CH-14 Occupational Health and Safety – Human Resources Management in Canada : Chapter Notes

This document contains Chapters 14 to 17 PART FIVE: BUILDING EFFECTIVE EMPLOYEE–EMPLOYER RELATIONSHIPS CHAPTER 14 OCCUPATIONAL HEALTH AND SAFETY LEARNING OUTCOMES • Analyze the responsibilities and rights of employees and employers under occupational health and safety legislation. • Explain WHMIS legislation. • Analyze in detail three basic causes of accidents. • Describe how accidents at work can be prevented. • Explain why employee wellness programs are becoming increasingly popular. • Discuss six major employee health issues at work and recommend how they should be handled. CHAPTER DESCRIPTION The chapter begins with an explanation of the importance of occupational health and safety. The basic facts about occupational health and safety legislation are then presented. Next the supervisor's role in safety is explained, followed by a section on the causes of accidents and how they can be prevented. Employee wellness programs are then described. The chapter ends with a discussion of the major occupational health issues and challenges with which employers are currently dealing and how they should be handled. LECTURE OUTLINE • this chapter introduces the important topic of occupational health and safety, which is important for all employees • this area is heavily legislated in Canada • Three categories of rules in occupational health and safety legislation: 1. General health and safety rules 2. Rules regarding specific industries (e.g. construction, mining) 3. Rules regarding specific hazards such as biohazards • Figure 14.1 provides an example of a detailed construction regulation • Occupational health and safety is a joint responsibility of employees and employers under Canadian law • Employers have the responsibility to ensure a safe workplace for employees • Employees have the right to refuse to do unsafe work • Occupational health and safety laws also require joint management-labour health and safety committees • Occupational health and safety law is enforced by health and safety inspectors • Toxic substances must be carefully controlled • Workplace Hazardous Materials Information Systems (WHMIS) is a federal law that requires: • all hazardous materials to be labelled as such • material safety data sheets (MSDS) to be available to all employees using hazardous materials • employee training in how to deal with hazardous materials • Figure 14.2 illustrates the WHMIS hazard symbols • Figure 14.3 provides an example of a material safety data sheet • The supervisor’s role in safety • supervisors have a personal responsibility under the law to ensure the safety of their workers; they must try to get employees to care about safety and want to work safely • safety commitment must begin with top management • What causes accidents? 1. chance occurrences beyond anyone’s control 2. unsafe conditions 3. unsafe acts by employees • Unsafe conditions include: • improperly guarded equipment • defective equipment • hazardous procedures • unsafe storage • improper illumination • improper ventilation • Three other work-related accident factors are: • inherently dangerous jobs such as mining • work schedules that cause fatigue such as double shifts • a stressful psychological climate due to harassment or danger • Unsafe acts include: • throwing materials • operating machinery too quickly or working at unsafe speeds • rendering safety devices inoperative • using unsafe equipment or unsafe procedures • improper lifting that causes back injuries • horseplay • unsafe acts can be related to personal characteristics such as poor vision, young age (17–28), and differences in perceptual versus motor skills, as illustrated in Figure 14.4 • How to prevent accidents. Accidents can be prevented by: - reducing unsafe conditions - reducing unsafe acts: • careful selection and placement of employees • training and education • positive reinforcement of safe work behaviours • top management commitment to safe work practices • monitoring work overload and stress • Controlling workers’ compensation costs • Workers’ compensation costs are very high in most jurisdictions in Canada. These costs can be controlled by: • taking accident prevention measures before accidents occur • ensuring prompt medical attention after an accident • being supportive and keeping in touch with workers who are off on workers’ compensation • facilitating return to work as soon as possible • Employee wellness programs are a proactive approach to employee health that can keep employees healthy and reduce illness • Wellness programs include: • stress management • nutrition and weight management • smoking cessation programs • heart health • physical fitness • ergonomics and many other initiatives • Figure 14.5 provides information about the prevalence of corporate wellness initiatives in Canada • Occupational health and safety issues and challenges • substance abuse • job stress • repetitive strain injuries • workplace toxins • workplace smoking • violence