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CHAPTER 11 Rewarding Performance CHAPTER 11 – DISCUSSION QUESTIONS 1. Deming and other quality experts think PFP is a bad idea. What do you think? The accurate measurement of performance is the major stumbling block in pay for performance (PFP) efforts. The Deming view maintains that performance appraisal fosters competition among individual workers and diverts attention away from systems related to the quality of the product or service. PFP may only create more problems within the entire system (increase system variation in Deming terms) since employees will be focusing increased efforts at particular activities that can cause decrements in other areas (e.g., quality versus quantity trade off). Despite these problems, a PFP system can be an important part of a total management system that is designed to create a highly motivating work environment. The PFP system must support the competitive strategy and values of the organization. Essentially, the system can be successful if the rewards valued by the employee are clearly linked to organizational outcomes valued by the employer. Research evidence is strong that certain PFP systems are linked to stronger firm performance. 2. Why is trust so important for PFP systems? Openness and trust are necessary if employees are to accept the standards and believe in the equity of the rewards of a PFP system. Employees must believe that their added effort will actually lead to greater compensation. Involving them in decisions regarding output rates and levels of compensation can enhance employee trust in the system. If the employees do not feel that the level of compensation for additional effort is fair, or that their additional efforts are not being fairly recognized, they may not be motivated to expend the extra effort. 3. When is a group-based PFP system better than an individual system? Group plans are the most useful when tasks are so interrelated/interdependent that it is difficult (or impossible) to identify an individual output measure. The use of group plans is particularly effective when cooperation and teamwork are essential and when a goal of the system is to enhance the feeling of participation. See pages 409-410. 4. Some experts argue that a corporation’s board of directors should be paid only with stock options. What do you think? Since the boards that were compensated only with stock were less likely to overpay their CEOs and reported superior corporate performance, it makes sense to pay them with stock. U.S. CEO pay seems to be primarily driven by what other U.S. CEOs are paid as opposed to corporate profits. A few companies that pay their boards in this manner have no trouble assembling excellent boards. By tying the board’s compensation into corporate performance the limitation on CEO pay and tying the CEO pay to corporate performance, the organization can maintain or sustain competitive advantage. 5. How would you go about combining individual and group-based PFP systems? Employees who exceed the standard expectations of the job could be given a lump-sum bonus based on the company’s performance while still participating in a profit sharing or gainsharing plan. Both the individual and group-based systems must meet the determinants of effective PFP systems listed on Figure 11.1. Only those performance measures that reflect the strategic goals should be part of the individual PFP system. The group-based PFP system may only be tied to the profitability of the company, whereas the individual system may compensate for short-term benefits to the company as in minority recruiting or environmental assessments. 6. Some experts believe that if you have to use performance appraisals as the main source of data for a PFP system, you shouldn’t bother with the PFP system. What do you think? The performance appraisal system and the evaluators of performance are mainly responsible for establishing a clear link between employee performance and pay. There are a host of problems associated with the use of performance appraisals. The fundamental problem is with measuring performance, a problem compounded in service industries in which individual performance is more difficult to measure. Rater errors are a common problem. Recent research in this area has also shown that raters may be motivated to purposefully distort their ratings (e.g., giving subordinates high ratings to make the department look good; assigning low ratings in an effort to motivate subordinates, etc.). Additionally, many employees have inflated ideas of how well they are performing. Consequently, they may lose trust in the system if they do not receive the benefits they think they deserve. Even with all the inherent problems with performance appraisals, individuals do prefer to be paid on the basis of some measure of individual performance. The problem is creating the linkage when the criteria are ambiguous. The key is the development of more objective criteria. Raters can be provided with different types of training (e.g., observation training, frame of reference training, rater error training, skill dimension training, etc.) in an effort to increase their ability to make accurate ratings. Additionally, conducting the performance appraisal more frequently can establish closer ties to performance and provide more immediate feedback to individuals. Under what conditions (if any) should a company install a forced-distribution rating system for PFP? The evidence indicates that forced distribution may not be effective for many situations. The key would be to prevent an unhealthy competition among workers such that various forms of “gaming” would occur (e.g., individuals deliberately trying to inhibit the performance of co-workers). Conduct research on executive compensation contracts. Determine to what extent “clawback” or “give-back” provisions are part of the contract. Describe such a program and how the “clawback” works. Executive compensation contracts often include clawback provisions as a mechanism to hold executives accountable for financial misconduct or poor performance. These provisions allow companies to recoup or "claw back" previously awarded compensation under certain circumstances, such as financial restatements, fraudulent activity, or violation of company policies. The implementation of clawback provisions has become more prevalent in response to corporate scandals and regulatory reforms aimed at strengthening accountability and aligning executive pay with company performance. Here's an overview of how clawback provisions typically work in executive compensation contracts: 1. Triggering Events: Clawback provisions are activated by specific triggering events, which may include: • Financial Restatements: If the company is required to restate its financial statements due to material errors or accounting irregularities that occurred during the executive's tenure. • Violation of Company Policies: If the executive engages in misconduct or violates company policies, such as ethical breaches, fraud, or failure to comply with regulatory requirements. • Performance Failures: If the executive's actions or decisions result in significant financial losses or damage to the company's reputation, irrespective of whether the losses are due to misconduct or poor judgment. 