CH-1-3 Creating Value through Human Resources – Human Resource Management: Linking Strategy to Practice : Chapter Notes

This Document Contains Chapters 1 to 3 Chapter 1 Creating Value through Human Resources Chapter 1 Learning Objectives How can human resource management (HRM) facilitate organizational success? What are the core functions of HRM? What do human resource (HR) specialists do to help create successful organizations? How will current trends affect organizations and HRM practices? How do functional and strategic perspectives combine? Chapter 1 Outline 1.1 How can HRM facilitate organizational success? HRM: field of study and practice that focuses on people in organizations. HR skills help effectively hire, manage, and motivate employees so organizations are 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? Success in Life-Cycle Stages: measures of effectiveness change as an organization moves through stages during its lifetime. Entrepreneurial Stage: effective HRM is very important for the survival and growth of newly formed organizations. Communal Stage: marked by expansion, innovation, and cooperation. Formalization Stage: focus on improving efficiency and finding better ways to accomplish tasks. Elaboration Stage: when organizations need to adapt and renew. Success From Stakeholder Perspectives: success is measured by the extent that organizations meet stakeholders’ needs (e.g., employees, customers, owners, society). Employees: HR practices protect the interests of employees. 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 profits Society: Organizations that are better community citizens are generally more profitable than organizations that ignore environmental and social concerns. The Chain of Success Meeting the needs of one group can often help meet the needs of others. 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 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. What groups make up an organization’s stakeholders? Employees, customers, owners, and society How do HR practices help organizations to satisfy the needs of their stakeholders? Employees: Human resource practices protect the interests of employees and ensure that the organization complies with employment and safety laws. Human resource professionals help individuals plan and advance their careers. Good human resource practices reduce employee turnover. Customers: Research strongly supports the notion that good human resource management improves customer satisfaction, largely through customers’ interactions with employees. Employees tend to treat customers the same way they believe managers treat them. If employees feel the organization values them and treats them with respect, they reproduce these good attitudes and behaviors in their interactions with customers. Human resource practices that demonstrate care and concern for employees thus translate into increased customer satisfaction. Hiring and keeping skilled employees can also improve customer satisfaction. Owners: Research evidence generated strongly suggests that human resource management matters. Organizations are more profitable when they ensure high levels of employee skill by properly designing jobs, carefully selecting employees, and providing useful training. Effective practices also motivate employees by carefully measuring performance, making fair promotion decisions, and linking pay to performance. In short, employees who have better skills, are well paid, and feel their jobs are secure have higher individual performance, which translates into desirable improvements like growth in sales. Society: Effective human resource management within the organization results in other benefits to society. It provides employees with open channels of communication, which can reduce instances of unethical corporate behavior. Skilled and motivated employees also produce goods and services that help make the world a better place. 1.2 Core HR Functions The Society for HRM (SHRM) and its affiliated Certification Institute have identified six broad functional areas of HRM (people management activities). Strategic management focuses on planning how the organization will produce and market 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 manages salary and insurance plans. Employee and labor relations builds and maintains effective working conditions and relationships. Occupational health and safety promotes the physical and mental well-being of people in the workplace. Spreading Knowledge About HR Practices 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. CONCEPT CHECK What are the six core HR functions? Strategic management, workforce planning and employment, human resource development, compensation and benefits, employee and labor relations, and occupational health and safety. 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. 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 and ensure 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 Plan and conduct new employee orientation Serve as a link between management and employees by handling questions, interpreting and administering contracts, and helping resolve work-related problems. HR ROLES 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. Employee Advocate: listens to employees and provides them with the resources they need to be effective. 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. Human Capital Developer: adds value by helping employees build and maintain cutting-edge skills. HR Competencies: HR specialists need knowledge, skills, and abilities in many areas. Knowing the Business Must demonstrate knowledge of the organization’s core business processes. Must know financial management, customer relations, competitor analysis, globalization, production capability, and information systems. Carrying Out HR Practices Need to know how to recruit, select, promote; train, and develop employees. Need to know how to properly divide work duties, create reporting relationships, and design motivating jobs. Need to be skilled communicators and know how to design performance appraisal systems, offer feedback, and manage pay and benefit systems. Managing Change Need skills in identifying and solving problems. Change management competencies are particularly beneficial for carrying out the human capital developer and employee advocate roles. CONCEPT CHECK 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) and about the organization’s products and services. Finally, they must know how these activities, products, and services fit with the company’s strategic objectives. 