ Benefit plans that meet the regulations necessary for tax exemption status are known as qualified benefit plans. ✓ Supplemental Insurance ➢ Life insurance o Most common supplement for about 50 percent of workers. o Pays benefits to families or other beneficiaries when insured individual dies. ➢ Disability insurance o Provides benefits to individuals who have physical or mental disabilities that prevent them from being able to work. o Mostly, pays approximately 60 percent of person’s typical wages. ✓ Retirement Savings ➢ Legally required benefit of social security provides minimum level of savings for all employees. ➢ Many organizations supplement required social security benefit with a discretionary retirement savings plan. o Defined benefit plan: guarantees receipt of a certain level of income based on factors such as salary and number of years worked for organization. o Defined contribution plan  Organization pays monthly into retirement savings account for employee.  Monthly contribution during worker’s career is fixed by organization.  Amount employee receives upon retirement is not fixed—depends on how money is invested. ✓ 401(k): Personal savings accounts for tax-deferred contributions. ➢ In most cases, the organization matches employee contributions.

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Young workers often make mistake of not investing if not required to do so.

Defined benefit and defined contribution plans result in different perceptions of attachment to organization. o Defined contribution plans are highly portable. o Defined benefit plans associated with particular employer and savings are not portable. o Defined benefit programs best for Loyal Soldier and Committed Expert HR strategies. ✓ Pay Without Work: Paid as if worked during a time even though not working. ➢ Over 70 percent of employees receive paid holidays and vacations. ➢ Sick leave: Receive pay when cannot work because of illlness. ✓ Lifestyle Benefits ➢ Younger workers interested in working for organizations that fit lifestyles. ➢ Include doing enjoyable work and balancing work responsibilities with other aspects of life, such as family and leisure time.

Flexible Benefit Programs (pages 474-475) ✓ Allow each employee to choose customized benefits from a menu of options, which are sometimes known as cafeteria benefits. ✓ Customize benefits to maximize value of benefits for each employee.

CONCEPT CHECK 1. What are common types of legally required benefits?

Unemployment Insurance, and Worker’s Compensation.

Answer: Social Security,

2. What benefits are provided by worker’s compensation? Answer: Worker’s compensation provides several specific benefits: percentage of weekly wages is paid to employees during the time when are unable to work because of the accident, medical expenses and rehabilitation costs are paid to injured workers, and money is paid to workers who are permanently disabled or to families of workers who die because of a work-related accident.

3. How do HMOs and HSAs help control medical care expenses? Answer: Under a health maintenance organization (HMO), the provider receives a fixed amount for providing necessary services to individuals who are enrolled in the plan. In most cases, the employer contracts with the HMO to pay a fixed amount per person covered by the plan. Employees who are enrolled in the HMO plan pay a small fee each time they receive health services.

Because the HMO receives a fixed amount from the organization, it will not benefit from providing extra services. A health savings account (HSA) is a personal savings account that an employee can use to pay health-care costs. HSAs usually are combined with highdeductible health insurance plans. A high-deductible insurance plan requires the employee to pay a relatively large sum before the insurance plan pays anything. This helps reduce overspending by providing an incentive to consumers to minimize costs.

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4. What is the difference between defined contribution and defined benefit retirement plans?

Answer: A defined contribution plan is a retirement plan under which the employer and/or employee contribute to a fund for which only the contributions are defined and benefits vary according to the amount accumulated in the fund at retirement. A defined benefit plan is a retirement plan under which an organization provides retired individuals with a fixed amount of money each month; the amount is usually based on number of years employed and pay level at retirement.

12.5 What Are Common Individual Incentives? (pages 476-480) • In addition to base pay, most organizations offer incentives to reward high performers. ✓ Portion of compensation is at-risk and those rewards depend on performance. ✓ Properly designed individual incentives conform to notion of line of sight by linking rewards to actions and outcomes employees believe can influence.

• Piece-Rate Incentives: fixed amount for each piece of output produced. (pages 476-

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477). ✓ Focuses employees’ attention and effort on rewarded actions so other important tasks might not get done. ✓ Most effective when the line of sight is such that an individual has sole responsibility for producing a measurable portion of a good or service. ✓ Most often observed with Bargain Laborer or Loyal Solider HR strategies.

Commissions (pages 477-479) ✓ A commission is a compensation system where the employee receives a percentage of total amount received for each sale. ✓ Shifts some risk associated with low sales to employees. ✓ Overall level of compensation is usually higher with commissions than with salary. ✓ People paid commissions may think of themselves as free agents with little loyalty to an organization. Turnover can be high if alternative sales jobs are available. ✓ Desire to earn commissions drives sales representatives to focus on short-term results. ✓ Those paid with commissions may be unwilling to perform activities that do not directly increase sales. ✓ Straight commission system can present difficulties because income is uneven. ✓ In most cases, sales personnel are compensated with a low base salary plus commissions. ✓ Most appropriate for Free Agent and Committed Expert HR strategies.

Merit Pay Increases (pages 479-480) ✓ Most annual raises contain merit pay increase, which represents increase in base salary or hourly rate linked to performance. ➢ Reward employees for ongoing individual contributions. ➢ Providing merit pay increases result in higher productivity. ✓ Work best with clear and accurate methods for assessing performance. ✓ Need adequate funding for merit pay increase to be motivational. ✓ Represent very small proportion of total pay. ✓ Most common with Committed Expert HR strategy.

Merit Bonuses (page 480) ✓ Given to employee in addition to normal wages.

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✓

Differs from merit increase in that a merit pay increase becomes part of the base pay for next year, while a merit bonus does not. ✓ Merit bonuses present a potentially useful alternative to merit pay increases. ✓ Current trends suggest that merit bonuses are taking the place of merit raises in more and more organizations.

CONCEPT CHECK 1. What are some common problems associated with piece-rate incentive systems? Answer: The strong incentive focuses employees’ attention and effort on the actions that are rewarded, which means that other important tasks might not get done. Setting appropriate standards for the base wage rate and standard production rate is difficult. Problems arise when managers and employees disagree about the assumptions used to determine the appropriate standards. In some instances, workers deliberately work slowly when they know the standard rate is being computed. This allows them to easily produce at a rate higher than the standard rate once it has been set. In other instances, companies raise the standard rate when they feel that workers are exceeding the standard rate too much. Such practices destroy trust between managers and employees and often result in decreased motivation.

2. How is a merit bonus different from a merit pay increase? Answer: A merit bonus differs from a merit increase in that a merit pay increase becomes part of the base pay for the next year, whereas a merit bonus does not. In many cases, merit bonuses are given on a fixed schedule, such as at the end of the year.

12.6 What Are Common Group and Organizational Incentives? (pages 481-486) • Work is increasingly being structured around teams rather than individuals. ✓ Providing individual incentives often destroys teamwork. ✓ Encourage employees to develop sense of ownership in organization. ✓ Include profit sharing and stock plans.

• Team Bonuses and Incentives (pages 481-482) ✓ Linked to collective performance of groups rather than to performance of individuals. ✓ Work best when: ➢ size of group being measured is relatively small. ➢ collective performance can be accurately measured. ➢ management support for program is high. ✓ Goal-based team reward ➢ Provides payment when team reaches specific goal. ➢ Organization agrees to reward the team if it meets a specific performance objective. ✓ Discretionary team bonus ➢ Provides payment when high performance is observed. ➢ No goal set to achieve specific outcome. ➢ Managers provide a reward whenever they think the team has performed well. ➢ Frequency and size of reward are at discretion of manager.

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➢

•

•

•

When award given to team, can be divided among individual team members. o Divide it equally among team members. o Use some form of individual evaluation and provide higher-performing members with a greater portion of reward. ➢ Organizations can reward employees for contributions made to teams.

Gainsharing (pages 483-484) ✓ Sharing financial gains among owners, managers, and regular employees is central issue of gainsharing. ✓ Occurs when groups of workers receive portion of financial return from reducing costs and improving productivity. ✓ Aligns interests of workers with interests of company owners. ✓ Common in manufacturing organizations, where costs and productivity gains can be objectively measured. ➢ Limit plan to those employees with direct influence on product. ➢ After plan is developed, employees become involved in a participative effort to make production more efficient. ➢ If process becomes more efficient, amount of money saved is split between organization and employees. ✓ Not equally effective for all organizations. ➢ Requires cooperation and trust between managers and employees. ➢ Chances of success increase when employees are highly involved in developing and carrying out plan. ➢ Most beneficial in organizations where employees expect long careers. ➢ Best suited for Loyal Soldier HR strategies.

Profit Sharing (page 484) ✓ Incentive payments based on overall organizational profits. ✓ Potential to align interests of employees with interests of owners. ✓ Major problem is line of sight. ✓ Another weakness is employees come to expect bonuses and are dissatisfied in years when no bonus is available. ✓ Strong motivator when employees perceive their efforts influence overall profits. ✓ For Free Agent HR strategy, payout should be frequent. ✓ For Committed Expert and Loyal Soldier HR strategies, may make sense to delay payout as part of a retirement package that builds a long-term bond with employees.

Stock Plans (pages 485-486) ✓ One way to align interests of employees and owners is to make employees owners. ✓ Stock plans transfer corporate stock to individual employees. ➢ Stock options represent right to buy company stock at a given price on future date. ➢ Employee stock ownership plans (ESOPs): organization contributes stock shares to a tax-exempt trust that holds and manages stock for employees. ✓ Effectiveness in motivating individual employees is questionable; line of sight often far removed from organization’s stock price. ✓ Best with HR strategies that encourage long-term employment. ✓ Committed Expert and Loyal Soldier HR strategies tend to incorporate stock plans into compensation plans.

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✓

Organizations with Free Agent HR strategies can use stock plans to attract high performers, but in this case the period of time between receiving the stock award and owning stock should be minimized.

CONCEPT CHECK 1. How does gainsharing determine the extent of a team’s bonus? Answer: Gainsharing occurs when groups of workers receive a portion of the financial return from reducing costs and improving productivity. If a process becomes more efficient, the amount of money saved is split between the organization and employees. A 50–50 split is common.

2. What are some common problems associated with line of sight and organization-level incentives such as profit sharing and ESOPs? Answer: A major problem with profit sharing and ESOPs is line of sight. In many organizations, employees simply don’t feel that their personal efforts will have an impact on organizational profits. Another potential weakness of profit sharing is that employees come to expect bonuses and are dissatisfied in years when no bonus is available. As with profit sharing, line of sight is often far removed from the organization’s stock price.

12.7 How Do Strategic Decisions Influence a Compensation Package? (pages 486-488) • First task is to determine organization’s overall competitive strategy.

• Competitive strategy then drives broad HR strategy. ✓ A number of compensation decisions made to align reward system with strategy. ➢ Set pay level and establish pay structure. ➢ Determine how much at-risk compensation to include. ➢ Specific amounts must be allotted to base pay, benefits, individual incentives, and group incentives.

• Optimal percentage of at-risk compensation depends on overall strategy. ✓ Organizations with a competitive strategy of differentiation seek innovation and recognition of top performers. ✓ Placing high percentage of compensation at risk is common with Free Agent or Committed Expert HR strategies. ✓ Organizations with a cost-reduction strategy prefer to pay employees lower overall wages, which is at odds with need to pay employees more when they assume risk of receiving less compensation if performance is poor. ✓ Organizations with Bargain Laborer and Loyal Soldier HR strategies are therefore likely to have less at-risk compensation.

• HR strategy affects pay level decisions. ✓ Meet-the-market pay level strategies most frequently adopted Bargain Laborer and Loyal Soldier HR strategies. ✓ Differentiators rely on hiring and retaining highly talented employees. ➢ Free Agent and Committed Expert HR strategies often closely aligned with leadthe-market pay strategies.

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➢

Bargain Laborer HR strategies tend to compensate employees mostly in form of base pay, usually minimum-wage compensation. ➢ Loyal Soldier HR strategies offer base pay as a high percentage of overall compensation. ➢ Committed Expert HR strategy fits with higher levels of at-risk compensation. ✓ At-risk pay is often highest in organizations with Free Agent HR strategies.

CONCEPT CHECK 1. What are some common compensation package characteristics associated with each of the four basic HR strategies? Answer: Frequently, Free Agent or Committed Expert HR strategies include placing a high percentage of compensation at risk. In contrast, costreduction strategies pay employees lower overall wages, which is at odds with the need to pay employees more when they assume the risk of receiving less compensation if performance is poor. Bargain Laborer and Loyal Soldier HR strategies are therefore likely to have less at-risk compensation. Meet-the-market pay-level strategies are most frequently adopted by organizations pursuing Bargain Laborer and Loyal Soldier HR strategies. Free Agent and Committed Expert HR strategies are more often closely aligned with lead-themarket pay strategies. Bargain Laborer HR strategies tend to compensate their employees mostly in the form of base pay, usually minimum-wage compensation. Yet some organizations with this strategy do use piece-rate incentives that directly link production and labor costs. Loyal Soldier HR strategies also offer base pay as a high percentage of overall compensation, along with incentives that include piece-rate incentives, gainsharing, profit sharing, and stock options. These organizations also include a substantial number of employee benefits in their compensation packages.

Chapter 12 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (pages 489-490) Summaries of each of the six learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives: The chapter contains six learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 460

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Learning objective 2- page 464 Learning objective 3- page 466 Learning objective 4- page 476 Learning objective 5- page 481 Learning objective 6- page 486 Concept Checks The chapter contains six concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- page 464 Concept 2- page 466 Concept 3- page 475 Concept 4- page 481 Concept 5- page 486 Concept 6- page 488

Tables and Figures The table and figures presented in the chapter help illustrate the concepts of the chapter. They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 12.1- page 484 Rules for Gainsharing Success Figure 12.1- page 464 Combining Compensation Package Elements Figure 12.2- page 474 Percentage of Workers Receiving Benefits Figure 12.3- page 473 Accrual of Retirement Benefits Figure 12.4- page 487 Strategic Compensation Process Figure 12.5- page 487 Typical Compensation Elements A Manager’s Perspective (pages 456-457) What Do You Think? (page 457), and A Manager’s Perspective Revisited (page. 488-489) The chapter starts with a short scenario where Towanda is on her way to meet a small group of sales representatives whom she supervises. She’s on a new task force that has been charged with examining different approaches to compensation and she’s considering their options. Five true/false questions related to this scenario and the chapter topics are noted on page 457 and answered on page 489.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers

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should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what additional questions Towanda should ask.

During the discussion of the chapter material, you could refer to the questions noting that a certain section or discussion point addresses one or more of the questions.

You also may want to address the questions at the end of discussing the chapter. In this case, you may want to bring the students’ attention to these questions informing the students that they will be asked to answer the questions near the end of the chapter discussion. At that time, students (individually or in groups) could be asked to explain why the answers are true or false.

Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

Building Strength Through HR: IKEA (page 459) This special feature highlights several issues noted in this opening case regarding IKEA (refer to pages 458-459). IKEA manufactures and sells Scandinavian furniture at low prices. This case illustrates how IKEA has aligned compensation practices with their competitive business strategy.

The inset box (refer to page 459) presents some of the compensation practices and benefits mentioned in the case but not all. Therefore, you could ask the students what other compensation practices and benefits appeared to contribute to IKEA’s success (e.g., stock options, work-life balance). They also could be asked to suggest what other compensation practices and benefits might be appropriate for a cost reduction strategy. This discussion could be supplemented by students familiar with IKEA. Supplemental information could be provided by a student responsible for updating the case and finding relevant information from the organization’s website or other sources. You should inform the students of any school policies that address contacting organizations.

You could have the class or groups discuss the case, or briefly mention it in a mini-lecture to show relevance of the chapter topics. Additional ways to address the opening cases could include individual students or teams of students presenting the main points and how the case answers the opening question of that section. The opening cases also could be used as a topic for a more comprehensive assignment.

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Building Strength Through HR: Recession (page 462)

Strategically Managing Compensation During a

As noted above this inset box (refer to page 458), this box illustrates how three entrepreneurial companies utilize unique compensation practices.

You could briefly mention this inset as an example of compensation practices and benefits offered by some of the best firms to work for. You could ask the students to describe the benefits for each of the three organizations and speculate why the compensation and benefits create a motivational climate for their employees where they would feel valued. You also could ask which two or three of the noted compensation practices and benefits would most motivate the students and make them feel valued and why. Students could be asked what compensation practices and/or benefits they would prefer more (and why).

Building Strength Through HR: Netflix (page 465) Netflix, as described in the inset box, advertises that it pays an above average wage.

Furthermore, none of the compensation comes in the form of a bonus; it is all guaranteed base pay.

As part of an in-class discussion, consider generating team discussion on the following questions the organization had to answer with regards to setting employee pay based on an individual’s market value: (1) What could the employee get elsewhere? (2) What would the company need to pay for someone to replace the employee? (3) What does the company need to pay to keep the employee?

Students are encouraged to visit the organization’s website at www.netflix.com. By accessing “Jobs” referenced at the bottom of the main page, employment opportunities are discussed as well as the company’s organizational culture in a series of presentation slides.

Building Strength Through HR: Burton Snowboards (page 475) As noted just above the inset box (refer to page 475), lifestyle benefits are an important part of Burton Snowboards’ compensation practices.

You could briefly mention this inset as an example of lifestyle benefits and have the students be responsible for reading the inset box. If you want to spend more time on this topic, you could ask the students the following questions: (1) Why might these benefits appeal to and motivate workers who know snowboarding? (2) Why is the company willing to risk anyone or everyone taking time off work to snowboard on any one day? How might that affect overall productivity?

(3) What do you think about bringing a dog to work? What related issues might the company need to address (such as dogs must be housebroken, friendly to people and other dogs)? (4)

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What other lifestyle benefits might Burton Snowboards consider offering? Why?

Technology in HR: Enterprise Incentive Management (page 478) This inset box briefly addresses computer software (Enterprise Incentive Management; EIM) that helps organizations manage compensation systems.

The brief information presented in this box could be referred to during a lecture. Students could be asked the following questions: (1) Explain what EIM is and how it is developed. (2) Can the software be customized to meet the needs of various organizations or is it off-the-shelf? (3) How does EIM help organizational decision makers? (4) Does it appear that EIM has long term potential? Why or why not?

The topic in this box could be further researched by students.

How Do We Know? Does How Much You Make Depend on How Much You Weigh? (page 479) This inset box on page 479 addresses the questions: Do people who are overweight make less money than their thinner peers? Is the effect of weight the same for men and women?

Timothy Judge and Daniel Cable sought to answer these questions by examining data from two long-term studies. The first study obtained information from 11,340 German workers. The second study captured measures from 12,686 American workers. In both studies workers reported their weight and salaries over a number of years.

The results suggest that wages and salary decline as weight increases for women. Professors Judge and Cable conclude that this effect is consistent with media portrayals of the ideal woman as being unrealistically thin.

Building Strength Through HR: John Deere (page 482) As noted above the inset box (refer to page 482), the changes John Deere made to their compensation system are described.

You could briefly mention this inset as an example of how an organization’s compensation system may need to be changed so that it better supports the organization’s strategy. Students could be asked to discuss the following: (1) What was the major focus of the compensation system that was in effect prior to 1997? (2) What changes were made to the compensation system that was in effect prior to 1997? How did this change the way employees worked? (3) What other aspects of gainsharing most likely are included in their new compensation system?

Why might these contribute to increasing productivity and decreasing costs at John Deere? (4)

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What additional compensation practices and benefits might reinforce the gainsharing compensation at John Deere? Why? (5) Would you like to work in a gainsharing compensation system? Why or why not?

KEY TERMS (pages 490-491) At-risk pay 460 Base pay 463 Base wage 476 Commission 477 Compensation package 458 Defined benefit plan 472 Defined contribution plan 472 Disability insurance 471 Discretionary team bonus 481 Employee benefits 463 Employee stock ownership plan (ESOP) 485 Flexible benefit program, or cafeteria benefits 474 Gainsharing 483 Goal-based team reward 481 Group incentive 463 Healthcare plan 469 Health maintenance organization (HMO) 470 Health savings account (HSA) 470 Individual incentive 463 Life insurance 471 Line of sight 461 Merit bonus 480 Merit pay increase 479 Pay without work 474 Piece-rate incentive 476 Profit sharing 484 Qualified benefit plan 471 Sick leave 474 Social security system 467 Standard rate 476 Stock options 485 Stock plan 485 Unemployment insurance 468 Vested 472 Workers’ compensation 468 DISCUSSION QUESTIONS (page 491)

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1. What are some specific jobs in which you would be comfortable having a high percentage of pay at risk? What are some jobs in which you would prefer having guaranteed pay? What is the difference between the jobs on these two lists? Students’ answers will vary.

2. What type of person do you think might be attracted to work in an organization that has relatively low wages but extensive benefits? Students’ answers will vary.

3. Do you think social security has benefited or harmed workers? Do you think social security will be available when you retire? Students’ answers will vary.

4. Is it a good idea for the government to give tax incentives to organizations for providing employee benefits? Why or why not? Students’ answers will vary.

5. What makes piece-rate incentive systems such effective motivators? Answer: A person’s pay is contingent on the number of units he or she produces. How does a piece-rate system meet the requirements of expectancy theory? Answer: There is a strong pay-for-performance link.

6. What are some reasons why an organization might use incentives other than commissions to compensate a sales force? Answer: People who are paid commissions may tend to think of themselves as free agents with little loyalty to organization. Turnover can be high if alternative sales jobs are available. Other incentives can help with this and reduce the salesperson’s focus on short-term results and encourage them to perform activities that do not directly increase sales. A low base salary provides a safety net so sales representatives can cover living expenses when sales are low.

7. What principles of motivation make gainsharing such an effective motivational tool?

Answer: It requires a great deal of cooperation and trust between managers and employees (Need Theories). Receiving rewards equal to or fair based on the employees efforts (Equity Theory). Furthermore, chances of success increase when employees are highly involved in developing and carrying out a plan (Expectancy and Reinforcement Theories). Goal-setting theory also explains why gainsharing is effective.

8. Why do organizations continue to provide employees with stock plans even though evidence suggests they have only limited effectiveness for motivating most workers? Answer: They have the potential to align interests of employees and owners by making employees owners.

9. Many news articles discuss high compensation for CEOs. What justification do organizations have for paying CEOs millions of dollars each year? Do you think CEOs are paid too much? Why? Students’ answers will vary.

10. What are the specific elements of a compensation package that you would recommend for an organization with a Loyal Soldier HR strategy? Answer: Loyal Soldier HR strategies typically have less at-risk compensation and emphasize meet-the-market pay-level strategies.

Loyal Soldier HR strategies also offer base pay as a high percentage of overall compensation, along with incentives that include piece-rate incentives, gainsharing, profit

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sharing, and stock options. These organizations also include a substantial number of employee benefits in their compensation packages.

What are your recommendations for an organization with a Free Agent HR strategy?

Answer: The Free Agent HR strategy typically includes a high percentage of compensation at risk and are more often closely aligned with lead-the-market pay strategies. This strategy frequently includes commission-based pay systems, merit bonuses to reward outstanding accomplishments, and profit sharing and stock plans that emphasize near immediate payouts.

EXAMPLE CASE: Best Buy (pages 491-492) Questions 1. Why do you think so many of Best Buy executives opted for Choice 1 or 2? Answer: They are easier to understand. What would you do to encourage more employees to adopt Choices 3 and 4? Students’ answers might include: simplify the plan, show employees how the four plans compare over time and how their performance affects the value added, and explain Choices 3 and 4 better.

2. Does this Best Buy compensation program satisfy line of sight requirements? Answer: No. Which of the four choices do you think has the most direct line of sight? Students’ answers will vary.

3. What additional compensation elements would you add to the Best Buy compensation package? Students’ answers should include: piece-rate incentives, gainsharing, and profit sharing.

DISCUSSION CASE: Collegiate Promotions (pages 492-493) Questions 1. Do you think the compensation system at Collegiate Promotions is effective? Answer: No. 2. Why would a sales representative try to sell at the top of the price range? Answer: To maximize the commission.

Why at the bottom of the price range? Answer: To maximize sales and be more competitively priced than the other salespersons.

Do you predict that most sales are made at the top or bottom of the range of possible prices?

Answer: At the bottom of the range 3. How does the lack of geographically protected sales areas affect salespersons’ behavior?

Answer: Makes them more aggressive, competitive, and potentially frustrated.

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4. How committed do you think the independent contractors are to Collegiate Promotions?

Answer: Not committed to Collegiate Promotions.

What are some positive features of the independent contractor status for the organization?

Answer: No responsibility, no taxes, less paper work, could have good sales in the short term, greater coverage and saturation of territories, etc.

What might be some positive features for the independent representatives? Answer: They can represent multiple organizations thus increasing their potential pay, easy to change companies if a better opportunity comes along, get to set their own schedule and earn as much or little as they want or can, etc.

Would you expect sales representatives to have long-term associations with the company?

Answer: No.

EXPERIENTIAL EXERCISE: Learning Through Interviewing (pages 493-494) Questions: Students’ answers to the following will vary.

Using the information obtained from the interviews, do the following: 1. Identify areas in which the perceptions of the person beginning a career are different from the perceptions of the person near retirement.

2. Analyze these differences. Are there consistent differences that might result from the fact that the individuals are in different career stages? Are there differences that seem more individual and that might result from factors such as personality?

3. Develop a list of specific compensation changes that might be made to increase motivation for each person.

4. Evaluate whether differences in competitive strategies might explain some of the differences suggested by the people you interviewed.

INTERACTIVE EXPERIENTIAL EXERCISE: Is It All About Base Salary? Explaining Compensation Issues at SuperFoods (page 494) Access the companion website to test your knowledge by completing a SuperFoods interactive role play exercise.

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ADDITIONAL WEB-BASED ACTIVITIES Overview of activity Learn more about which benefits are offered by Fortune’s (2008) “The 100 Best Companies to Work for in America.”

Exercise: Students should identify the benefits most often offered by four to five of Fortune Best 100 Companies to work for in America. Such a comparison is possible by accessing the information found on the “Perk-Finder” link on the money.cnn.com website: http://money.cnn.com/magazines/fortune/best-companies/ Alternate Approaches to the Exercise: Students could summarize one or more of the following polls related to Fortune Best 100 Companies to work for in America found on the money.cnn.com website. The students could explain whether or not they agree with the results of the survey. A more in depth written project could involve supporting the main findings of the surveys through recent articles that address the main points of the survey(s).