2. Scope of Clawback: Clawback provisions typically apply to various forms of compensation, including: • Cash Bonuses: Clawing back performance-based bonuses or incentive payments that were awarded based on financial metrics or other performance targets that were subsequently found to be misstated or improperly calculated. • Stock Awards: Recouping shares or stock options that were granted as part of the executive's compensation package, especially if the company's financial performance was misrepresented or artificially inflated at the time of grant. • Other Benefits: Retrieving other forms of compensation, such as salary, benefits, or perquisites, if they were obtained through fraudulent means or in violation of company policies. 3. Process and Enforcement: The process for invoking clawback provisions typically involves: • Investigation: Conducting an internal investigation or audit to determine whether the triggering event has occurred and whether clawback provisions are warranted. • Decision-Making: Reviewing the findings of the investigation and determining whether to initiate clawback proceedings, usually by the company's board of directors or compensation committee. • Enforcement: Taking appropriate action to recover the specified compensation from the executive, which may involve withholding future payments, demanding repayment, or pursuing legal action if necessary. 4. Disclosure and Transparency: Companies are often required to disclose the existence and terms of clawback provisions in their executive compensation contracts in accordance with regulatory requirements and best practices for corporate governance. Transparency about the conditions under which clawback provisions may be invoked helps to reinforce accountability and align executive behavior with shareholder interests. Overall, clawback provisions serve as a critical tool for companies to mitigate risks associated with executive misconduct or underperformance, promote responsible stewardship of corporate resources, and enhance investor confidence in the integrity of executive compensation practices. By incorporating clawback provisions into executive compensation contracts, companies demonstrate their commitment to accountability, transparency, and sound corporate governance. CHAPTER 12 MANAGING THE EMPLOYMENT RELATIONSHIP CHAPTER 12 - DISCUSSION QUESTIONS A CEO once told an HR consultant that organizational justice is a “touchy feely concept not related to anything important.” If you were the HR consultant, what would you say? Research has shown that perceptions of justice impact organizational outcomes such as productivity, absences, turnover, accident rates and health costs, theft and acts of aggression on supervisors. It behooves the organization, through employee surveys, to ascertain the perceptions of justice in the organization. Even though perceptions are individually based, corrective actions by the organization can improve perceptions of the “injustice.” Should realistic job previews be applied to overseas assignments? If so, how would you go about constructing a realistic job preview for such an assignment? Pick one country and do a draft of an RJP for an assignment there. Since expatriates say that cultural shock and spousal satisfaction are their two main complaints of overseas assignments and RJPs increase the level of job satisfaction, it is recommend that RJPs be used in overseas assignments. Ideally the RJP would be “the day in life of” each of the family members that would be relocating to that particular country. The video would show all aspect of the situation, positive and negative, in order to retain the highest number of quality applicants. In addition, candid interviews with incumbents and incumbents’ families will help to give a better idea of the living conditions that will be experienced. The “covenant of good faith and fair dealing” as related to employment-at-will implies that excellent performance over an extended period of time grants the performer a right to only be terminated for “just cause.” Research your state’s position in this area. Montana became the first state to enact a comprehensive statute protecting at- will employees from unlawful discharge while limiting the damages they can recover. It is likely to be the model for other state legislatures considering statutes in this area. Other states with narrower statutes limiting discharges in particular circumstances include California, Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Missouri, New Jersey, New York, Pennsylvania, Texas, Utah, and Washington. Should companies have the right to monitor all Internet “surfing” at work? How would you react if a company stipulated that no personal surfing is allowed and, if discovered, could result in termination? LETTER TO EDITOR OF ST. LOUIS POST-DISPATCH REGARDING WORKPLACE INTERNET USE, IN RESPONSE TO MISQUOTE The following letter to the Editor of St. Louis Post-Dispatch is posted in full because it presents an overview of the legal issues which have arisen as a result of Internet use in the workplace, and it corrects a misquote of Susan Gindin in the May 9, 1999 issue. This letter was substantially abbreviated by St. Louis Post-Dispatch when published in the Letters to the Editor column. May 10, 1999 Ms. Christine Bertelson, Editor
St. Louis Post-Dispatch
900 North Tucker