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. What is a competency and what competencies do HR professionals need to develop? A competency represents the knowledge, skill, and ability needed to perform a desirable behavior. HR professionals need to know the business, carry out HR practices, and manage change. How Will Current Trends Affect HRM? Population Trends 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 high rate throughout the twentieth century, and current projections indicate that the country’s total population will continue to increase. The balance between young and old people in the U.S. population is also changing. By 2014 the number of people between the ages of 16 and 24 will increase slightly The number between 35 and 44 will decrease modestly, and The number between 55 and 64 will increase significantly. Labor Force Trends: Labor force trends focus on the number and characteristics of people who will be working or looking for work. By 2014 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 71 to 66 percent of the workforce The percentage of Hispanic workers will increase from about 12 to 15 percent of the workforce. Another important trend concerns women in the workforce. The number of female employees is expected to continue growing faster than the number of male employees. 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 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 education and health services. 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 and teachers. A forecasted need for additional employees to provide professional and business services, particularly employment services. Jobs related to HRM are expected to increase significantly by 2014. Careers in HRM thus appear to have a bright future. Trends in Education and Training 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. Growth is 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 Globalization refers in part to a process in which companies move beyond their national borders to do business internationally. 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. 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 high rate throughout the twentieth century and current projections indicate that the country’s total population will continue to increase. The rate of growth until 2014 is expected to be somewhat lower than in the past. The balance between young and old people in the U.S. population is also changing. By 2014 the number of people between the ages of 16 and 24 will increase slightly. The number between 35 and 44 will decrease modestly, and the number between 55 and 64 will increase significantly. Labor Force Trends: Racial proportions will continue to change. The percentage of non-Hispanic white employees is expected to decrease from 71 to 66 percent of the workforce, whereas the percentage of Hispanic workers will increase from about 12 to 15 percent of the workforce. Another important trend concerns women in the workforce. The number of female employees is expected to continue growing faster than the number of male employees. Attracting and keeping minority and women employees will become increasingly important. Future HR Practices: We might see more programs that offer convenience to working mothers, such as flexible working hours and onsite daycare. Organizations will need to find better ways to meet the needs of minority workers and create ongoing groups of people with underrepresented backgrounds and needs who can meet together and discuss issues. These groups would provide important feedback and suggestions to help leaders understand the unique perspectives of minority workers. 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 education and health services. 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. Jobs related to human resource management are expected to increase significantly by 2014. 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? 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 combine strategic planning with day-to-day functional activities. CONCEPT CHECK 1. How do the functional perspective and the strategic perspective differ? 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. 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. Concept Checks Answers to each of the four sets of Concept Checks are presented at the appropriate points in the chapter outline. The pre- and post-quiz questions also address the Concept Checks. 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. A Manager’s Perspective, What do you think?, And A Manager’s Perspective Revisited The chapter starts with a short scenario where Allen has had a successful interview for a position as entry-level managers. Five true/false questions related to this scenario and the chapter topics are noted on page 3 and answered on page 29. 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 should Allen 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: Trader Joe’s This special feature (page 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 “Jobs” 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 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? Are Great Places to Work More Profitable? The “Chain of Success” section ends with a reference to this inset box (found on page 12). Ingrid Fulmer, Barry Gerhart, and Kimbery Scott compared the financial performance of companies listed by Fortune as “The 100 Best Companies to Work for in America” to companies not included on the list. The Fortune list is based on extensive surveys of employee attitudes regarding their organizations as having high credibility, respect, fairness, pride, and ca¬maraderie. The researchers conclude that organizations are more profitable when they treat employees well. 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 HR practices might be contributing to the employees’ high ratings of the five criteria. The speculation would be more accurate if some or all students were assigned to investigate the top ten organizations on the most recent list via websites and related sources. A web-based activity is described at the end of this chapter in the Instructors’ Manual. 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 on-line learning or, if no experience, why they have elected not to take on-line courses. The students could be asked to assess the user-friendliness 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 on-line HR systems (e.g., PeopleAdmin, 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: Lucent Technologies As noted on page 20 of this chapter, this inset box (refer to page 21) illustrates how the strategic partner role is demonstrated at Lucent Technologies. 