•Would you prefer more pay or more vacation? http://money.cnn.com/POLLSERVER/results/37002.html •What perk do you wish your company offered? http://money.cnn.com/POLLSERVER/results/37003.html •Is your employer adding or cutting benefits? http://money.cnn.com/POLLSERVER/results/37004.html

Links to relevant information http://money.cnn.com/magazines/fortune/best-companies/ http://money.cnn.com/magazines/fortune/best-companies/2013/perkfinder/

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Chapter 13 Working Effectively with Labor Chapter 13 Learning Objectives 1. Explain how unions and organized labor fit with human resource strategies.

2. Describe the history of organized labor in the United States, and explain how current trends are affecting labor unions.

3. Explain the steps involved in organizing a labor union, and describe managerial actions that are appropriate responses to unionization efforts.

4. Describe the collective bargaining process.

5. Explain the employee grievance process.

Chapter 13 Outline 13.1 How Can Good Labor Relations Make an Organization Effective? (pages 498-500) ✓ A labor union is an organization of workers who work collectively to improve the conditions of their employment ✓ Interactions between employing organizations and labor unions are called labor relations.

13.2 How Are Labor Relations Strategic? (pages 500-503)

• Not all organizations can benefit from cooperative labor relations.

✓ Unions are more prevalent in some industries. ✓ Benefits of unions depend to some extent on competitive strategy. ✓ Gain from partnering with unions when HR practices have overall objective of creating stable workforce where all employees are treated similarly.

• Unions provide employment security and long-term employment.

✓ Powerful labor union can make it difficult for organization to dismiss workers. ✓ Encourage organizations to provide training and better develop specific skills. ✓ Are more compatible with organizations seeking long-term relationships with workers.

• Unions seek to secure fair wages and benefits for all workers.

• Most prevalent, and potentially most beneficial, for Loyal Soldier HR strategy.

✓ Labor costs tend to be higher for unionized organizations but benefits of stable workforce help maintain quality. ✓ Cost-focused organizations can achieve higher productivity by working with unions to reduce costs and create more efficient processes to better satisfy customer needs.

• Difficulties

✓ Free Agent HR strategy has most difficulty with unions. ✓ Unions can create problems for Committed Expert HR strategies as well. ➢ Organizations with unions tend to invest fewer profits into business because higher percentage of profit goes to employees’ higher wages.

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➢ Tend to spend less on research and development, which can be a particular problem when seeking to innovate and differentiate products and services. ✓ Lack of focus on long-term employment relationships makes labor unions somewhat incompatible with Bargain Laborer HR strategies.

CONCEPT CHECK 1. Which HR strategy is most compatible with labor unions? Organizations seeking long-term employment relationships and high levels of equality among workers are most compatible with labor unions. Unions thus seem to be most prevalent, and potentially most beneficial, in organizations pursuing a Loyal Soldier HR strategy.

2. What problems do labor unions pose for organizations with a Free Agent HR strategy?

Typically a union’s goals are the opposite of a Free Agent HR strategy that combines a desire for short-term relationships with an emphasis on recognizing performance differences.

13.3 How Has Organized Labor Evolved over Time? (pages 504-514)

• Rise of labor unions in U.S. is relatively recent.

• Influence of Government Regulations (pages 504-508)

✓ Railway Labor Act (RLA) (1926): Regulated relationships between railroads and unions and still regulates labor relations in railroad and airline industries. ✓ Wagner Act (1935): Gives employees the right to participate in labor unions. ➢ Employees can strike, or collectively refuse to work, to protest unfair labor practices, or seek higher economic rewards. ➢ Prohibits management from engaging in unfair labor practices.

▪ Cannot punish employees who engage in union activities.

▪ Prohibited from dominating or illegally assisting unions.

▪ Prevents management from helping to create a weak union it can easily coerce into complying with management requests. ➢ Employers required to bargain with unions in good faith. ➢ National Labor Relations Board (NLRB): Enforces Wagner Act. ✓ Taft-Hartley Act (1947): Shifted power back toward management interests by creating list of unfair labor practices for unions.

▪ Prohibits labor unions from coercing employees to join.

▪ Requires unions, like management, to bargain in good faith.

▪ Describes procedures for removing a union once it is in existence. ➢ Taft-Hartley Act makes several union practices illegal.

▪ Secondary boycott: occurs when a labor union pressures other businesses to stop purchasing goods and services from the business with which the union has a dispute.

▪ “Featherbedding”: occurs when the union requires the business organization to pay employees wages even though employees are not performing any services.

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▪ Prohibits closed shop.

 Closed shop hires only individuals who are members of particular union.  Union shop does not require union membership as a condition of hiring but does require employees to join the union once on the job.  Agency shop does not require employees to join the union but requires them to pay service fees to the union.  Open shop does not require employees to have any relationship with the union. ➢ Provides states with authority to enact right-to-work laws—laws allowing open-shop arrangements. ➢ Federal Mediation and Conciliation Service (FMCS): agency has mission of preventing or minimizing impact of labor disputes. ✓ Landrum-Griffin Act (1959): Regulates internal workings of unions and protects union members from abuse by corrupt leaders. ➢ Bill of rights for union members. ➢ Requires unions to report on several aspects of inner workings.

• Current Trends in Organized Labor (pages 508-510)

✓ Declining Union Membership ➢ Manufacturing has replaced workers with automated processes. ➢ Manufacturing facilities moved to other countries where labor costs are lower. ➢ Jobs remaining in U.S. are those not traditionally unionized. ➢ Businesses increasingly hostile toward unions and more sophisticated at fighting attempts to unionize. ➢ Declines in union membership are not consistent across all jobs. Most noticeable difference in union representation is between public- and private-sector employees.

▪ Unionized employees in private sector declined from 35 percent in 1950 to 7 percent in 2010.

▪ Percentage of unionized employees in public sector grew over same period. ✓ Unions in Public Sector ➢ Public-sector union activity is regulated by laws of individual states.

▪ Many states limit right of public-sector employees to engage in strikes.

▪ Some states prohibit collective bargaining for public-sector employees. ➢ Number of factors support organizing of public workers.

▪ General desire for voice among public-sector employees.

▪ Improving current work situation is important for public-sector employees, who often have specialized skills not easily transferred to other organizations.

▪ Many public-sector organizations pursue Loyal Soldier HR strategies. ➢ Public-sector unions face obstacles that caused decline of unions in private sector.

▪ Increased pressure to control service costs is pressuring many governments to curtail wage growth.

▪ Public sentiment seems to be shifting toward less favorable opinion of unions.

▪ Many public services are becoming privatized. ✓ Union Responses to Current Trends

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➢ Declines in membership have led unions to rethink many strategies.

▪ Focusing on organizing part-time and professional workers.

▪ Made greater efforts to organize historically disadvantaged workers, such as employees who work in temporary jobs that may last only single day. ➢ Union responses to current trends suggest Committed Expert and Bargain Laborer HR strategies may face more union organization in future.

• International Differences in Organized Labor (pages 510-513)

✓ A key for understanding role of unions is to explore how unions in U.S. differ from unions in other countries. ✓ Unionization around world increasingly relevant for U.S. organizations. ✓ Union Membership Around the World ➢ Overall percentages range from 78 percent in Sweden to 8 percent in France. ➢ 12 percent in U.S. is lower than percentages for many other countries. ➢ Overall percentage organized into unions generally declining throughout world. ➢ Prevalence of unions has increased in Finland, Belgium, Denmark, and Sweden. ✓ Differences Among Countries ➢ Labor unions in U.S. have overall goal of increasing economic well-being of workers.

▪ Focus on “bread-and-butter” issues (e.g., wages, benefits, and job security).

▪ System of unions is modeled after court system, with both unions and management striving to represent rights of constituents.

▪ Although unions in U.S. often support specific political candidates, political activism is not primary purpose. ➢ Unions in some countries similar to unions in U.S, but there are also many countries that are very different.

▪ Unions differ in focus on economic interests.  Unions in some countries organized with primary purpose of increasing wealth of employees they represent.  Unions in other countries place only limited emphasis on advancing employees’ financial interests.

▪ Unions vary across countries in focus on political activities.  Unions in many European nations closely aligned with political parties.  Main emphasis of affiliated unions is promoting a social agenda that advances broad interests of workers.  Increased wages and benefits not primary focus of many union activities.

▪ Unions in some countries emphasize both economic and political perspectives. ➢ Greater acceptance of unions in many foreign countries may affect U.S. as businesses become more global.

• The Effect of Labor Unions on Nonunion Workers (pages 513-514)

✓ Only a small percentage of U.S. workforce is organized into labor unions, but most employees benefit from existence of unions. ➢ Evidence shows unionized workers have higher salaries than non-unionized workers performing similar jobs. ➢ Union employees working for organizations acquired by non-union organizations lose as much as 8 percent of annual earnings.

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➢ Unionization can increase wages for nonunionized workers. ✓ Threat of unionization appears to improve working conditions. ➢ These organizations recognize that dissatisfied employees are more likely to join a labor union, so they work to implement HR practices to meet employees’ needs.

▪ Communicating sense of care and trust for employees is important part of avoiding union organization. ➢ Satisfaction may be equally high in unionized and non-unionized firms. Mere opportunity for employees to unionize, or to leave to join unionized firm where they perceive they will be treated better, appears to help ensure employees are treated fairly, even if those employees are not themselves union members.

CONCEPT CHECK 1. What major laws regulate labor unions? Answer: Railway Labor Act (RLA): federal law passed in 1926 to regulate relationships between railroad companies and unions. Wagner Act: federal law passed in 1935 that created the National Labor Relations Board and provided employees with the express right to organize unions; formally known as the National Labor Relations Act. Taft-Hartley Act: federal law passed in 1947 that regulates union activities and requires unions to bargain in good faith; formally known as the Labor-Management Relations Act. Landrum-Griffin Act: federal law passed in 1959 to prevent corruption and regulate internal union affairs; formally known as the Labor-Management Reporting and Disclosure Act. 2. What are some current trends that are influencing labor unions? Answer: Several factors make it more difficult for unions to organize workers resulting in decline of union membership.

Manufacturing has replaced workers with automated processes and organizations have moved their manufacturing facilities to foreign countries where labor costs are lower. Businesses have become increasingly hostile toward unions and more sophisticated at fighting attempts to unionize. The most noticeable difference in union representation is between public and private sector employees.

Nevertheless, some trends suggest that public-sector unions are currently facing many of the obstacles that caused the decline of unions in the private sector. Increased pressure to control service costs is pressuring many governments to curtail wage growth. Public sentiment seems to be shifting toward a less favorable opinion of unions. Many public services are becoming privatized.

3. How do labor unions in the United States differ from labor unions in other parts of the world?

Answer: The 12 percent figure for the union membership in the United States is lower than the percentages for many other countries. Unions in some countries are similar to unions in the United States, but unions in other countries are very different. One way unions differ is in their focus on economic interests. Unions in some countries (e.g., U.S.) are organized with the primary purpose of increasing the wealth of the employees they represent. Unions in other countries place only limited emphasis on advancing employees’ financial interests. A second way unions vary across countries is in their focus on political activities. Unions in many European nations (e.g., .France and the United Kingdom) are closely aligned with political parties. The main emphasis of affiliated unions is promoting a social agenda that advances the broad interests of workers. Increased wages and benefits are not the primary focus of many union activities.

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13.4 How Do Workers Become Part of a Union? (pages 514-517)

• Union Organizing Campaigns (pages 514-516)

✓ Wagner Act established procedures for organizing workers into labor unions, and NLRB oversees such efforts: ➢ An Authorization Card Campaign allows employees to sign cards stating that they wish to hold a secret-ballot election to determine whether a union will be formed. ➢ A Representation Petition can be filed to the NRLB once 30 percent of eligible workers have signed authorization cards.

▪ A bargaining unit is defined as two or more employees who share a community of interest and may be reasonably grouped together for collective bargaining purposes. ➢ After receiving a petition for representation, the NRLB conducts a union certification vote (Certification Election) that is usually held within 50 days of the petition filing. ➢ The Union Certification is valid if the NLRB determines that at least 50 percent of employees in the bargaining unit voted in favor of the union.

• Decertification Campaigns: Taft-Hartley Act provides guidelines for employees to end their affiliation with the union. (page 516). ✓ A vote to remove a union is known as a decertification election. ✓ Individuals seeking to get rid of the union must obtain signatures of support from at least 30 percent of the employees in the bargaining unit.

• Factors Influencing Union Campaigns (page 517)

✓ Employers generally would prefer not to have an election in first place. ✓ Employees are most likely to support unionizing when they feel powerless, company policies don’t show respect for employees, and management is ineffective. ✓ Union organization efforts more effective when union clearly seeks to meet needs of employees rather than pursuing national political agendas. ➢ Delivering on promises and leaders seen as being in touch with the interests of laborers is more likely to succeed in an organizing campaign. ➢ Emphasize dignity and fairness rather than simply better wages and benefits. ➢ Use person-to-person contacting, whereby employees who support the union personally share the message with friends. ➢ Sense of solidarity comes from joining people similar in race, gender, and religious identification. ✓ Regardless of union organizing strategies, individual employees differ in willingness to support and join labor unions. ➢ Workers with parents who are more supportive of unions are more likely to support unions themselves. ➢ Employees who have had positive experiences with unions are also more likely to vote to participate in a union.

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CONCEPT CHECK 1. What steps are required for employees to be organized into a union? Answer: Authorization card campaign, Representation Petition, Certification Election, and Union Certification.

2. How can employees remove a union once it is in place? Answer: The procedures of a decertifying election are similar to those for certifying a union. Individuals seeking to get rid of the union must obtain signatures of support from at least 30 percent of employees in the bargaining unit. Once enough signatures have been obtained, a petition is filed with the NLRB. The NLRB then holds a secret-ballot election to determine if a majority of bargaining unit employees agree to end representation by the union.

3. What factors influence whether a union organizing campaign will be effective? Answer: Union organization efforts are more effective when the union clearly seeks to meet the needs of employees rather than pursuing national political agendas. In contrast to men, who focus more on money, women support unions when they have confidence that their efforts with the union will truly be effective in making the organization a better place to work. A union that has a record of delivering on promises and has union leaders who are seen as being in touch with the interests of laborers is more likely to succeed in an organizing campaign. Effective union organizing campaigns also tend to emphasize dignity and fairness rather than simply better wages and benefits. In addition, they often use person-to-person contacting, whereby employees who support the union personally share the message with their friends. The sense of solidarity that comes from joining with people similar in race, gender, and religious identification may also increase the likelihood that employees will support organizing a union.

13.5 What Happens During Labor Negotiations and Collective Bargaining? (pages 518525)

• Once a union is recognized, agree on a contract that spells out terms of the relationship

between the organization and workers. Collective bargaining: Agreeing on a labor contract.

• Bargaining Topics (pages 518-519)

✓ Mandatory bargaining topics represent issues NLRB classifies as fundamental (i.e., wages, hours, working conditions). ✓ Permissive bargaining topics are topics that the parties are allowed but not required to discuss. ✓ Illegal bargaining topics are topics that cannot be discussed in negotiation process.

• Work Stoppages (pages 519-520)

✓ Lockouts: Occur when an employer shuts down operations during a labor dispute. ✓ Strikes: Occur when union members collectively refuse to perform jobs. ➢ Can be most damaging to organization. ➢ Boycott – encourage consumers or other companies not to purchase company’s goods or services. ➢ A strike can impose hardships on workers as well as employers.

• Bargaining Atmosphere (pages 520-523)

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✓ Under NLRB guidelines, management and unions must negotiate to create a new collective bargaining agreement each time the previous agreement expires. ✓ Effective labor relations require creation of a positive bargaining atmosphere. ➢ Degree of trust developed during previous negotiations. ➢ Expertise and style of the negotiators. ➢ Negotiators who believe labor-management relationship can be a win-win association more cooperative. ➢ Ability to clearly distinguish distributive and integrative issues.

▪ Distributive issues – where rewards and benefits must be divided among parties.

▪ Integrative issues – result in mutual gains, increasing overall level of rewards and benefits for everyone. ➢ Adopt problem-solving techniques.

▪ Leaders and mediators ensure mutual motivation, which exists when both sides see importance of arriving at cooperative resolution.

▪ Create sense of equality so neither side is allowed to dominate the other.

▪ Leaders and external consultants can provide social support to reduce negative emotions and enhance discussions.

• Interest-Based Negotiation (pages 523-525)

✓ Interest-based negotiation represents an innovative strategy for collective bargaining. ➢ Each side explains factors of most interest. ➢ They work together to find a solution that best satisfies the interests of both parties. ✓ Four steps to interest-based negotiation: ➢ Step 1: Prepare for Negotiations: Interest-based negotiations use data to identify key concerns. ➢ Step 2: Open Negotiations: Each side presents an opening statement listing its major interests, what issues are most important, and clarifying the scope of problems. ➢ Step 3: Negotiate Using Interest-Based Principles: Negotiators discuss interests behind issues, list potential solutions, and identify a set of standards to evaluate the quality of each solution. ➢ Step 4: Communicate Bargaining Results: Management and union representatives work together to create a joint statement that describes the negotiation process and outcome.

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CONCEPT CHECK 1. What topics are negotiated during collective bargaining? Answer: Wages such as minimum salary, bonus payments, and benefits. Other mandatory topics are hours and working conditions. The topic of hours focuses on work scheduling and includes holidays, vacation time, and shifts. Working conditions encompass safety rules, promotions, layoffs, and grievance procedures. Management and union may choose to discuss some issues that are not related to wages, hours, and working conditions. Issues that parties are allowed but are not obligated to discuss are labeled permissive bargaining topics.

2. How is a lockout different from a strike? Answer: A lockout occurs when an employer shuts down operations during a labor dispute. Members of the union are prohibited from working and are not paid. A strike is where union members refuse to perform their job duties as a result of a labor dispute.

3. What steps are associated with interest-based negotiation? Answer: Prep for Negotiations, Open Negotiations, Negotiate Using Interest-Based Principles, and Communicate Bargaining Results.

13.6 What Is the Grievance Process? (pages 525-526) ✓ Grievance: Dispute between employer and employee over terms of employment agreement.

• Grievance Procedures (pages 525-526)

✓ Generally follow multi-step process. ✓ In general, steps move from informal discussions to formal mediation. ➢ Normally begins when employee feels he or she has been treated unfairly and goes to the supervisor with a complaint.

▪ In some cases, initial complaint is made in writing, but in many instances first step is simply a verbal statement to inform the supervisor of a concern.

▪ Majority of grievances resolved at first stage. ➢ If not resolved at first step, employee moves to a step that involves more people.

▪ Employee often obtains help from a union steward (union representative who advocates for employees).

▪ Many unions have a grievance committee and national representatives who get involved if a resolution is difficult.

▪ Department or division managers listen to appeals and HR representatives often play a supporting role. ➢ Final step in most grievance procedures is arbitration (type of judicial process).

▪ Management and union representatives act like attorneys to present facts and arguments supporting each side of disagreement.

▪ Arguments are heard by an arbitrator (neutral third party role similar to judge).

▪ Arbitrator makes a ruling, which is usually binding on both parties.

▪ About 2 percent of grievances actually reach arbitration stage.

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• Determinants of Grievance Filing: (page 526)

✓ Characteristics of individual workers. ➢ People who file have higher rates of absenteeism and more insurance claims. ➢ Younger, male, educated workers working in skilled jobs are more likely to file. ✓ Rates higher when supervisors emphasize production over friendly relationships and when low perceived fairness of supervisors. ✓ Unions initiate grievances to define actions associated with particular jobs.

• Grievance Mediation (page 526)

✓ Many organizations have adopted mediation as step in grievance process. ➢ When mediation is used, occurs just before arbitration. ➢ Similar in some respects to interest-based negotiation.

▪ In most organizations, mediation involves a third party who helps parties work together to arrive at a mutually beneficial resolution.

▪ Process is more informal than arbitration.  Each side presents facts.  No witnesses or cross-examination.  Mediator does not make binding decision.  If do not resolve conflict with mediator’s help, issue goes to arbitration. ✓ Evidence suggests mediation has long-term benefits. ➢ Most organizations see it as an effective way to resolve disputes. ➢ Conflict is generally decreased with mediation, and managers, union leaders, and employees learn effective methods of resolving future disagreements.

CONCEPT CHECK 1. What are the common steps associated with filing a grievance? Answer: Normally begins when an employee complains to a supervisor. If the grievance is not resolved at the first step, the employee often obtains help at this point from the union steward. Many unions also have a grievance committee and national representatives who get involved if a resolution is difficult. From management’s side, additional steps in the grievance process usually involve leaders higher in the organizational hierarchy. Department or division managers listen to appeals, and human resource representatives often play a supporting role. The final step in most grievance procedures is arbitration, which is a type of judicial process.

2. Why do some organizations experience more grievances than others? Answer: Grievance rates are higher when supervisors emphasize production rather than friendly relationships and the perceived fairness of supervisors has an effect. Organizations with procedures that are seen as fairer have lower grievance rates.

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Chapter 13 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (pages 527-528) Summaries of each of the five learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives: The chapter contains five learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 500 Learning objective 2- page 504 Learning objective 3- page 514 Learning objective 4- page 518 Learning objective 5- page 525

Concept Checks The chapter contains six concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- Pg. 503 Concept 2- Pg. 514 Concept 3- Pg. 517 Concept 4- Pg. 525 Concept 5- Pg. 526

Tables and Figures The table and figures presented in the chapter help illustrate the concepts of the chapter. They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 13.1- page 505 Unfair Labor Practices for Management Table 13.2- page 506 Unfair Labor Practices for Labor Unions Table 13.3- page 512 Unions Around the World

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Table 13.4- page 521 Conditions Influencing Cooperation in Negotiations Table 13.5- page 523 Approaches to Collective Bargaining Figure 13.1- page 501 Human Resource Strategy and Labor Unions Figure 13.2- page 507 Right-to-Work States Figure 13.3- page 508 Union Membership in the United States 1950-2010 Figure 13.4- page 509 Union Membership in the U.S. Public and Private Sectors, 19502010 Figure 13.5- page 513 Points of Emphasis for Unions Figure 13.6- page 515 Steps Organizing a Union Figure 13.7- page 524 Interest-Based Negotiation Process A Manager’s Perspective (page 496-497), What Do You Think? (page 497), and A Manager’s Perspective Revisited (page 527) The chapter starts with a short scenario where Jose is thinking about union-related issues (e.g., ongoing strike, picket line, producing during the strike). Five true/false questions related to this scenario and the chapter topics are noted on page 497 and answered on page 527.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what additional questions Jose should ask.

During the discussion of the chapter material, you could refer to the questions noting that a certain section or discussion point addresses one or more of the questions.

You may wish to address the questions near the end of your chapter discussion. In this case, you may want to bring the students’ attention to these questions informing the students that they will be asked to answer the questions near the end of the chapter discussion. At that time, students (individually or in groups) could be asked to explain why the answers are true or false. Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

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Building Strength Through HR: Kaiser Permanente (page 500) This special feature highlights several issues noted in this opening case regarding Kaiser Permanente (refer to pages 498-499). This case illustrates how an organization can have effective, more cooperative relations with their union that can benefit employees, a federation of unions (AFLCIO), and the organization.

The inset box (refer to page 500) presents most of the general practices and benefits mentioned in the case but not all. Therefore, you could ask the students how Kaiser and their alliance of unions (American Federation of Labor and Congress of Industrial Organizations; AFLCIO) interact. For example, top Kaiser executives and union officials meet frequently. Interestingly, the cooperative agreement has resulted in decreased workplace injuries (by over 20 percent), increased employee satisfactions (by 15 percentage points), and cost savings estimated at over $100 million. This discussion could be supplemented by students who have worked for Kaiser Permanente and/or who are members or aware of the AFLCIO. The Experiential Exercise (Investigating the Labor-Management Partnership; page 532 of text) asks the students to access the relevant website to read about the Labor Management Partnership at Kaiser Permanente. The questions associated with the Experiential Exercise are noted at the bottom of this chapter in the Instructor’s Manual. You may want to assign those questions prior to starting the chapter. This way, you and the students could discuss the case and partnership in more detail.

You could guide a class discussion of the main points or you may prefer to briefly mention the highlights of the case in a mini-lecture to show relevance of the chapter topics. Another way to address this case would be to have individual students or teams of students present the main points and how the case answers the opening question of that section.

Building Strength Through HR: MidState Medical Center (page 503) As noted on the page after the inset box, this inset box illustrates how MidState Medical Center works with union members to provide excellent health care.

You could briefly mention this inset in a mini-lecture or you could ask the students to describe how MidState, their employees, and the union benefit from their cooperative relationships.

Students could discuss whether this is possible at all organizations that have unionized workforces and why or why not. Students also could be asked their opinions of the fact that MidState “in some instances operates by bypassing the union and meeting the needs of employees” as noted in the inset box. For example, if management focuses on employee needs, is there still a need for a union? You also could ask the students what other HR practices might be necessary or desirable.

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How Do We Know? Can Unions Make Life Better for Child-Care Workers? (page 511) This inset box is briefly mentioned above the box. This gives a good reason to elaborate on the information presented in the box. Three researchers investigated whether unions can make things better or worse for employees. As described in the inset box, the findings of their study revealed that unions can improve working conditions and provide greater economic rewards for employees in the child-care industry.

The class could be encouraged to read the details in the inset box or read more by accessing the 2002 article. During the lecture or class discussion of the chapter, the study, conclusions, and recommendations could be summarized. This could be accomplished through your lecture (asking for student input) or by assigning the box to an individual student. You or the student could lead a brief class discussion after presenting the facts.

Regardless of who presents the information, the students could be asked the following questions: (1) Why might better wages and benefits be typical outcomes of union membership (versus those of non-unionized organizations)? (2) Are unions necessary for improvements in wages and benefits? Why or why not? (3) How might union membership benefit child-care providers who are better qualified and have more skills since they tended to receive higher pay whether or not they were union members? (4) What factors make the child-care industry a good candidate for unionization? Are there other industries and job categories that might be good candidates for unionization? Explain. (5) Might these results generalize to other industries and other countries (e.g., U.S.)?

Other ways to address this information could be through a short written assignment or a more indepth research paper on the topic.

Technology in HR: Replacing Laborers with Computers (page 520) As noted on the previous page, this inset box addresses union reactions to and benefits of an organization adopting new technology that can displace workers.

