CH-1 Strategic Human Resource Management – Human Resource Management : Chapter Notes

This document contains Chapters 1 to 3 CHAPTER 1 STRATEGIC HUMAN RESOURCE MANAGEMENT IN A CHANGING ENVIRONMENT CHAPTER OBJECTIVES: After reading this chapter, you should be able to: Describe the field of HRM and its potential for creating and sustaining competitive advantage. Describe discrepancies between actual HRM practices and recommendations for HRM practice from research. Describe the major activities of HRM. Explain important trends relevant to HRM, including the increasing globalization of the economy, changing technology, the role of regulations and lawsuits, the changing demographics of the workforce, and the growing body of research linking particular HRM practices to corporate performance. Emphasize the importance of measurement for effective and strategic HRM. Understand what is meant by competitive advantage, and why it is important for organizations. CHAPTER 1 - SUMMARY Overview Good measurement, allied with business strategies, will help organizations select and improve all of their HRM activities and provide a much stronger connection between HRM activities and organizational effectiveness. What is Human Resource Management? HR consists of all people who perform the organizations activities. The HRM function involves all decisions that affect member of the work force HRM is pervasive throughout the organization. 3. HRM is a business within the company with 3 distinct product lines 4. HRM functional departments provide tools, processes and data for organizational design, staffing, rewards, training, performance management and compliance 5. HRM can create and sustain competitive advantage; however, as practiced by line managers is often a weakness rather than a strength HRM and Corporate Performance “High performance work practices" (HPWP) are HR practices that have been shown to have a significant effect on corporate performance. They are characteristics designed to enhance employees’ competencies and productivity so that employees can be a reliable source of competitive advantage. Valid staffing and promotion systems Formal mediation and grievance procedures Training and development Team-based work configurations Group-based rewards and skill-based pay at above market rates vi. Formal performance management and appraisal with a high % of jobs filled from within. The most effective HRM functions are conceptualized in a business capacity, constantly focusing on the strategy of the organization and the core competencies of the organization. Effective HRM focus on strategy and core competencies HRM specialists must demonstrate a positive impact on the company's bottom line. Cost and efficiencies are criterion for evaluating HRM. Discrepancies between Academic Research and HRM Practice HR specialist must have knowledge and skills to identify best practices aligned with current research. One study reinforced a “knowledge gap” between practitioners and academic findings Should be capable of conducting own research to evaluate off-the shelf-programs. 1. Must have the training to evaluate vendor claims of cost effectiveness and efficiency gains. C. Academic research offers objective evaluation of activities and programs. There are discrepancies between findings of academic research versus current HR practice. Necessary to regularly evaluate programs to be sure they continue to be valid and reliable. The Domains of Human Resource Management (Figure 1-3) Five Major HRM domains are: Organizational design; Staffing; Performance management and appraisal; Employee training and organizational development; Reward systems, benefits & compliance; Employer relations; and Employee health and safety Organizational design is the arrangement of work tasks based on the interaction of people, technology, and the tasks to be performed in the context of the mission, goals, and strategic plan of the organization. HRM activities include: Human resources planning, Job and work analysis, Organizational restructuring, Job design, computerization, Design drives staffing, training, performance management and compensation. Should almost always be the first issue addressed whenever significant change is necessary Staffing is flow of people into, through, and out of the organization. Recruitment, outplacement, selection, promotion, and termination are among the functions. Performance management assesses individual, unit, or other aggregated levels of performance Measures and improves work performance. Includes employee discipline. E. Training and organizational development establish, foster and maintain employee skills 1. Management development 2. Career Planning 3. Attitude surveys 4. Employee assistance/counseling programs F. Reward systems and benefits have to do with any type of rewards or employee benefits. 1. Direct and indirect compensation, merit pay, profit sharing, health care, parental leave programs, vacation leave, pensions. 2. Compliance requirements of local, state and federal agencies. 3. Labor law, health and safety issues and unemployment policy 4. Union relationships and collective bargaining Trends Enhancing the Importance of HRM Trend #1: The Increased Globalization of the Economy Opportunity for global workforce and labor cost reduction Development of a worldwide labor market for US companies Easy to move work around when it can be digitized Decrease the cost of labor HRM is more complicated Increased union activities & resistance. Corporate downsizing linked to new technology Increasing global competition for US products & services Barriers to entry have been reduced, increasing international competition from firms and individuals alike. Requires constant vigilance over productivity and customer satisfaction Opportunity for expansion that presents global changes for HR US exports now generate about one in six American jobs, an increase of over 20% in just 10 years U.S. firms are expanding in new countries and new markets Restructuring/downsizing Large corporations have reduced work forces by more than 10% in the last decade. HRM specialists experts in organizational restructuring Conduct vocational counseling for displaced Assist in developing new staffing plans Help in a legal defense against allegations of discrimination. Trend #2: Technological Changes, Challenges and Opportunities. Great opportunities presented by Web-based systems Products and services can be delivered more effectively through an optimal combination of people, software and equipment; thereby, increasing productivity. Maximize profit margins and sustained customer value Automation of HRM activities/transactions Electronic tracking of HR activities such as turnover and performance reviews. Software is easily customized to each organization. Computer search of a potential applicant pool. Standardized resumes in database. Fast, convenient and efficient recruiting of core personnel Announcement and responses through electronic mail. Increased speed of communication across organization. Worldwide virtual teams Computer based testing and interviewing. New Threats: Increased focus on security of personnel information and intellectual property ensuring employee privacy and confidentiality protecting intellectual property Email/ electronic communication policies Banning cell phones/cameras & instant messaging Policies regarding personal communication devices and social media and networking Trend #3: Increase in Litigation & Regulation Related to HRM Federal, state & municipal lawsuits on the increase Federal lawsuits increased over 125% since 1991. Jury awards have gotten much larger: 2010, 32% of judgments were $1 million or more Expected increase in age discrimination lawsuits due to aging of workforce and recent Supreme Court rulings. Federal protection against employer use of genetic information State laws regarding corporate acquisitions and mergers, AIDs victims and sexual orientation, family leave benefits, and video displays Health and safety regulations, employee pensions and other compensation programs, plant closures, mergers and acquisitions, new immigration laws, and equal opportunity laws and guidelines. Wrongful discharge; negligent hiring and retention lawsuits Trend #4: Changing Characteristics of the Workforce Growing workforce diversity, which complicates HRM more diverse HRM systems & practices increases the probability of litigation Estimated that by 2016 US workforce will be 80% white, 12% African American and 5% Asian Greater proportion of women and minorities have entered male-dominated positions Nearly 90% of the growth in the US workforce from the first part of the 21st century came from women, immigrants, African-Americans, Hispanic and Asians. More dual-career couples in the labor force Fewer than 20% of the workforce fit the “male, white, single-earner household” mold May 2008: 11.6% of US population foreign born – about half of the youngest 100 million Americans are immigrants and their US born children. Labor shortages/aging workforce vs. Millennials rising Baby Boomers: Baby Boomer generation (born between 1946-64) retirements expected to create a shortage of skilled workers and perhaps affect economic output By 2030, Boomers make will up 20% of population Increase social security and Medicare costs/contributions Some experts predict enough Boomers will remain in the workforce to make up for any shortfall of workers and reduce the projected govt. unfunded obligations. 