St. Louis, Missouri 63101 Dear Ms. Bertelson: In Kyung M. Song's article, "Personal Use of Workplace E-mail is a Gray Area at Many Companies," in yesterday's issue of your newspaper, I was misquoted as saying that "it's unrealistic for employers to prohibit personal use of company computers." What I actually told Ms. Song was that employers have very good reasons for restricting, or even prohibiting, personal uses of company computers. Accordingly, it is realistic for employers to restrict personal uses of company computers. This issue is very important for your readers--employers and employees alike--and I feel that full clarification is essential. As I pointed out in my discussion of reasons employers restrict personal uses of company computers, with Ms. Song, and in my publication, Guide to E-Mail and the Internet in the Workplace, one reason is that employers are concerned about being held liable for the electronic misdeeds of employees. As Ms. Song noted in the article, employers have been sued for racial and sexual harassment on the basis of company e-mail. Also, actions have been brought against employers for defamation, for copyright infringement, and for National Labor Relations Act violations as a result of workplace e-mail and Internet activity. Another reason that employers restrict personal uses of company computers is concern regarding employee productivity. Studies have shown that employees with access to the Internet at work spend an average of five to ten hours per week sending personal e-mail or searching for information unrelated to their jobs. One study reported that in one month alone, employees at IBM, Apple Computer, and AT&T together visited Penthouse Magazine's Web site 12,823 times. As reported in the Wall Street Journal (Nov. 25, 1996), "Based on an average visit of 13 minutes, that comes to more than 347 eight-hour days." Employers are also concerned that employees will say or do things on the Internet or via e-mail that embarrass or harm the reputation of the employer. Additionally, employers may be concerned that employees' downloading of Internet pages with extensive graphics will tax the workplace system resources. On the other hand, many employees feel that restrictions on workplace computer use may violate their rights to privacy and to freedom of speech and expression, and some argue that sending e-mail and surfing the Internet at work is the equivalent of a lunch break. Further, some studies indicate that employee health problems, productivity, and morale deteriorate when employers monitor the workplace. In fact, many employers do permit a certain amount of personal use of workplace computers, and I have read that some employers do encourage employees to spend some time surfing the Internet as a way to promote technology savvy (although I am not aware of any employers which encourage employees to shop online, as Ms. Song writes in the article, and which she seems to attribute to me). However, the decision of an employer as to whether or not to restrict employee personal use of computers, the Internet, and e-mail, will depend on the needs and culture of the organization. I do strongly recommend that employers adopt carefully-drafted Internet, e-mail, and computer use policies, and that these policies be clearly communicated to employees, in order to reduce the number of disputes that arise as a result of misunderstandings relating to computer and Internet use. For further information on this issue, I invite you and your readers to read my Guide to E-Mail and the Internet in the Workplace, which was published by the Bureau of National Affairs this year. An excerpt is available on my Web site at http://www.info-law.com/guide.html. Sincerely, Susan E. Gindin, Attorney at Law
26 West Dry Creek Circle, Suite 600
Littleton, Colorado 80120
303-683-4841
sgindin@info-law.com
http://www.info-law.com www.info-law.com/post-dispatch.html How does a binding arbitration agreement work? Should companies be allowed to adopt a binding arbitration requirement for their current employees in which employees surrender their right to litigate employment disputes through the court system? Explain your answer. What is the current state of the law regarding arbitration? The American Arbitration Association (AAA) identifies the following as the stages in the arbitration process. Agreement to arbitrate Selection of the arbitrator Preparation for the hearing Presentation of the case The award. In 2001, the Supreme Court in Circuit City v. Adams determined that an employer can insist on the submission of an employment dispute to arbitration as a condition of employment. Should companies purchase software that shuts down all access terminated employees have to company equipment, credit cards, website access, and premises as soon as the termination takes effect? Why would a company need to purchase such software? Employers will have greater control over the organization’s assets. This is especially important if the termination was due to illegal or inappropriate use of those assets. Software would be able to automate a time consuming and potentially costly process. Employers would no longer have to change all the locks or change all the passwords. The software would automatically do the “lock out” and notify all those that need to be notified of the termination. In addition, the security of organization will stay intact, damage to assets will be mitigated, and the company may help other employees’ stay safe by getting rid of the disgruntled employee as soon as possible. To what extent would you be attracted to an organization that offered a variety of work arrangements such as flextime, telecommuting, four-day workweeks and job sharing? Most of the Fortune Best Companies to Work For offer some sort of flexible work arrangements. Given the choice of a company that had flexible arrangements and a company that required the standard workweek with all things being equal (same pay, same job status, same benefits, etc.) most if not all would choose the flexible arrangements. Work as a home-based agent appeals to non-traditional labor sources such as college students, stay-at-home parents, the disabled, retirees and those who are caring for adults or children with special needs. The cost of operating a traditional call center is $31 an hour per employee, including overhead and training, compared with $21 an hour per employee for homesourcing, says Stephen Loynd, IDC analyst. Employees and agents can earn $8 to $13 or more an hour. What firms do you know have a strong code of ethics, and how important is this to you as a potential employee of that firm? Several firms are known for having strong codes of ethics that guide their business practices and corporate culture. Some notable examples include: 1. Johnson & Johnson: Johnson & Johnson is renowned for its Credo, a guiding philosophy that emphasizes the company's commitment to ethical behavior, integrity, and social responsibility. The Credo outlines the company's responsibilities to its customers, employees, communities, and shareholders, serving as a moral compass for decision-making. 2. Google (Alphabet Inc.): Google places a strong emphasis on ethical conduct and corporate responsibility. The company has a Code of Conduct that outlines expectations for employees regarding integrity, respect, and compliance with laws and regulations. Google's commitment to ethical behavior is reflected in its initiatives related to privacy protection, environmental sustainability, and diversity and inclusion. 3. Patagonia: Patagonia is known for its commitment to environmental sustainability and ethical business practices. The company's mission statement, "Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis," underscores its dedication to ethical and sustainable practices throughout its operations. 