The brief information presented in this box could be referred to during a lecture. You could ask the students to discuss these questions: (1) Should unions attempt to stop productivity improvements through technology and other changes that may reduce the number of workers needed in a specific job? Why or why not? (2) In general, what should be a union’s role in regard to improvements through technology and worker rights? (3) In the near (and far) future, do you think technology will replace more jobs than it adds? Will resulting skill levels typically be a mixture of low and high skills as described in the inset box? Explain. (4) What HR-related issues are involved when some jobs and other skilled or unskilled jobs are reduced, abolished, and added?

The topics in this box could provide topics to be researched by students.

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How Do We Know? Does Cooperating with Unions Help Organizations Succeed? (page 522) This inset box is introduced in the paragraph above the box. Stephen Deery and Roderick Iverson studied whether management and the union can cooperate without compromising the position of either party. The researchers concluded that cooperative relationships increased employee commitment and loyalty to the union and organization. This also resulted in increased productivity which included customer service and lower absenteeism.

The information reported in the inset box could be part of a lecture or class discussion. Students could be asked to speculate what types of information management needs to share with the union in order to be seen as more cooperative. They also could discuss which practices a union might assess as being fair.

Finally, you could refer back to information about Australian unions that was presented in the text chapter (refer to page 507). The authors note that only 23 percent of Australian organizations are unionized and they’ve been on a consistent decline since 1970 (now decreased by 27 percent). You could ask the students how this information affects how one might interpret this study in regard to Australian organizations.

KEY TERMS (page 528-529) Agency shop 506 Arbitration 526 Authorization card campaign 514 Bargaining unit 515 Boycott 519 Closed shop 506 Collective bargaining 518 Decertification election 516 Distributive issues 522 Featherbedding 506 Grievance 525 Illegal bargaining topics 519 Integrative issues 522 Labor relations 498 Labor union 498 Landrum-Griffin Act 507 Lockout 519 Mandatory bargaining topics 518 Mediation 526 National Labor Relations Board (NLRB) 505 Open shop 506 Permissive bargaining topics 518 Railway Labor Act (RLA) 504

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Right-to-work laws 506 Secondary boycott 506 Strike 519 Taft-Hartley Act 505 Unfair labor practices 505 Union shop 506 Union steward 525 Wagner Act 504 DISCUSSION QUESTIONS (page 529) 1. If you were a union organizer, where would you focus your efforts? What type of people do you think are most likely to join a union today? Students’ answers will vary.

2. Why have U.S. labor unions and businesses adopted an adversarial approach to labor relations? Why might it be difficult for many to accept and pursue a cooperative relationship? Answer: Relationships between unions and employers are often adversarial.

Each side focuses on getting what it feels it deserves from the other. Such relationships frequently prevent unions and employers from working together to improve overall productivity and customer service. The end result is that unions may be seen as harmful to overall productivity and organizational success.

3. Why do unions pose problems for organizations pursuing Free Agent HR strategies?

Answer: Union’s goals usually are the opposite of a Free Agent HR strategy that combines a desire for short-term relationships with an emphasis on recognizing performance differences.

4. What issues do you think are responsible for declining union membership? Do you believe membership will increase in the future? Why or why not? Students’ answers will vary.

5. Is new legislation needed to better regulate relationships between organizations and labor unions? What legal reforms do you think might be helpful? Students’ answers will vary.

6. Do you think union membership will decrease in the public sector? Why or why not?

Students’ answers will vary.

7. Why do you think fewer union organizing campaigns are successful today than in the past?

Students’ answers will vary.

8. Although you are probably not a union member, think about ways in which unions have influenced your life. What have unions done to improve your life? What have they done to make your life worse? Students’ answers will vary.

9. What do you think causes younger male workers who are highly skilled to file more grievances? Students’ answers will vary.

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10. What issues make some labor strikes more successful than others? What factors do you think make it difficult for the National Hockey League players’ union to be effective in advocating the interests of players? Students’ answers will vary.

EXAMPLE CASE: Energy Co. (pages 529-531) Questions 1. How did the existence of very poor labor relations encourage the partnership? Answer: Because worker-management relations were poor, the workers needed someone (like the union) to intervene and serve as their voice.

2. What competitive strategy do you think is most appropriate for Energy Co.? Answer: Loyal Soldier HR strategy. How do unions fit with this strategy? Answer: Unions support the long term orientation and strive for equality. They can also help with the internal cost focus.

3. How does a cooperative relationship with labor unions influence worker autonomy? Answer: The employees have a say in decision making. Employees determine how management’s goals are achieved. In addition, it supposedly gets all the workers involved.

4. Which of the 13 principles do you think was most difficult for management to accept?

Which principles do you think are most critical for making the partnership work? Students’ answers will vary.

DISCUSSION CASE: Teaching Assistants at State University (pages 531-532) Questions 1. Do you think a union would help resolve the complaints of the teaching assistants? Students’ answers will vary.

2. What makes the position of teaching assistant different from many jobs frequently represented by unions? Answer: Teaching assistants are temporary, part-time jobs (more like an internship); they have no power because they are students; faculty could play politics and not graduate someone. In addition, there is no one supervisor over a group of teaching assistants and some of the problems are with individual faculty (who are not held accountable for inequitable treatment).

3. Do you think the administration’s response is appropriate? Students’ answers will vary.

4. If you were a graduate student at State University, would you vote for the union? Why? Students’ answers will vary.

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EXPERIENTIAL EXERCISE: Investigating the Labor-Management Partnership (page 533) Questions: Students’ answers to the following questions will vary.

1. Are the outcomes of this agreement different from the outcomes of most other labor negotiations?

2. Why do you think Kaiser and the AFL-CIO are so willing to make this agreement public?

3. Do you think this agreement would improve the quality of your work life if you were employed at Kaiser Permanente?

INTERACTIVE EXPERIENTIAL EXERCISE: Unions: Negotiating a New Labor Contract for Mega Manufacturing (page 528) Access the companion website to test your knowledge by completing a Mega Manufacturing interactive role play exercise.

ADDITIONAL WEB-BASED ACTIVITIES Overview of activity Learn more about information available from unions’ websites.

Exercise: Compare the information available for two or more websites. The students could address the following: (1) Which is more helpful to a group who might want to unionize their workplace, a new union member, a continuing union member, and retiring member? (2) Which website is more user friendly and why? (3) What appears to be their main purpose (e.g., political, worker benefits)?

Alternate Approaches to the Exercise: Students could report on the accomplishments of a union (as noted on website) and whether (and how) those have benefited employees, each organization, the union, and the consumer.

You may want to allow students to select different unions. If you have them present some of their findings to the class, you may want to have the students work in small groups on different union websites. Of course, this means that you will need to have each group identify which website (listed below or one they found) they wish to investigate. You may want to limit any duplication of websites to two groups.

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Sample of links to relevant information AFL-CIO: http://www.aflcio.org/ Australian Workers’ Union: http://www.awu.net.au/ American Farm Workers: http://www.ufw.org/ American Postal Workers: http://www.apwu.org/index2.htm United Auto Workers: http://www.uaw.org/ Transport Workers’ Union: http://www.twu.org/ Communications Workers of America: http://www.cwa-union.org/ Culinary Workers’ Union (Local 226): http://www.culinaryunion226.org/ Starbucks’ Workers’ Union: http://www.starbucksunion.org

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Chapter 14 Aligning Strategy with Practice Chapter 14 Learning Objectives 1. Explain the concepts of vertical and horizontal alignment.

2. Identify the specific human resource practices that fit within each of the basic HR strategies.

3. Understand how basic competitive and HR strategies can vary, what role human resources can play in strategy formulation, and why human resource management is important for small organizations.

4. Describe how the field of human resource management is likely to change in upcoming years.

Chapter 14 Outline 14.1 How Can Alignment of HR Practices Make an Organization Effective? (pages 538540) ✓ Bundling HR practices is important. ✓ HR is most effective when various practices work together to create an overall culture of excellence. ✓ Combinations, or bundles, of practices are more valuable than a single good practice in isolation. ✓ A set of good HR practices builds a strong culture.

14.2 What Are Two Basic Forms of Strategic Alignment? (pages 541-543)

• Each HR practice is in alignment when it is in its proper place relative to other practices and strategic objectives. ✓ Vertical alignment ➢ Positioning of HRM strategy in relation to other organizational strategies. ➢ Research supports value of vertical alignment. ✓ Horizontal alignment concerns coordination of parts within organization. ➢ In specific case of HRM, refers to fit of specific practices with other practices. ➢ Research supports benefits of horizontal alignment.

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CONCEPT CHECK 1. How do the concepts of vertical and horizontal alignment differ? Answer: Vertical alignment refers to the positioning of an organization’s human resource management strategy in relation to other organizational strategies. The fundamental issue here is whether an organization’s human resource strategy fits with its competitive strategy. Horizontal alignment concerns the coordination of parts within the organization. In the specific case of human resource management, horizontal alignment refers to the fit of specific practices with other practices.

2. What happens when an human resource practice is not in horizontal alignment with other practices? Answer: Research studies also support the benefits of horizontal alignment.

Firms with consistent bundles of human resource practices have been found to be more effective than firms without consistent practices. Organizations that send inconsistent messages about the value of human resources are less effective.

14.3 How Do HR Practices Align with One Another? (pages 543-554)

• External/Cost: Alignment for Bargain Laborers focuses on creating efficiency with talent obtained from external labor markets. ✓ HR practices focus on minimizing labor costs. ✓ Most employees working in entry-level positions require few specialized skills. ✓ Few workers feel strong organizational commitment. ✓ Work Design ➢ Work is simple so employees with little skill can learn quickly. ➢ Work is structured according to mechanistic approach to job design. ✓ Recruiting and Selection ➢ Recruiting ▪ Designed to identify a large number of candidates.  High turnover creates a need for ongoing applications.  No need for specific skills allows organizations to cast a wide net.  Positive aspects of job highlighted to encourage applicants to accept positions.

▪ Common recruiting methods include referrals, print advertising in newspapers, electronic advertising on commercial websites, and public employment agencies. ➢ Selection ▪ Constantly hire new employees.  Do not need to identify specific skills and abilities.  Employees will not have long career with organization—little need to assess organizational fit.  Mostly, hire dependable employees who are willing to follow instructions.

▪ Common selection methods include cognitive ability testing, physical ability testing, integrity testing, drug testing, and application forms.

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✓ Retention ➢ Frequent turnover of employees is common. ➢ Emphasis on cost reduction often makes it difficult to retain high performers. ➢ Good employees encouraged to stay as long as they will. ➢ Given ongoing need to attract workers, low-performing employees usually allowed to stay employed as long as they meet minimum requirements. ✓ Performance Management ➢ Performance management within Bargain Labor HR Strategy focuses on ensuring employees perform above minimally acceptable level. ➢ Assessments based on absolute standards do not compare employees with each other. ➢ Little emphasis is placed on identifying high performers. ✓ Training and Development ➢ Teaching how to perform specific job duties efficiently is key focus of training.

▪ Training  Focuses on learning how to do things.  Focuses on communicating importance of following company procedures.  Assessed in terms of costs associated with helping employees learn.

▪ Costs minimized by:  Purchasing off-the-shelf training packages.  Reducing travel.  Using current employees as part-time trainers. ➢ Long-term employee development is not common. ✓ Compensation ➢ Compensation levels tend to be relatively low.

▪ Set wage rates at point necessary to attract workers.

▪ Do not offer premium wages.

▪ Compensation for each job depends largely on what individuals can earn in similar jobs at other organizations. ➢ Often use uniform transactional compensation.

▪ Minimizes pay differences among employees.

▪ Acknowledges most employees do not have a strong organizational commitment. ➢ Employees usually paid hourly wage for doing what asked to do. ➢ Some employees receive piece-rate pay tied to individual productivity. ✓ Labor Relations ➢ Major objective of most labor unions is ensuring job security. ➢ Unions are somewhat at odds with Bargain Laborer HR strategy. ➢ Employees less likely to organize or join unions.

• Internal/Cost: Alignment for Loyal Soldiers (pages 546-549) ✓ ✓ ✓ ✓ ✓

Focuses on internal talent development and efficiency.

Develop strong culture of commitment.

Encourage long careers within organization.

Work is facilitated when employees do as asked with a focus on reducing costs.

Work Design ➢ Adopt standardization as a core principle of work design.

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✓ ✓

✓

✓

✓ ✓

✓

➢ Work is structured according to mechanistic approach for job design. ➢ Focus is on determining efficient production processes and encouraging employees to follow prescribed methods of doing things.

Recruiting and Selection Recruiting ➢ Strategies designed to identify current employees who can be promoted and transferred.

▪ Applicants receive a realistic recruiting message.

▪ Internal methods include job posting and electronic advertising within company.

▪ Common external methods for entry level employees include employee referrals, electronic advertising, public employment agencies, and campus recruiting. ➢ Selection ▪ External efforts focus on finding people with personality characteristics that fit with organizational values.

▪ Common methods include cognitive ability testing, personality testing, physical ability testing, drug testing, application forms, and interviewing.

Retention ➢ Employee retention is a major part of Loyal Soldier HR strategy.

▪ Poor performers often transferred to a position that better fits abilities and interests.

▪ Organization continually monitors employee satisfaction and implements programs to improve working conditions.

▪ Organization communicates support and care about employees’ well-being.

▪ Workers embedded by relationships with others in organization.

Performance Management ➢ Used to motivate employees. ➢ Parity-based assessments compare performance against absolute standards and allow everyone to be classified as high performer.

Training and Development ➢ Training is done on the job and focuses on specific procedures for completing tasks. ➢ Ongoing training is important, since employees will rotate through a number of jobs.

Compensation ➢ Focuses on providing rewards for long-term contributions.

▪ Workers with the organization for more time earn higher wages.

▪ Uniform relational compensation provides similar rewards to all employees.

▪ Good benefits help strengthen bond between employees and organization.

▪ Mostly base pay and little is placed at risk.

▪ Organization may use group incentives to encourage cooperation among workers and may offer profit-sharing and stock plans to link employee behavior with longterm organizational interests. ➢ Designed to reward team players who commit to long careers with organization.

Labor Relations ➢ Frequently see unions in organizations pursuing a Loyal Soldier HR strategy.

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▪ Focus is on ensuring long-term employment and equality.

▪ Sense of solidarity that comes from a union adds to the culture of cooperation.

➢ Sense of stability that usually develops can help organizations achieve efficiency through long-term relationships with employees.

• Internal/Differentiation: Alignment for Committed Experts (pages 549-552)

✓ Focuses on creating distinctive products and services with talent developed internally. ➢ Workers encouraged to pursue long-term careers within the organization. ➢ Employees expected to become experts in their chosen fields. ➢ Workers use expertise to innovate and create unique outputs. ✓ Work Design ➢ Emphasize high worker autonomy and reciprocal processing.

▪ Give employees broad responsibilities.

▪ Expect employees to continually coordinate efforts with others.

▪ Skilled employees have freedom to adjust work to fit changing demands.

▪ Workers coordinate efforts and adapt to changing technological innovations and shifting market conditions.

▪ Work is designed around motivational approach to job design. ➢ Focus is on designing work in ways that provide employees with opportunities to innovate and develop ongoing relationships with others. ✓ Recruiting and Selection ➢ Recruiting ▪ Focuses first on internal candidates.  Targeted skills approach, combined with internal sourcing.  Communicates realistic message.

▪ Identify people with specific skills committed to advancing in the organization.

▪ Common recruiting sources  Internal – job postings and electronic advertising in company website.  External – employee referrals and campus recruiting.

▪ Selection  Identify individuals with potential to develop specific expertise over time. ➢ Employees should have ability and interest necessary to develop specific skills during careers. ➢ Employee characteristics fit culture of organization.  Common methods to assess potential and fit include cognitive ability testing, personality testing, assessment centers, biodata, and interviewing. ➢ Retention ▪ Retain high performers and dismiss low performers.

▪ Focus on creating a desirable workplace with satisfied employees.

▪ Discipline and dismissal should be rare. ✓ Performance Management ➢ Success depends on having employees who exceed minimum expectations. ➢ Approach strengthens culture of innovation and creativity. ✓ Training and Development Page 5

➢ Teach specific skills employees need for current jobs.

▪ Continuous improvement of skills produces superior goods and services.

▪ Assessment and feedback programs help employees see where improvement is needed.

▪ Provide guidance and support for employees advancing through organizational ranks. ➢ Help employees develop superior skills which enable them to perform well in current and future positions. ✓ Compensation ➢ Because they seek to hire and retain best workers, overall level of pay is usually higher than at other organizations.

▪ Variable relational compensation provides extra incentives for high performance.

▪ Long-term incentives such as profit sharing and stock options align monetary interests of employees with long-term interests of organization.

▪ Merit pay provides higher pay for more years of contribution and team-based incentives encourage cooperation among employees.

▪ Good benefits strengthen ties between organization and employees. ➢ Overall compensation is designed to provide high incentives to top performers who pursue long-term careers with organization. ✓ Labor Relations ➢ Long-term emphasis of strategy is compatible with labor unions. ➢ Unions often incompatible with focus on innovation. ➢ Giving favorable treatment to high performers can be at odds with union interests.

• External/Differentiation: Alignment for Free Agents (pages 552-554)

✓ Aimed at obtaining input of experts to create distinct products and services. ➢ Organizations acknowledge that these employees develop careers within occupations rather than specific organizations. ➢ Employees are more loyal to a particular profession rather than to an organization. ➢ Strong bonds between the organization and employees are not encouraged. ➢ Workers frequently replaced by new employees who have up-to-date skills. ✓ Work Design ➢ Focuses on creating a work environment where skilled employees have freedom and opportunity to innovate and create unique outputs.

▪ Autonomy is high and tasks are complex.

▪ Workers apply expertise. ➢ Focus is on giving highly skilled workers freedom to accomplish tasks they are uniquely qualified to perform. ✓ Recruiting and Selection ➢ Recruiting ▪ Designed to locate and gain attention of skilled workers.  Focuses on locating specific talent outside organization.  Only a limited number of people possess desired skills.

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▪ Common sources include employee referrals, print advertising in specialized

✓ ✓

✓

✓

✓

journals, targeted Internet sites, and private employment agencies. ➢ Selection ▪ Identify individuals who have desired skills and abilities.

▪ Assess potential employees’ past achievements.

▪ Fit with demands of a particular job is more important than fit with organization.

▪ Methods include work sample testing, résumés, and interviewing.

Retention ➢ Removing low-performing employees is important. ➢ Poor performance must be dealt with quickly and employees dismissed.

Performance Management ➢ Focuses on separating high and low performers.

▪ Create culture of competition and excellence by comparing employees.

▪ Forced distributions. ➢ Assess outcomes rather than behavior.

Training and Development ➢ Not critical for strategy. ➢ Long-term development opportunities help firm recruit highly skilled workers. ➢ Highly skilled employees are more likely to accept positions with organizations when they perceive they will have opportunity to continue growing skills. ➢ Skill development that can be transferred to other organizations is important.

Compensation ➢ Compensation rates relatively high.

▪ Must pay higher wages than other organizations.

▪ Variable transactional compensation provides higher wages to top performers.

▪ Lack of emphasis on long-term contribution means newly hired employees often paid highest wages.

▪ In most cases, a large proportion of compensation is put at risk.

▪ Commission and bonuses frequently part of pay package. ➢ Overall compensation designed to provide immediate reward for high contribution.

Labor Relations ➢ Emphasis on short-term employment relationships, along with higher compensation for top performers, generally incompatible with unions. ➢ Most employees see themselves as professional workers rather than union members.

Unions are rare.

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CONCEPT CHECK 1. What specific practices align within each of the four HR strategies? Note: Recruiting and selection practices are addressed in the second concept check answer below. Answer: Bargain Laborers: Work is structured according to mechanistic approach; ongoing need to attract workers so low-performing employees are usually allowed to stay employed as long as meeting minimum requirements; key focus is training employees how to perform specific job duties efficiently; often use uniform transactional compensation; employees less likely to organize or join unions. Loyal Soldiers: Work is structured according to mechanistic approach; organization continually monitors employee satisfaction and implements programs to improve working conditions; poor performers often transferred to a position that better fits abilities and interests; parity-based assessments compare performance against absolute standards and allow everyone to be classified as high performer; training is done on job and focuses on specific procedures for completing tasks; uniform relational compensation; and frequently see unions in organizations. Committed Experts: Work is designed around motivational approach; retain high performers and dismiss low performers; success depends on having employees who exceed minimum expectations; continuous improvement (training) of skills needed for current jobs produces superior goods and services; variable relational compensation, and innovation and giving favorable treatment to high performers can be at odds with union interests. Free Agents: Work autonomy is high and tasks are complex; poor performance must be dealt with quickly and employees dismissed if necessary; assess outcomes rather than behavior; training and development not critical for strategy; highly skilled employees more likely to accept positions with organizations when they perceive they will have opportunity to continue growing skills; variable transactional compensation; and emphasis on short-term employment relationships and higher compensation for top performers are generally incompatible with unions.

2. How do recruiting and selection practices differ across the HR strategies? Answer: Bargain Laborers: Recruiting sources include referrals, print advertising in newspapers, electronic advertising on commercial websites, and public employment agencies. Selection methods include cognitive ability testing, physical ability testing, integrity testing, drug testing, and application forms. Loyal Soldiers: External sources for entry level employees include employee referrals, electronic advertising, public employment agencies, and campus recruiting. Selection methods include cognitive ability testing, personality testing, physical ability testing, drug testing, application forms, and interviewing. Committed Experts: Internal recruiting sources include job postings and electronic advertising in company website while external sources include employee referrals and campus recruiting. Selection methods to assess potential and fit include cognitive ability testing, personality testing, assessment centers, biodata, and interviewing. Free Agents: Recruiting sources include employee referrals, print advertising in specialized journals, targeted Internet sites, and private employment agencies. Selection methods include work sample testing, résumés, and interviewing.

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14.4 What Are Some Other HR Issues? (pages 554-557)

• Variations of Basic Strategies (pages 555-556)

✓ Turnaround strategy ➢ Variation of organization’s competitive approach. ➢ Company performing badly attempts to change radically and return to profitability. ➢ New approaches to production implemented which usually makes it compatible with external labor orientation. ➢ Free Agent HR strategy is often part of the competitive strategy emphasizing the need to quickly improve low organizational performance. ✓ Global expansion strategy ➢ Variation of competitive strategy. ➢ Focuses on growing organization’s presence in foreign countries.

▪ HRM can play an important role in helping an organization achieve its objective.  Working in foreign countries may require skills and abilities different from those needed by employees working in home country.  Need workers who are quite different from current employees. ➢ Free Agent HR strategy is most closely aligned with global expansion competitive strategy. ✓ Growth strategy ➢ A variation of competitive strategy. ➢ A company seeks to expand into new markets. ➢ Companies with employees and HR practices that do not fit parent company’s model are less likely to be acquired. ✓ There are other variations on competitive strategies. ➢ Fortunately, core HR concepts can be adapted to help organization achieve whatever strategy it is pursuing. ➢ Key is to begin by thinking about what types of worker inputs are needed to carry out the strategy successfully.

• HR as Input to Competitive Strategy (pages 556-557)

✓ Rational strategic approach: organizations begin with a competitive strategy and match HR strategy to competitive strategy. ✓ Evolutionary strategic approach: organization’s HR capabilities can be seen as part of strategy formulation process.

• Role of HR in Small Businesses (page 557)

✓ Small businesses often lack elaborate HR systems and strategies. ➢ Those with better strategic plans for HRM are shown to have higher rate of survival. ➢ Small firms that place greater emphasis on recruiting, selection, performance appraisals, training, and compensation grow at a faster rate than other firms. ➢ Effective HRM helps small organizations innovate. ➢ Little is known about specific HR practices most effective for small businesses.

▪ Adapt commonly accepted practices to fit unique demands of small organizations.

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▪ In future, field of HRM will benefit from additional research and investigation into unique circumstances of small businesses.

CONCEPT CHECK 1. What are some variations of basic competitive strategies? How do the basic HR strategies fit with these variations? Answer: One variation is a turnaround strategy where a poorly performing company attempts to change radically and return to profitability. A Free Agent HR strategy is often part of a competitive strategy that emphasizes the need to turn around low organizational performance quickly. A global expansion strategy focuses on growing an organization’s presence in foreign countries. The Free Agent HR strategy is most closely aligned with the global expansion competitive strategy. Another variation is the growth strategy through which a company seeks to expand into new markets. In some cases, this is done through acquisitions and mergers. Effective HRM can be critical for reducing barriers to effective integration of organizational cultures.

2. In what ways can human resource capabilities influence an organization’s competitive strategy? Answer: The rational strategic approach assumes that organizational leaders plan what they want to accomplish and use HR practices to help them reach their objectives.

Under an evolutionary strategic approach, strategy unfolds over time. From this perspective, an organization’s human resource capabilities can be seen as part of the strategy formulation process. The notion that human resources provide an input to competitive strategy suggests that organizations with human resource limitations may not be able to carry out certain strategies. In contrast, organizations with certain human resource strengths may be able to incorporate these strengths into future plans. HR capabilities can drive strategy formulation.

14.5 What Might the Future of HR Look Like? (pages 558-561)

• The field of human resource management is continually changing. In recent years, the emphasis has moved away from personnel management designed to ensure compliance with legal requirements toward a strategic model that links the management of people to competitive objectives. ✓ Increased emphasis on sustainability ➢ Society is increasingly paying attention to the effect of business practices on the natural environment. Companies are examining their business practices to determine areas where improvement is needed. Regulations requiring environmental protection are growing in many countries. ✓ Growth of social networking ➢ Employees are increasingly expecting organizations to integrate human resource activities with these tools. Having a presence in network circles provides organizations with a tool to increase employee engagement. ✓ Balancing of work and family ➢ People are increasingly struggling to balance work and family commitments. HR must continue to develop flexible career paths.

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✓ Volatile economic conditions ➢ The focus often shifted away from hiring more workers to reducing the workforce.

HR has thus been forced to think more strategically and become better at using data to drive decisions. ✓ Adaptation to healthcare legistlation ➢ HR is taking the lead to ensure that companies comply with new regulations. Wellness programs are also an increasing priority for organizations seeking to improve the overall health of employees.

CONCEPT CHECK 1. What issues are expected to become priorities for HR executives in the next 10 years? Answer: According to Figure 14.2- Retaining and rewarding the best employees, developing the next generation of leaders, creating corporate culture that attracts emplyoees, remaining competitive in the talent markets, finding employees with specialized talents, creating smooth and efficient HR processes, finding global employees, creating an employee-centric HR organization, and breaking down global cultural barriers.