2008 economic turmoil will likely impact Baby Boomer retirement plans Generational conflicts may continue Age discrimination litigation is expected to increase 2008 Supreme Court ruling on age discrimination changed the burden of proof needed to prove age discrimination and may further increase ligation Generation Y/ Millennials / Net Generation estimated in 2014 there will be almost 63 million Gen Y (born 1979-1995) in the workforce while Boomers will decline to less than 48 million Expected to have greater career vs. personal demands career vs. child/elder care More racially and ethnically diverse than Boomers and Gen Xers more comfortable working in a diverse environment HRM must develop and implement programs on diversity, more flexible work schedules, better training programs, child and elder care arrangements, and career development strategies HRM must build and sustain a quality workforce in the face of increased diversity Millennials have increased racial and ethnic diversity and are more comfortable working in a diverse environment. E. Summary: HR consultants have been instrumental in helping companies discover their core competencies and then developing optimal work design and HR strategies. 1. Competition for HR related projects can result in outsourcing and has reduced the size of many HR departments The Importance of HRM Measurement in Strategic Thinking A workforce than can execute strategy is the most critical and underperforming asset in most organizations. Three challenges to maximizing workforce potential to meet strategic objectives: view the workforce in term of contributions rather than cost use measurement as a tool for differentiating contributions to strategic impacts hold line and HR mgt responsible for getting the workforce to execute strategy Six general steps of a workforce “scorecard” identify critical and carefully defined outcome measures that really matter translate the measures into specific actions and accountabilities employees receive detailed descriptions of what is expected and how improved can be facilitated identify high and low performing employees and establish differentiated incentive system develop supporting HR management and measurement systems specify the roles of leadership, the workforce, and HR in strategy execution Three challenges for successful workforce measurement & management Perspective challenge Metrics challenge Execution challenge The key is linking measurement to strategic goals Link measurement to goals and make connections to leading and lagging indicators. Chain of relationship: Turnover, long-term profitability, growth and HRM practices are driven by customer satisfaction In the past HRM interventions were rarely linked to financial measures or cost figures in order to show a reliable financial benefit Develop clear criteria linked to strategic goals is critical for managerial success and should be a major driver of HR policy Requires sound measurement Should try to quantify all facets of HR to determine what works and what doesn’t work; while focusing on the big picture Competitive Advantage Competitive advantage is organizational placement in favorable position relative to other companies in industry Customer Value If customer perceive they receive more value from their transaction with an organization than from its competitors. Value chain analysis assesses amount of added value produced by each position, program, activity and unit; allows the organization to refocus on its core competencies and requirements. Reputation of the organization/ How a company treats its employees is important for avoiding lawsuits and bad publicity Customer Value related to Corporate Social Responsibility Many customers seek out products and services at least to some extent as a function of the reputation of the organization selling the product or service Some companies believe that social responsibility figures into the calculation of their value (i.e. Special Olympics, Environmental Policies, International labor conditions, employee relations, etc). Evidence indicates that corporate CSR is related to financial performance. Socially responsible investing Corporate Sustainability Movement Employer-Employee Relations Maintaining Uniqueness Uniqueness defined as cannot easily imitate or copy ie. Apple’s product lines Sources of Uniqueness Ensure uniqueness lasts over time Four mechanisms to offer customers uniqueness: Financial or economic capability derives from an advantage related to costs: produce a good/service more cheaply; the overriding ‘cost’ equation. Strategic or product capability: differentiated products or services. Technological or operational capability: a distinctive process. Organizational capability: matching customer and strategic needs through work structure and design. Summary Human resource management is concerned with any decision that affects workforce and potential workforce Line management is still primarily responsible for HRM Trends underscore the importance of HRM Organizations need competent personnel trained in HRM and motivated managers to recognize the importance of HRM Focus HR programs on "leading indicator" measurement Measured in the context of the mission and strategic objectives Enhance competitive position by focusing on customers and offering uniqueness. Four capabilities provide uniqueness and competitive advantage: financial, strategic or product, technological or operational, and organizational. Organizational capability derives from the organizations HRM practices HRM professionals need up-to-date knowledge of HRM research and the regulatory environment. CHAPTER 1 - IMPORTANT TERMS Baby-Boomers - People born between 1946- 1964 Core Competencies - What a company does best and the essence of its business. Correlation - Statistical relationship between two or more variables (-1 to 1.0) Customer Value - Customers perceive that they receive more value for their transaction from an organization than that of its competitors. Competitive Advantage -¬ customers perceive they receive more value from their transactions with an organization than from its competitors. Corporate social responsibility (CSR) - when an organization considers the interests of society and the impact of their activities on stakeholders and the environment (source: Wikipedia). Corporate Sustainability Movement - companies making a profit while not sacrificing the resources of its people, the community and the planet. Diversity - In context of this chapter refers to growing number of women and minorities entering the workforce. Effectiveness - Meeting or exceeding customer requirements. Efficiency - In context of this chapter refers to meeting customer requirements at the lowest cost possible. Employee training and organizational development - Programs concerned with fostering and maintaining employee skills based on organizational and employee needs. Employee Engagement - an employee's involvement with, commitment to, and satisfaction with work Execution challenge - Workforce scorecard challenge; Does management have access to the data and motivation to use the data in decision making? Financial or Economic Capability - A business receives special access to financial funding or is able to produce a good or service cheaper than that of its competitors. Generation X - people born between 1965 – 1976 Generation Y (Millennials) - people born between 1977 - 1994 High Performance Work Practices (HPWP) - HR practices that are correlated with financial performance, productivity, product and service quality, and cost control. Intellectual Property – Information that a company considers to be confidential including such things as patents, financial information and customer lists Human Resources - consist of all people who perform an organization activities Human Resources Management - concerns the personnel polices and managerial practices and system that influence the workforce Lagging Indicators - Traditional financial performance measures such as return on equity (ROE), stock price, and return on investment (ROI). Leading Indicators - Indicators shown to predict “lagging indicators.” Meta-analyses - The quantitative analyses of a research topic. Metrics challenge - Workforce scorecard challenge; Has the organization identified and collected the right measures of success? Millennials (Generation Y) - born between 1977 - 1994 Organizational Capability - Business’s ability to manage organizational systems and people in order to match customer and strategic needs. Outsourcing – moving a function out of the organization to be handled by a company specializing in that function Organizational design - Involves the arrangement of work tasks based on the interaction of people, technology, and the tasks to be performed in the context of the mission, goals, and strategic plan of the organization. Performance appraisal and management - Include assessments of individual, unit, or other aggregated levels of performance to measure and improve work performance. Perspective challenge - Workforce scorecard challenge; Does management fully understand how workforce behaviors affect strategy execution. Quantitative – capable of being measured; based on