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 Lucent 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: Quantum Corporation As noted above the inset box (refer to page 23), the HR professionals at Quantum Corporation are focused on dealing with change. You could briefly mention this inset as an example of how the change management competencies are utilized by HR professionals at Quantum 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 Quantum 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 facilitating change. KEY TERMS Business knowledge competencies Change management competencies Communal stage Compensation and benefits Competency Education and training trends Elaboration stage Employee advocate role Employee and labor relations Employee Turnover Employment opportunity trends Entrepreneurial stage Formalization stage Functional expert role Globalization trends Human capital developer role Human resource development Human resource management Human resource practice competencies Labor force trends Occupational health and safety Organizational life cycle Population trends Stakeholders Strategic management Strategic partner role Workforce planning and employment Chapter 2 Making Human Resource Management Strategic Chapter 2 Learning Objectives Explain how a strategic approach to human resource management (HRM) can improve the effectiveness of organizations. Describe the strategy formulation process. Describe two generic competitive business strategies that organizations use. Explain the universalistic and contingency approaches to human resource (HR) strategy, including key characteristics of the commitment strategy. Describe four HR strategies that organizations commonly use. 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? Research suggests profitability is result of 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? 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, which focuses on choices and actions about how to serve needs of customers. HR strategy, which focuses on choices and actions concerning management of people. Gathering Information Assessing the External Environment (i.e., physical and social factors outside of organization’s boundaries categorized as Opportunities and Threats) 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 Technological change - trends such as improving manufacturing technologies and increased availability of information Assessing Internal Capabilities (i.e., organization’s internal resources and capabilities categorized as strengths and weaknesses) HRM is part of the value chain Gathering information about HR capabilities is therefore a vital part of an effective assessment of organizational strengths and weaknesses. Analyzing Information and Making Decision Step 1: build collective intuition Step 2: stimulate conflict Step 3: maintain an appropriate pace Step 4: diffuse politics CONCEPT CHECK What are the three steps in the strategy formulation process? Gather information, analyze information and make decision, and implement the decision What are some components of an organization’s external environment? Features of the environment might in¬clude 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 dis¬tribution 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 orga-nizations and threats for others. 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. 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? The most important strategy for HRM is business-level strategy, which concerns how the organization will compete with other companies that provide similar goods and services. Cost Leadership Strategy (goal is to become highly efficient, which will allow organization to create value by producing goods and services at lower cost). 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. 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 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. 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? 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 - 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 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 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. 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 Relationship between organization and employees is weak and based on contractual agreements. Employees work because they are paid, not necessarily because they are loyal. Employees usually do not develop a strong feeling of attachment to organization. Employees do not provide unique competitive advantage. CONCEPT CHECK 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. 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. What is the difference between an internal labor orientation and an external labor orientation? 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? Internal/Cost HR Strategy: The Loyal Soldier 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 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 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. 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 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. 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 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 long-term compensation packages are avoided. Rarely see unions in these organizations. CONCEPT CHECK 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.) 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? Research supporting the contingency approach to HRM Organizations are likely to have HR practices that fit with their competitive business strategies. Organizations that effectively recruit, select, train and compensate their employees develop an advantage that is hard for other organizations to copy. A strategic approach to HRM sees people as an important resource vital to organizational effectiveness. Putting it all together 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 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. The final question is whether organizations with a cost leadership or differentiation strategy perform better when they have matching human resource strategies. Research in this area is generally supportive. For instance, a study of manufacturing firms found that plants with a differentiation strategy have higher performance when their human resource practices include selective staffing, comprehensive technical training, and group incentives to ensure that employees are well paid. These practices fit with the Committed Expert HR strategy. At the same time, manufacturing plants using a cost leadership strategy were found to have higher performance when their practices focused on ensuring compliance with policies and procedures, consistent with the Loyal Soldier HR strategy. In another study, organizations, in both service and manufacturing performed best when they combined a cost leadership competitive strategy with a Loyal Soldier HR strategy rather than a human resource strategy focused on differentiation. Also, organizations following a competitive strategy of differentiation performed best with a Committed Expert HR strategy rather than human resource practices associated with a cost focus. Employees working in firms with matching competitive and human resource strategies were also found to have higher morale. 