2. What trends are shaping the future of human resource management? Answer: increased emphasis on sustainability, growth of social networking, balancing of work and family, volatile economic conditions, adaptation to healthcare legistlation.

Chapter 14 Teaching Notes The following presents suggestions designed to help you utilize the special features and cases found in Human Resource Management: Linking Strategy to Practice.

Summary: (pages 562-563) Summaries of each of the four learning objectives are presented. It is recommended that students review each objective and discuss in class or in teams as a means of gaining better understanding and comprehension.

Learning Objectives: The chapter contains four learning objectives. Each is presented at the beginning of the concept being discussed and can be found on: Learning objective 1- page 541 Learning objective 2- page 543 Learning objective 3- page 554 Learning objective 4- page 557

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Concept Checks The chapter contains four concept checks. Each is presented at appropriate points in the learning objective being discussed and can be found on: Concept 1- page 543 Concept 2- page 554 Concept 3- page 557 Concept 4- page 561

Tables and Figures The table and figures presented in the chapter help illustrate the concepts of the chapter. They should be brought to the attention of the students and, perhaps, included in the exams where appropriate.

Table 14.1- page 544 Practices Aligning with Bargain Laborer HR Strategy Table 14.2- page 546 Practices Aligning with Loyal Soldier HR Strategy Table 14.3- page 550 Practices Aligning with Committed Expert HR Strategy Table 14.4- page 552 Practices Aligning with Free Agent HR Strategy Figure 14.1- page 541 Vertical and Horizontal Alignment Figure 14.2 page 558 Challenges Faceing HR A Manager’s Perspective (page 536-537), What Do You Think? (page 537), and A Manager’s Perspective Revisited (page 561) The chapter starts with a short scenario where Takashi is thinking about proposed changes to the performance appraisal process about to take place at his company. During his 10 years with the company he has been part of more than 30 initiatives to alter performance management processes and the most current proposal is causing him concern about how it will be accepted by a group of the company’s top executives. The new performance management program puts less emphasis on identifying top performers and seeks to treat everyone similarly, which could send a signal that is not consistent with the company’s other HR practices. Five true/false questions related to this scenario and the chapter topics are noted on page 537 and answered on page 561.

Discussion of the chapter could start by posing these questions and asking for the class to vote on which questions are true through a show of hands, thumbs-up/thumbs-down, clickers, or paper copies of the questions. To keep student interest, the methods for identifying true answers should be varied.

The activity could be repeated near the end of the chapter discussion. At that time, students could be asked if they agree with the answers. The students also could be asked to identify what

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additional questions Takashi should ask.

During the discussion of the chapter material, you could refer to the questions noting that a certain section or discussion point addresses one or more of the questions.

Alternatively, you may wish to address the questions at the end of discussing the chapter. You may want to bring the students’ attention to these questions, informing the students that they will be asked to answer the questions near the end of the chapter discussion. At that time, students (individually or in groups) could be asked to explain why the answers are true or false. Students also could add questions to the list and briefly explain why they think a new question should be asked. This could be done as a class or in smaller groups. If done in smaller groups, each group could be asked to briefly report on an aspect of their discussion.

Of course, one or more of the questions or more detailed versions of the questions could be included in an exam. If included in an exam, students should be warned that these questions might be part of the exam.

Building Strength Through HR: Walt Disney World (page 540) This special feature highlights several issues noted in this opening case regarding Walt Disney World (refer to pages 538-540). This capstone case describes how a system of compatible human resource management practices can help build an organization’s competitive strength.

The inset box (refer to page 540) presents some of the HR practices mentioned in the case but not all. Therefore, you could ask the students what other HR practices appeared to contribute to Walt Disney World’s success (e.g., dinner parties for high performers, awards for mile stones, flexible work design, promotion from within). This discussion could be supplemented by students familiar with Walt Disney World. Their website (http://corporate.disney.go.com/) adds very little additional information. Nevertheless, you might want to review it because the students probably will have done so before class discussion.

You could assign a student to provide supplemental and update information. This person also could tell the class about relevant information from the organization’s website or other sources.

You should inform the students of any school policies that address contacting organizations.

You may wish to address this capstone case through guided class or group discussion or briefly mention it in a mini-lecture to show relevance of the chapter and text topics. Additional ways to address the opening cases could include individual students or teams of students presenting the main points and how the case answers the opening question of that section.

How Do We Know? What Happens When Organizations Send Mixed Signals about the Value of Employees? (page 543) This inset box is briefly mentioned on the previous page (page 542). Christopher Zatzick and

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Roderick Iverson investigated the relationship between layoffs and HR practices. As described in the inset box, they found that productivity decreases when an organization implements an HR practice that does not fit with their other HR practices. Specifically, they concluded that layoffs can negate the competitive advantage that a firm has achieved through high commitment HR practices.

The class could be encouraged to read the details in the inset box. During the lecture or class discussion of the chapter, the study, conclusions, and recommendations could be summarized.

This could be accomplished through your lecture (asking for student input) or by assigning the box to an individual student. You or the student could lead a brief class discussion after presenting the facts.

Regardless of who presents the information, the students could be asked to discuss the following: (1) Is the reverse of these findings possible where layoffs in an organization with poorly aligned, non-supportive, or non-existent HR practices actually result in an increase in productivity? Why or why not? (2) How could an organization with high commitment HR policies lessen the negative affects of layoffs (or other mismatched HR practices)?

What actions and communications would be more consistent with these HR practices? (3) This study involved 3,000 Canadian workplaces. Would you expect the same results in organizations in the U.S. or other countries?

Other ways to address this information could be through a short written assignment or a more indepth research paper on the topic.

Building Strength Through HR: U.S. Navy (page 547) This inset box illustrates how the U.S. Navy must effectively manage the recruiting of over 330,000 active duty personnel and over 66,000 reservists by using an overall HR strategy that is closely aligned with the Loyal Soldier perspective. As a team discussion exercise, you could have teams review how each of the five Vector Model milestones are utilized and measured.

How Do We Know? Does Working in a Foreign Country Require More Skill? (page 536) The study described in this inset box is mentioned prior to the box. Three researchers investigated whether employees working in a different country have higher skill and ability requirements than needed in their home country. Among other things, the researchers found that international assignments called for greater social skills, more perceptual and reasoning skills, and higher motivation to achieve and adjust. They conclude that global organizations need to carefully select and train employees that have the potential to succeed in an international assignment.

The information reported in the inset box could be part of a lecture or class discussion. Students could be asked to discuss the following: (1) How can organizations determine if an employee has the potential to succeed in an international assignment? (2) What kind of training might be

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important for everyone to succeed in an international assignment? What might be important for different specific countries (e.g., Mexico, Japan, India)? (3) In general, should organizations select and train employees so that they have the skills to fit in with the culture of an organization in their home country so that the employees will succeed? (4) Would you want to work in a country that is very different from your home country? Why or why not? What additional training or other HR factors might help you succeed as an employee or manager in and visitor to another country?

Building Strength Through HR: Ford Motor Company (page 560) As noted above the inset box, Ford not only turned a net profit of $2.7 billion for 2009, but it was the only U.S. automaker not to receive government bailout assistance.

You could briefly mention this inset as an example of the importance of measuring how HR practices and department are adding value. If you want to spend more time on this important topic, you could ask the students to discuss the following questions: (1) What tangible benefits were tied to the HR practices? (2) What might be some intangible benefits of HR? How might they be measured? (3) What other outcomes might an organization want to measure to assess HR’s contributions? (4) How will the organization know if the benefit is due to one or more HR practices (and which ones)?

KEY TERMS (page 563) Alignment 541 Evolutionary strategic approach 557 Global expansion strategy 555 Growth strategy 555 Horizontal alignment 542 Rational strategic approach 556 Turnaround strategy 555 Vertical alignment 541

DISCUSSION QUESTIONS (page 563) 1. How is horizontal alignment different from vertical alignment? Answer: Horizontal alignment concerns the coordination of parts within the organization. In the specific case of HRM, horizontal alignment refers to the fit of specific practices with other practices.

Vertical alignment refers to the positioning of an organization’s HRM strategy in relation to other organizational strategies. The fundamental issue here is whether an organization’s HR strategy fits with its competitive strategy.

2. Which do you think is more important: vertical alignment or horizontal alignment? Students’ answers will vary.

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3. What might happen if an organization combines a merit-based performance appraisal system with compensation practices that limit differences in employee pay? Answer: Most likely, employees will be confused and frustrated. In the long run, the benefits of a merit-based system will not be realized.

4. Within the Loyal Soldier HR strategy, how does the approach of parity-based performance appraisal support the work-design goal of standardization? Answer: If everyone needs to perform the same way, it is logical that all who do would be treated equally.

5. What difficulties might an organization face when it attempts to change its human resource practices? Answer: There are many difficulties depending upon the changes. Assuming the changes result in HR practices that better support each other and the organization’s strategy, difficulties would include what to change first, employee and managerial resistance to change, and the learning curve.

6. What are some specific HR practices that could be used to support a global expansion strategy? Answer: Carefully recruit and select people who would fit and succeed in an international assignment. Train employees and family members in the culture, language, etc. of the new country. Carefully communicate what it will be like in the new country. Have a contact person in the new country who can serve as a mentor. Have the employee read and sign a performance contract that specifies relevant issues such as what will happen if the person is not successful and wants to return before the assignment is over.

7. What specific methods of selecting and compensating employees do you think a small business should use? Students’ answers will vary.

8. How do you believe current societal trends will influence future human resource strategies and practices? Students’ answers will vary.

9. What advice do you think would be helpful for someone beginning a career as a human resource professional? Students’ answers will vary.

10. How would you summarize the most important concepts you have learned about human resource management? Students’ answers will vary.

EXAMPLE CASE: Portman Ritz-Carlton in Shanghai, China (pages 564-565) Questions 1. How do selection, retention, and training practices work together at the Portman RitzCarlton? Answer: In many ways. In general, they hire qualified people, give opportunities for advancement, and teach and reinforce the organization’s values.

2. Which of the HR strategies do you think the Portman Ritz-Carlton is pursuing? Answer: Loyal Soldier.

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3. Why do you think employee satisfaction leads to customer satisfaction? Students’ answers will vary.

DISCUSSION CASE: Technology Consultants (page 565-566) Questions 1. Which human resource practices would you recommend that Technology Consultants change? Students’ answers will vary.

2. How well do the company’s human resources practices align with one another? Answer: Very poorly.

3. How would you approach human resource management if you were starting a company like Technology Consultants? Students’ answers will vary.

EXPERIENTIAL EXERCISE: Learning about Company Cultures (page 566) Questions: Students’ answers to the following will vary.

1. How are the company cultures different?

2. Is there any evidence that human resource practices create company culture? How do recruitment and selection seem to influence culture? How does compensation influence interactions between employees?

3. Within each organization, identify human resource practices that are aligned. Are there some practices that seem to be out of alignment?

INTERACTIVE EXPERIENTIAL EXERCISE: A Final Journey: Communicating the Strategic Importance of HR (page 567) Access the companion website to test your knowledge by completing an interactive role play exercise.

ADDITIONAL WEB-BASED ACTIVITIES Overview of activity Review a website of an excellent company and comment on whether or not the HR practices appear to support each other and the organization’s strategies.

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Exercise: Students should review one of the more extensive websites of organizations thought to be excellent companies in regard to HR practices (e.g., Google, Wegmans). Extensive refers to explanations of a variety of HR practices. Students could use the tables in Chapter 14 as templates to assess how well the HR practices support each other and the strategy. They could suggest additional HR practices that should fit the organization’s purpose, strategy, culture, and known HR practices.

Alternate Approaches to the Exercise Students could compare HR practices for two or more excellent organizations. The students could select organizations with different HR strategies. Students could identify which HR practices follow the tables in Chapter 14 and which HR practices are common to the organizations even though they have different strategies. They could speculate on why there are similarities and differences with the tables and organizational HR practices.

Links to relevant information Sample of Organization Links: Wegmans Food Market: www.wegmans.com W.L. Gore: www.gore.com/en_xx/careers/index.html Google: www.google.com/intl/en/corporate/index.html Fenmarc: www.fenmarc.com/

Sample of Links to lists of excellent companies: NOTE: The students may need to search for “best companies” within some of the following links bestcompaniestoworkfor.net/bestemployers/viewall.htm money.cnn.com/magazines/fortune/bestcompanies/2008/perkfinder/index.html www.DiversityInc.com/Top50 www.essence.com/essence/workandwealth/atwork/0,16109,1596624,00.html www.latinastyle.com/latina50.html www.workingmother.com www.shrm.org www.workforce.com

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On-Line Human Resource Management Experiences The HR “Big Picture”: Building an HR Department at Mega Manufacturing As an HR Consultant, you’ll be assisting an established injection molding company, Mega Manufacturing, that is expanding significantly as a result of winning a new government contract.

Because of the company’s growth, the CEO plans to add a dedicated HR person to his management team, and he wants you to help build an HR department. As he tells you about his beliefs and vision of the company, you consider the organizational life cycle model, core HR functions, and critical HR roles. He then asks for your suggestions, and you realize that this assignment may be a great opportunity to align the new HR department with the company’s strategy.

What Action Do You Take?

A.

Recommend that Mega follow the goals and objectives of the Communal stage of the organizational life cycle model.

B.

Recommend that Mega follow the goals and objectives of the Formalization stage of the organizational life cycle model.

C.

Recommend that Mega follow the goals and objectives of the Elaboration stage of the organizational life cycle model.

Incorrect Responses B. Mega would not yet be considered stable and ready to develop clear practices and procedures for doing work. This focus on improving efficiency and finding better ways to accomplish tasks will come in the near future though for Mega.

C. Companies only go through the Elaboration stage when they need to adapt and renew.

This may seem like the correct choice as Mega is an established firm, however, since there are no established procedures, there are steps required before Mega reaches this stage.

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On-Line Human Resource Management Experiences The HR “Big Picture”: Building an HR Department at Mega Manufacturing Summary of Steps Taken: 1. Recommend that Mega follow the goals and objectives of the Communal stage of the organizational life cycle model.

With the upcoming expansion and innovation, Mega will need to build a sense of belonging and satisfy the needs of its employees. It will need to focus on developing and improving processes for effectively producing goods and services. Once effective HR practices are established, good employees can be hired and provided with training. As a result, employees will feel committed and both loyalty and job satisfaction will increase.

The CEO then wants your opinion on the most important function that HR can provide to help his company now and into the future.

What Action Do You Take?

A.

Respond that while there are many important functions, you feel that the biggest contribution that can be made is in the area of human resource development.

B.

Respond that while there are many important functions, you feel that the biggest contribution that can be made is in the area of workforce planning and employment.

C.

Respond that while there are many important functions, you feel that the biggest contribution that can be made is in the area of strategic management.

Incorrect Responses A. Human resource development is a very important function as it will allow employees to learn the knowledge, skills, and abilities needed for long-term success. It will also for employee performance to be measured.

However, there is a different choice here that will likely be more important to helping the organization function most effectively and that will gain acceptance of HR.

B. Workforce planning and development is also a very important function as the designing of jobs and placement of employees is of critical importance. This function also allows for the hiring or promotion of people with the necessary talents. However, there is a different choice here that will likely be more important to helping the organization function most effectively and that will gain acceptance of HR.

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On-Line Human Resource Management Experiences The HR “Big Picture”: Building an HR Department at Mega Manufacturing Summary of Steps Taken: 1. Recommend that Mega follow the goals and objectives of the Communal stage of the organizational life cycle model.

2. When asked about the most important function HR can provide to Mega, respond that while there are many important functions, you feel that the biggest contribution that can be made is in the area of strategic management.

Strategic management focuses on planning how the organization will produce and market goods and services. HR experts can provide extremely valuable information to a company’s strategic plan such as determining whether employees have the needed skills, helping to identify required training needs, finding and hiring the right applicants for open positions, as well as retention of key employees. To be successful here, HR people must be able to manage change and must be knowledgeable about the business to understand how activities and products fit within strategies.

The conversation then turns to whether HR can add value to both people and processes. The CEO mentions that he would like to see his new HR team focus on long-term contributions to organizational processes aimed at hiring and motivating talented workers. From this information, which of the critical roles for human resource professionals will be most important for Mega?

What Action Do You Take?

A.

Recommend that Mega’s HR team focus on the role of functional expert.

B.

Recommend that Mega’s HR team focus on the role of strategic partner.

C.

Recommend that Mega’s HR team focus on the role of human capital developer.

Incorrect Responses A. Almost. You’re on the right track as this option does focus on organizational processes aimed at hiring and motivated talented workers.

However, the functional expert role is focused on short-term activities rather than on longterm contributions.

C. Not quite. This choice does focus on longterm contributions but also emphasizes people rather than processes as the focus is helping employees improve their skills. This role is becoming increasingly important though in organizations today.

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On-Line Human Resource Management Experiences The HR “Big Picture”: Building an HR Department at Mega Manufacturing Summary of Steps Taken: 1. Recommend that Mega follow the goals and objectives of the Communal stage of the organizational life cycle model.

2. When asked about the most important function HR can provide to Mega, respond that while there are many important functions, you feel that the biggest contribution that can be made is in the area of strategic management.

3. Recommend that Mega’s HR team focus on the role of strategic partner because of the emphasis on long-term contributions to organizational processes aimed at hiring and motivating talented workers.

In the strategic partner role, HR works with various organizational leaders to implement strategy, knows a great deal about the other business activities and products and services of the company, as well as how these items fit with the company’s strategic objectives. This enables HR to provide assistance in guiding organizational decisions and actions.

As your meeting is about to wrap up, the CEO asks if you have any suggestions on important trends the organization will need to pay attention to in the future. While there are many possibilities, there is one that applies more than the others based on what you know about Mega Manufacturing.

What Action Do You Take?

A.

Describe recent labor force trends and the fact that the workforce is seeing many more minority and female employees.

B.

Describe recent education and training trends and the fact that on-the-job training is becoming as important as formal education in some industries.

C.

Describe recent population trends and the fact that the workforce is aging.

Incorrect Responses A. While it is true that the number of minority and female employees is on the rise, there is nothing from what we have heard about Mega’s strategies to suggest that this will be a concern. Some form of diversity training will be a good idea though.

B. This is a true statement but likely will not impact Mega as much as some other companies because of its focus on an external labor orientation and hiring experienced employees who are already trained. Some new and/or refresher training will of course be needed, but it will not be a major concern.

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On-Line Human Resource Management Experiences The HR “Big Picture”: Building an HR Department at Mega Manufacturing Summary of Steps Taken: 1. Recommend that Mega follow the goals and objectives of the Communal stage of the organizational life cycle model.

2. When asked about the most important function HR can provide to Mega, respond that while there are many important functions, you feel that the biggest contribution that can be made is in the area of strategic management.

3. Recommend that Mega’s HR team focus on the role of strategic partner because of the emphasis on long-term contributions to organizational processes aimed at hiring and motivating talented workers.

4. Describe how recent population trends and the fact that the workforce is aging is one trend that will be a major concern for Mega as attracting and motivating older workers will become a more important task.

Well done! The aging workforce will be a major concern to a company such as Mega Manufacturing. More people will be near the end of their careers and fewer will be in the middle so there will be a more limited number of experienced employees for Mega to hire. Not only will attracting these older workers be a challenge, but so will motivating them. You’re off to a great start and should be able to help Mega’s new HR team become aligned with the company’s existing business strategies. The strategic side of HR is very difficult for a lot of people to comprehend as it is only in recent years that HR is starting to be viewed as a strategic business partner. As you will see throughout this textbook and these exercises though, HR can be an asset to a company strategically while still significantly contributing to the traditional functional areas (staffing, training, compensation, performance management, etc.). Next will be a closer look at the basic HR strategies.

For More Information:_________________________________________________________ A number of Web sites are available for more information on the core HR functions, roles of HR specialists, and current trends affecting HR. • • • •

www.shrm.org - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. www.workforce.com – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. www.hr.com – Information on a variety of HR topics.

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On-Line Human Resource Management Experiences HR Strategy in Action: Selling the HR Function at Mega Manufacturing While meeting with senior management at Mega, you try to convince other members of the management team that HR needs to have a “seat at the table” and function as a business partner within the company. The CFO, however, expresses the opinion that HR is just a “touchy feely” department that adds no legitimate business value. Your objective is to gain credibility and show that a strategic approach to HR can improve Mega Manufacturing. Based on previous discussions, you have learned that Mega believes that its products are better than those of its competitors. You also know that the company prefers to hire experienced people who won’t require much training. How will you defend the HR function to this CFO and others in the meeting who may share the same opinions of HR?

What Action Do You Take?

A.

Based on Mega’s belief that its products are superior and preference to hire experienced people, recommend that Mega follow the Free Agent HR strategy.

B.

Based on Mega’s belief that its products are superior and preference to hire experienced people, recommend that Mega follow the Bargain Laborer HR strategy.

C.

Based on Mega’s belief that its products are superior and preference to hire experienced people, recommend that Mega follow the Committed Expert HR strategy.

Incorrect Responses B. While the Bargain Laborer strategy does have an emphasis on buying talent (hiring experienced employees), this answer is incorrect because it also emphasizes efficiency rather than the distinctiveness that comes from a differentiation philosophy.

C. While the Committed Expert strategy does have an emphasis on differentiation, it places more value on making talent by developing employees from within than on hiring experienced employees who will not need extensive training.

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On-Line Human Resource Management Experiences HR Strategy in Action: Selling the HR Function at Mega Manufacturing Summary of Steps Taken: 1. Based on Mega’s belief that its products are superior and preference to hire experienced people, recommend that Mega follow the Free Agent HR strategy.

The Free Agent HR strategy does align with Mega’s goals of differentiation (superior products) and external labor orientation (hiring experienced employees who can “hit the ground running”).

The main focus for this strategy is hiring people who have critical skills but who may not stay with the organization for the long-term. Employees will have extensive responsibility within their specific job areas. No efforts are made to encourage strong attachments between the employees and the organization though since long-term commitments are avoided.

As you know, it is important for organizations to combine competitive business strategy with human resource strategy to assure high organizational effectiveness. During the meeting, it becomes clear that one of the management members feels you should just implement HR practices that have worked at other companies.

What Action Do You Take?

A.

Suggest that Mega follow a corporate-level strategy.

B.

Suggest that Mega follow a contingency approach to HR.

C.

Suggest that Mega follow a universalistic approach to HR.

Incorrect Responses A. Corporate-level strategies are a type of competitive business strategy where decisions related to business types are made. They are of great importance but are not critical for dayto-day HR activities.

C. Under the universalistic approach, the goal is to find the one best way to manage HR that would be beneficial for all organizations. While there is some support for this approach in academic research, it tends to focus more on broad principles and results in a commitment strategy that does not align with Mega’s values.

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On-Line Human Resource Management Experiences HR Strategy in Action: Selling the HR Function at Mega Manufacturing Summary of Steps Taken: 1. Based on Mega’s belief that its products are superior and preference to hire experienced people, recommend that Mega follow the Free Agent HR strategy.

2. Suggest that Mega follow a contingency approach to HR to align the two strategies.

The contingency approach does indeed make the most sense for Mega as not all HR practices can be applied to all organizations. They will only work most effectively if the two strategies align and this approach seeks to align people management practices with competitive business strategies.

The Production Manager says that he’s starting to understand the potential value of HR. With the expansion coming soon, he wants to know in what manner HR can help him analyze Mega’s internal capabilities and assess the external environment. You start seeing the Strategy Formulation Process flow diagram in your mind.

What Action Do You Take?

A.

Explain the Analyzing Information and Making a Decision stage of the Strategy Formulation process.

B.

Explain the Gathering Information stage of the Strategy Formulation process.

C.

Explain the Implementing the Decision stage of the Strategy Formulation process.

Incorrect Responses A. While it may sound like examining the internal capabilities and external environment are a form of analyzing information, you must actually collect the data before you can analyze it.

C. You’re jumping ahead in the process a little too quickly. This will become a critical stage in the process soon enough, but first you must take care of a couple other items of importance.

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On-Line Human Resource Management Experiences HR Strategy in Action: Selling the HR Function at Mega Manufacturing Summary of Steps Taken: 1. Based on Mega’s belief that its products are superior and preference to hire experienced people, recommend that Mega follow the Free Agent HR strategy.

2. Suggest that Mega follow a contingency approach to HR to HR to align the two strategies.

3. Explain the Gathering Information stage of the Strategy Formulation process can be used to analyze internal and external positives and negatives.

The gathering information stage is where Mega will examine the environment to assess opportunities and threats as well as assess internal capabilities to determine strengths and weaknesses that they have. There will also be a focus here on making HR a rare resource that is difficult to duplicate by other companies.

More of the Mega management team is starting to see the value of HR. They’ve accepted that the Free Agent strategy does align best with their philosophies, primarily because of their focus on differentiation. They realize this will require hiring many people externally and that employee loyalty will never be a strength. You mention that it’s possible to have a more equal mix of two different strategies at times. If the CEO asks which other strategy may work for them in combination with their current strategy, how would you respond?

What Action Do You Take?

A.

Respond that the most likely choice is Bargain Laborer.

B.

Respond that the most likely choice is Loyal Soldier.

C.

Respond that the most likely choice is Committed Expert.

Incorrect Responses A. Not quite. Bargain Laborer does share the focus on external labor that the Free Agent approach follows, but it aligns more with Loyal Solider on the cost leadership strategy component.

B. Organizations with a cost leadership competitive advantage are expected to do best when they have either a Loyal Soldier or Bargain Laborer approach, so this answer is not correct.

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On-Line Human Resource Management Experiences HR Strategy in Action: Selling the HR Function at Mega Manufacturing Summary of Steps Taken: 1. Based on Mega’s belief that its products are superior and preference to hire experienced people, recommend that Mega follow the Free Agent HR strategy.

2. Suggest the Mega follow a contingency approach to HR to HR to align the two strategies.

3. Explain the Gathering Information stage of the Strategy Formulation process can be used to analyze internal and external positives and negatives.

4. Respond that the most likely strategy to pair with the Free Agent strategy is that of Committed Expert.

Nice work! Organizations with a competitive business strategy of differentiation are expected to do best when they have either a Committed Expert or Free Agent HR strategy. The senior management team at Mega will almost certainly accept your recommendations because of the thorough display of knowledge you have shown them. You’ve completed the initial portion on the basic HR strategies and we will now turn to several of the individual HR functional areas.

Remember that to be successful in HR today and in the future, it will be crucial to think strategically and know the business so that you can contribute to the organization in many ways.