math, numbers and mathematical modeling Reward systems, benefits, and compliance - Refers to type of rewards or benefits that may be available to employees. Society for Human Resource Management - 190,000-member society for HRM which established the Human Resources Certification Institute Staffing - Has to do with flow of people into, through, and out of the organization. Strategic or Product Capability - Business offering of a product or service that differentiates it from other products or services. Socially Responsible Investing - investors buy into companies with favorable corporate social/environmental performance. Technological or Operational Capability - Business that has a distinctive way of building or delivering is products or services. Turnover – employees who exit the organization Uniqueness - offering a product or service that your competitor cannot easily imitate or copy. Validity – shown to predict something important Workforce scorecard - six steps for managing human capital to execute strategy. CHAPTER 2 THE ROLE OF GLOBALIZATION IN HR POLICY AND PRACTICE CHAPTER OBJECTIVES After reading this chapter, you should be able to: Describe the different ways companies may engage in international commerce. Explain the different international business strategies Explain how international human resources management (IHRM) differs from traditional domestic HRM Understand the different IHRM strategies Describe the trends relating to international job assignments. Understand the issues and trends relating to the development of globally competent business leaders. Chapter 2 - Summary Overview Increasing globalization of the world economy and competition Growth of foreign direct investment (FDI) is control through ownership by a foreign company or foreign individuals Creation of offshore professional and operations centers Why expand globally? Access to additional resources (including skilled workers) Lower costs Economies of scale Favorable regulations and tax systems Direct access to new and growing markets Ability to customize products to local tastes and styles Rise of regional trade alliances (e.g., NAFTA, the European Union) Majority of Fortune 500 companies are now multinational; deriving more than half of their revenues from overseas business How Do Companies Engage In International Commerce? Export Work To increase sales and revenues To spread research and development costs over a larger sales volume To relieve excess capacity For diversification due to maturing domestic markets Lack necessary knowledge to directly do business effectively on foreign shores Directly sell their products in a foreign market Use intermediaries who are third parties that specialize in importing and exporting. Advantages of exporting include: Relatively low investment Ease of withdrawing from a market Disadvantages of exporting include: Tariffs and quotas High transportation costs Difficulty finding good distributors License is when the licensor leases the right to use its intellectual property to the licensee for a fee. Intellectual property includes patents, formulas, patterns, copyrights, trademarks, brand names, and methods and procedures. Franchise agreement allows franchisee to operate a business under the name of franchiser for a fee Contract manufacturing is when outsourcing of the creation of products occurs Management contracts occur when a company sells its management and/or technical expertise to another Foreign direct investment occurs when an organization owns part of or an entire business in a foreign market Partner alliance allows gradual investment and sharing risk with another Joint ventures create a new, separate company owned jointly by partners Strategic alliance - agreement to partner with one another, not as a separate entity Sole ownership – high risk; single owner in foreign market ensures they have full decision-making authority and operational control What Influences the Decision to Invest in a Particular International Market? General Environment A particular country’s economic, legal, political, and socio-cultural systems, plus diversity in language and religious beliefs Task Environment Those forces that are directly related to the industry within which a firm operates Cost pressures, the intensity of competitive rivalry, the ease with which organization may enter or leave the industry, and the degree of power over the company maintained by suppliers and customers Porter’s two types of international industries: Multilocal industry – competition in each country or region is essentially independent of the competition in other regions Global industry – a firm’s competitive position in one country is significantly affected by its position in other countries Internal Strengths or Weaknesses Relevant internal factors include an organizational culture, the expertise of its management staff, the sophistication of its information systems, and the ability to detect and respond to consumer trends These are critical assets that add value within the firms Domestic versus International HR HR activities all relate to the procurement, allocation and utilization of people. The particular activities themselves may not be all that different regardless of where they are performed or who they cover. Factors that differentiate domestic HR from international HR Different national governments Different legal systems Different economic conditions People of diverse cultures and values Suppliers and customers over vast geographical distances Factors that affect the level of difficulty involved in operating HR on an international basis Legal complexity Degree of cultural difference (Geert Hofstede) Individualism/collectivism Power distance Uncertainty avoidance Masculinity/femininity Long term vs. short term orientations Organization’s degree of foreign investment in relation to its domestic investment Attitude of senior management toward international operations Failure to recognize differences between domestic and international operations frequently creates problems in foreign business units International HR strategies Four general international HR management strategies Ethnocentric approach - foreign subsidiaries have little autonomy, operations are typically centralized, and major decisions are made at the corporate headquarters Key positions in management held by parent company nationals (Parent Company Nationals (PCNs)) Polycentric philosophy - tend to treat each subsidiary as a distinct entity with some level of decision-making authority PCNs fill key upper level management for a time Host country nationals (HCNs) fill middle- and lower-level positions, but eventually move up to take over for PCNs Geocentric managerial approach - strives to integrate headquarters and foreign subsidiaries through a global workforce Third country nationals are residents of a country different than either the parent country or the host county Find best person to fill the position, whether or not they are a PCN, HCN, or third-country national (TCN) Regiocentric managerial approach - may be thought of as a scaled-down version of the geocentric model in that it tends to appoint people to positions within global regions What Influences the choice of IHRM strategy? General environment The industry environment Firm’s internal strengths and weaknesses Firm’s strategy International Business Assignments International businesses need international expertise Expatriates: employees who are placed in an assignment outside their home country Impatriates: individuals from a host country or a third county who are assigned to work in the headquarters office Goals of International Business Assignments Key element in developing management teams that are globally focused & globally competent Expatriate assignments encourage high levels of coordination and control among business units Requires high levels of international communication, both information sharing and information exchange, because of geographical distances, cultural diversity, complex supply & demand conditions, and other similar pressures Challenges of International Business Assignments Assignment failure International compensation: understand cost of living differences impact on setting competitive wages Balance sheet approach Going rate approach Cafeteria-style benefit package Regional system Trailing spouse benefits Cross-cultural training for expatriate and family a) Factual information b) Cultural orientation and assimilation c) Language training d) Sensitivity training e) Field experience 4. Repatriation Difficulty retaining expatriates/ high turnover Reverse culture shock Frustration with perceived career opportunities; failure to be able to leverage their international experience, and knowledge Recent Trends in Overseas Assignments Four types of expatriate assignments Short-term assignments Developmental assignments Strategic assignments Long-term assignment More international assignments for women Push for reducing expenses leads to reliance on shorter term assignments and localization Global Leadership Challenges Organizations are increasingly committed to developing management teams that are globally focused. HR goal to develop solid global teams What is a globally competent leader? Integrators who see beyond obvious country and cultural differences Diplomats who can resolve conflicts