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. Concept Checks Answers to each of the four sets of Concept Checks are presented at the appropriate points in the chapter outline. The pre- and post-quiz questions also address the Concept Checks. 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. A Manager’s Perspective, What do you think?, And A Manager’s Perspective Revisited The chapter starts with a short scenario where Rachel (HR Director) is getting ready to meet with the new company President. Profits have been declining and she hopes that the purpose of the meeting will be to talk about how HRM practices fit with the company’s strategic objectives. Five true/false questions related to this scenario and the chapter topics are noted on page 37 and answered on page 66. 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 Rachel 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 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. 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 Note: As reported on Southwest website in January 2008, Gary Kelly is Southwest’s Vice Chairman of the Board and Chief Executive Officer (CEO), Colleen Barrett is Southwest’s President, and Herb Kelleher is the Executive Chairman of the Board for Southwest. (source: http://www.southwest.com/about_swa/press/factsheet.html#Leadership accessed January 2008) This special feature (page 40) highlights several issues noted in this opening case regarding Southwest Airlines (refer to pages 38-40). This case illustrates how human resource management can help build an organization’s competitive strength. The inset box (refer to page 40) 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, hire people who have the right attitude and who are willing to work hard, employees pitch in where needed and focus on keeping costs low, recent management-employee conflict over demands for higher wages, and emphasis on having a career with Southwest. 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 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. Technology in HR: The Internet: Opportunities and Threats This inset box (refer to page 43) briefly addresses some of the opportunities and threats a company can face by using the internet. The last paragraph addresses a few issues related to internet career networks. During a mini-lecture, you may want to refer to the information in this box as illustrating some strategic issues related to the internet. If a more general discussion is desired, students could be asked in what ways the internet presents opportunities and threats for a company. Students could be asked how employees and HRM practices could help the internet 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 on-line help (e.g., MicroSoft, Dell) and e-mailed messages from organizations for which employees affect the quality and helpfulness. The last paragraph of this box discusses internet career networks. Students could discuss their experiences with on-line job boards (e.g., Monster, CareerBuilder, Jobster, Yahoo HotJobs). Some of the opportunities and threats of these job boards are noted in the box. Students could be asked for their opinions and experience with these job boards. For example, have they found these job boards easy to use, informative, helpful in locating jobs, spam- and virus-free, etc.? Further, students could voice their opinions on a growing trend of employers making hiring decisions after accessing a job candidate’s Facebook. Several on-line job boards such as CareerBuilder, Jobster, Yahoo HotJobs are making this easier by developing links to Facebook. [G. Ruiz (Oct. 2, 2007). Job Boards Tap Facebook For Gen Y Workers, Workforce.com] How Do We Know? What Differentiates Fast-Food Restaurants? This inset box (on page 50) 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’s 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? Does Good Human Resource Practice Improve Productivity? This inset box (found on page 54) is mentioned on page 53. 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) 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 selection and self-selection). Since high-involvement 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 high-involvement 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 As noted on page 56 of this chapter, this inset box (refer to page 57) 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 “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 description of purposes of their locations in the United Kingdom, testimonials, and lots of 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? What Makes College Basketball Programs Successful? As noted below the inset box (refer to page 64), college basketball programs have benefited from matching human resource strategy with competitive strategy. The research shows that organizations can benefit from recruiting people with skills needed to help competitive strategies. The study also indicates that high performance occurs when employees’ skills and abilities match the organization’s strategic objectives. You could briefly mention this inset as an example of organizations being more productive when employees’ skills and abilities fit the organizational strategy 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 to describe how these results translate to non-sports-related organizations. Other questions could include: Describe examples of sports and non-sports-related organizations that illustrate success (or failure) in matching players/employees to the organization’s strategy? Does this mean that everyone in an organization have the same skills and abilities? What are the risks of everyone matching the strategy? Where does diversity fit into this? Can group decision-making (e.g., stimulating conflict) be effective if everyone matches the strategy or is that issue relevant only to non-sports-related organizations (e.g., perhaps a head coach is the main decision maker so no group decision making occurs)? You could end by asking what the students might conclude from the research study and their discussion. KEY TERMS Bargain Laborer HR strategy Business-level strategy Committed Expert HR strategy Commitment strategy Competitive business strategy Contingency approach Control strategy Corporate-level strategy Cost leadership strategy Differentiation strategy External environment External labor orientation Free Agent HR strategy Human resource bundles Human resource strategy Internal labor orientation Loyal Solider HR Strategy Opportunities Role Strategy Strengths Threats Universalistic approach Weaknesses Chapter 3 Ensuring Equal Employment Opportunity and Safety Chapter 3 Learning Objectives What is the main law relating to discrimination and employment? What are other important employment laws? What is affirmative action? What are the major laws pertaining to occupational safety? What specific practices increase fairness and safety? Chapter 3 Outline 3.1 What Is the Main Law Relating to Discrimination and Employment? Federal Laws: Discrimination is based on immutable characteristics, traits that cannot reasonably change if they want a job (e.g., sex, race, age, and religion). 