Just being an expert in the field of Human Resources is no longer enough. Don’t forget the concepts behind these basic HR strategies as we will build on them each chapter and in these exercises. Next up is Equal Employment Opportunity and Safety.

For More Information:_________________________________________________________ A number of Web sites are available for more information on the common competitive business strategies, basic approaches to human resource strategy, and common human resource strategies.

• • • • • •

www.shrm.org - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. www.workforce.com – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. www.hr.com – Information on a variety of HR topics. http://www.tutor2u.net/business/strategy/competitive_advantage.htm - Information on Porter’s Competitive Business strategies. http://www.associatedcontent.com/article/239501/business_strategy_creating_a_competitive. html - Information on creating competitive strategies.

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On-Line Human Resource Management Experiences The Legal Side of HR: Handling Equal Employment Issues at Mega Manufacturing It’s Friday afternoon, and you’re looking forward to catching up on some leisure activities this weekend. You accompany the owner of Mega Manufacturing on a tour of the plant to meet some of the hourly employees. A female employee comes up to you and complains that a male coworker has been sexually harassing her. While you are talking with her, the owner receives a phone call. When he hangs up, he tells you that the caller was a former job applicant, who insists that he was not hired because he is a member of a minority group. The former applicant plans to file a claim with the EEOC. The owner asks for your advice on how to begin handling these issues. So much for that weekend of relaxation.

What Action Do You Take?

A.

Schedule a meeting with the female employee to discuss specifics of the incident. Then plan to do the same with the male employee who she claims is doing the harassing.

B.

Discipline the supervisor for the harassing behavior and warn him that additional acts will result in termination.

C.

Review the company’s formal policy on harassment with the female employee and demonstrate that the behavior could not have been harassment because she was still capable of performing her job.

Incorrect Responses B. This is an appropriate step that may come up as a result of the investigation, but it’s a bit premature to assume the supervisor is guilty at this point without doing a complete investigation of the incident(s). Re-visit this step if he is determined to be in violation of the company policy.

C. This will only make matters worse as the employee will likely think that either you don’t believe her or that you simply don’t care and want the issue to just disappear. Besides, victims need not show that the harassment made them incapable of doing their jobs, only that the environment had a negative impact on their psychological well-being.

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On-Line Human Resource Management Experiences The Legal Side of HR: Handling Equal Employment Issues at Mega Manufacturing

Summary of Steps Taken: 1. Schedule a meeting with the female employee to discuss specifics of the incident. Then plan to do the same with the male employee who she claims is doing the harassing.

It will be critical to investigate rapidly in this case to determine what is really occurring. While there may or may not be harassment, it is important to not let the reputation of one of the employees shape your opinion of the truth. Remember that there are multiple types of sexual harassment and just because certain people may not be offended by some types of behavior, it does not mean that harassment didn’t occur.

During the investigation, you find out that the male employee was making a few unwelcome comments occasionally, but never told her that her future with the company depended on her willingness to engage in sexual activities with him. He is not even her supervisor. The owner thinks that the company is likely “in the clear” on this one and wants the matter dropped as soon as possible.

What Action Do You Take?

A.

Agree with the owner and act to drop the issue as a simple misunderstanding with the expectation that the behavior should probably stop.

B.

Schedule a meeting to reiterate the company policy on sexual harassment with a general warning to everyone present that this type of behavior is not and will not be tolerated at Mega.

C.

Respond that while there may be no quid pro quo case of harassment, the actions of the male employee could still be causing the female to feel that this is now an intimidating, hostile, or offensive work environment.

Incorrect Responses A. This would not be a wise choice. While it’s true that there is no quid pro quo case present, Mega needs to be concerned that the situation created a hostile environment. The investigation needs to be completed and appropriate discipline steps taken once a determination is made.

B. While this is a good decision, it is not the right choice here as Mega is not “in the clear” just because there is no issue of continued employment being based on sexual favors. Go ahead and do this, but it should come later (after the investigation has been completed because there are more pressing concerns).

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On-Line Human Resource Management Experiences The Legal Side of HR: Handling Equal Employment Issues at Mega Manufacturing Summary of Steps Taken: 1. Schedule a meeting with the female employee to discuss specifics of the incident. Then plan to do the same with the male employee who she claims is doing the harassing.

2. While there may be no quid pro quo case of harassment, the repeated comments by the male employee could still be causing the female to feel that this is now an intimidating, hostile, or offensive work environment.

It really doesn’t matter whether the person is a supervisor or not and the actions do not need to involve the request for sexual favors. Even having suggestive pictures hanging up could be enough to result in sexual harassment. This is an area that continues to grow in importance to organizations nationwide. Finish the investigation and then take the appropriate disciplinary actions up to and potentially including termination.

You didn’t forget about the disgruntled applicant who is filing the EEOC claim, did you? The owner tells you that the 44-year old applicant had strong skills for the job but was ultimately not hired because of his failing test scores on a mechanical ability test that the company uses for all applicants. The owner mentions he was shocked that the 52-year old white applicant did so much better on the test. It sounds like another Title VII issue under the 1964 Civil Rights Act. Which type of discrimination did you need to make the owner aware of and what should be the first step?

What Action Do You Take?

A.

Disparate treatment; explain to the owner that there is no issue as long as all applicants took the test.

B.

Adverse impact; ensure that the test is truly relevant to the job the person interviewed for.

C.

Age discrimination; advise the owner that may have a potential issue because the applicant who failed the test is older than 40 and therefore protected by the Age Discrimination in Employment Act.

Incorrect Responses A. While this choice is technically correct in that there was no specific practice of treating certain types of people differently than others, you’re not off the hook yet.

C. While 40 and above is the age where this becomes a protected class, you are not in violation of this act since the applicant selected was older than the person rejected.

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On-Line Human Resource Management Experiences The Legal Side of HR: Handling Equal Employment Issues at Mega Manufacturing Summary of Steps Taken: 1. Schedule a meeting with the female employee to discuss specifics of the incident. Then plan to do the same with the male employee who she claims is doing the harassing.

2. While there may be no quid pro quo case of harassment, the repeated comments by the male employee could still be causing the female to feel that this is now an intimidating, hostile, or offensive work environment.

3. On the applicant discrimination issue, make the owner aware that this may be a case of adverse impact. Ensure that the test is truly relevant to the job the person interviewed for.

You do indeed have a potential adverse impact issue. Adverse impact is more subtle than disparate treatment and occurs when a company treats all applicants the same but their practices result in different employment opportunities for different groups. An important key will be whether the mechanical ability test in this case accurately identifies people who can do the job better.

Good news: the mechanical ability test has a high validity for this type of position. Bad news: 70% of white applicants are hired for this type of position, but only 24% of minority applicants are hired; it looks like you will fail the 4/5 rule.

What Action Do You Take?

A.

Tell the owner that it would be wise to choose a different job-related test that has no adverse impact even if the test is not quite as good of a predictor.

B.

Start hiring several minority applicants immediately. The 4/5 rule says that if you hire 70% of white applicants, you need to hire at least 56% of minority applicants (80% of 70%).

C.

Since the test is validated, you tell the owner not to worry about the 4/5 rule in this case.

Incorrect Responses A. While it would be nice to have a test that does not result in adverse impact, this one is validated. You do not want to sacrifice the validity of this test as a good predictor of future performance on the job just to lessen the potential adverse impact.

B. There’s nothing wrong with the decision to hire more minority applicants as long as they are qualified for the positions. Mega will violate the 4/5 rule in this scenario, but hasn’t necessarily violated Title VII as long as it can show that the selection procedures have validity.

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On-Line Human Resource Management Experiences The Legal Side of HR: Handling Equal Employment Issues at Mega Manufacturing Summary of Steps Taken: 1. Schedule a meeting with the female employee to discuss specifics of the incident. Then plan to do the same with the male employee who she claims is doing the harassing.

2. While there may be no quid pro quo case of harassment, the repeated comments by the male employee could still be causing the female to feel that this is now an intimidating, hostile, or offensive work environment.

3. On the applicant discrimination issue, make the owner aware that this may be a case of adverse impact. Ensure that the test is truly relevant to the job the person interviewed for.

4. Since the test is job relevant and validated for this type of position, you tell the owner not to worry about the 4/5 rule in this case.

Great job! Even though Mega has violated the 4/5 rule, they are not in violation of Title VII since the selection test was validated. This exercise contained two tough issues that HR people face all too often in organizations. One of the best recommendations that can be made is to investigate quickly, but thoroughly and remember to document everything. We’ll return more to selection practices in Chapter 6. In terms of the potential discrimination claim, remember that Mega does now have to be concerned about the EEOC and Affirmative Action Plans under Executive Order 11246 because of its new status as a government contractor. Better start preparing those utilization studies. Next up is designing work that is both productive and satisfying. That’s not always as easy as it may seem.

For More Information:_________________________________________________________ A number of Web sites are available for more information on Title VII, Civil Rights Acts of 1964 and 1991, ADEA, ADA, EPA, FMLA, OSHA, and Worker’s Compensation: • • • • • • • •

http://www.shrm.org/law/ - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. http://www.workforce.com/section/03/ – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. http://www.dol.gov/ - Department of Labor website with links to all major employment laws. http://www.afscme.org/ - American Federation of State, County, and Municipal employees. http://www.elinfonet.com/ - Employment Law Information Network. http://www.osha.gov/ - Occupational Safety and Health Administration. www.eeoc.gov – Equal Employment Opportunity Commission.

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On-Line Human Resource Management Experiences Job Design: Creating New Positions at Graphics Design, Inc. Another of your clients is Graphics Design, Inc. (GDI), who produces display boards and signs.

The company is in the process of creating several new positions because of growth and a need for more efficiency. You recommend that some form of job analysis be used to design the features of the new jobs. One of the company’s managers tells you that job analysis isn’t necessary, since the new jobs will be similar to existing jobs. But in view of the company’s need for increased efficiency and its preference for employees with high levels of loyalty, you are not sure that the old job descriptions can or should be used. When the CEO asks for your input, how will you respond?

What Action Do You Take?

A.

Recommend that GDI follows a basic HR strategy of Bargain Laborer.

B.

Recommend that GDI follows a basic HR strategy of Loyal Soldier.

C.

Recommend that GDI follows a basic HR strategy of Committed Expert.

Incorrect Responses A. Bargain Laborer is a cost strategy that has an emphasis on efficiency and standardization, but it would result in a preference for an external labor orientation rather than employee loyalty.

C. Committed Expert is focused on employee loyalty but is a differentiation strategy that prefers innovation and experimentation to efficiency that GDI is seeking.

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On-Line Human Resource Management Experiences Job Design: Creating New Positions at Graphics Design, Inc. Summary of Steps Taken: 1. Recommend that GDI follows a basic HR strategy of Loyal Soldier because of its desire for increased efficiency and the fact that the company prefers employees with high levels of loyalty.

The Loyal Soldier HR strategy seems to align quite well with GDI’s philosophies. This strategy will result in increased efficiency, low autonomy, and a sequential processing form of interdependence. These items will correspond with improved performance when processes are fairly simple and require mostly physical inputs.

Let’s assume that you assist GDI complete a formal job analysis process to help clarify what is expected of workers. You’ve already received buy-in from senior management, chosen the jobs to analyze, found what has been written about the jobs, and chosen a sample of incumbents, supervisors, and subject matter experts (SMEs) to discuss the positions with. Consider what to do next.

What Action Do You Take?

A.

It’s now time to start creating the job descriptions through making a list of duties that use action words.

B.

It’s now time to begin creating job specifications by developing a list of characteristics needed to do the jobs.

C.

It’s now time to collect job information through the use of interviews, questionnaires, and observation.

Incorrect Responses A. It’s almost time to start the job description which will focus on the duties and responsibilities that employees in the job perform. While you may be able to write a portion of the job description already, it will be difficult to get very far without first going back to one of the other options.

B. Slow down! Job analysis is a very thorough and time-consuming process and you’re trying to get to the end a bit too quickly. Job specifications identify the knowledge, skills, and abilities that workers need to perform the identified tasks. This will be the last step in the job analysis process.

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On-Line Human Resource Management Experiences Job Design: Creating New Positions at Graphics Design, Inc. Summary of Steps Taken: 1. Recommend that GDI follows a basic HR strategy of Loyal Soldier because of its desire for increased efficiency and the fact that the company prefers employees with high levels of loyalty.

2. If GDI is completing a formal job analysis process to help clarify what is expected of workers and you’ve already received buy-in from senior management, chosen the jobs to analyze, found what has been written about the jobs, and chosen a sample of incumbents, supervisors, and subject matter experts (SMEs) to discuss the positions with, the next step is to collect job information through the use of interviews, questionnaires, and observation.

The collection of job information is a critical step in the job analysis process. Information can be obtained from mechanisms and can be obtained via any of the above methods. Three specific methods that can be used to collect the needed data are the task analysis inventory, critical incidents technique, and the Position Analysis Questionnaire (PAQ). For a more thorough form of job analysis that takes into account the strategic issues and a broader range of characteristics, it should be combined with competency modeling.

In terms of grouping work tasks together, you realize that GDI should use a mechanistic approach because of the emphasis on efficiency. As you explain that approach to the CEO, he tells you that GDI is also concerned about decreasing the number of errors employees can make. You can now recommend another approach to grouping work tasks.

What Action Do You Take?

A.

Recommend that GDI place some emphasis on the motivational approach.

B.

Recommend that GDI place some emphasis on the perceptual approach.

C.

Recommend that GDI place some emphasis on the biological approach.

Incorrect Responses A. The mechanistic approach and motivational approach are actually exact opposites of one another. This approach is concerned with designing jobs that are challenging, and thus will increase workers’ intrinsic motivation.

C. The biological approach can work well for companies with a Loyal Soldier HR strategy but the emphasis here is on designing jobs to prevent injuries, not on reducing the number of errors that employees make.

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On-Line Human Resource Management Experiences Job Design: Creating New Positions at Graphics Design, Inc. Summary of Steps Taken: 1. Recommend that GDI follows a basic HR strategy of Loyal Soldier because of its desire for increased efficiency and the fact that the company prefers employees with high levels of loyalty.

2. If GDI is completing a formal job analysis process to help clarify what is expected of workers and you’ve already received buy-in from senior management, chosen the jobs to analyze, found what has been written about the jobs, and chosen a sample of incumbents, supervisors, and subject matter experts (SMEs) to discuss the positions with, the next step is to collect job information through the use of interviews, questionnaires, and observation.

3. In terms of grouping work tasks together, you realize that GDI should use a mechanistic approach because of the emphasis on efficiency. Since they also have a concern about decreasing the number of errors employees can make, you also recommend placing some emphasis on the perceptual approach.

Job designers using the perceptual approach group tasks together in ways that help workers to process information better. The basic objective of this approach is to simplify mental demands on workers and thereby decrease errors which will also result in more safety and the prevention of accidents.

Lastly, you convince the company that they should consider some form of family-friendly scheduling alternative to help keep employees home with their families a little more often. The CEO’s not crazy about this idea, but asks for any suggestions you may have. Keep the Loyal Soldier strategy in mind.

What Action Do You Take?

A.

Recommend that GDI implement an alternative work location option (telecommuting).

B.

Recommend that GDI implement a flexible work schedule (flextime).

C.

Recommend that GDI implement a compressed workweek schedule (4-day workweeks).

Incorrect Responses A. Telecommuting (working from home) can be an attractive option for trusted employees in certain positions as advances in technology have made it very easy to stay connected with the office through voice and data services. It can work well with the motivational approach and therefore should not be considered further

by GDI.

B. Flextime is a nice feature in that employees have the freedom to decide when they arrive and leave work as long as they are present during core working hours. Flextime is most useful for organizations pursuing differentiation strategies and does not align well with GDI.

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On-Line Human Resource Management Experiences Job Design: Creating New Positions at Graphics Design, Inc. Summary of Steps Taken: 1. Recommend that GDI follows a basic HR strategy of Loyal Soldier because of its desire for increased efficiency and the fact that the company prefers employees with high levels of loyalty.

2. If GDI is completing a formal job analysis process to help clarify what is expected of workers and you’ve already received buy-in from senior management, chosen the jobs to analyze, found what has been written about the jobs, and chosen a sample of incumbents, supervisors, and subject matter experts (SMEs) to discuss the positions with, the next step is to collect job information through the use of interviews, questionnaires, and observation.

3. In terms of grouping work tasks together, you realize that GDI should use a mechanistic approach because of the emphasis on efficiency. Since they also have a concern about decreasing the number of errors employees can make, you can also recommend placing some emphasis on the perceptual approach.

4. To stay within their Loyal Soldier strategy, you convince the company that they should consider implementing a compressed workweek scheduling option to help keep employees home with their families a little more often.

Excellent! The compressed workweek alternative may be a good option for GDI as it will allow employees to work full-time hours in fewer than five days per week. Employees can be scheduled to work at the same time each day, and setup costs can be minimized by longer shifts.

You’ve now worked your way through the job analysis process. Although this may seem like a very tedious and time-consuming process, the organization will benefit greatly from the productive and satisfying work the employees will feel as a result. It can also help tremendously in keeping the number of potential legal hurdles to a minimum in terms of what knowledge, skills, and abilities truly are needed to perform specific jobs. Next up is recruiting talented employees.

For More Information:_________________________________________________________ A number of Web sites are available for more information on Job Analysis, Competency Models, and Work-Life Balance issues: • • • • • • •

http://www.shrm.org/ - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. http://www.workforce.com/index.html – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. http://www.job-analysis.net/ - Job Analysis Network. http://online.onetcenter.org/ - Occupational Information Network. http://www.opm.gov/studies/transapp.pdf - Competency Model example for HR professionals. http://www.worklifebalance.com/ - Work/Life balance issues.

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On-Line Human Resource Management Experiences Strategic Recruitment: Finding the Right People for Graphics Design, Inc. It’s time to start trying to attract potential employees to fill the newly created positions with GDI. You have many decisions to consider, including which recruiting sources to use, what skill scope is needed, and what type of message to convey to applicants. You also need to consider the HR planning process and the fact that the basic HR strategy of GDI is that of Loyal Soldier. What will be your first recommendation to the GDI management team when you meet with them in the next several days?

What Action Do You Take?

A.

Focus on finding employees who fit the organizational culture and who will stay a long time; strive for lots of applicants as no specialized skills are needed; promote from within when possible; provide realistic job previews.

B.

Focus on finding employees who fit the organizational culture and who will stay a long time; keep the number of applicants small since loyalty is a key; promote from within when possible; provide idealistic job previews.

C.

Focus on finding employees who have specialized skill sets and who will stay a long time; strive for lots of applicants; hire externally as often as possible to avoid taking proven resources from within promote from within; provide realistic job previews.

Incorrect Responses B. This answer has some correct components but the Loyal Soldier strategy would not want to minimize the number of applicants and would not provide idealistic job previews.

C. This answer has some correct components but the Loyal Soldier strategy would not want to focus on specialized skills sets at the expense of fitting the organization’s culture and would not want to hire externally if there are qualified employees internally who could be promoted.

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On-Line Human Resource Management Experiences Strategic Recruitment: Finding the Right People for Graphics Design, Inc. Summary of Steps Taken: 1. GDI should focus on finding employees who fit the organizational culture and who will stay a long time; strive for lots of applicants as no specialized skills are needed; promote from within when possible; and provide realistic job previews.

The above features are all in alignment with a basic HR strategy of a Loyal Soldier. This broad skill scope strategy seeks to recruit people with specialized skills and abilities and aligns with other cost strategies. Internal recruiting will help form long-term relationships with employees.

Realistic job previews will share both positive and negative information about the organization and job, thus helping employees develop accurate expectations and subsequently reducing turnover. Recruiting practices are shown to be more successful when they are aligned with the organization’s HR strategy.

In terms of the HR planning process, GDI has finished assessing the current employment levels.

The owner asks what they should do next.

What Action Do You Take?

A.

Recommend that GDI next predict employee movement.

B.

Recommend that GDI next begin planning external hiring.

C.

Recommend that GDI next predict future needs.

Incorrect Responses A. Predicting employee movement is the third step in the HR planning process. These predictions are based on the assumption that past patterns will be repeated in the future.

Historical data is assessed to determine how many employees in each job category can be expected to quit or be terminated in the near future.

B. While very important, planning external hiring is the fourth and final step in the HR planning process. It simply can’t come any sooner in the process as it combines the information from the first three steps. The difference between the number of people needed and the number available is the estimate of the number of external hires needed.

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On-Line Human Resource Management Experiences Strategic Recruitment: Finding the Right People for Graphics Design, Inc. Summary of Steps Taken: 1. GDI should focus on finding employees who fit the organizational culture and who will stay a long time; strive for lots of applicants as no specialized skills are needed; promote from within when possible; and provide realistic job previews.

2. In terms of the HR planning process, GDI has finished assessing the current employment levels. You recommend that the next step be for them to predict future needs.

The second step in the HR planning process is indeed to predict future needs. This process begins by assessing environmental trends. One common method for making employment predictions is to assume that HR needs will match expected trends for goods and services. The overall goal of the second step is to combine information from the environment with the organization’s competitive objectives in order to forecast the number of employees needed in particular jobs.

The GDI management team has completed the planning process and knows it must start the search for several external employees. Based on Loyal Soldier strategy, which type of person looking for work do you recommend they target?

What Action Do You Take?

A.

Recommend that GDI focus their searches primarily on people who have been in the workforce but are currently unemployed.

B.

Recommend that GDI focus their searches primarily on people entering the workforce for the first time.

C.

Recommend that GDI focus their searches primarily on people employed but seeking a different job.

Incorrect Responses A. There is a lot of academic research that explores the negative attitudes associated with being unemployed. This includes decreased physical and mental health, lower life satisfaction, and increased marital and family problems. Companies with a Bargain Laborer strategy who have a constant need for new employees willing to work for low wages may benefit from recruiting unemployed people.

C. People who search for alternative jobs while still employed tend to be intelligent, agreeable, open to new experiences, and less prone to worry. A constant need for people with highly specialized skills makes efforts to recruit people currently working an important target for companies with a Free Agent strategy. Be careful to avoid talent wars though and remember that the employees could leave you just as easily.

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On-Line Human Resource Management Experiences Strategic Recruitment: Finding the Right People for Graphics Design, Inc. Summary of Steps Taken: 1. GDI should focus on finding employees who fit the organizational culture and who will stay a long time; strive for lots of applicants as no specialized skills are needed; promote from within when possible; and provide realistic job previews.

2. In terms of the HR planning process, GDI has finished assessing the current employment levels. You recommend that the next step be for them to predict future needs.

3. When searching for external employees to fill open positions, recommend that GDI focus their searches primarily on people entering the workforce for the first time because of its Loyal Soldier strategy.

Although the Loyal Soldier strategy has a preference for filling open positions from within the organization, it’s simply not possible to do that with every open job. When they do need to look at external candidates, GDI should place considerable emphasis on people just graduating from school and entering the workforce for the first time. Applicants and organizations at this level are expected to carefully examine the potential fit that is critical for long-term relationships.

Not all open jobs needing external candidates can be filled by new graduates. When GDI needs to use other common recruiting sources to attract quality candidates, which approaches would you recommend that will most align with their Loyal Soldier strategy?

What Action Do You Take?

A.

Recommend a combination of print advertising and internal job postings.

B.

Recommend the use of private employment agencies and internal job postings.

C.

Recommend employee referral programs and internal job postings.

Incorrect Responses A. Internal job postings are obviously correct for the Loyal Soldier strategy, however, newspaper advertising works especially well for the broad recruiting associated with the Bargain Laborer HR strategy. Advertising in specialized journals, on the other hand, is most helpful for companies with a Free Agent strategy.

B. Internal job postings are obviously correct for the Loyal Soldier strategy, however, private employment agencies (search firms) specialize in being able to recruit people who are employed but not actively seeking new positions. Because of their targeted approach, these agencies can be quite helpful for organizations pursuing a Free Agent strategy.

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On-Line Human Resource Management Experiences Strategic Recruitment: Finding the Right People for Graphics Design, Inc. Summary of Steps Taken: 1. GDI should focus on finding employees who fit the organizational culture and who will stay a long time; strive for lots of applicants as no specialized skills are needed; promote from within when possible; and provide realistic job previews.

2. In terms of the HR planning process, GDI has finished assessing the current employment levels. You recommend that the next step be for them to predict future needs.

3. When searching for external employees to fill open positions, recommend that GDI focus their searches primarily on people entering the workforce for the first time because of its Loyal Soldier strategy.

4. Other common recruiting sources you can recommend to GDI to align with their Loyal Soldier strategy include employee referral programs and internal job postings.

Great work! Internal job postings can be a great source for either the Loyal Soldier or Committed Expert strategies because of their focus on internal recruiting strategies. A good possibility for recruiting success from outside the firm is the use of employee referral programs. In fact, a majority of HR professionals believe that employee referrals are the single most effective method of recruiting as it is assumed that employees will not refer someone that may make them look bad to their employer. Referrals can be effective for organizations pursuing any HR strategy, as can electronic recruiting for that matter. If recruiting efforts do not focus on the right types of applicants, it is hard for any organization to find success over the long-term. The person you hire is only as good as the applicants you attract for the open positions. Next up, we will return to selection practices.

For More Information:_________________________________________________________ A number of Web sites are available for more information on the HR planning process, types of job seekers, common recruiting sources, and measures of recruiting effectiveness: • • • • • • • • •

http://www.shrm.org/ - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. http://www.workforce.com/section/06/ – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. www.monster.com – Job search and employer recruiting website. www.careerbuilder.com – Job search and employer recruiting website. www.hotjobs.com - Job search and employer recruiting website. www.recruiting.com – Variety of recruiting resources. www.recruitersnetwork.com – Variety of recruiting resources. http://humanresources.about.com/od/recruitingandstaffing/Employee_Planning_Recruiting_S electing_Staffing_and_Hiring.htm - Recruiting and Selection website.

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On-Line Human Resource Management Experiences Employee Selection: Choosing the Best of the Best for Graphics Design, Inc. You have identified several potential candidates for the new positions at GDI, and it is now time to begin the selection process. In designing the appropriate selection system for the company, you must consider reliability, validity, utility, legality, and acceptability along with common testing methods, information- gathering sources, and interview types. Whatever system you choose, you know that you’ll need to gain buy-in from the managers who need these new employees. You know, too, that the system must support GDI’s basic HR strategy, the Loyal Soldier strategy.