and influence locals to accept world standards or commonalities They can recognize the best from various places and adapt it for utilization elsewhere They have an in-depth understanding of world markets: their potential and their problems Masters of global supply chains and distribution channels They skillfully embrace cultural diversity Competency Model for global leadership: competencies have been identified, however, there is often an overlap of competencies and they often focus on traits rather than learned behaviors. In addition, not enough research to show that the competencies are predictive of actual performance domestically or internationally. Global mindset is a general description of the need for all organizational decision-makers to think well beyond domestic issues General components of a global mindset Global data bank Market knowledge Understanding the global superstructure Global economic systems Cross-cultural skills Cultural roots Spirit of generosity, magnanimity VIII. Summary Business and commerce are increasingly crossing national, regional, and continental borders. Even if you never work for a multinational corporation, chances are the global economy will affect you and your business. There are many approaches to participating outside of an organization’s native borders. These approaches vary in risk and investment. After choosing how to focus outside national borders, an organization must determine a basic management strategy. These range from multidomestic to a more global focus. Choosing the right international human resource strategy (IRHM) can aid the organization in meeting its objectives and global goals. Traditionally US companies have used key management talent and international job rotation as a means for developing and deploying strategic capability during efforts to internationalize. Development of effective global leadership continues to be a major challenge CHAPTER 2 - IMPORTANT TERMS Acquisitions - involve the purchase of an existing business Balance sheet approach - international compensation approach that ensures the expatriate maintains the same standard of living in the host country as he/she had in the home country by providing a variety of financial, social, and family benefits Business Partnership- allows gradual investment and sharing risk with another Cafeteria-style benefit package – international compensation approach where expatriates can choose from a variety of benefits, at costs that meet a specified total Competency- KASOC’s that enable an individual to perform effectively in a job Contract manufacturing - when outsourcing of the creation of products occurs Culture - has been defined, as “a system of values and norms that are shared among a group of people and that when taken together constitute a design for living" Developmental assignments – an expatriate assignment that is increasingly considered to be a necessity for a high potential fast tracker in many large international companies Ethnocentric approach - foreign subsidiaries have little autonomy, operations are typically centralized, and major decisions are made at the corporate headquarters Expatriates- Employees who are placed in an assignment outside their home country Export - when a company sells it goods or services to a foreign market Export strategy - views world as single marketplace and standardize goods or services Foreign direct investment - an investment abroad; usually where the company being invested in is controlled by the foreign corporation or foreign individual. Franchise agreement - allows franchisee to operate a business under the name of franchisor for a fee General environment - a country’s economic, legal, political, and socio-cultural systems, plus diversity in language and religious beliefs that influences an organization’s decision to invest in a particular international market Geocentric - managerial approach strives to integrate headquarters and foreign subsidiaries Global approach - combines export orientation and multilocal management Global industry – one of Porter’s two types of international industries. This type of company’s competitive position in one country is significantly affected by its position in other countries. This type of company requires integration among units in order to leverage the firm’s competitive advantage. Important to have a balance between global competitiveness and local respoinsiveness. Global mindset - a general description of the need for all organizational decision-makers to think well beyond domestic issues Global workforce – a workforce that can be deployed in a variety of ways throughout the world. Individual differences in nationality are not as important as individual differences in talent Globally competent managers and leaders—knowledgeable, effective, well-rounded individuals who could be sent anywhere on the globe to run an operation Host country nationals (HCNS)- individuals who are residents of countries in which a foreign subsidiary is located Impatriates- individuals from a host county or a third county who are assigned to work in the headquarters office, when it is located in a different county Individualism vs. Collectivism – refers to the degree to which individuals looks after themselves or operate in groups Intermediaries - third parties that specialize in importing and exporting Joint ventures - create a new, separate company owned jointly by partners KASOCS- Necessary knowledge, abilities, skills and other characteristics Licensing is when the licensor leases the right to use its intellectual property to the licensee for a fee Localization – international compensation approach that converts expatriates to local standard; the “going-rate approach” Long-term assignment – an expatriate assignment that is similar to the traditional expatriate role; involves start-ups or ongoing managerial presence to resolve major problems and would typically be taken by a ‘career expatriate” Long-term vs. Short-term orientation – refers to the extent to which members of a society accept delayed gratification of their material, social or emotional needs Management contracts - occur when a company sells its management and/or technical expertise to another Masculinity/femininity – refers to different expectation about gender roles in society Multilocal industries – competition in each country, or region, is essentially independent of the competition in other regions Offshore professional and operations center – either as a form of sole ownership or a strategic alliance, these centers involve the exporting of the work itself to places around the globe in order to obtain competitive advantage by leveraging combination of such factors as workforce skills, cultural similarities, costs, time, and government policies, regardless of where the work product is ultimately marketed Parent-country nationals (PCNS)- individuals who are residents of the organization’s home country who are sent offshore on assignment Polycentric philosophy - treats each subsidiary as a distinct entity with some level of decision-making authority Power distance – the extent to which less powerful members of society accept and expect that power is distributed unequally Regiocentric managerial approach - may be thought of as a scaled-down version of the geocentric model in that it tends to appoint people to positions within global regions Regional System- international compensation approach that sets wages for all expatriates assigned to a particular region according to the system that exists in that region Repatriation – when the expatriates return to the home country Reverse culture shock – occurs when expatriates who live and work in foreign country become immersed in their new cultures and return home surprised to find that everything has changed, from their companies to their communities Short-term assignments – an expatriate assignment described as “something longer than a business trip” Sole ownership - has full decision-making authority and operational control Strategic alliance - agreement to partner with one another, not as a separate entity Strategic assignments – an expatriate assignment that involves persons with special skills who are moved to become a country manager in an unfamiliar area Task environment – the forces that are directly related to the industry within which a firm operates that influences the decision to invest in a particular international market Third country nationals (TCNS) - are residents of a different country than the parent country or the host country Trailing spouse- the spouse of an individual assigned to an expatriate assignment that leaves a job and travels with their spouse on the international assignment Uncertainty avoidance – refers to whether members of society feel comfortable in structured situations CHAPTER 3 THE LEGAL ENVIRONMENT OF HRM: EQUAL EMPLOYMENT OPPORTUNITY CHAPTER OBJECTIVES: After reading this chapter you should be able to: Explain the legal issues affecting HRM activity and the various laws related to equal employment opportunity and employment discrimination Identify potential problems in HRM policy and practice as related to equal employment opportunity laws. Know the importance of judicial interpretation in EEO law. Understand the implications of EEO law in the international context. Describe the future trends related to EEO law and their implications for practice. CHAPTER 3 - SUMMARY Overview EEO law and regulation has a major impact on the practice of HRM. The potential for litigation has increased as a consequence of increasing workforce diversity. Employment- related litigation and regulation is increasing. EEO compliance represents good HR practice. Equal Employment Opportunity Law What is Employment Discrimination? Employment decisions or working conditions that are advantageous/disadvantageous to members of one protected group compared to members of another group Can apply to: Staffing /Personnel selection Training program opportunities Work assignments Transfers Compensation/Rewards Lay-offs Discipline Dismissals Work atmosphere and conditions What Are the Major Sources of EEO Redress? 