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 Age (i.e., 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 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. 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. 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. Disparate Treatment – which is the specific practice of treating certain types of people differently than others. Exceptions: safety and bona fide occupational qualification (BFOQ) Prevention against claims: ensure consistent treatment for all Adverse Impact Adverse impact occurs when 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. Results of all measures must be linked to differences in job performance. Harassment occurs when employee is persistently annoyed or alarmed by improper words or actions of people in the workplace, such as supervisors or coworkers. Most cases of harassment involve behavior directed at 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 submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual, or 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 workplace have purpose or effect of unreasonably interfering with individual’s work performance or creating intimidating, hostile, or offensive working environment. Protection against claims of sexual harassment? Formal policies concerning harassment, as well as formal channels to communicate allegations of harassment, are important for demonstrating that 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.) Shifts burden of proof to companies accused of adverse impact discrimination. Normally, burden of proof in lawsuit is on the plaintiff. Up until 1991, the Court decided a number of cases that appeared to signal that burden of proof should not be shifted to company. The 1991 act directly specifies that burden of proof rests with company once potential victim establishes 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 and punitive damages. Allows jury trials for employment discrimination cases. Application of U.S. Laws to International Employers If job is located in U.S and employer is U.S. company, then U.S. laws protect the employee holding that job, as long as employee is authorized to work in the U.S. Title VII and similar laws do not apply in countries if employer is not U.S. company. 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 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. 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. 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 workplace have purpose or effect of unreasonably interfering with individual’s work performance or creating intimidating, hostile, or offensive working environment. 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 actual and punitive damages). How do U.S. discrimination laws apply to international employers? If job is located in U.S and if employer is U.S. company, then U.S. laws protect 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 employer is not a U.S. company. Workers in other countries are only protected by U.S. discrimination laws when they are U.S. citizens working for U.S. organizations. 3.2 What Are Other Important Employment Laws? The Age Discrimination in Employment Act 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 an earlier 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 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. Who Is Covered? To be classified as a disability, 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 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 way things are customarily done that enables individual with disability to enjoy EEO. An organization may not have to make reasonable accommodations if doing so would create 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: medical exam can be required after a conditional job offer has been made, as long as 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 content of jobs. Develop 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) 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 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 employee may request leave of absence because 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 or needs to care for a newborn child. needs to care for child just adopted or fostered by 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. Employee must have worked for company for at least 12 months and at least 1,250 hours during the 12 months. Employees who take leave receive no pay while they are not working. Company is required to continue providing healthcare coverage under a group plan. Employees who wish to take leave usually provide 30 days’ advance notice. Company may also require an employee requesting leave based on a serious health condition to provide certification of the condition. Courts have ruled that 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 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. 