Your recommendations on the appropriate selection program are due this afternoon. What will it look like?

What Action Do You Take?

A.

To align with the Loyal Soldier strategy, recommend that GDI select long-term generalists who will fit with the overall organization and who are projected to have high potential and motivation.

B.

To align with the Loyal Soldier strategy, recommend that GDI select short-term specialists who will fit the job well and who are projected to have high achievement.

C.

To align with the Loyal Soldier strategy, recommend that GDI select long-term specialists who will fit with the overall organization and the job, as well as who are likely to have specific expertise.

Incorrect Responses B. Short-term specialists align with the Free Agent HR strategy. Hiring these people allows firms to quickly acquire needed expertise as new hires bring unique knowledge and skills to the organization. When the expertise is no longer needed, the employment relationship is ended.

C. Long-term specialists align with the Committed Expert HR strategy. Hiring people who can develop specialized skills over time enables organizations to create and keep a unique resource of talent that other organizations do not have. Employees are given time and resources to develop the needed skill sets.

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On-Line Human Resource Management Experiences Employee Selection: Choosing the Best of the Best for Graphics Design, Inc. Summary of Steps Taken: 1. To align with the Loyal Soldier strategy, recommend that GDI select long-term generalists who will fit with the overall organization and who are projected to have high potential and motivation.

The Loyal Soldier HR strategy focuses on long-term generalists who can develop the skills and knowledge for how things are done within a specific organization. While the lack of specific expertise allows firms to reduce payroll costs, the skills and abilities the employees develop over time are specific to the organization which reduces the chances of them leaving the company for another employer.

GDI’s previous selection methods consisted of unstructured interviews and reference checks.

You have recommended they alter their selection practices to consist of cognitive ability tests, personality tests, and structured interviews. The owner wants to know if there is any evidence that this new selection method can increase productivity in the workplace.

What Action Do You Take?

A.

Explain the concept of reliability and how it is concerned with the consistency of measurement. Discuss aspects of the test-retest method, alternate-forms method, split halves method, and inter-rater method.

B.

Explain the concept of validity and the two main types (content and criterion). Also discuss how these tests are applicable to all positions because of validity generalization.

C.

Explain the concept of utility (cost effectiveness) and how it examines increases in validity, number of people selected, average tenure, performance variability, ratio of applicants to hires, and costs.

Incorrect Responses A. The first question to ask about any selection procedure is whether it is reliable. Knowing in general how high reliability estimates should be makes both managers and HR better consumers of selection procedures. While the various reliability methods are all important, this option will not likely convince the owner that productivity will increase.

B. Once reliability has been established, the selection method’s validity is examined.

Knowing the content and criterion validity is of critical importance, but will not be able to convince the GDI team that an increase in productivity is in the future.

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On-Line Human Resource Management Experiences Employee Selection: Choosing the Best of the Best for Graphics Design, Inc. Summary of Steps Taken: 1. To align with the Loyal Soldier strategy, recommend that GDI select long-term generalists who will fit with the overall organization and who are projected to have high potential and motivation.

2. You have recommended that GDI alter their selection practices to consist of cognitive ability tests, personality tests, and structured interviews. To convince the owner that this new selection method can increase productivity in the workplace, explain the concept of utility (cost effectiveness) and how it examines increases in validity, number of people selected, average tenure, performance variability, ratio of applicants to hires, and costs.

The concept of utility is one that can be very effective at showing managers about the gains that can be expected from an improved selection procedure. Not only can it demonstrate the percent and dollar increases in productivity, it can also be used to show the percent decrease in hires needed to sustain the current level of output, percent increase in top performers, and percent decrease in bottom performers.

The utility presentation has impressed the GDI senior management team. You’re now ready to discuss your ideas for the information gathering and interview processes.

What Action Do You Take?

A.

Recommend a package consisting of applications, resumes, and unstructured interviews.

B.

Recommend a package consisting of applications, biodata, and structured interviews assessing fit that will examine personality, motivation, and social skills.

C.

Recommend a package consisting of applications, resumes, reference checks, and structured interviews assessing achievement that will examine job experiences and certifications in specific skills.

Incorrect Responses A. Not a bad choice, but resumes are more appropriate for companies recruiting specialists rather than generalists. Unstructured interviews are preferred by managers, but historically have been found to have less reliability and validity than structured interviews (although some recent research has brought that into question).

C. You won’t be the only person selecting this option as this set reflects a very common process for many organizations. Resumes are more appropriate for companies recruiting specialists rather than generalists. References have very questionable validity. Structured interviews assessing achievement are for organizations recruiting short-term specialists.

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On-Line Human Resource Management Experiences Employee Selection: Choosing the Best of the Best for Graphics Design, Inc. Summary of Steps Taken: 1. To align with the Loyal Soldier strategy, recommend that GDI select long-term generalists who will fit with the overall organization and who are projected to have high potential and motivation.

2. You have recommended that GDI alter their selection practices to consist of cognitive ability tests, personality tests, and structured interviews. To convince the owner that this new selection method can increase productivity in the workplace, explain the concept of utility (cost effectiveness) and how it examines increases in validity, number of people selected, average tenure, performance variability, ratio of applicants to hires, and costs.

3. You recommend an information gathering and interview process consisting of applications, biodata, and structured interviews assessing fit that will examine personality, motivation, and social skills.

Applications provide valuable information about work experiences, utility, and information about past achievements, potential, and fit. Biodata covers core traits and values and is good for longterm employees and measuring potential. Structured interviews assessing fit are for long-term generalists.

The last step in the selection process is to determine how to make the final decision. Remember that your primary selection methods are a cognitive ability test, personality test, and a structured interview. Recommend the method with the fewest potential problems.

What Action Do You Take?

A.

Recommend a multiple hurdles approach to also take advantage of the minimum cutoffs method.

B.

Recommend using banding which uses statistical analysis to identify scores that not be meaningfully different.

C.

Recommend using predictor weighting where statistical methods are used to determine the best set of weights.

Incorrect Responses A. This process requires that applicants have at least a minimum score on each assessment method before moving on to the next one. If inexpensive tests are given first, this approach can increase utility. However, decision makers may eliminate applicants without knowing how they would score on all tests.

B. While banding accounts for the fact that employment tests are not totally reliable and that slightly different test scores may just be the result of measurement error, banding is somewhat controversial as utility may be decreased because people with lower test scores (and lower potential to succeed) are hired.

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On-Line Human Resource Management Experiences Employee Selection: Choosing the Best of the Best for Graphics Design, Inc. Summary of Steps Taken: 1. To align with the Loyal Soldier strategy, recommend that GDI select long-term generalists who will fit with the overall organization and who are projected to have high potential and motivation.

2. You have recommended that GDI alter their selection practices to consist of cognitive ability tests, personality tests, and structured interviews. To convince the owner that this new selection method can increase productivity in the workplace, explain the concept of utility (cost effectiveness) and how it examines increases in validity, number of people selected, average tenure, performance variability, ratio of applicants to hires, and costs.

3. You recommend an information gathering and interview process consisting of applications, biodata, and structured interviews assessing fit that will examine personality, motivation, and social skills.

4. In terms of the final decision on which candidate(s) to select, recommend using predictor weighting where statistical methods are used to determine the best set of weights.

Great work! The process of predictor weighting is helpful for assuring that managers and HR people give appropriate attention to the information obtained from each of the selection methods.

It also allows for an applicant’s strength in one area to compensate for weakness in another area as well as for the most important selection methods to have a stronger influence on the final decision. You’ve now completed the challenging world of recruiting and selection. Just finding the best applicants isn’t enough. You’ve got to be able to select which ones are most likely to have the best performance on the job. Then once they are on board, you must be able to retain them. Speaking of which, we will now turn to the issue of employee retention and turnover.

For More Information:_________________________________________________________ A number of Web sites are available for more information on testing and employee selection methods: • • • • • • • •

http://www.shrm.org/ - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. http://www.workforce.com/section/06/ – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. http://www.hr-guide.com/selection.htm - Portion of the above website dedicated solely to selection. http://www.job-interview.net/ - Guide to interviewing. www.recruiting.com – Variety of recruiting resources. www.recruitersnetwork.com – Variety of recruiting resources. http://humanresources.about.com/od/recruitingandstaffing/Employee_Planning_Recruiting_S electing_Staffing_and_Hiring.htm - Recruiting and Selection website.

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On-Line Human Resource Management Experiences Turnover: Dealing with the Good, the Bad, and the Ugly at Global Telecommunications Another of your clients is Global Telecommunications. Global has adopted a Committed Expert HR strategy. Unfortunately, it has some potential turnover problems. In a few minutes, you will meet with a key member of senior management who has posted her resume on-line and is actively looking for a new job. How will you handle this discussion? Another problem concerns an employee who, in management’s view, is a detriment to his department and truly needs to be fired. He can be very emotional and is viewed as having a bad temper. Before this person can be fired, you will need to make sure all appropriate steps have been taken. This will be a challenging assignment. As you begin reviewing his file, the senior management member arrives for her meeting with you. Good luck – she doesn’t look happy to be here.

What Action Do You Take?

A.

Based on the Committed Expert HR strategy, you will recommend that the senior management member should leave because her loyalty is broken and that the problem employee be encouraged to leave or terminated because of his performance.

B.

Based on the Committed Expert HR strategy, you will recommend that the senior management member try to be retained and that the problem employee be encouraged to leave or terminated because of his performance.

C.

Based on the Committed Expert HR strategy, you will recommend that the senior management member try to be retained and that the problem employee be given another chance to improve his performance.

Incorrect Responses A. This would be the approach for a company following the Free Agent strategy where there is low emphasis on retaining high performers and high emphasis on removing low performers.

C. This would be the approach for a company following the Loyal Soldier strategy where there is high emphasis on retaining high performers and low emphasis on removing low performers.

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On-Line Human Resource Management Experiences Turnover: Dealing with the Good, the Bad, and the Ugly at Global Telecommunications Summary of Steps Taken: 1. Based on the Committed Expert HR strategy, you will recommend that the senior management member try to be retained and that the problem employee be encouraged to leave or terminated because of his performance.

The Committed Expert strategy places high emphasis on retaining high performers as well as on removing low performers. Retaining top performers helps build a workforce with unique skills that employees of other organizations do not have. Meanwhile, quickly identifying and removing individuals who do not fit the organizational culture or who are unable to develop the needed skill and motivation reduces the cost of bad hiring decisions.

In the meeting with the senior management member, you discover that she has been thinking of leaving the organization for some time now because she was passed over for a promotion and that she has considered both the positives and negatives of staying with the firm. Which path to voluntary turnover can be used to describe her decision-making process?

What Action Do You Take?

A.

The path she has used in making her decision is that of a comparison with other alternatives.

B.

The path that she has used in making her decision is that of a sense of dissatisfaction.

C.

The path she has used in making her decision is that of a calculated decision to leave.

Incorrect Responses A. This question is tricky as all the answers have some level of correctness to them. The incorrect issue with this choice though is that it implies that the decision was made after a careful comparison between the current job and a specific job elsewhere.

B. This question is tricky as all the answers have some level of correctness to them. The incorrect issue with this choice though is that in this path, no specific event can be identified as causing the employee to begin thinking about quitting.

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On-Line Human Resource Management Experiences Turnover: Dealing with the Good, the Bad, and the Ugly at Global Telecommunications Summary of Steps Taken: 1. Based on the Committed Expert HR strategy, you will recommend that the senior management member try to be retained and that the problem employee be encouraged to leave or terminated because of his performance.

2. In the meeting with the senior management member, you discover that she has been thinking of leaving the organization for some time now because she was passed over for a promotion and that she has considered both the positives and negatives of staying with the firm. The path to voluntary turnover you use to describe her decision-making process is that of a calculated decision to leave.

In this path, the decision to leave begins with an event that causes an individual to begin thinking about leaving the organization. The person does not make a quick decision though as options are weighed and the positives and negatives of leaving the company are examined. This decision is not influenced by alternative job opportunities. Potential items that may convince her to stay with the organization include specifying a career path, education programs or other learning, or maybe offering her a sabbatical.

Now it’s on to the problem employee. The company has done a good job of documenting his performance issues and appears to have followed the principles of due process. He was given a verbal warning about his performance a couple weeks ago. You get to determine the next level of discipline now that his performance has not improved.

What Action Do You Take?

A.

Suspend the employee without pay for 2 weeks and give him a final written warning.

B.

Give the employee a written warning that will be placed in his personnel file for 6 months.

C.

Terminate him from the organization immediately because the proper documentation is in order, he’s had plenty of chances, and because Global follows the Committed Expert strategy in which low performers are terminated quickly.

Incorrect Responses A. Depending on the organization’s policy, this may be the chosen approach but it is likely that there would be a step before this one would be chosen.

C. This may seem like the right answer because it is in line with the Committed Expert strategy; however, it seems a little harsh to terminate the employee already.

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On-Line Human Resource Management Experiences Turnover: Dealing with the Good, the Bad, and the Ugly at Global Telecommunications Summary of Steps Taken: 1. Based on the Committed Expert HR strategy, you will recommend that the senior management member try to be retained and that the problem employee be encouraged to leave or terminated because of his performance.

2. In the meeting with the senior management member, you discover that she has been thinking of leaving the organization for some time now because she was passed over for a promotion and that she has considered both the positives and negatives of staying with the firm. The path to voluntary turnover you use to describe her decision-making process is that of a calculated decision to leave.

3. Now it’s on to the problem employee. The company has done a good job of documenting his performance issues and appears to have followed the principles of due process. He was given a verbal warning about his performance a couple weeks ago. His performance has still not improved and you determine that the next level of discipline will be to give the employee a written warning that will be placed in his personnel file for 6 months.

The written warning definitely seems like the right approach as there may still be hope for the employee. A suspension without pay may result in financial hardship and termination is even more extreme at this stage.

Two months later, the employee has been suspended and after a few days back on the job starts a fight with a co-worker in the breakroom.

What Action Do You Take?

A.

Document the incident and give him one final chance since this offense was not related to his prior performance problems.

B.

Decide to terminate the employee but wait until Friday afternoon to let him collect pay for a few more days before informing him of his dismissal.

C.

Hold the dismissal meeting immediately, give the employee his final check, and escort him off the premises.

Incorrect Responses A. Not even the most compassionate employee advocate is going to support keeping this employee around after this latest incident.

It’s time for him to go.

B. Not a bad decision, but why wait and give him a chance to do some real harm. Plus, the sooner you terminate him, the sooner he can start trying to find another job. Give him some type of severance if you’re that concerned.

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On-Line Human Resource Management Experiences Turnover: Dealing with the Good, the Bad, and the Ugly at Global Telecommunications Summary of Steps Taken: 1. Based on the Committed Expert HR strategy, you will recommend that the senior management member try to be retained and that the problem employee be encouraged to leave or terminated because of his performance.

2. In the meeting with the senior management member, you discover that she has been thinking of leaving the organization for some time now because she was passed over for a promotion and that she has considered both the positives and negatives of staying with the firm. The path to voluntary turnover you use to describe her decision-making process is that of a calculated decision to leave.

3. Now it’s on to the problem employee. The company has done a good job of documenting his performance issues and appears to have followed the principles of due process. He was given a verbal warning about his performance a couple weeks ago. His performance has still not improved and you determine that the next level of discipline will be to give the employee a written warning that will be placed in his personnel file for 6 months.

4. Two months later, the employee has been suspended and after a few days back on the job starts a fight with a co-worker in the breakroom. Hold the dismissal meeting immediately, give the employee his final check, and escort him off the premises.

Excellent! Go ahead and end the employment relationship immediately. Many states require that terminated employees be given their final paychecks on their last day of employment so that would be a wise decision. Because of his recent aggressive behavior and temper, have a security person escort him out of the building and to his car. You’ve now successfully handled a couple difficult retention and separation issues and followed the right steps. While keeping the right employees around, remember that sometimes turnover is good for both the employee and the organization. Know when to try to salvage the relationship and when to part ways.

Next up is measuring performance and providing feedback.

For More Information:_________________________________________________________ A number of Web sites are available for more information on employee retention and separation, layoffs, and discipline: • • • • •

http://www.shrm.org/ - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. http://www.workforce.com/ – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. http://humanresources.about.com/od/retention/Retention_of_Employees_Tips_and_Tools_for _Employee_Retention.htm - Website dedicated to employee retention. http://humanresources.about.com/od/layoffsdownsizing/Downsizing_and_Layoff_Strategies.h tm - Website dedicated to downsizing and layoffs.

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On-Line Human Resource Management Experiences Performance Appraisal: Delivering Positive and Negative Feedback at Global Telecommunications It is performance appraisal time for Global Telecommunications. In the past, the company has had problems with several managers who either failed to complete appraisals of their employees, failed to distinguish among employees in any meaningful way, or failed to evaluate the appropriate information. The company has asked you to modify its appraisal program and to train managers on the benefits and techniques of good performance management programs. In particular, top management wants you to help the company better achieve its Committed Expert HR strategy. How will you modify the program and gain the needed buy-in from individual managers?

What Action Do You Take?

A.

Recommend that Global implement a parity-based performance management program where people are compared to standards (rather than to each other) because evaluating most employees highly encourages the development of long-term relationships and a sense of loyalty.

B.

Recommend that Global implement a merit-based performance management program where success is best accomplished by employees stretching to accomplish high goals and poor performers are encouraged to leave.

C.

Recommend that Global implement a merit-based performance management program where people are compared with others on relative measures and promotions depend on achieving results and performing better than others (outcomes).

Incorrect Responses A. The type of strategy described here is that of organizations aligned with the Loyal Soldier mentality. Committed Expert strategies call for the organization to use a merit-based system that distinguishes between the accomplishments of employees rather than trying to reward everyone equally.

B. You’re very close. The only real issue with this option is that it does not take into account that promotions are specifically based on performing better than others (outcomes). This option is aligned more with the Free Agent HR strategy.

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On-Line Human Resource Management Experiences Performance Appraisal: Delivering Positive and Negative Feedback at Global Telecommunications Summary of Steps Taken: 1. Recommend that Global implement a merit-based performance management program where people are compared with others on relative measures and promotions depend on achieving results and performing better than others (outcomes).

Merit-based systems use relative measures and encourage competition and stretch goals to foster innovation, creativity, and high quality. Promotions are indeed based on someone performing better than their peers. Outcomes are the key rather than the activities of employees (behavioral processes). Also, keep in mind that elements of job performance to be evaluated in any situation include task (declarative and procedural knowledge), citizenship behavior (organizational and interpersonal), and also counterproductive behaviors.

As you review last year’s performance appraisals, you notice that a couple managers tend to rate people either quite high on all categories or quite low on all categories. This makes you wonder if there is some type of rater bias taking place. Which type of rater error will you caution the managers about?

What Action Do You Take?

A.

Train the managers about the concept of central tendency error.

B.

Train the managers about the concept of halo error.

C.

Train the managers about the concept of primacy error.

Incorrect Responses A. Central tendency error occurs when the rater places almost everyone in the middle of the scale rather than distinguishing between them. This occurs when the rater dislikes separating people into categories.

C. Primacy error is the opposite of recency error. It is when a rater places too much emphasis on behavior that is first observed.

The rater makes an initial judgment and fails to account for later contributions that should alter the initial observation.

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On-Line Human Resource Management Experiences Performance Appraisal: Delivering Positive and Negative Feedback at Global Telecommunications Summary of Steps Taken: 1. Recommend that Global implement a merit-based performance management program where people are compared with others on relative measures and promotions depend on achieving results and performing better than others (outcomes).

2. As you review last year’s performance appraisals, you notice that a couple managers tend to rate people either quite high on all categories or quite low on all categories. This makes you wonder if there is some type of rater bias taking place and you train the managers about the concept of halo error.

Halo error occurs when a rater provides similar ratings for an employee on all the different dimensions of performance based on a general impression rather than on specific contributions.

The general impression in halo error can result in either very high performance ratings or very low ratings. While there are many methods for increasing rating accuracy, the most effective method is to help raters develop a consistent view of what represents good and bad performance. This approach is called frame-of-reference training and provides instruction and practice to help raters see different performance episodes in the same way.

There are many rating formats which exist for assessing performance of employees. The key to successful appraisal is to choose the format that best accomplishes the purpose of the appraisal.

The Global management team asks you which format you recommend to stay consistent with their Committed Expert strategy.

What Action Do You Take?

A.

Recommend that Global use the forced distribution rating format.

B.

Recommend that Global use the narrative ratings format.

C.

Recommend that Global use the forced rankings format.

Incorrect Responses B. Organizations that use narrative ratings ask raters to simply provide a written description of performance. This type of system makes it very difficult to compare the performance of different individuals and is therefore best for companies that don’t use employee comparisons in making decisions on training, promotions, and compensation.

C. Forced ranking occurs when a rater is required to rank all employees. This technique eliminates central tendency error and clearly distinguishes the top performers. Many supervisors are uncomfortable with ranking though so there is a better choice for Global considering some of the supervisors have failed to complete their appraisals in the past.

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On-Line Human Resource Management Experiences Performance Appraisal: Delivering Positive and Negative Feedback at Global Telecommunications Summary of Steps Taken: 1. Recommend that Global implement a merit-based performance management program where people are compared with others on relative measures and promotions depend on achieving results and performing better than others (outcomes).

2. As you review last year’s performance appraisals, you notice that a couple managers tend to rate people either quite high on all categories or quite low on all categories. This makes you wonder if there is some type of rater bias taking place and you train the managers about the concept of halo error.

3. There are many rating formats which exist for assessing performance of employees. The key to successful appraisal is to choose the format that best accomplishes the purpose of the appraisal. You recommend to the Global management team that they use the forced distribution rating format to stay consistent with their Committed Expert strategy.

The forced distribution format combines the numerical features of graphic ratings with the forced rating approach. This format requires that a certain percentage of employees be placed in each rating category. It allows the rater to give groups of employees the same rating but also forces the separation of employees into categories. Because they encourage competition, forced distribution formats emphasize merit and are most suitable for firms focusing on differentiation.

You recommend a 360-degree rating process where ratings are obtained from supervisors, peers, subordinates, employees themselves, and possibly even certain key customers. You’re asked for your recommendation on providing positive and negative feedback to employees.

What Action Do You Take?

A.

Develop a culture of ongoing feedback that encourages continuous learning and development; have leaders communicate high expectations to increase performance; be specific about communicating the best way to complete tasks.

B.

Develop a culture of ongoing feedback that encourages continuous learning and development; have leaders communicate high expectations to increase performance; avoid providing clear examples to support your points if they are negative.

C.

Develop a culture of ongoing feedback that encourages continuous learning and development; have leaders communicate high expectations to increase performance; be specific if communicating how to do clearly defined tasks.

Incorrect Responses A. The only error in this option is that specific feedback should not be given if it will discourage employees from seeking better ways to do something.

B. The only error here is that providing clear examples to support your points should always be done. When negative, focus the comments on the task though (not the employee).

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On-Line Human Resource Management Experiences Performance Appraisal: Delivering Positive and Negative Feedback at Global Telecommunications Summary of Steps Taken: 1. Recommend that Global implement a merit-based performance management program where people are compared with others on relative measures and promotions depend on achieving results and performing better than others (outcomes).

2. As you review last year’s performance appraisals, you notice that a couple managers tend to rate people either quite high on all categories or quite low on all categories. This makes you wonder if there is some type of rater bias taking place and you train the managers about the concept of halo error.

3. There are many rating formats which exist for assessing performance of employees. The key to successful appraisal is to choose the format that best accomplishes the purpose of the appraisal. You recommend to the Global management team that they use the forced distribution rating format to stay consistent with their Committed Expert strategy.

4. You recommend a 360-degree rating process where ratings are obtained from supervisors, peers, subordinates, employees themselves, and possibly even certain key customers. In terms of providing positive and negative feedback to employees, you recommend developing a culture of ongoing feedback that encourages continuous learning and development; having leaders communicate high expectations to increase performance; and being specific when communicating how to do clearly defined tasks.

Great work! Providing positive feedback will increase performance when linked to goals for continuous improvement. Negative feedback will increase performance when individuals receiving the feedback are confident in their abilities and the feedback is presented in a way that decreases negative emotions. It’s also important to combine feedback with goals for improvement. The next chapter will examine how training can improve performance.

For More Information:_________________________________________________________ A number of Web sites are available for more information on performance management systems, dimensions of job performance, types of performance measures / ratings, and giving feedback to employees: • • • • • •

http://www.shrm.org/ - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. http://www.workforce.com/ – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. http://humanresources.about.com/od/performancemanagement/Performance_Management_ Evaluation_Review_Improvement.htm - Website dedicated to performance management. http://www.managementhelp.org/perf_mng/perf_mng.htm - Website dedicated to performance management. http://www.opm.gov/perform/overview.asp - US Office of Personnel Management website.

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On-Line Human Resource Management Experiences The Art of Training: Finding the Right Program for Global Telecommunications Global Communications also wants your help in improving its training programs. One of the department managers is complaining that his employees “just don’t get it so they must need more training”. It doesn’t seem that this manager has very good communication skills, and you can understand why the employees may not be learning from him. To make matters even more challenging, the manager tells you he doesn’t have much of a budget for training, and he can’t afford to let his employees miss work for more than a few hours anyway. You start thinking about what can be done. Global really wants to use training to support the Committed Expert HR strategy. How should the training program be developed and carried out?

What Action Do You Take?

A.

Place an emphasis on hiring new employees who already possess the desired skills.

When training does occur, focus on providing superior service and innovation.

B.

Place an emphasis on training existing employees and have the training focus on providing superior service and innovation.

C.

Place an emphasis on training existing employees and focus the training on reducing costs and improving efficiency.

Incorrect Responses A. This action aligns with the Free Agent HR strategy rather than Committed Expert, which places an emphasis on training existing employees rather than hiring new ones.

C. This action aligns with the Loyal Soldier HR strategy rather than Committed Expert, which places an emphasis on training that focuses on providing superior service and innovation.

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On-Line Human Resource Management Experiences The Art of Training: Finding the Right Program for Global Telecommunications Summary of Steps Taken: 1. Place an emphasis on training existing employees and have the training focus on providing superior service and innovation.

Consistent with the Committed Expert focus on an internal labor orientation and on differentiation, this strategy places emphasis on current employees and on creativity and innovation. To have successful training programs, organizations must have managers, employees, and HR staff working in partnership and must use a systematic process for the design and development of training programs. This systematic process will consist of needs assessment, design and delivery, as well as evaluation.