4. Salesforce: Salesforce is recognized for its strong corporate culture centered around values such as trust, customer success, innovation, and equality. The company has a comprehensive Code of Conduct that guides employees' behavior and emphasizes integrity, transparency, and respect in all interactions. As a potential employee, the importance of a firm's code of ethics cannot be overstated. A strong code of ethics signals the organization's commitment to integrity, transparency, and responsible business practices. It provides a framework for ethical decision-making and sets clear expectations for employee behavior. For me, joining a company with a strong code of ethics would be highly important as it would provide assurance that the organization values integrity, respects ethical principles, and prioritizes social responsibility. Working for a company with a robust ethical framework not only aligns with my personal values but also contributes to a positive work environment, fosters trust among employees, and enhances the company's reputation and long-term sustainability. You have probably seen many colleagues, family, or friends experience either downsizing or alternatives to downsizing (e.g., furloughs, cuts in benefits or perks, redeployment). Interview them and find out how thy feel about what has happened to them. Did their firm take the view that “downsizing is the 1st option for cost savings” or the “last option,” and what impact did that have on their views of the company? However, I can discuss common sentiments and perspectives that individuals may have in response to such situations. When individuals experience downsizing or alternative cost-saving measures in their organizations, their feelings and views can vary widely depending on their personal circumstances, job security, and perceptions of how the company handled the situation. Here are some potential responses: 1. Feelings of Uncertainty and Anxiety: Employees may feel anxious and uncertain about their future employment prospects, especially if they are directly affected by downsizing or furloughs. Concerns about financial stability, career advancement, and job security can weigh heavily on individuals' minds during such times. 2. Sense of Betrayal or Disappointment: Some employees may feel betrayed or disappointed if they perceive that their company prioritized cost savings over employee well-being or failed to communicate openly and transparently about the reasons for downsizing or other cost-saving measures. 3. Gratitude for Retention: Employees who are not directly impacted by downsizing may feel grateful for retaining their jobs but may also experience survivor guilt or empathy for their colleagues who were affected. They may appreciate the company's efforts to minimize job losses but still harbor concerns about the overall health and stability of the organization. 4. Impact on Loyalty and Trust: The company's approach to downsizing—whether it was perceived as a first or last resort—can significantly impact employees' views of the company. If employees believe that downsizing was the company's first option for cost savings without exploring alternative measures or considering the well-being of its workforce, it may erode trust and loyalty toward the organization. 5. Resilience and Adaptability: Some employees may view downsizing or cost-saving measures as inevitable in today's economic climate and demonstrate resilience and adaptability in navigating through the changes. They may focus on leveraging their skills and experiences to weather the storm and emerge stronger on the other side. Overall, employees' feelings about downsizing or alternative cost-saving measures are complex and multifaceted, influenced by various factors such as job security, communication from leadership, perceived fairness, and the overall organizational culture. Companies that prioritize transparency, empathy, and employee well-being during times of change are more likely to maintain the trust and loyalty of their workforce, even in challenging circumstances. CHAPTER 13 LABOR RELATIONS AND COLLECTIVE BARGAINING CHAPTER 13 - DISCUSSION QUESTIONS 1. Should public employees of all types of jobs be allowed to strike? Those who believe public employees should be allowed to strike argue that only by buttressing collective bargaining with a strike can true collective bargaining occur by individuals who are intimately familiar with the workplace. Those against the strike argue that many public employees are essential to public health and safety such as police and fire fighters. Strikes by these types of workers could be life threatening and, therefore, should not be allowed. Further, those opposing public sector strikes also argue that these employees have too much bargaining power because of the essential nature of their services and as a consequence are likely to demand and get unreasonable settlements. Some take a more moderate view and believe that public sector workers in safety areas should not be allowed to strike but that other public sector workers (e.g., teachers, clerical workers) should be allowed to strike. 2. What are the major effects of unions on compensation? There are two major views regarding the effects of unions: monopoly and collective voice. The monopoly view of unions starts with the premise that unions raise wages above competitive levels. Estimates of union and nonunion wage differentials are around 15 percent higher for union employees. Unions have been condemned because some economists believe that the union wage effect leads to inefficient firm responses such as substituting labor for capital. They argue that society suffers due to resource misallocation between the union and nonunion sectors. This negative view of unions is further exacerbated by the fact that many American workers prefer pay for performance (PFP) systems to straight pay, and unions generally favor pay systems based strictly on seniority. Meanwhile, union advocates insist that banding together and creating a "collective voice" results in reduced worker quit rates, thereby leading to retention of experienced workers, lowering a firm's training costs, and raising its productivity. The evidence regarding the effects of unions on organizational productivity is mixed. Studies show that unionization negatively affects accounting profits and shareholder wealth; however, unions do not seem to change the overall firm value, but they do redistribute the firm's economic profits from the stockholders to the workers. There are two major effects of unions on wages. First, unions tend to raise wages above competitive wage levels. Second, unions reduce wage dispersion, so that there is less variation in wages between jobs than would exist in the absence of unions. Some argue that unions force management to become more efficient and productive because of the higher wage levels. Collective bargaining agreements do tend to reduce management discretion in promotion and layoff decisions and reduce managerial flexibility in work assignments, and work rules. 