1. Title VII of 1964 U.S. Civil Rights Act (and subsequent amendments) 2. Age Discrimination in Employment Act (ADEA) of 1967 3. The Americans with Disabilities Act (ADA) of 1990 4. States and many municipalities also have their own fair employment laws 5. Equal Employment Opportunity Commission i. All claims of discrimination under CRA, ADEA, and ADA must first be filed with the EEOC (80,000 in 2010) ii. EEOC can sue on behalf of others or by itself What Is the Cost of Violating EEO Laws? 1. Direct Expenses related to litigation and costs associated with judgments 25% of jury verdicts at $1 million or more Civil Rights Act of 1991 allows compensatory and punitive damages 2. Damage to the company’s reputation 3. Future outside controls on personnel practices D. How Do You File a Discrimination Law Suit? 1. File a charge of discrimination within 180 days of the alleged discrimination 2. Offers a mediation process to attempt reconciliation between the parties 3. See Figure 3-3 on page 67 Title VII of the Civil Rights Act Prohibits discrimination based on race, sex, religion, color, or national origin. Applies to employers with more than 15 employees, except Private clubs Religious organizations Places of employment connected to an Indian reservation The EEOC U.S. Equal Employment Opportunity Commission monitors and enforces compliance with Title VII and other EEO laws Issues guidelines, interpretations and recommendations Uniform Guidelines on Employee Selection Procedures (UGESPs) Interpretative Guidelines on Sexual Harassment, 1980. Policy Guidance on Reasonable Accommodation Under ADA, 1999. The EEOC requires submittal of EEO-1 forms (see Figure 3-5). applies to organizations with 100 or more employees used to identify possible patterns of discrimination What Is Not Prohibited by Title VII? Discrimination based on Seniority systems Veteran's preference rights National security reasons Job qualifications based on test scores Background or Experience "Bona fide occupational qualifications" (BFOQs) Legal Steps Followed in a Title VII Case Initially, plaintiff presents “prima facie” evidence of discrimination “Prima facie” means presumed to be true until proven otherwise Although the plaintiff retains the “burden of proof,” a model is used such that the burden of producing evidence shifts from the plaintiff to the defendant and back to the plaintiff. There are two theories under Title VII Disparate Treatment Procedures established by the 1973 Supreme Court case, McDonnell Douglas v. Green Plaintiff must show employer intentionally treats one or more members of a protected group differently because of race, sex, color, religion or national origin Disparate treatment can be in the form of retaliation; which is prohibited Figure 3-6, page 72 outlines shifting burden of proof Disparate Impact Procedures established in the 1971 Supreme Court case, Griggs v. Duke Power (intention is not necessary). Prima facie case can be established through the use of the four-fifth rule. Number of disadvantaged can not be less than 4/5th of the group with the highest advantage rate Often escalate to class action suits Commonality must exist to certify the class Employer (defendant) must show job relatedness/ business necessity if “prima facie” evidence is found The burden shifts back to the plaintiff, who must then show that an alternative procedure is available that has equal or better validity than the employer’s practice and has less adverse impact Methods to Determine Disparate Impact Four-fifths rule is statistical finding presented to support “prima facie” evidence of Disparate Impact Has been used in many cases involving neutral employment practices such as tests, entrance requirements, particular credential or physical requirements Also used for “subjective” practices such as interviews and performance appraisals Employers can still defend use of their particular practices Standard Deviation Rule, examines the difference between what is expected and actual rates Fisher Exact Test determines if there is a relation between two categorical variables Race Norming, interpreting test scores based on protected class status, is illegal How Does An Employer Prove "Job-Relatedness?" Griggs v. Duke Power (1971) – if an employment practice cannot be shown to be related to job performance, and that practice operates to exclude a disproportionate number of protected class members, then the practice is prohibited. Albemarle Paper Company v. Moody (1975) - clarified the job-relatedness defense, requiring a careful job analysis to identify the specific knowledge, skills, and abilities necessary to perform the job or a study that shows a clear statistical relationship between applicant test scores (or a particular credential) and their job performance Connecticut v. Teal (1982) - the “bottom line” defense (e.g.. who was actually hired or promoted) is not an acceptable legal defense. Rather, the “job relatedness” burden must be met where personnel decisions are made and “prima facie” evidence is presented. The burden is on the defendant to prove the practice was “job related.” i. Job relatedness must be applied to all steps of multiple-hurdle procedure where adverse impact occurs Significant correlation between test scores and performance is ideal to support job relatedness argument. Validity can be “transported” from existing studies to a new situation Validity Generalization(VG) – based on meta-analysis research. Uses validation data from other studies to support validation for a different situation with similar jobs The mean of several correlational studies is a strong basis for concluding that there is a valid relationship with similar jobs. The organization still needs to demonstrate that the relevant job is similar to the jobs under study in the VG study. In addition, the VG study should present sufficient detail on the individual studies that led to the inference that the test was valid. It is unclear whether the exclusive use of “borrowed” validity in the form of a VG study will meet the “job relatedness” burden for organizations between test scores and job performance for similar job situations c) “Alternative practices or procedures” - where two or more selection procedures or practices are available which serve the user’s “legitimate interest in efficient and trustworthy workmanship,” and which are equally valid for a given purpose, the user should use the procedure which has been demonstrated to have the lesser adverse impact. i) The plaintiffs can present evidence that an alternative method or practice exists and that its use would result in less (or no) adverse impact. Watson v. Ft. Worth Bank & Trust (1988) – disparate impact theory can be applied to “subjective” employment practices such as interviews and performance appraisals. What Is Illegal Harassment? Harassment is unwelcome conduct that is based on race, color, sex, religion, national origin, disability, and/or age The harassment becomes unlawful where 1) enduring the offensive conduct becomes a condition of continued employment, or 2) the conduct is severe or pervasive enough to create a work environment that a reasonable person would consider intimidating, hostile, or abusive What Constitutes Sexual Harassment under Title VII? The EEOC has published Guidelines for employers dealing with sexual harassment issues Meritor Savings v. Vinson (1986) - Quid pro quo or a causal relationship between the rejection of sexual advanced and specific personnel action is not necessary just the establishment of an unfavorable or hostile working conditions is necessary. Harris v. Forklift (1993) – Psychological effect is unnecessary, only “reasonable person” standard; see Faragher and Ellerth cases. Favorable legal outcomes for claimant when there is physical contact, threats, notification of management, corroboration of claims, and no formal harassment policy has been communicated to employees What is the Employer’s Liability in Sexual Harassment Cases? Burlington Industries, Inc. vs. Ellerth (1988), and Faragher vs. City of Boca Raton (1988) landmark Supreme Court rulings defining affirmative defense Employer is liable when a hostile environment is created by a supervisor and there is a tangible employment action (e.g., termination) Employer liable if management was aware and does not exercise “reasonable care” A company is less likely to be found liable under the following can present the following in support of an affirmative defense There is a specific policy on harassment that a supervisor/employee violated