If the decision is made that the needs assessment should include competency modeling, what type of needs assessment are you recommending and at what stage of that needs assessment does the competency modeling take place?

What Action Do You Take?

A.

Competency modeling can take place in organizations conducting a proactive needs assessment and takes place at the organization analysis stage.

B.

Competency modeling can take place in organizations conducting a reactive needs assessment and takes place at problem definition stage.

C.

Competency modeling can take place in organizations conducting a proactive needs assessment and takes place at the task analysis stage.

Incorrect Responses A. While competency modeling can take place in organizations conducting a proactive needs assessment, it occurs later in the process than the organization analysis stage.

B. As you may recall from Chapter 4, competency modeling results in broader, more worker-focused training. Thus, it would be a form of proactive (rather than reactive) needs assessment.

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On-Line Human Resource Management Experiences The Art of Training: Finding the Right Program for Global Telecommunications Summary of Steps Taken: 1. Place an emphasis on training existing employees and have the training focus on providing superior service and innovation.

2. If the decision is made that the needs assessment should include competency modeling, you recommend that Global conduct a proactive needs assessment in which the competency modeling serves as a variation of task analysis.

Competency modeling is a form of task analysis that can take place in proactive needs assessment. One benefit is lower cost. While it aligns the values of the employees with those of the organization, one concern is that it does not involve determining specific competencies for each job within the organization. Needs assessment is a critical component of the training process as it determines who should be trained and what the training should include. Whether proactive or reactive, it just needs to be done.

A few weeks have passed and needs assessment is done and you have started developing a training program based on theory and research from the academic literature. If Global wants to effectively train these employees on knowledge, skills, and attitudes and have the best of chance of transfer (regardless of cost), what method will you recommend?

What Action Do You Take?

A.

Recommend that the training method be a simulation.

B.

Recommend that the training method be a case study.

C.

Recommend simple classroom style presentation as the best training method.

Incorrect Responses B. Case analysis is an active training method in which trainees discuss, analyze, and solve problems based on real or hypothetical situations. A case study can teach knowledge, but skills and attitudes are not always trainable through this approach. Also, the likelihood of transfer is only medium.

C. Presentation is the primary passive method of instruction. While lectures have a bad reputation, research suggests that people do learn from them. Also, they are an efficient way for many learners to receive the same content and gain the same knowledge.

Likelihood of transfer is quite low however and learners are not given an opportunity to apply what is being learned.

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On-Line Human Resource Management Experiences The Art of Training: Finding the Right Program for Global Telecommunications Summary of Steps Taken: 1. Place an emphasis on training existing employees and have the training focus on providing superior service and innovation.

2. If the decision is made that the needs assessment should include competency modeling, you are recommending that Global conduct a proactive needs assessment in which the competency modeling serves as a variation of task analysis.

3. A few weeks have passed and needs assessment is done and you have started developing a training program based on theory and research from the academic literature. If Global wants to effectively train these employees on knowledge, skills, and attitudes and have the best of chance of transfer (regardless of cost), you recommend that the training method be a simulation.

Simulations are active methods that reproduce events, processes, and circumstances that occur on the job. It gives the trainees the opportunity to experience at least some aspects of their job in a safe controlled environment and build skills relevant to those aspects of the job. They can be used to train knowledge and skills and possibly even attitudes. While the cost of development is high and cost of administration is medium, the likelihood of transfer with this approach is high.

Several months later, training is now completed. Global did a nice job of enhancing transfer before training (preparation), during training (relapse prevention and generalizability back to the job), and after training (opportunity to perform). If they want to capture as much data as they can about the three primary purposes of evaluation (feedback for designers and trainers, input about whether to continue the program, and information that can be used to market the program), what would you recommend be their primary target of evaluation?

What Action Do You Take?

A.

Recommend that Global collect and analyze data about training content and design.

B.

Recommend that Global collect and analyze data about changes in learners.

C.

Recommend that Global collect and analyze data about organizational payoffs.

Incorrect Responses A. Training content and design can be assessed to provide feedback to designers and trainers that help improve the training program.

It can be examined before, during, or after training has been completed. There is a more thorough choice though.

B. Changes in learners can be measured to provide feedback and make decisions about whether or not to continue providing the training. There is a more thorough choice though.

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On-Line Human Resource Management Experiences The Art of Training: Finding the Right Program for Global Telecommunications Summary of Steps Taken: 1. Place an emphasis on training existing employees and have the training focus on providing superior service and innovation.

2. If the decision is made that the needs assessment should include competency modeling, you are recommending that Global conduct a proactive needs assessment in which the competency modeling serves as a variation of task analysis.

3. A few weeks have passed and needs assessment is done and you have started developing a training program based on theory and research from the academic literature. If Global wants to effectively train these employees on knowledge, skills, and attitudes and have the best of chance of transfer (regardless of cost), you recommend that the training method be a simulation.

4. Several months later, training is now completed. Global did a nice job of enhancing transfer before training (preparation), during training (relapse prevention and generalizability back to the job), and after training (opportunity to perform). To capture as much data as possible about the three primary purposes of evaluation (feedback for designers and trainers, input about whether to continue the program, and information that can be used to market the program), you recommend their primary target of evaluation be to collect and analyze data about organizational payoffs.

Nice job! Collecting and analyzing data about organizational payoffs can be collected and used for all three primary purposes of evaluation. The full training evaluation process typically consists of four steps (determining the purpose of evaluation, deciding on relevant outcomes, choosing an evaluation design, as well as collecting an analyzing the data and reporting the results). Training can boost employees’ commitment and motivation. It can also help employees perform work more effectively and efficiently, as well as help organizations meet their overall strategic objectives. Your next journey will be into the world of employee and career development.

For More Information:_________________________________________________________ A number of Web sites are available for more information on training strategies, needs assessment, design and delivery, methods and media, and training evaluation: • • • • • •

http://www.shrm.org/ - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. http://www.workforce.com/section/11/ – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. http://humanresources.about.com/od/training/Training_Development_and_Education_for_Em ployees.htm - Website dedicated to training and development. http://www.managementhelp.org/trng_dev/basics/reasons.htm - Reasons for training employees. http://www.allbusiness.com/human-resources/careers-job-training/1465-1.html - Tips for employee training.

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On-Line Human Resource Management Experiences Career Development: Building a Workforce for Long-Term Success at Global Telecommunications Global has been quite impressed with your work. Now top management has asked you to help the company with the issue of career development. Members of the top management team have decided to try using a competency model program to attempt to align the values and vision of Global’s employees with those of the organization. They feel that this will lead to better employee retention and higher commitment. They would like you to evaluate whether this plan aligns with Global’s basic HR strategy – that of a Committed Expert. You should also be prepared to discuss with them any other critical career management dilemmas that they may encounter.

What Action Do You Take?

A.

Recommend that Global focus on developing skills of existing employees and focus on developing skills needed for high level service and innovation.

B.

Recommend that Global focus on developing skills of existing employees and focus on low-cost alternatives to development.

C.

Recommend that Global focus on attracting experienced employees from the external labor market (such as from competitors) and focus on developing skills needed for high level service and innovation.

Incorrect Responses B. Global would focus on developing skills needed for high level service and innovation, not on low-cost alternatives to development.

The approach described here aligns with the Loyal Soldier HR strategy.

C. Global would focus on developing skills of its own internal employees rather than on attracting external employees (even if they were from a competitor). The approach described here aligns with the Free Agent HR strategy.

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On-Line Human Resource Management Experiences Career Development: Building a Workforce for Long-Term Success at Global Telecommunications Summary of Steps Taken: 1. Recommend that Global focus on developing skills of existing employees and focus on developing skills needed for high level service and innovation.

Companies that rely on the Committed Expert strategy rely on internal supplies of labor to fill positions whenever possible to do so. They have more extensive development programs because they must create the pool of employees that they’ll use in the future (even if the industry and company change). Firms pursuing a differentiation strategy also must use development to foster high-quality service and innovation. They are less concerned with controlling costs than with gaining a competitive advantage by offering superior products or services. And to answer the initial question, a competency model program would work fine in the Committed Expert HR strategy.

In terms of how organizations can help employees develop, Global plans to implement a developmental relationship program through mentoring new employees when they join the organization. The management team wants your recommendations on what the mentoring program should look like.

What Action Do You Take?

A.

Recommend that program encourages proximity, provides an orientation that trains both mentors and protégés, and assigns a mentor similar in age to the new hire so that the new employee will feel comfortable with the person.

B.

Recommend that the program encourages proximity, provides an orientation that trains both mentors and protégés, and chooses someone from a department from which there would normally be little interaction to gain insight into other parts of the business.

C.

Recommend that the program encourages proximity, provides an orientation that trains both mentors and protégés, and allows them to have an input on the type of person with whom they are matched.

Incorrect Responses A. The early portion of this answer is correct but the phrase on age may be an issue as Global’s plan should be to end up with a less experienced person paired with a more experienced person who can contribute to personal and professional growth.

B. The early portion of this answer is fine but the part about choosing someone from a department they will never interact with does not make much sense as career advice and sponsoring of the new employee may be irrelevant in this situation.

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On-Line Human Resource Management Experiences Career Development: Building a Workforce for Long-Term Success at Global Telecommunications Summary of Steps Taken: 1. Recommend that Global focus on developing skills of existing employees and focus on developing skills needed for high level service and innovation.

2. In terms of how organizations can help employees develop, Global plans to implement a developmental relationship program through mentoring new employees when they join the organization. You recommend that the program encourages proximity, provides an orientation that trains both mentors and protégés, and allows them to have an input on the type of person with whom they are matched.

Academic research has found that providing high-quality training to mentors and protégés and allowing them to have an input on the type of person with whom they are matched contributes to participants reporting that the program was effective. Mentors can greatly assist new employees by providing career benefits (such as offering challenging work experiences, providing advice, and sponsoring the employee for promotions and other opportunities). The mentor can also provide psychological and social benefits by helping the new employee build a sense of identity and personal competence.

Forward-looking companies help employees to manage their development using the career development process. This is a series of steps that helps employees identify and pursue career goals and the developmental goals to help them achieve those career goals. At which stage of the career development process would you recommend that Global have employees create milestones or achievements for the future?

What Action Do You Take?

A.

Global should have the creation of milestones or achievements come during the action planning stage of the career development process.

B.

Global should have the creation of milestones or achievements come during the goal setting stage of the career development process.

C.

Global should have the creation of milestones or achievements come during the self assessment stage of the career development process.

Incorrect Responses A. You’re jumping ahead a bit in the process.

During the action planning stage (the last stage), employees make plans for how they will accomplish their goals. In most cases, action planning means selecting developmental opportunities appropriate to the goal.

C. Self-assessment is actually the first phase in the career development process. During that stage, employees determine their interests, values, personalities, and skills. This stage often involves psychological tests like the Self-Directed Search (SDS) which helps employees gain insight into their interests, skills, and desired working conditions.

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On-Line Human Resource Management Experiences Career Development: Building a Workforce for Long-Term Success at Global Telecommunications Summary of Steps Taken: 1. Recommend that Global focus on developing skills of existing employees and focus on developing skills needed for high level service and innovation.

2. In terms of how organizations can help employees develop, Global plans to implement a developmental relationship program through mentoring new employees when they join the organization. You recommend that the program encourages proximity, provides an orientation that trains both mentors and protégés, and allows them to have an input on the type of person with whom they are matched.

3. Forward-looking companies help employees to manage their development using the career development process. This is a series of steps that helps employees identify and pursue career goals and the developmental goals to help them achieve those career goals. You recommend that Global have employees create milestones or achievements for the future during the goal setting stage of the career development process.

Examples of items covered in the goal setting stage (third stage) include positions to achieve, skills to be gained, and development efforts to pursue. By the way, the second stage of the goal setting process is the reality check. During that stage, employees gather information to determine whether their self assessments are realistic and how they fit with opportunities in the labor market and with their current employer’s future labor needs.

As you know there are many career development challenges. One of them is new employee orientation (the process of bringing people into the organization and helping them adjust so they can perform their work effectively). You’ve been asked to modify Global’s existing program.

What Action Do You Take?

A.

Design a new hire orientation program that consists of the first full day of employment spent in HR covering paperwork, benefits, vision, mission, values, history, and philosophies of the company and ending the day with a tour of the facility.

B.

Design a new hire orientation program that includes the above features but adds the ability to meet with key members of the new employee’s own department too.

C.

Design a new hire orientation program that keeps the features above but makes the process a series of ongoing events that includes HR, the new employee’s own department, as well as other key members of the organization.

Incorrect Responses A. This option is a good start to the HR portion of the program, but needs to include other departments as well, especially some representation from the department the new employee will be working in.

B. This option is even better but is forgetting that the orientation process is not a one-day event, but an ongoing process that may include several sessions (even if it does take the employees away from performing the job functions they were hired to complete).

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On-Line Human Resource Management Experiences Career Development: Building a Workforce for Long-Term Success at Global Telecommunications Summary of Steps Taken: 1. Recommend that Global focus on developing skills of existing employees and focus on developing skills needed for high level service and innovation.

2. In terms of how organizations can help employees develop, Global plans to implement a developmental relationship program through mentoring new employees when they join the organization. You recommend that the program encourages proximity, provides an orientation that trains both mentors and protégés, and allows them to have an input on the type of person with whom they are matched.

3. Forward-looking companies help employees to manage their development using the career development process. This is a series of steps that helps employees identify and pursue career goals and the developmental goals to help them achieve those career goals. You recommend that Global have employees create milestones or achievements for the future during the goal setting stage of the career development process.

4. One of the many career development challenges is new employee orientation, the process of bringing people into the organization and helping them adjust so they can perform their work effectively. In modifying Global’s existing program, you design a new hire orientation program that consists of the first full day of employment spent in HR covering paperwork, benefits, vision, mission, values, history, and philosophies of the company and ending the day with a tour of the facility. It also includes the ability to meet with key members of the new employee’s own department and makes the process a series of ongoing events that includes HR, the new employee’s own department, as well as other key members of the organization.

Excellent work! Research has found that employees who attend orientation programs have significantly higher levels of affective organizational commitment than those who do not attend.

In addition to orientation, other career development challenges that may well need to be addressed include preventing employee burnout, helping employees balance work with personal lives, and developing a diverse workforce. Failing to meet these challenges may be enough to cause employees to leave the organization. An organization’s employee development practices are strategic when they help the organization maintain a continual supply of talented and committed employees. Next up is using compensation to motivate the workforce.

For More Information:_________________________________________________________ A number of Web sites are available for more information on the employee / career development and critical career management challenges that organizations face: • • • • •

http://www.shrm.org/ - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. http://www.workforce.com/ – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. http://humanresources.about.com/od/careerplanningandadvice1/Success_in_Career_and_Pe rsonal_Development_and_Management.htm - Website dedicated to career development. http://www.managementhelp.org/career/career.htm - Website dedicated to career development.

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On-Line Human Resource Management Experiences How Much to Pay: Finding the Right Balance at SuperFoods Word of your consulting success is spreading rapidly, and SuperFoods has retained your services to help management evaluate the company’s compensation strategy and practices. The basic HR strategy of SuperFoods, a producer of dairy products, is to keep pay levels low but to ensure fairness. As you talk with the top managers about their beliefs concerning pay, it becomes quite clear to you how you can help them align the company’s compensation strategy with its overall competitive strategy. The management team has asked for your input on various aspects of compensation. What will you include in your recommendations that will allow the company to retain its current HR strategy?

What Action Do You Take?

A.

Recommend that SuperFoods follow the Free Agent (Variable Transactional) HR strategy.

B.

Recommend that SuperFoods follow the Bargain Laborer (Uniform Transactional) HR strategy.

C.

Recommend that SuperFoods follow the Loyal Soldier (Uniform Relational) HR strategy.

Incorrect Responses A. The Free Agent approach suggests high pay levels and short-term incentives so that does not align with SuperFoods’ goal of low pay levels and consistent processes.

C. The Loyal Soldier approach suggests similar pay levels for everyone and rewards for employee loyalty so that does not align with SuperFoods’ goal of low pay levels and consistent processes.

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On-Line Human Resource Management Experiences How Much to Pay: Finding the Right Balance at SuperFoods Summary of Steps Taken: 1. Recommend that SuperFoods follow the Bargain Laborer (Uniform Transactional) HR strategy.

The SuperFoods’ goal of low pay levels and fair, consistent processes aligns very well with the Bargain Laborer (Uniform Transactional) HR strategy. Uniform compensation seeks to build a sense of teamwork by paying employees similarly regardless of performance level. Transactional commitments emphasize short-term pay and bonuses. Uniform transactional compensation fits with a Bargain Laborer HR strategy by reducing labor costs. Because pay is lower than it probably should be, an important aspect of compensation in these organizations is to develop fair and uniform practices that increase perceptions of fairness.

The SuperFoods’ senior management team wants you to recommend any theories of motivation that will work for them while still following their Bargain Laborer HR strategy.

What Action Do You Take?

A.

Recommend that SuperFoods can use the reinforcement theory to increase employee motivation.

B.

Recommend that SuperFoods can use the expectancy theory to increase employee motivation.

C.

Respond that while there are many theories of motivation, SuperFoods will likely not have much luck getting any of them to significantly increase employee motivation because of the low pay approach of the Bargain Laborer.

Incorrect Responses A. Reinforcement theory suggests that people engage in behavior when they receive desirable consequents. These consequents only motivate behavior though when they are contingent. In terms of compensation, this suggests that higher pay should be given if and only if performance is high (i.e. pay for performance plans). This theory will likely not provide significant benefit to a Bargain Laborer.

B. Expectancy theory asserts that people are motivated when they have three beliefs: valence, instrumentality, and expectancy.

Valence is belief that a certain reward is valuable. Instrumentality is the belief that the reward will be given if the desired outcome is met. Expectancy concerns people’s belief that they can actually achieve the desired outcome.

This theory will likely not provide significant benefit to a Bargain Laborer.

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On-Line Human Resource Management Experiences How Much to Pay: Finding the Right Balance at SuperFoods Summary of Steps Taken: 1. Recommend that SuperFoods follow the Bargain Laborer (Uniform Transactional) HR strategy.

2. The SuperFoods’ senior management team wants you to recommend any theories of motivation that will work for them while still following their Bargain Laborer HR strategy.

Unfortunately, you have to let them know that they will likely not have much luck getting any of them to significantly increase employee motivation because of the low pay approach of the Bargain Laborer.

While one or more of the theories of motivation (reinforcement, goal setting, justice, expectancy, and agency) may provide some increased motivation to the SuperFoods’ employees, uniform compensation practices are not nearly as effective as variable compensation practices for encouraging high motivation. The goal with uniform practices is instead to create a culture of fairness and cooperation. Incentives that encourage high individual performance can lead to sabotage, which reduces the performance of the group as a whole. With a Bargain Laborer strategy seeking to pay the lowest possible wages, employees are likely to move from organization to organization depending on which organization is willing to pay the most.

The conversation next turns to pay level strategies and how the compensation structure is determined. The SuperFoods’ management team is looking for more positive news with this set of recommendations (but still wants to keep their current strategy).

What Action Do You Take?

A.

Recommend that they continue to focus on the lag-the-market pay strategy but strive to reach the meet-the-market level. In terms of compensation structure, recommend a skillbased pay approach.

B.

Recommend that they continue to focus on the lag-the-market pay strategy but strive to reach the meet-the-market level. In terms of compensation structure, recommend a jobbased pay approach.

C.

Recommend that they move to a lead-the-market pay strategy to attract top-quality workers. In terms of compensation structure, recommend a job-based pay approach.

Incorrect Responses A. The pay strategy in this choice is fine, but skill-based pay does not make much sense as it uses differences in employee skills as the basis for determining pay. In that approach, employees are given an opportunity to earn more as they develop more skills (very inconsistent with SuperFoods’ Bargain Laborer strategy).

C. While a move to a lead-the-market pay strategy would indeed attract better quality applicants, this approach simply does not make sense to a company focused on maintaining a Bargain Laborer HR strategy. The job-based pay approach in the second half of this answer is correct though.

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On-Line Human Resource Management Experiences How Much to Pay: Finding the Right Balance at SuperFoods Summary of Steps Taken: 1. Recommend that SuperFoods follow the Bargain Laborer (Uniform Transactional) HR strategy.

2. The SuperFoods’ senior management team wants you to recommend any theories of motivation that will work for them while still following their Bargain Laborer HR strategy.

Unfortunately, you have to let them know that they will likely not have much luck getting any of them to significantly increase employee motivation because of the low pay approach of the Bargain Laborer.

3. The conversation next turns to pay level strategies and how the compensation structure is determined. Recommend that they continue to focus on the lag-the-market pay strategy but strive to reach the meet-the-market level. In terms of compensation structure, recommend a job-based pay approach.

While a lag-the-market pay strategy probably makes the most sense for a company such as SuperFoods, it is possible for Bargain Laborers to be at meet-the-market in terms of pay (average level for other organizations). With job-based pay, each job is assigned a point value based on various characteristics of the job, and people working in jobs worth more points receive a higher pay. Since Bargain Laborers usually don’t seek to hire people who have developed specific skills, this strategy can be an attractive option.

You are still meeting with the SuperFoods’ management team and start talking about the Fair Labor Standards Act (FLSA). Knowing what you do about SuperFoods, which of the compensation practices governed by FLSA is likely to be the biggest concern you need to make sure they are aware of?

What Action Do You Take?

A.

Remind them of the FLSA regulations concerning minimum wage laws.

B.

Remind them of the FLSA regulations concerning exempt vs. non-exempt employees.

C.

Remind them of the FLSA regulations concerning overtime.

Incorrect Responses B. This is a possibility with a company like SuperFoods (Bargain Laborer) as they may try to classify their hourly employees as exempt just to avoid paying them overtime. We need to assume they are not unethical though.

C. This is also a possibility with a company like SuperFoods (Bargain Laborer) as they may try to avoid paying the overtime rate of 1.5 times the normal wage rate because of their emphasis on reduced labor costs. More likely though is them simply not allowing OT hours at all.

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On-Line Human Resource Management Experiences How Much to Pay: Finding the Right Balance at SuperFoods Summary of Steps Taken: 1. Recommend that SuperFoods follow the Bargain Laborer (Uniform Transactional) HR strategy.

2. The SuperFoods’ senior management team wants you to recommend any theories of motivation that will work for them while still following their Bargain Laborer HR strategy.

Unfortunately, you have to let them know that they will likely not have much luck getting any of them to significantly increase employee motivation because of the low pay approach of the Bargain Laborer.

3. The conversation next turns to pay level strategies and how the compensation structure is determined. Recommend that they continue to focus on the lag-the-market pay strategy but strive to reach the meet-the-market level. In terms of compensation structure, recommend a job-based pay approach.

4. You are still meeting with the SuperFoods’ management team and start talking about the Fair Labor Standards Act (FLSA). Knowing what you do about SuperFoods, you remind them of the FLSA regulations concerning minimum wage laws.

Great job! The relatively low skill level of the SuperFoods’ workforce suggests that the wage rate for the employees will be very near the minimum wage that is allowed under the law because of the emphasis on reducing labor costs. Keep in mind that effective organizations have compensation practices that motivate employees to do things that help increase their firm’s productivity. Strong compensation and benefits packages attract better employees who are more likely to stay and are more highly motivated, which leads to higher levels of performance (as we will discuss in the next chapter).

For More Information:_________________________________________________________ A number of Web sites are available for more information on compensation practices, theories of motivation, pay level strategies, pay structures, and FLSA: • • • • • •

http://www.shrm.org/ - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. http://www.workforce.com/section/02/ – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. http://www.hr-guide.com/compensation.htm - Website dedicated solely to compensation issues. http://humanresources.about.com/od/salaryandbenefits/Salary_Benefits_Variable_Pay_Bonu ses_Profit_Sharing.htm - Website dedicated to compensation issues. http://www.dol.gov/esa/whd/flsa/ - DOL website dedicated to the FLSA.

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On-Line Human Resource Management Experiences Is It All about Base Salary? Explaining Compensation Issues at SuperFoods One of the managers at SuperFoods informs you that, at least in her department, the main motivator for the employees is their base salary. The rest of the compensation package, she says, is “just details”. She insists that giving the employees in her department big pay increases will make all of them very happy, regardless of the rest of the compensation package. Your solid HR education and your years of diverse experience as a consultant, however, tell you that statement is likely not true, even though the company’s HR strategy has always been that of Bargain Laborer. How should you respond to the manager’s comments?

What Action Do You Take?

A.

Agree with her and work to push the pay strategy minimally to meet the market, but take away some of the paid time off and medical insurance benefits as a result to try to keep within the current strategic framework as much as possible.

B.

Explain that the base salary is only part of the total compensation package and that a strong benefits package and at-risk incentives that motivate employees could make significant improvements to the current pay philosophies. You can also point out that base pay is already a very large percentage of the current compensation package as a Bargain Laborer.

C.

Try to convince the company that they could do much better by converting to the Committed Expert strategy for their HR practices.

Incorrect Responses A. Some employees may feel this would be a good trade if they never take vacation and are not covered by the company’s health care plan.

Overall though, the decreases in the benefits element could very well lead to a reduction in morale and thus increase turnover and decrease productivity in the process.

C. While this may seem on paper like a good plan, there is a potential issue in doing so.

This approach would mean that the company’s competitive business strategy and HR strategy are no longer aligned. You would also need to be successful in getting SuperFoods to change its overall business philosophy for this plan to show a significant increase in outcomes.

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On-Line Human Resource Management Experiences Is It All about Base Salary? Explaining Compensation Issues at SuperFoods Summary of Steps Taken: 1. Explain that the base salary is only part of the total compensation package and that a strong benefits package and at-risk incentives that motivate employees could make significant improvements to the current pay philosophies. You can also point out that base pay is already a very large percentage of the current compensation package as a Bargain Laborer.

Although it will likely not result in any improvements, this option is probably the best strategy. It points out that there may be alternatives available to make some improvements without you having to be too critical of SuperFoods’ strategy.

If SuperFoods were to agree to add one type of voluntary employee benefits to its current compensation package that includes only health care coverage and minimal paid time off, which type would you recommend as making the most impact to employees while not straying too far from their HR strategy?

What Action Do You Take?

A.

Recommend the addition of lifestyle benefits such as concierge services and some form of flextime.

B.

Recommend the addition of more paid time off.

C.

Recommend the addition of a retirement savings package (defined contribution plan such as a 401 (k) with a minimal employee match).

Incorrect Responses A. This option may have some potential for SuperFoods as it is really not about having to pay the employees any additional money.