3. Why do unions sometimes have a positive impact on productivity? When the industry is growing and more specifically the company is growing, union shops tend to produce more than nonunion shops. However, if the industry is stagnant or only growing slowly, the union demands for wages and benefits do not justify the slight increased output. Therefore, the economy and the industry’s economy in particular seem to be a determinative factor in the productivity of a union shop. 4. If unions are to survive, what do you think they will have to do to attract and maintain members? In order for unions to survive, they will need to aim their organizing efforts at the growing service sector of the labor force. In addition, unions must also begin recognizing and responding to the individual differences of employees. In many service sector jobs, women represent the majority of workers. Thus, sensitivity to the special needs of women such as provisions for maternity leave and on site childcare will become increasingly important. Unions may also need to be more supportive of training efforts (especially for minorities) and the inclusion of pay and promotion systems based on performance. In addition, unions need to work on changing general attitudes toward unions. 5. Should companies be allowed to hire workers based on their attitudes toward unions? Currently, the laws state that a company must not discriminate on the basis of union membership or union activity. In 1995, the Supreme Court ruled that employers violate the NLRA if they refuse to interview or discharge people who intend to organize the workers. In NLRA v. Town & Country, included paid union organizers in their definition of an employee. Most (but not all) experts believe that this ruling thus protects applicants. 6. Why is it advantageous for both the union and management to remain flexible during collective bargaining negotiations? The negotiations will go smoother, faster, and with less costs involved for both sides if both management and unions can remain flexible throughout the collective bargaining process. If both are unwilling to listen to the demands of the other then there is an increased likelihood of reaching an impasse and moving onto mediation or striking. 7. Describe the sources of power brought to the bargaining table by both the union and management sides. Unions’ bargaining power is economic and can be used to strike the employer, picket the employer or boycotting the employer. The determination of which to use is assessed by weighing the consequences and risks of each power. Management’s power is in the ability to use capital, how well it can weather the strike or through lockouts. Management can close operations down or subcontract its work during strikes, use technology rather than labor or hire nonunion workers to cover for the unionized strikers as long as it is done in accordance with the law. 8. Describe how union and management might prepare for labor negotiations. How are their preparations similar and different? Since both union and management start out with their own demands, research for strengthening the justification of the demands would probably be done on both sides. For instance, if a wage increase is to part of the union’s side of the negotiations, average salary data in the industry may be used to indicate the need for an increase. Likewise, management could use the statistics for the industry that indicates that instead of increased revenue there has been either a leveling or a decrease of income to shore up its justification for no wage increases. The preparations for the negotiation are very similar. What is different is the particular statistics and the use of those data. 9. Should the government be allowed to intervene in strikes that are not a threat to national security or public welfare, in order to expedite their resolution? Why or why not? In passing the Railway Labor Act and the National Labor Relations Act (Wagner Act), the federal government gave employees the right to organize and bargain collectively. One of the powers the union has in its negotiations of the collective bargaining process is striking. With the increasing number of firms that are hiring permanent replacements for the striking employees, there doesn’t seem to be any need for government intervention. It was the government intervention in the air traffic controllers’ strike that spearheaded the current movement in hiring replacement workers. President Reagan stepped in under the Taft-Hartley Act because the strike would have put the public welfare in jeopardy. In doing so, the sting of the striking workers to the companies employing them has been greatly lessened. Because of this lessening, it is unlikely that companies or any government agency need the intervention of the federal government. 10. How might a multinational corporation better prepare itself for dealing with the differing union environments in other countries? The first information that a multinational corporation might need to know is how strong the union is in the particular area the multinational wishes to locate. What the union focuses on, whether its economics and/or politics, is another question that would be helpful to ask. A few of the other questions might be: Is there just one union or do multiple unions represent the same workers? How is collective bargaining done? What are the local or national laws concerning unions and collective bargaining? What is the history and statistics regarding this particular union(s)? What is the relationship between management and the unions (adversarial or cooperative)? Are there any worker representations (codeterminations) that management needs to know about? How are the relationships of the other companies in this industry with the unions in question? What percentage of the workers in this industry is unionized in this country? What is the union’s view on dismissals, automation, striking, etc.? Managers (especially expatriates) for multinational companies need the information gathered from questions such as these to understand the role of unions in each of the specific countries the multinationals are located. Preparing a multinational corporation (MNC) to navigate the diverse union environments in other countries requires a strategic and proactive approach. Here are several key steps an MNC can take to better prepare itself: 1. Conduct Comprehensive Research: Prior to expanding into new countries or regions, conduct thorough research to understand the local labor laws, regulations, and union landscape. This includes identifying the presence and influence of labor unions, their objectives, bargaining power, and historical relationships with employers. 