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 way things are customarily done that enables individual with 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. What Is Affirmative Action? Executive Order 11246 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 opportunity to catch up with rest of society. Opponents say preferential treatment is nothing more than reverse discrimination. No law requires affirmative action; policy is derived from Executive Order 11246. Executive Order 11246 (1965) Requires any organization doing business with federal government to have affirmative action plan but Executive Order 11246 does not have force of law 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. Sanctions 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, company cannot be sued for failing to follow affirmative action plan. Affirmative Action Today 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 without harming people who are not members of a protected class. CONCEPT CHECK 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. How have court decisions influenced attempts to pursue affirmative action? They have placed important restrictions on affirmative action practices. One of the first cases concerned medical school admission. The Supreme Court ruled that the medical school’s quota system was unacceptable, but the Court upheld the principle of affirmative action and stated that race could be used along with other factors in making admission decisions. Other court cases have focused on the issue of layoffs and subcontractors. In one instance, a fire department was forced to lay off some of its workers. In order to meet its affirmative action goals, the department terminated some white firefighters who had more seniority than some minority employees who were retained. The Supreme Court ruled that the policy was unacceptable because it punished innocent employees to remedy past discrimination. In a more recent case, a contractor was found guilty of discrimination for giving favorable status to minority subcontractors. The Supreme Court said the plan seemed too broad and not tailored to correct a particular problem. This decision illustrates the necessity of creating an affirmative action plan that corrects a specific problem. 3.4 What Are the Major Laws Relating to Occupational Safety? Occupational Safety and Health Act 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. Employers that do not follow guidelines of OSHA may be fined. OSHA Standards: Organizations must provide information about protective measures that reduce the chance of harm from the chemicals. Each workplace must have a written plan. Emergency Plans: Plans for dealing with fires and other emergencies are the main subject of the emergency action plan standard. Workspace Layout: Emphasizes need to keep 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. 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. HR function is to ensure the accuracy of the relevant records, train workers how to report injuries and work with medical providers. CONCEPT CHECK 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. What protection is provided by state workers’ compensation laws? Provides 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, insurance that 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. 3.5 What Specific Practices Increase Fairness and Safety? 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. 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 their 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 who 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. Concept Checks Answers to each of the four sets of Concept Checks are presented at the appropriate points in the chapter outline. The pre- and post-quiz questions also address the Concept Checks. 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. A Manager’s Perspective, What do you think?, And A Manager’s Perspective Revisited The chapter starts with a short scenario where Sally (a supervisor) has just met with one of her best employees. The employee told her of a situation that could be sexual harassment by the male members of a team. She also considers other legal issues that she’s learned of in her organization and other organizations. Five true/false questions related to this scenario and the chapter topics are noted on page 75 and answered on page 107. 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 Allen 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: Responding to Discrimination Claims This special feature (page 77) highlights several issues noted in this opening case regarding some organizations that have settled some discrimination-related cases (refer to pages 76-77). This case then focuses on Wal-Mart’s on-going class action lawsuit and the actions Wal-Mart has taken to offset the poor publicity and improve their HR practices. The inset box (refer to page 77) 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, leaders demonstrate their commitment to fairness). Of course, you could ask a related question of the students that puts the focus back on Wal-Mart. Most students know about Wal-Mart, and this author’s experience indicates that they are likely to have strong opinions about Wal-Mart’s HR practices. Thus you could ask: If we assume that some of the allegations are true, how could Wal-Mart 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 Wal-Mart 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 Wal-Mart 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 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? This inset box (on page 83) is referred to prior to the inset box (refer to page 82). 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 in-depth research paper on the topic. Technology in HR: Legal Issues with Internet and E-mail Use This inset box (refer to page 85) 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 versus 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? This inset box (see page 87) is mentioned on page 86. Jonathan Ziegert and Paul Hanges investigated implicit racial attitudes and motivation to control prejudice. The researchers conclude 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, 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 As noted above this inset box (refer to page 96), 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, who 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 Hispanic and African American consumers, respectively. You could ask students to discuss whether those consumer groups are the only ones who 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 As noted on the page before the inset box found on page 101, the health and safety programs at Union Pacific Corporation are briefly described. You could briefly 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). 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 to not 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. KEY TERMS Adverse impact Affirmative action Bona fide occupational qualification (BFOQ) Comparable worth Discrimination Disparate treatment Emergency action plan standard Equal employment opportunity Equal Employment Opportunity Commission Four-fifths rule Harassment Hazard communication standard Hostile environment Immutable characteristics Material safety data sheet Medical and first aid standard Mental disabilities Physical disabilities Protected classes Punitive damages Quid pro quo Race-norming Reasonable accommodation Sexual harassment Title VII Undue hardship Utilization study Validity Walking/working surfaces standard Workers’ compensation Instructor Manual for Human Resource Management: Linking Strategy to Practice Greg L. Stewart, Kenneth G. Brown 9780471717515