Work/life balance items would likely be most appealing to younger employees though. With the company’s focus on an external labor orientation, they are always hiring experienced workers who may not fall into the younger generation who this is so appealing to.

B. This plan may sound good, but likely makes no sense considering the Bargain Laborer HR strategy. With a focus already on reducing labor costs as much as possible, the odds of SuperFoods agreeing to pay the employees to be away from the job more often is slim to none. This approach may work well though for a Loyal Soldier or Committed Expert strategy.

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On-Line Human Resource Management Experiences Is It All about Base Salary? Explaining Compensation Issues at SuperFoods Summary of Steps Taken: 1. Explain that the base salary is only part of the total compensation package and that a strong benefits package and at-risk incentives that motivate employees could make significant improvements to the current pay philosophies. You can also point out that base pay is already a very large percentage of the current compensation package as a Bargain Laborer.

2. If SuperFoods were to agree to add one type of voluntary employee benefits to its current compensation package that includes only health care coverage and minimal paid time off, the type you would recommend as making the most impact to employees while not straying too far from their HR strategy is the addition of a retirement savings package (defined contribution plan such as a 401 (k) with a minimal employee match).

The benefit of adding the defined contribution plan is that it would likely not be all that costly to the company. Because of the Bargain Laborer HR strategy, turnover is fairly high and so the matched portion of the retirement plan will likely not get paid out because most employees won’t stay employed long enough to receive vesting. Employees may still see this as a nice addition though because the plan is portable and they can roll their contributions over to another employer if they leave SuperFoods. The burden of investment rests with the individual employees.

If also adding one of the common individual incentives, which one makes the most sense and are you most likely to get approved by the senior management team?

What Action Do You Take?

A.

Recommend the implementation of commissions.

B.

Recommend the implementation of piece-rate incentives.

C.

Recommend the implementation of merit pay increases.

Incorrect Responses A. As commissions apply primarily only to sales people, this is a strategy that makes very little sense to try to implement. These systems tend to be most appropriate for organizations that adopt Free Agent or Committed Expert HR strategies.

C. It’s likely that a company like SuperFoods is currently only providing cost of living increases each year and not merit pay increases which represent an increase based on individual performance. Merit pay increases normally represent a very small proportion of total pay though and are not likely to be seen as an extra to the employees. Since they are designed to recognize ongoing contributions, they make more sense in a Committed Expert strategy.

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On-Line Human Resource Management Experiences Is It All about Base Salary? Explaining Compensation Issues at SuperFoods Summary of Steps Taken: 1. Explain that the base salary is only part of the total compensation package and that a strong benefits package and at-risk incentives that motivate employees could make significant improvements to the current pay philosophies. You can also point out that base pay is already a very large percentage of the current compensation package as a Bargain Laborer.

2. If SuperFoods were to agree to add one type of voluntary employee benefits to its current compensation package that includes only health care coverage and minimal paid time off, the type you would recommend as making the most impact to employees while not straying too far from their HR strategy is the addition of a retirement savings package (defined contribution plan such as a 401 (k) with a minimal employee match).

3. If also adding one of the common individual incentives, recommend the implementation of piece-rate systems as the one that makes the most sense and is most likely to get approved by the senior management team.

This one should have been fairly easy as piece-rate systems are a common feature of the Bargain Laborer strategy. Piece-rate systems are where employees are paid a fixed amount for each piece of output they produce. These systems can also be powerful motivators as there is a strong pay-for-performance link. They can sometimes create problems though in that employees may focus too much attention and effort on the actions that get rewarded and ignore other important tasks (such as safety practices) in the process.

As a final addition to its compensation plan, SuperFoods is willing to consider adding either a common group or organizational benefit. Once again, you get to recommend the one that makes the most sense and is most line with the Bargain Laborer HR strategy.

What Action Do You Take?

A.

Recommend that SuperFoods consider implementing a gainsharing plan.

B.

Recommend that SuperFoods consider implementing a profit sharing plan.

C.

Recommend that SuperFoods consider implementing a stock option plan.

Incorrect Responses B. Profit sharing occurs when employees receive incentive payments based on overall company profits. Profit sharing has the potential to align the interests of employees with those of the owners. Many times though, employees don’t feel their personal efforts will impact the firm’s profits. There may be a better option for SuperFoods.

C. Stock options give employees the right to buy company stock at a given price on a future date. It is likely that the employees of SuperFoods do not feel enough loyalty in the company to buy the stock and would not be able to afford to purchase the options anyway (due to the low wages) if they did want them.

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On-Line Human Resource Management Experiences Is It All about Base Salary? Explaining Compensation Issues at SuperFoods Summary of Steps Taken: 1. Explain that the base salary is only part of the total compensation package and that a strong benefits package and at-risk incentives that motivate employees could make significant improvements to the current pay philosophies. You can also point out that base pay is already a very large percentage of the current compensation package as a Bargain Laborer.

2. If SuperFoods were to agree to add one type of voluntary employee benefits to its current compensation package that includes only health care coverage and minimal paid time off, the type you would recommend as making the most impact to employees while not straying too far from their HR strategy is the addition of a retirement savings package (defined contribution plan such as a 401 (k) with a minimal employee match).

3. If also adding one of the common individual incentives, recommend the implementation of piece-rate systems as the one that makes the most sense and is most likely to get approved by the senior management team.

4. As a final addition to its compensation plan, SuperFoods is willing to consider adding either a common group or organizational benefit, you recommend that they implement a gainsharing plan as the one that makes the most sense and is most line with the Bargain Laborer HR strategy.

Excellent work! You’ve made it through the compensation and benefits section of the textbook.

Work is increasingly being structured around teams rather than individuals and the potential addition of a gainsharing plan to SuperFoods’ compensation package may make a significant difference to the employees. Gainsharing occurs when groups of workers receive a portion of the financial return from reducing costs and improving productivity. This practice is especially common in manufacturing organizations where costs and productivity gains can be objectively measured. Effective organizations develop compensation packages that align the overall HR strategy with base pay, employee benefits, individual incentives, as well as group or organizational incentives. Next up is how to work effectively with labor unions.

For More Information:_________________________________________________________ A number of Web sites are available for more information on types of compensation packages, employee benefit plans, and incentive plans: • • • • • •

http://www.shrm.org/ - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. http://www.workforce.com/section/02/ – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. http://www.hr-guide.com/compensation.htm - Website dedicated solely to compensation issues. http://humanresources.about.com/od/salaryandbenefits/Salary_Benefits_Variable_Pay_Bonu ses_Profit_Sharing.htm - Website dedicated to compensation issues. http://www.benefitnews.com/ - Employee benefits resource.

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On-Line Human Resource Management Experiences Unions: Negotiating a New Labor Contract for Mega Manufacturing The collective bargaining agreement at one of Mega Manufacturing’s plants will expire soon, and you’ve been hired to help with the contract negotiations. Recall that Mega follows a Free Agent HR strategy with an external labor orientation and a focus on differentiation. Mega’s management has several concerns about the upcoming negotiations. For one thing, a major increase in health care costs needs to be passed along to the employees, at least to some extent.

In addition, the union and its members will expect bigger raises in this contract due to the current labor market. Both sides have traditionally bargained in good faith, but these contract negotiations will be especially challenging, and rumblings of a strike have already surfaced. To make matters worse, the employees at another of Mega’s plants are starting a union organizing campaign. What bargaining approach will you recommend that Mega follow in the contract negotiations?

What Action Do You Take?

A.

Have a strong plan regarding the potential issue of short-term relationships of employees that places emphasis on recognizing performance differences across employees.

B.

Have a strong plan regarding the misfit between labor unions and innovation.

C.

Have a strong plan regarding how to handle having so many long-term employees and too much equality.

Incorrect Responses B. Companies using a Committed Expert HR strategy can have problems with unions because of innovation issues even though they emphasize long-term relationships that unions strive for. These organizations tend to invest less of their profits back into the business, spend less on new construction, and spend less on R&D which can be a problem for companies seeking to innovate and differentiate.

C. Companies using a Loyal Soldier HR strategy are most compatible with labor unions so there is generally not a big issue in working with them. Even though the union may result in higher labor costs, a stable workforce can increase quality. Cost-focused organizations can thus achieve higher productivity by working with unions to reduce costs and create more efficient processes to better satisfy customer needs.

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On-Line Human Resource Management Experiences Unions: Negotiating a New Labor Contract for Mega Manufacturing Summary of Steps Taken: 1. Have a strong plan regarding the potential issue of short-term relationships of employees that places emphasis on recognizing performance differences across employees.

Unfortunately, the Free Agent HR strategy utilized by Mega Manufacturing is the least compatible with labor unions because these companies combine a desire for short-term relationships with an emphasis on recognizing performance differences. Mega may truly be in for a very challenging set of contract negotiations in order to successfully avoid the strike that has been rumored.

Knowing what you do about the Bargain Laborer strategy, which of the mandatory topics would you recommend to Mega as the best place to start the negotiations with if they want to begin with the easiest topic?

What Action Do You Take?

A.

Encourage Mega to begin with the negotiations regarding wages (base pay, bonuses, and employee benefits).

B.

Encourage Mega to begin with the negotiations regarding hours (schedules, shifts, and paid time off).

C.

Encourage Mega to begin with the negotiations regarding working conditions (safety, promotions, layoffs, and grievance procedures).

Incorrect Responses A. This is definitely not the category to begin the negotiation process on if Mega is hoping to get off to a quick resolution on something.

Because of the focus on reducing labor costs and knowing that big raises are already expected due to the labor market and that they have a benefits increase to pass along to the employees, this will be by far the toughest of the three mandatory topics to reach an agreement on. The outcome of the negotiations in this category will likely determine whether the strike indeed occurs.

B. This category will likely not be nearly as difficult to reach agreement as the wages will be, but there are still a few potential problem areas in the area of paid time off due to the emphasis on reduced labor costs. Paying employees for additional time away from work will only lead to Mega having to pay overtime to current employees or bring in temporary workers (neither of which is cost-effective).

The schedule and shift topics may be okay though since their focus on short-term relationships means there are constantly new employees who can be placed on 2nd and 3rd shifts.

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On-Line Human Resource Management Experiences Unions: Negotiating a New Labor Contract for Mega Manufacturing Summary of Steps Taken: 1. Have a strong plan regarding the potential issue of short-term relationships of employees that places emphasis on recognizing performance differences across employees.

2. Knowing what you do about the Bargain Laborer strategy, you encourage Mega to begin with the negotiations regarding working conditions (safety, promotions, layoffs, and grievance procedures) to have the best chance of starting the negotiations with a topic that is likely to go fairly smoothly.

Mega is likely to have the most success on the dealings with the labor union regarding the working conditions topic (safety, promotions, layoffs, and grievances). Simplified work tasks and hiring experienced workers should limit the number of potential injury situations they’ll have to deal with. Having employees frequently leaving the company will likely mean that there are several opportunities for promotion that can be determined by seniority since there is an emphasis on limiting employee differentiation in performance. Layoffs are not likely to be a concern as Mega could simply institute a hiring freeze and not replace outgoing employees if it needs to cut back on workforce. The emphasis on consistent and fair processes will limit the number of potential grievance situations that Mega may encounter.

In order to try to influence cooperation in the negotiations, Mega does a good job of focusing on trust developed between management and the union from prior negotiations, relying on the expertise and style of its negotiators, and its ability to use problem-solving techniques. It also plans to conduct an interest-based negotiation where each side explains the factors they consider to be most important. You’re asked to recommend which step of that process is the most critical.

What Action Do You Take?

A.

Convince Mega that the most important step will be how they open the negotiations at the bargaining table.

B.

Convince Mega that the most important step in the process is the preparation for negotiations that will be done prior to meeting with the labor union.

C.

Convince Mega that the most important step will be the actual back-and-forth negotiation itself.

Incorrect Responses A. This stage will start with each side presenting an opening statement that lists its major interests. It also clarifies the scope of problems that need to be addressed. Clearly defining issues is also very important here.

While the opening statement is of significant importance, it is likely not the most critical step.

C. You may be right, but it’s quite possible that this is not the best choice for a Bargain Laborer. This step will include discussing interests behind the issues, brainstorming, setting standards, and arriving at a consensus.

What if adequate preparation was not done in the very beginning though?

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On-Line Human Resource Management Experiences Unions: Negotiating a New Labor Contract for Mega Manufacturing Summary of Steps Taken: 1. Have a strong plan regarding the potential issue of short-term relationships of employees that places emphasis on recognizing performance differences across employees.

2. Knowing what you do about the Bargain Laborer strategy, you encourage Mega to begin with the negotiations regarding working conditions (safety, promotions, layoffs, and grievance procedures) to have the best chance of starting the negotiations with a topic that is likely to go fairly smoothly.

3. In order to try to influence cooperation in the negotiations, Mega does a good job of focusing on trust developed between management and the union from prior negotiations, relying on the expertise and style of its negotiators, and its ability to use problem-solving techniques. It also plans to conduct an interest-based negotiation where each side explains the factors they consider to be most important. You recommend that the most critical step of that process is the preparation for negotiations that will be done prior to meeting with the labor union.

If adequate preparation is not done in advance, Mega will have no way to know whether they may have left more at the bargaining table than they should have or whether they had very unrealistic expectations. Interest-based negotiations rely on accurate data to identify key concerns, so an important step is to collect as much data as possible. The data should include information about the interests of both sides. It can be gathered through formal surveys or informal conversations.

Once gathered, it will be shared with the other side.

Great news! The strike was avoided as both sides reached a win-win in the negotiation process.

But wait. Did you forget about that other plant which is starting a union organizing campaign?

Nearly half the workers signed authorization cards and the petition for election has been filed with the NLRB. If you want to avoid having to work with another labor union, recommend a strategy.

What Action Do You Take?

A.

Issue wage increases immediately in hopes that it will discourage the employees from feeling that a labor union is necessary.

B.

Ask employees about union activities that have been going on to see if the company even has anything to worry about.

C.

Recommend that management attempt to thwart unionization by grouping employees who are sympathetic to a union with employees who are not.

Incorrect Responses A. While it may sound like a good plan, this action is actually an unfair labor practice as set forth by the Wagner Act. It will be enforced by the NLRB.

B. While it may sound innocent enough, this action is actually an unfair labor practice as set forth by the Wagner Act. It will be enforced by the NLRB.

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On-Line Human Resource Management Experiences Unions: Negotiating a New Labor Contract for Mega Manufacturing Summary of Steps Taken: 1. Have a strong plan regarding the potential issue of short-term relationships of employees that places emphasis on recognizing performance differences across employees.

2. Knowing what you do about the Bargain Laborer strategy, you encourage Mega to begin with the negotiations regarding working conditions (safety, promotions, layoffs, and grievance procedures) to have the best chance of starting the negotiations with a topic that is likely to go fairly smoothly.

3. In order to try to influence cooperation in the negotiations, Mega does a good job of focusing on trust developed between management and the union from prior negotiations, relying on the expertise and style of its negotiators, and its ability to use problem-solving techniques. It also plans to conduct an interest-based negotiation where each side explains the factors they consider to be most important. You recommend that the most critical step of that process is the preparation for negotiations that will be done prior to meeting with the labor union.

4. Great news! The strike was avoided as both sides reached a win-win in the negotiation process. You still have to deal with that other plant which is starting a union organizing campaign. Nearly half the workers signed authorization cards and the petition for election has been filed with the NLRB. To try to avoid having to work with another labor union, recommend that management attempt to thwart unionization by grouping employees who are sympathetic to a union with employees who are not.

Well done! Because large groups of employees are often difficult to organize, this is a legitimate strategy for Mega. It is also permissible for supervisors to make employees aware of factual information about the union (frequency of strikes, cost of dues, etc.). The other two choices listed were both unfair labor practices as are threatening employees with loss of job or benefits if they join, threatening to close the plant, and spying on union gatherings. Keep in mind that a primary objective of unions is to provide employment security and long-term employment as well as to secure fair wages and benefits for all workers. Effective organizations manage relationships with labor unions to ensure high productivity and fair treatment of all workers. Only one more stop left on your journey through Strategic HR. The last step will align strategy with practice and recap what you’ve learned along the way.

For More Information:_________________________________________________________ A number of Web sites are available for more information on labor unions, legislation, union trends, negotiation and collective bargaining, and the grievance process: • • • • • • • •

http://www.shrm.org/ - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. http://www.workforce.com/ – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics. http://www.unions.org/home/ - Union Directory. http://www.aflcio.org/ - American Federation of Labor website. http://www.nlrb.gov/ - National Labor Relations Board. www.flra.gov – Federal Labor Relations Authority. www.nrtw.org – National Right to Work

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On-Line Human Resource Management Experiences A Final Journey: Communicating the Strategic Importance of HR Through your diverse consulting experience, you have learned a great deal about how HR should align with competitive strategy (vertical) and how HR practices should align with each other (horizontal). While traveling to an HR conference, you meet a corporate executive who has a very negative opinion of HR as a whole. He tells you that HR is the same in every company, that it adds no value to organizations, and that HR people are unable to think strategically. You recall what you’ve learned about the four basic HR strategies and the four companies you’ve recently helped – Mega Manufacturing, Graphics Design, Global Telecommunications, and SuperFoods.

How will you convince the executive that he’s wrong about HR?

What Action Do You Take?

A.

Agree with him for the most part and let the opportunity pass by just assuming that this person has always been stuck with poor HR people in the companies he’s worked for.

B.

Explain the two basic forms of strategic alignment (vertical and horizontal) and the four basic HR strategies (Bargain Laborer, Free Agent, Committed Expert, and Loyal Soldier).

C.

Share with him your own views on why the field of HR is actually the most important department in the vast majority of organizations today.

Incorrect Responses A. HR people get criticized by many people in many organizations. Although some of the criticism may in fact be legitimate at times, HR departments for the most part add a tremendous amount of value and HR professionals in many firms can and do think strategically each day in their jobs. Take the opportunity to set this person straight.

C. OK, we fully admit this option is a bit extreme. It may well be closer to the truth though than what this executive originally told you on the plane. Take the opportunity to tell him about some of the various HR strategies and how they can differ across organizations.

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On-Line Human Resource Management Experiences A Final Journey: Communicating the Strategic Importance of HR Summary of Steps Taken: 1. Explain the two basic forms of strategic alignment (vertical and horizontal) and the four basic HR strategies (Bargain Laborer, Free Agent, Committed Expert, and Loyal Soldier).

Good choice. This approach should clearly show the executive how HR departments can differ and still perform effectively and strategically no matter what the competitive business strategy of the company may be. The core HR concepts can be adapted to help an organization achieve whatever strategy it is pursuing. The key is to begin by thinking about what types of worker inputs are needed to carry out the strategy successfully. Once these inputs have been identified, the company can usually modify one of the core HR strategies to help it acquire and motivate the types of workers it needs. The four basic HR strategies thus provide a good foundation for thinking about ways to successfully manage people, but they may need to be adapted to meet the needs of a specific organization.

The executive is intrigued by your views and describes his ideal company as one that has broad work responsibilities, recruits based on high potential and organizational fit, retains high performers and dismisses low performers, provides skill training for the current job and development for future positions, and uses variable pay to reward its best performers. He asks if this set of practices aligns with any of the HR strategies that you have described.

What Action Do You Take?

A.

Respond that this set of HR practices appears to be aligned very well with the Free Agent HR strategy and that the company likely would have an emphasis on an external labor orientation and on differentiation.

B.

Respond that this set of HR practices appears to be aligned very well with the Loyal Soldier HR strategy and that the company likely would have an emphasis on an internal labor orientation and on cost leadership.

C.

Respond that this set of HR practices appears to be aligned very well with the Committed Expert HR strategy and that the company likely would have an emphasis on an internal labor orientation and on differentiation.

Incorrect Responses A. The Free Agent strategy would be one that has complex tasks, recruits based on job fit, dismisses low performers, attracts good employees by offering development opportunities, provides high compensation for top performers, and makes rewards contingent on performance.

B. The Loyal Soldier strategy would be one that has standardized procedures, recruits based on organizational fit, keeps loyal workers, teaches specific skills, provides continual learning, rewards long-term contribution, and limits pay differences among employees.

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A Final Journey: Communicating the Strategic Importance of HR Summary of Steps Taken: 1. Explain the two basic forms of strategic alignment (vertical and horizontal) and the four basic HR strategies (Bargain Laborer, Free Agent, Committed Expert, and Loyal Soldier).

2. The executive is intrigued by your views and describes his ideal company as one that has broad work responsibilities, recruits based on high potential and organizational fit, retains high performers and dismisses low performers, provides skill training for the current job and development for future positions, and uses variable pay to reward its best performers. He asks if this set of practices aligns with any of the HR strategies that you have described.

Respond that this set of HR practices appears to be aligned very well with the Committed Expert HR strategy and that the company likely would have an emphasis on an internal labor orientation and on differentiation.

At this point in the course, you likely recognized this strategy as that of Committed Expert right away. In addition to the above characteristics of the Committed Expert strategy, there is also a recruiting focus on predicting high potential employees, merit-based performance assessments that encourage good outcomes, long-term employee benefits and employee ownership, as well as the potential negative impact of labor unions on innovation.

The conversation then turns to the future of HR. The executive is curious as to what you think is likely to be the biggest change or development to the HR field in the future.

What Action Do You Take?

A.

Respond that in terms of organizations, the biggest issues will be dealing with constant changes in employment and labor law, as well as in dealing with increased diversity in the workplace.

B.

Respond that in terms of organizations, the biggest developments will be the growing importance of HR, greater prominence of strategic issues, and an increased emphasis on measuring the value of HR.

C.

Respond that in terms of organizations, the biggest developments will be finding creative compensation, training, and performance appraisal programs that help to position companies for long-term success.

Incorrect Responses A. The issues of employment and labor law and diversity in the workplace are all important and will continue to be that way in the future, but there is a choice that is likely to be of even more importance.

C. This is a good choice as the areas of compensation, training, and performance management are all important and will continue to be that way in the future, but one of the choices is likely to of even more importance.

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On-Line Human Resource Management Experiences A Final Journey: Communicating the Strategic Importance of HR Summary of Steps Taken: 1. Explain the two basic forms of strategic alignment (vertical and horizontal) and the four basic HR strategies (Bargain Laborer, Free Agent, Committed Expert, and Loyal Soldier).

2. The executive is intrigued by your views and describes his ideal company as one that has broad work responsibilities, recruits based on high potential and organizational fit, retains high performers and dismisses low performers, provides skill training for the current job and development for future positions, and uses variable pay to reward its best performers. He asks if this set of practices aligns with any of the HR strategies that you have described.

Respond that this set of HR practices appears to be aligned very well with the Committed Expert HR strategy and that the company likely would have an emphasis on an internal labor orientation and on differentiation.

3. As the conversation turns to the future of HR, the executive is curious as to what you think is likely to be the biggest change or development to the HR field in the future. You respond that in terms of organizations, the biggest developments will be the growing importance of HR, greater prominence of strategic issues, and an increased emphasis on measuring the value of HR. Great answer. Due to the upcoming labor shortage, HR will only grow in importance. Also, the emphasis on strategic aspects of HR in organizations is expected to expand significantly. Finally, there will be an increased emphasis on HR metrics and measuring the value that HR adds to organizations.

The captain announces that the plane is about to begin descent and you have time to discuss one final topic. It seems like the executive is actually starting to see the benefits of a strong HR department that aligns with a company’s competitive strategy. He asks what you feel are the two biggest challenges faced by HR professionals. If you want to avoid stating any potential weaknesses about HR, which answers are appropriate?

What Action Do You Take?

A.

Respond that HR people have a lack of power and can feel overwhelmed.

B.

Respond that HR is vulnerable to workforce reductions and is normally paid lower wages than other key departments.

C.

Respond that HR must constantly balance between employees and managers and that they have to deal with skeptical people who don’t see the value in HR.

Incorrect Responses A. While these answers are indeed challenges faced by HR professionals, this response will likely leave the executive with the feeling that maybe HR people are not as much of an asset as you tried to convince him they were.

B. While these answers are likely both true (at least in a number of organizations), admitting vulnerability and complaining about low pay are likely not the right response to end what has been a very positive experience.

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On-Line Human Resource Management Experiences A Final Journey: Communicating the Strategic Importance of HR Summary of Steps Taken: 1. Explain the two basic forms of strategic alignment (vertical and horizontal) and the four basic HR strategies (Bargain Laborer, Free Agent, Committed Expert, and Loyal Soldier).

2. The executive is intrigued by your views and describes his ideal company as one that has broad work responsibilities, recruits based on high potential and organizational fit, retains high performers and dismisses low performers, provides skill training for the current job and development for future positions, and uses variable pay to reward its best performers. He asks if this set of practices aligns with any of the HR strategies that you have described.

Respond that this set of HR practices appears to be aligned very well with the Committed Expert HR strategy and that the company likely would have an emphasis on an internal labor orientation and on differentiation.

3. As the conversation turns to the future of HR, the executive is curious as to what you think is likely to be the biggest change or development to the HR field in the future. You respond that in terms of organizations, the biggest developments will be the growing importance of HR, greater prominence of strategic issues, and an increased emphasis on measuring the value of HR. 4. It seems like the executive is actually starting to see the benefits of a strong HR department that aligns with a company’s competitive strategy. He asks what you feel are the two biggest challenges faced by HR professionals. To avoid stating any potential weaknesses about HR, respond that HR must constantly balance between employees and managers and that they have to deal with skeptical people who don’t see the value in HR. Terrific work! You were able to answer the question honestly without showing any potential weaknesses in the HR profession. You were even able to use a little humor to make the executive see the irony in his initial logic. By the way, you now have a new client as a result of this conversation. You have now successfully navigated your way through the full course and several challenging decision trees dealing with HR’s role in strategic management. Whether you pursue a career in HR or go into management where you will deal with many of these issues on a daily basis, you now know a great deal about the field of Human Resources. Most great leaders acknowledge the importance of surrounding themselves with highly skilled people who are motivated to succeed. The strategic principles and practices that we have discussed can help you do the same by more effectively managing people at work. Good luck on your own journey.

For More Information:_________________________________________________________ A number of Web sites are available for more information on future HR issues and trends: • • •

http://www.shrm.org/ - Society for Human Resource Management (SHRM) website that provides information on a variety of HR disciplines. http://www.workforce.com/ – Information on a variety of HR functional areas and employment law topics. www.hr-guide.com – Information on a variety of HR functional areas and employment law topics.

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