2. Engage in Stakeholder Dialogue: Establish open lines of communication with local union leaders, government officials, and other key stakeholders to gain insights into the union environment and build positive relationships. Engaging in dialogue allows the MNC to address concerns, establish mutual understanding, and foster cooperation. 3. Develop Tailored Strategies: Recognize that union environments vary significantly from one country to another, and adopt tailored strategies for each location. This may involve customizing negotiation approaches, grievance handling procedures, and employee relations practices to align with local cultural norms and regulatory requirements. 4. Invest in Employee Relations Training: Provide training and development programs for managers and HR professionals on effective employee relations practices, conflict resolution techniques, and negotiation skills. Equipping staff with the necessary knowledge and skills helps them navigate complex union dynamics and maintain positive labor relations. 5. Establish Clear Policies and Procedures: Develop clear and transparent policies and procedures for engaging with unions, addressing labor disputes, and resolving conflicts. Ensure that these policies comply with local labor laws and regulations while reflecting the MNC's commitment to fair treatment, employee rights, and ethical business practices. 6. Monitor and Adapt: Continuously monitor developments in the union landscape, labor market trends, and regulatory changes in each country where the MNC operates. Stay informed about emerging issues, anticipate potential challenges, and be prepared to adapt strategies accordingly to maintain constructive labor relations. 7. Promote Employee Engagement: Foster a culture of open communication, collaboration, and employee engagement within the organization. Actively involve employees in decision-making processes, seek their input on workplace issues, and demonstrate a commitment to addressing their concerns and interests. 8. Implement Corporate Social Responsibility (CSR) Initiatives: Demonstrate the MNC's commitment to corporate social responsibility by engaging in initiatives that promote labor rights, social justice, and community development. Engaging in CSR activities can enhance the MNC's reputation, build goodwill with stakeholders, and contribute to positive labor relations. By taking these proactive measures, multinational corporations can better prepare themselves to navigate the differing union environments in other countries, foster constructive labor relations, and mitigate potential risks associated with labor disputes or industrial unrest. 11. Compare and contrast unions in the United States, Germany, and Japan. How are they similar and different? What can they learn from one another? Both Germany and Japan have representatives from the union and management on work councils or consultation groups to discuss personnel and financial issues. This type of codetermination is foreign to the United States. The United States also has the lowest union participation rate of the three countries. Japan concentrates its union contract negotiation on the macro level (national and industry-wide), whereas both Germany and the United States focus primarily on the local level. Germany can have more than one union per industry, so that within the same company there may be more than one union. In the United States, there is only one union per industry while in Japan there is one union per company. The government in the United States is not as active in labor relation issues as the German government. Both Japan and German have cooperative style relationships between management and the unions. In the United States, the union-management relationship has been one of conflict and confrontation. CHAPTER 14 EMPLOYEE HEALTH AND SAFETY CHAPTER 14 DISCUSSION QUESTIONS 1. Why is a 20 year old with three years of experience more likely to be involved in an accident than a 30 year old with three years of experience? After you develop your theory for this fact, explain how companies can intervene to reduce (or wipe out) the effect. The higher accident rates for younger employees may be due to a number of factors. Older employees have a longer work history and may have seen the consequences of accidents involving themselves or their coworkers. The greater exposure to accidents may make them more conscientious about their performance and result in lower accident rates. Younger workers are also at a different life stage than older workers. The younger employee may not yet have a family and be as concerned about avoiding accidents. Younger employees may also be prone to taking greater risks since they may not have developed an appreciation of their own mortality. Companies can use a variety of approaches to reduce accidents. One method of accident reduction is not to select employees who are "accident-prone" or have a history of accidents. A training program in accident prevention and safety can be provided to make employees aware of unsafe practices and the consequences of unsafe behaviors. This specialized training is rarely provided to new employees. OSHA also provides "voluntary training guidelines" for employers, which provides a framework for the development, administration, and evaluation of training programs. A training program by itself may not be enough to reduce accidents. An incentive system, which encourages and rewards safe behavior will help ensure that the behaviors learned in the training program will be practiced on the job. In addition, organizations can use a peer review process to improve safety records by providing immediate and constant feedback and positive reinforcement to shape behavior. Published safety rules are another approach to reduce accidents. In order for safety rules to be effective, they need to carefully describe the steps to be taken on the job to ensure maximum safety. For each step, potential dangers are identified to alert the worker. In addition to specificity in the rules, it is also critical to get workers to read and comprehend safety handbooks. Safety rules, like safety training programs, will be meaningless if they are not enforced. Consistent enforcement of safety rules, with discipline for infractions, will send a clear message to employees that the company takes safety seriously and should reduce accidents. Documentation of consistent discipline for work rule violations would be necessary in order for a company to avoid OSHA liability. 