There is a company grievance/complaint procedure that the complainant did not follow The grievance procedure allows the complainant to bypass the alleged harasser in filing the violation No tangible employment action is involved Farley v. American Cast Iron Pipe (1997) - Effective harassment policy can provide employer an “affirmative defense” Policy that requires that a complaint be made through an immediate supervisor (with no alternatives) is not an acceptable policy 6. What Steps Should A Company Follow Regarding Sexual Harassment? Develop a written policy Conduct training Inform employees what to do if rights are violated Detail sanctions for violators Establish grievance procedure Investigate claims Discipline violators 7. Oncale v. Sundowner Offshore Services (1998) Supreme Court ruling that same sex harassment is illegal under CRA What is Affirmative Action? Refers to employers attracting, retaining, and upgrading members of protected classes as defined by CRA 2. Activities once associated with AA are similar to current day Diversity initiatives 3. Contractor and subcontractors with more that $50,000 in government business and 50 employees must take affirmative action 4. Section 503 of the Rehabilitation Act requires federal contractors to apply AA to persons with disabilities 5. Executive Order 11246 requires qualified government contractors to develop written AA plans annually 6. The Office of Federal Contract Compliance Programs enforces Executive Order 11246 and section 503 of the Rehabilitation Act What Is The Legal Status Of Affirmative Action? Federal courts can order involuntary AA programs, and organizations can implement involuntary programs US Steelworkers v. Weber – establishes the “Weber Test” to ascertain the legality of voluntary plans: Does not “unnecessarily trammel” the interests of majority employees Can not fire people to meet affirmative action goals Be must temporary. Johnson v. Santa Clara Transportation Agency (1987) – clarified further how a company can embark on a voluntary program: two major conditions To correct a “manifest imbalance", even if no evidence of past discrimination Select from pool of equally qualified candidates Qualifiers on appropriateness of an Affirmative Action Program Should be narrowly tailored to achieve their ends with a timetable for ending the preferential practice Class-based firing or layoff schemes are too harsh on the innocent and inappropriate in most circumstances Preferential personnel practices of any kind are appropriate only in employment situations where there is a prior history or indication of past discrimination Gratz v Bollinger, Grutter v. Bollinger (2004)– Supreme Court decisions addressed the question of whether college admissions racial preference programs are unconstitutionally discriminate (based on the equal protection clause of the Constitution) against white students race can be a factor in college admissions since a social value may be derived from greater “diversity” in the classroom. However, race cannot be an “overriding” factor in admissions decisions. schools have dropped fixed or rigid, point-based systems for admission California, Washington and Michigan ban any preferential treatment in public education, employment and contractor selection What Is Required Before A Company Embarks On A Voluntary Affirmative Action/Diversity Program? Criteria for voluntary affirmative action plans Fix old patterns of discrimination Not impose an absolute bar to white advancement Be temporary Not trammel the interests of white employees Fix manifest imbalance (not 80% rule violation standard) Only choose from a pool of equally qualified candidates Criteria for involuntary affirmative action programs Remedy pervasive and egregious discrimination Flexible benchmarks for court monitoring rather than rigid quotas Be temporary Does not unnecessarily trammel the interests of white employees 3. Ricci v. DeStefano- the Supreme Court ruled that standard for permissible race based action is that the employer must “demonstrate a strong basis in evidence that, had it not taken the action, it would have been liable under the disparate-impact statute” Is Affirmative Action Still Necessary? Does the election of a black President indicate that EEO has been attained “Glass Ceiling” refers to barriers still encountered by women and minorities attempting to obtain senior managerial positions The public tends to favor affirmative action in terms of recruitment, training opportunities, and attention to applicant qualifications. They tend to oppose preferential treatment and any form of quota based decision making The Age Discrimination in Employment Act (ADEA) of 1967, amended in 1978 and 1986 Prohibits discrimination in employment decisions against persons over the age of 39 Applies to employers with 20 or more employees 23,264 claims of age discrimination in 2010, up 7000 from 2005 Gross v. FBL Financial Services –Supreme Court ruling that in a disparate treatment case the plaintiff must prove that age was the cause of the employment action Smith v. Jackson the Supreme Court ruled that impact theory can be used with ADEA cases. Meacham v. Atomic Power they ruled that the employer carries the burden to prove that affirmative defense of a reasonable factor other than age What Is Required To Establish Prima Facie Evidence Of Age Discrimination? 1. Requirements for a prima facie case of age discrimination: Employee is 40 or older Employee can perform at absolute or relative level (plaintiff must prove) Employee was Not hired Not promoted Not compensated Was discharged Was laid off Was forced to retire The position was filled or maintained by a younger person; just younger, not necessarily under 40 Defendant must present reasonable factors other than age that were the basis of the personnel decision Mastie v. Great Lakes Steel Corp (1976) - The critical question in ADEA litigation is whether age was a “determinative factor” in a personnel decision. Smith v. Jackson (2005) – employers must show an age-neutral ‘business necessity’ for their actions. This shifted the burden to employers once evidence is presented, usually statistical, showing prima facie discrimination. Meacham v. Atomic Power (2008) ruled that the burden is on the employer to show that action against a worker stems from “reasonable factors other than age.” 6. General Dynamics Land Systems v. Cline - the ADEA does not prohibit an employer from practicing “reverse age discrimination” where older workers are favored (i.e. they kept their health care) over younger workers (they didn’t) who are over 39 Can Employers Claim Age As A Bona Fide Occupational Qualification (BFOQ)? Courts have recognized age ceiling as legal when: Physical fitness is important to job Applies same standards to everyone over and under 40 EEOC provides the following rules Age limit is reasonably necessary for the business All or almost all individuals over the age are unable to perform adequately Some people over that age have a disqualifying characteristic that cannot be determined independent of age. The Americans with Disabilities Act of 1990 (ADA) Amended 2008 Extends to all private sector and state or local government employers with 15 or more employees EEOC received 25,165 charges of disability discrimination in fiscal year 2010, almost 10,000 more than in 2000. The ADAAA is probably mainly responsible for the increase. Summary of guidelines An individual with a disability is someone who Has an impairment that substantially limits one or more major life activity Has a record of such impairment Is regarded as having such and impairment 2. A qualified applicant/employee, is an individual who with or without reasonable accommodation can perform the essential functions of the job "Reasonable accommodations" should not pose an "undue hardship". Factors to consider include size of the business, the type of operation, and nature and cost of the accommodation. Process for assessing “reasonable accommodation” Determine purpose and essential functions of job Consult the individual with the disability to id potential accommodations If there is a choice of accommodations, preference should be given to the individual’ preference 3. Applicants may be asked about their ability to perform the functions of the job. A job offer may be conditional pending the results of a medical examination. ADA does not protect use of illegal drugs A drug test is not considered to be a medical examination A disability cannot pose a direct threat to the health or safety of others in the workplace What Is Legal And Illegal Under ADA? Questions to applicants only about ability to perform job functions Employers may not ask about disability Disability limits one or more major life activity such as seeing speaking walking reading bending Employers may ‘require documentation of the individuals needs for and entitlement to reasonable accommodations.’ The Americans with Disabilities Act Amendments Act of 2008 makes important changes to the definition of the term “disability” by rejecting the holdings of Sutton v. United Air Lines and Toyota v. Williams Supreme Court decisions. Expands the definition of “major life activities” by including those activities that the EEOC had recognized (e.g., walking) and adding other activities that EEOC had not specifically recognized (e.g., reading, bending, and communicating). In addition, a second list is stipulated in the amendment that includes major bodily functions (e.g., “functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions.) The ADA Amendment also states that mitigating measures other than “ordinary eye glasses or contact lenses” shall not be considered in assessing whether an individual has a disability” and that an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active Genetic Information Nondiscrimination Act (GINA) (2008) To address concerns that workers could be denied employment or job benefits due to predisposition for a genetic disorder. There were 201 charges filed in 2010 GINA has the following major provisions: GINA prohibits insurers from denying coverage to patients GINA prohibits employers from making hiring, firing, or promotional decisions based on genetic test results Pregnancy Discrimination Act of 1978 Prohibits discrimination based on pregnancy, childbirth, or related conditions Does not guarantee same job or any job when return from pregnancy leave The PDA stipulates that an employer cannot refuse to hire a pregnant woman if she can perform the essential functions of the job Employers must provide benefits for pregnancy as for other medical conditions States may require additional benefits for pregnant employees Are Expatriates Covered By Federal EEO Laws When They Are Assigned To Countries Other Than The United States? Civil Rights Act, ADA, and ADEA all have extraterritoriality Americans working overseas for U.S. companies are covered Also applies to resident aliens working for foreign companies on US soil What are employee rights when working for multinational employers? Figure 3-12 In general, all three laws apply to the American company and protect the American worker Future Trends in EEO Litigation and legislation will continue related to affirmative action/diversity ADEA cases are expected to increase because of Smith v. Jackson and Meacham v. Atomic Power allowing ‘disparate impact’ theory putting the burden of proof on the employers; thereby increasing the proportion of workers who are eligible to sue Business liability insurance to cover employment practices Alternative Dispute Resolution: An Employer Reaction to Increased Litigation Alternative dispute resolution expected to increase More businesses requiring mandatory arbitration EEOC v. Waffle House – EEOC can challenge arbitration decisions Increase of EEO complaints filed by Muslims, Arabs, Sikhs, and others requiring religious dress. Summary EEO means an equal opportunity in employment decisions EEO does not mean preferential treatment One Implication of Increased Litigation: Better HRM practices Monitor employment practices for disparate treatment or adverse impact. Make sure disparities essential and are based on job-related reasons. Eliminate practices that are not job-related. CHAPTER 3 - IMPORTANT TERMS Affirmative action - The extent to which employers make an effort through their personnel practices to attract, retain, and upgrade members of protected classes or persons with disabilities. Affirmative defense - An employer may not be responsible for harassment when there is no tangible employment action if it can be shown that the employer exercised ‘reasonable care’ in preventing and correcting the harassing behavior and the plaintiff failed to take advantage of corrective opportunities that were available. Age as the determinative factor - The critical question in ADEA litigation is whether age was the "determinative factor" in a personnel decision. Alternative dispute resolution - An alternative to litigation, such as mediation and arbitration Bona fide occupational qualifications - Discriminatory practices whenever these practices are “reasonably necessary to the normal operation of the organization” Class action - A judge certifies a class of people who make “common” claims against a company (e.g., African-Americans who failed to pass a selection test) Compensatory Damages- include future financial loss and emotional effects Commonality- plaintiffs make the argument that class members shared “common issues of law or fact” Discrimination - Defined as employment decision making or working conditions that are advantageous (or disadvantageous) to members of one protected group compared to members of another group Disparate impact - The unintentional but illegal discrimination based on the disproportionate negative effect on members of a protected group. Can be used in Title VII and ADEA cases Disparate treatment - The intention to discriminate in treatment of a group of persons based on race, religion, national origin, or sex. Diversity- Is the term used to describe a multicultural, multiracial, and multiethnic workforce. EEO-1 form - A required form used by the EEOC to identify possible patterns of discrimination in particular organizations or segments of the workforce (for employers with 100 or more employees). US Equal Employment Opportunity Commission (EEOC) - An agency of the US Department of Labor created to monitor and enforce compliance with several laws, including Title VII, ADEA, and the ADA. Equal Protection Clause- This clause guarantees that no person shall be denied the same protection of the laws that is enjoyed by other persons in their lives, liberty, property, and pursuit of happiness. Employment-at-will - When both the employer and employee can terminate a working relationship at any time and for any reason other than what is covered under law. Essence of the Business - When normal business operations would be significantly affected by not employing members of one group exclusively Essential Function- The job duties and responsibilities that are the reasons for its existence are known as essential job functions. Extraterritoriality - Means that an American working for an American company on foreign soil is covered under EEO law. Fisher’s Exact Test- Is a superior statistic also used in numerous EEO cases to examine and define “prima facie” evidence of discrimination. The Fisher test can be used to test whether there is any relation between two categorical variables (e.g., males and females) and two levels (e.g., promoted/not promoted). Four-fifths rule - The yardstick recommended by EEOC to determine disparate or adverse impact. Refers to selection rate for a protected group that cannot be less than 4/5th or 80% of the group with the highest selection rate Glass ceiling - Refers to the barriers and limitations faced by women and minorities trying to attain advancement to top managerial positions. Harassment - Unwelcomed conduct that is based on race, color, sex, religion, national orgin, disability, and/or age. Implied contract - What exists by the actions or statements of an employer (in this chapter, refers to implied employment contract). Job related - Related to performance on the job. Similar to “validity” of practice Mandatory arbitration - Requires employees and/or job applicants to sign a contract in which they agree to binding arbitration in order to resolve any dispute related to their employment. Manifest Imbalance- organizations may adopt voluntary programs to hire and promote qualified minorities and women to correct a “manifest imbalance” in their representation in various job categories, even when there is no evidence of past discrimination. OFCCP- The Office of Contract Compliance Programs (OFCCP) in the U.S. Department of Labor monitors the written affirmative action plans developed by federal contractors and subcontractors in order to ensure equal employment opportunity. Prima facie case - Means “presumed to be true until proven otherwise” must show a high likelihood that a violation of EEO law has occurred. Punitive damages - CRA of 1991 provides for compensatory and punitive damages (in addition to back pay) of $300,000 for companies with over 500 employees. Quid pro quo - The causal relationship between sexual advances and a specific personnel action Race/gender norming - An attempt to avoid statistical adverse impact by interpreting test scores based on the ethnicity/gender of the test taker. Prohibited by CRA of 1991 Reasonable Accommodations - Changes to a disabled person unessential job functions that include reassignment, part-time works, flexible schedule, readers, interpreters, assistants, etc. Retaliation - In context of this chapter, special form of disparate treatment due to filing an EEO claim Sexual harassment - Defined as unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature explicitly or implicitly as a condition of employment, or submission or rejection of such affect employment decisions, or interferes with performing work. Standard deviation rule- The rule uses probability distributions to investigate adverse impact. The SD analysis looks at the difference between the expected representation (e.g., hiring or promotion rates) for a protected group and the actual rate in order to determine whether the difference between the two values is greater than what would occur by chance. Transportability defense- It requires the following evidence: (1) the results of the borrowed study (or studies), (2) a test fairness analysis investigating differences in scores as a function of protected class characteristics, (3) job analysis data showing the similarity of the jobs under