2. How could you as a manager develop a strategy for increasing employees' motivation to work more safely? However the responses should reflect some (or all) aspects of Figure 14-7 on pg. 523. An example might be the following: The first step would be make sure that some form of safety training is available to the employees. In order for employees to work more safely, they need to have an awareness of what constitutes safe and unsafe behaviors. Given that the employees know what the acceptable safe behaviors are, the problem is how to get them to perform them on the job. This could be accomplished through an incentive system or tying safe behaviors to compensation. Some organizations use incentive systems where company units compete with one another for cash prizes. Other contests are set up so that each unit competes with its safety record. If a lower number of accidents occurs, an award is given. Compensation can be linked to individual safety if a pay for performance system is in place. The performance appraisal would include behaviors important for safety (e.g., keeps work area free of debris, cleans up spills immediately). A portion of each employees' compensation could also be based on the number of accidents in their unit. This approach would need to be well thought out before it was implemented. Otherwise, if the members in the unit knew part way through the year that they wouldn't receive a safety bonus, they may be less careful and accident rates could increase. Or if the prize was too large, an omission of reporting accidents may occur. A third way to motivate employees would be to enforce work safety rules, constantly educate employees on safety issues, and consistently discipline infractions. 3. Devise a training program and a policy directed at increasing the physical fitness of your employees. Take a position on smoking, alcohol use, and other health related matters, and state whether you would make the programs mandatory. A training program designed to increase employee physical fitness should start with a needs analysis. The needs analysis would target specific areas of physical fitness that need improvement. Potential areas include: stress reduction; reducing or eliminating drug use; smoking; weight loss; exercise. The training program should include instructional objectives and criteria for evaluation. A variety of instructional methods could be used which describe the benefits of better physical fitness (e.g., audio visuals, lectures, small group discussion). The physical fitness policy needs to establish what the goals of the program are, whom the program covers, and how the programs will be implemented to meet the goals. Most wellness programs incorporate a number of different programs to satisfy the individual needs of employees (e.g., in house fitness center, weight control consultation, blood pressure analysis and treatment, nutritional advice). Since the establishment of a physical fitness policy or wellness program is likely to be expensive, it would be a good idea to make involvement in the programs mandatory. Certainly it would not make sense to require someone who does not smoke to go to a smoking cessation program, but it would be possible to require every employee to attend a certain number of educational seminars each year. One of the biggest issues of employee physical fitness is smoking in the workplace. There is a great deal of evidence that documents the negative effects of smoking including exposure to second hand smoke. Companies are faced with the health effects of smoking on their workforce and the additional costs of health insurance premiums. Critics of smoking bans argue that smoking is an individual choice and should not be regulated. Proponents of smoking bans argue that non smokers have the right to enjoy a pollution free environment and employers have the obligation to provide a safe workplace free of cigarette smoke. A well designed stop smoking company policy that offers employee assistance programs to quit smoking should be a win win situation. That is, employees should enjoy a higher standard of health, while the organization should benefit from a healthier, more productive workforce. Such a strategy may also reduce the cost of an organization's health insurance premiums. 4. Do you think that managers should be held criminally liable for health and safety violations? Should they go to jail for such violations? If so, under what conditions? If not, why not? Again, students' responses will vary. Those who believe that managers should not be held criminally liable may respond in the following manner: The majority of health and safety violations are not under the immediate control of a manager. The cause of accidents is primarily due to employee behavior, and the responsibility of the accident or violation lies with the individual employee. Managers won't purposefully expose their employees to hazardous situations or direct them to do dangerous tasks where they could be seriously injured because managers have a stake in maintaining a healthy workforce that will be able to perform. Students who think that managers should be held criminally liable for health and safety violations might offer the following: The bottom line is that managers are responsible for the health and safety of their employees. Managers who fail to make sure that the working conditions for employees are safe are negligent in their duties and should be persecuted. Managers should be sentenced to jail when their actions (or lack thereof) put employees in significant jeopardy regarding health and safety. 5. Do you support a policy of random drug testing for all employees? Explain. Would you be less attracted to an organization that required random drug testing with no probable cause? Students are likely to have different reactions toward this question. A typical response against random drug testing might include the following: Drug testing by itself may or may not be an invasion of privacy, but random drug testing may be. Random drug testing gives the employer more control over the employee and creates an atmosphere of mistrust. A policy of random drug testing is about the same as a random search and seizure of articles in an employee's home. Employers are trying to use drug testing as a panacea, but they are directing their efforts at the wrong area. Many more workdays are lost to alcohol use/abuse than controlled substances. Is it fair to have a test that detects drug use but not alcohol use (remember the pilots for Delta who sat in the cocktail lounge for hours before takeoff)? Supporters of random drug testing may say that only those employees who are using controlled substances need to be worried. However, drug testing is not a perfect science and employees who aren't using drugs will occasionally fail the test. Even if the employee is later cleared, management and other employees will stigmatize him or her. It's not the drug use that is at issue here, but the process involved with the random test, which is a clear violation of an individual's civil liberties. Advocates of random drug testing might respond in the following manner: Employers have an obligation to create a safe working environment. Employees should be supportive of management efforts including random drug testing to make the workplace safe. Granted, there are many issues surrounding a random testing policy, but it is a policy that is necessary. It is not enough to only test employees when they are hired. The pre employment drug test can only determine if employees have previously used drugs and is not a guarantee that they will not do so in the future. The presence of random drug testing is a necessary precaution to reduce the chance of employees using drugs in the future and to help maintain a safe working environment. 6. Should a company be allowed to prohibit smoking or drinking alcohol on or off the job for its employees? Explain your answer. Companies already are able to restrict smoking and drinking alcohol on the job. The usual policy for alcohol use on the job is no tolerance. Their smoking policies range from the use of designated smoking areas to the banning of all smoking at the workplace and non smoking as a condition of employment. There has been a great deal of evidence that documents the hazards of smoking and exposure to second-hand smoke. It is the consensus of legal opinion that companies can ban smoking in the workplace, except where smoking is expressly allowed as part of a union contract, or where legislation exists which protect smokers. While it is possible for companies to enforce no smoking and no alcohol policies at the workplace, some have questioned the right of the company to ban smoking and alcohol consumption activities outside of the workplace. Supporters of anti-ban would argue that a company’s smoking and drinking alcohol ban outside the workplace is an infringement of employees' rights. Companies have no right to interfere with the lives of employees who smoke outside of the workplace. On the other hand, several fire departments have imposed deadlines that state that smoking firefighters must quit smoking or be terminated. Particularly in hazardous work environments where the risks of cancer are great, even without the added risk of tobacco, companies are likely to impose no smoking rules and no alcohol consumption rules. No smoking rules are simply designed to protect the health, safety and welfare of employees and should be allowed. 7. Given the accumulated evidence of the effects of smoking, why hasn't OSHA taken any steps to regulate smoking and second-hand smoke in the workplace? OSHA will almost certainly issue regulations regarding smoking in the workplace. Section 654(a) of OSHA states that the "general duty" of employers is to provide places of employment "free of recognized hazards that are causing or likely to cause death or serious physical harm to his employee." In 1992, OSHA took the initial steps in considering tobacco smoke as a workplace hazard. Given that the Surgeon General's report now documents the effects of side-stream smoke and the Environmental Protection Agency places tobacco smoke in the top tier of known carcinogens, the OSHA obligation seems obvious. There could be a number of reasons why OSHA attempts to regulate smoking in the workplace have been so long in coming. The most obvious reason is the political might of the tobacco lobby. Another possible reason is that when OSHA was initiated in 1970, there were many more smokers than there are today. It is unlikely that in 1970, strong anti smoking regulations would have been adopted because smoking was still widely accepted and practiced. In addition, there finally is enough conclusive evidence on the ill effects of smoking to warrant the introduction of anti smoking regulation. 8. What kind of work-related factors affect employees’ stress levels? What recommendations would you offer a company to manage the stress of its employees? Job stress has been related to too many job demands, role conflict, role ambiguity, conflicts between job obligations and family obligations, work groups, fatigue, and burnout. Companies can intervene by changing the degree of stress potential in a situation by reducing the intensity or number of stressors present (education and training, redesign work, and EAPs). Companies can also help employees modify their appraisal of potentially stressful situations (education, training, and EAPs). In addition, companies can help employees cope more effectively with consequences of stress (education, training and EAPs). 9. Compare and contrast employee assistance and wellness programs. What is the value of each for an organization? Both EAPs and wellness programs are based on the employees volunteering for the program. Companies with federal contracts must adopt formal anti-drug policies under the Drug Free Workplace Act. However, they gain more than maintaining legal specifications. EAP programs have been linked to higher productivity for those who complete the program, lower accident rates, and lower absenteeism which all save the company the costs associated with each. With wellness programs, companies can experience better rates on insurance programs. EAPs are designed to fix problems while wellness programs are designed to prevent them. Wellness programs also increase productivity and attract and retain high caliber employees. 10. Why has violence in the workplace become a larger problem for organizations? What recommendations would you offer to a company to ensure that it does not experience violence? Be specific. The effects on business by workplace violence is exorbitant costs, not just monetarily, but also loss of lives, trauma, rising health care costs, high workers’ compensation, legal fees, lost days of work, lower productivity, and decreased public image. OSHA’s guidelines for a workplace violence prevention program should include management commitment, employee involvement, work-site analysis, hazard prevention and control and training and education. Specifically, companies can develop a pre-employment screening tool similar to the PSI, set policies and procedures that state firmly that violence will not be tolerated, train and educate employees and supervisors to identify the potential perpetrators and/or situations that could produce violent acts, institute EAP programs to help with stress coping techniques, communicate with previous offenders and offer assistance so that the violence doesn’t happen again, handle layoffs and terminations with sensitivity and have assistance (counseling or job search help) if needed, develop threat management programs, and tighten security. Solution Manual for Human Resource Management John H. Bernardin, Joyce E. A. Russell 9780078029165, 9780071326186