study, and (4) data showing the similarity of the applicants under study. Validity generalization (VG) - Accumulated evidence of validity, based on a meta-analysis, available for a selection procedure can justify its use in a new situation without conducting a local validation study. In these instances, use of the selection procedure may be based on demonstration of the generalized validity inferences from that selection procedure, coupled with evidence of applicability to present situation. CHAPTER 3 - COURT CASES Albemarle Paper Company v. Moody - Clarified job-relatedness defense, requiring a careful job analysis to identify the specific knowledge, skills, and abilities necessary to perform the job or study correlating scores on a procedure with job performance. Also required employer to use specific criteria on which to evaluate job performance in showing job relatedness Burlington Industries, Inc. v. Ellerth - an employee who refuses the unwelcome and threatening sexual advances of a supervisor, yet suffers no adverse, tangible job consequences, may recover against the employer without showing the employer is negligent or otherwise at fault for the supervisor’s actions, but the employer may interpose an affirmative defense. Connecticut v. Teal - "Job-relatedness” argument must be applied to all steps of a multiple-hurdle staffing procedure EEOC v. Waffle House - An agreement between an employer and an employee to arbitrate employment-related disputes does not bar the EEOC from pursuing victim-specific judicial relief, such as back pay, reinstatement, and damages, in an ADA enforcement action. Faragher v. City of Boca Raton - An employer is vicariously liable for actionable discrimination caused by a supervisor, but subject to an affirmative defense looking to the reasonableness of the employer's conduct as well as that of the plaintiff victim. Farley v. American Cast Iron Pipe (1997) - a good harassment policy (any type of harassment) can give an employer legal protection. Employee must use an effective anti-harassment policy. General Dynamics Land Systems vs. Cline - the ADEA does not prohibit an employer from practicing ‘reverse age discrimination’ where older workers are favored over younger workers who are over 39. Gratz v. Bollinger (2004); Grutter v. Bollinger (2004) - The Court ruled that race can be a factor in college admissions since a social value may be derived from greater “diversity” in the classroom (Grutter v. Bollinger). However, race cannot be an “overriding” factor in admissions decisions (Gratz v. Bollinger). While these twin decisions involving the University of Michigan only directly applied to public universities, the decisions are likely to have implications for private schools, other governmental decisions-making and perhaps the business world. Griggs v. Duke Power -Disparate impact illegal if employment practice is not job-related. It established the use of the four-fifths rule. Harris v. Forklift - Supreme Court ruled Harris does not have to present evidence of psychological damage/effects to constitute harassment. Only a ‘reasonable person’ needed to find it hostile or abusive. Johnson v. Santa Clara Transportation - First time that Supreme Court explicitly ruled that women as well as blacks and other minorities could receive preferential treatment. Organizations may adopt voluntary programs to hire and promote qualified minorities and women to correct a "manifest imbalance" in their representation in various job categories, even when there is no proven evidence of past discrimination. Selection must be from pool of equally qualified candidates. Mastie v. Great Lakes Steel Corp. - ADEA case found the controlling issue should be whether age was a determinative factor in the personnel decision, not the absolute accuracy or correctness of the personnel decision. Meacham v. Atomic Power - ADEA allows disparate impact theory putting the burden of proof on the employer in disparate impact cases. McDonnell Douglas v. Green - Disparate treatment: Plaintiffs must show that an employer treats one or more members of a protected group differently. Meritor Savings Bank v. Vinson - Any workplace conduct that is "sufficiently severe or pervasive to alter the conditions of employment and create an abusive working environment" constitutes illegal sexual harassment. Oncale v. Sundowner Offshore Services- The sexual harassment policy should stipulate that the policy applies to same-sex harassment as well. Diaz v. Pan Am World Airways (1971) - Employers cannot argue BFOQ based on customer preference. Ricci v. DeStefano- the standard for permissible race-based action under Title VII is that the employer must “demonstrate a strong basis in evidence that, had it not taken the action, it would have been liable under the disparate-impact statute.” Smith v. Jackson (2005) - employers must show an age-neutral “business necessity” for their actions. The Court thus shifted the burden to employers once evidence is presented, usually statistical, showing “prima facie” discrimination. But as Fortune Magazine put it so delicately, “there usually is a ‘business necessity’ for dumping workers over 50.” That “business necessity” is cost reduction. Older workers tend to make more money than what it would cost the employer to get the same work done today. Thompson v. North American Stainless- it illegal to fire, demote, harass, or otherwise “retaliate” against people (applicants or employees) because they filed a charge of discrimination, because they complained to their employer about discrimination on the job, or because they participated (e.g., gave testimony) in an employment discrimination proceeding (such as an investigation or a lawsuit). Employers are also prohibited from retaliating against a worker who has filed a discrimination complaint by making reprisals against that worker’s fiancé, family members, or other close associates. Toyota v. Williams - analyzed only a limited class of manual tasks and failed to ask whether respondent’s impairments prevented or restricted her from performing tasks that are of central importance to most people’s daily lives. United Steelworkers v. Weber - Approved Kaiser Aluminum's voluntary affirmative action plan because it did not unnecessarily trammel the interests of majority employees and because it was a temporary measure that would cease when blacks reached parity with their representation in the labor market. It is acceptable to use affirmative action programs to remedy "manifest racial imbalance" regardless of whether an employer had been guilty of discriminatory job practices in the past. Watson v. Ft. Worth Bank & Trust (1988) - Clara Watson was denied a promotion based on an interview. The critical question that the Supreme Court ultimately addressed was whether “impact” theory could be used in “subjective” employment practices such as interviews and performance appraisals. In a unanimous decision, the Court allowed “disparate impact” theory for subjective employment practices. CHAPTER 3 – LEGISLATION Age Discrimination in Employment ACT of 1967, Amended in 1978 & 1986 - The ADEA’s broad ban against age discrimination for people 40 years and older. Americans with Disabilities ACT of 1990 - The ADA prohibits discrimination on the basis of disability in all employment practices. Civil Rights Act of 1991 - made major changes to CRA of 1964 against employment discrimination enforced by EEOC. Enacted in part to reverse several Supreme Court decisions that limited the rights of persons protected by these laws, the Act also provides additional protections. Prohibits race/gender norming. The Act authorizes compensatory and punitive damages in cases of intentional discrimination and provides for obtaining attorneys’ fees and the possibility of jury trials. It also directs the EEOC to expand its technical assistance and outreach activities. Equal Employment Opportunity Act 1972 - Amended the Civil Rights ACT of 1964. Equal Pay ACT - prohibits discrimination on the basis of sex in the payment of wages of benefits, where men and women perform work of similar skill, effort, and responsibility for the same employer under similar working conditions. Executive Order 11246- contractors and subcontractors are required to develop a written affirmative action plan that is designed to ensure equal employment opportunity. Genetic Information Nondiscrimination ACT (GINA) 2008 - The legislation is designed to address concerns that workers could be denied employment or job benefits due to predisposition for a genetic disorder. Pregnancy Discrimination ACT of 1978 - Prohibits employment practices that discriminate on the basis of pregnancy, childbirth, or related medical conditions (e.g., abortion). Rehabilitation Act - Requires federal contractors to take affirmative action to employ and advance qualified people with disabilities. Title VII of the 1964 US Civil Rights ACT - Title VII prohibits not only intentional discrimination, but also practices that have the effect of discriminating against individuals because of their race, color, national origin, religion, or sex. Family and Medical Leave Act - For this chapter, this law provides additional protection related to pregnancy Instructor Manual for Human Resource Management John H. Bernardin, Joyce E. A. Russell 9780078029165, 9780071326186