at work • substance abuse is a longstanding serious and widespread workplace problem with costs of over $39.8 billion in 2002 • guidelines to supervisors include: monitoring the employee’s behaviour on the job; keeping a written record of the employee’s behaviour on the job; and referring the employee to an employee assistance program or outside services for counselling and treatment (this often involves persuading a reluctant employee to take advantage of this service) • traditional techniques used by organizations to treat substance abuse include: • in-house counselling through an EAP • referral to an outside agency such as Alcoholics Anonymous • disciplining the employee for poor performance • discharge if poor performance continues • Under human rights laws, alcoholism and drug addiction are considered to be disabilities. On the other hand, under occupational health and safety legislation, employers are responsible for maintaining due diligence • Substance abuse testing is only legal if: • the test is rationally connected to the performance of the job • the test is adopted in an honest and good-faith belief that it is necessary for the fulfilment of a legitimate work-related purpose • the test is reasonably necessary to the accomplishment of the work-related purpose • Substance abuse policies should include the following: • The prohibition of alcohol and drug use (or coming to work drugged or drunk) during work hours and company special events • Clearly defined roles and responsibilities of workers and management in meeting company expectations regarding alcohol and drug use, and seeking help if problems arise • Disciplinary measures • Communicating such policies to staff • Preventive education • Training to ensure that supervisors can identify employees with suspected substance abuse problems • Provision for confidential assistance and treatment programs for employees with drug and alcohol problems • Job stress can be caused by environmental factors, personal factors, or both • Environmental factors include: • work schedule • pace of work • lack of job security • Personal factors include: • Type A personality • work/family conflict • family problems such as divorce and many others • Table 14.1 lists the top ten sources of workplace stress • job stress can be reduced in a number of ways, including supervisory monitoring of employees with stress problems, transferring an employee to a job that will be less stressful, EAP counselling, and fair treatment programs • Burnout is a total depletion of physical and mental resources caused by excessive striving to meet unrealistic goals • burnout can be avoided by breaking stressful work habits and patterns, “getting away from it all” periodically, reassessing goals, thinking about work/life balance, and reducing stress • Repetitive strain injuries (RSIs) are activity-related tissue injuries of the neck, shoulders, arms, wrists, hands, back, and legs. • RSIs can be caused by a number of factors such as repetition, work pace, awkward or fixed positions, forceful movements, vibration, cold temperatures, and insufficient recovery time • repetitive strain injuries are preventable through ergonomically designed workstations • Ergonomics is the art of fitting the workstation and work tools to the individual • other workplace health issues include: • workplace toxins and carcinogens – cancer is the leading cause of work-related deaths around the world, as shown in Figure 14.8 • workplace smoking – smokers develop increased risks of cancer when exposed to other carcinogens in the workplace, such as asbestos • violence at work is an increasingly serious problem • Workplace violence is defined by the International Labour Organization (ILO) as incidents in which an employee is abused, threatened, or assaulted in circumstances relating to work, and includes harassment, bullying, intimidation, physical threats, assaults, and robberies • there are several ways to prevent and control workplace violence: • identifying jobs with high risk of violence • enhancing security arrangements • instituting a workplace violence policy • creating a healthy work environment • heightening security measures • training for violence reduction • improving employee screening • use the first half of the class time to cover the introductory material, legislation, and the supervisor’s role in safety, and what causes accidents; the running case can be used here • use the second half of the class time to cover employee wellness programs and health issues; the case incident can be used here; the first experiential exercise can be used as a project DISCUSSION BOX SUMMARIES WORKFORCE DIVERSITY: Guiding Young Workers in Health and Safety (page 376) This box describes four basic steps that can be used to reduce accidents and injuries to young workers as suggested by the Canadian Centre for Occupational Health and Safety. ========================================================================== STRATEGIC HR: Safe Practices at USF Water Group (page 379) This box features safety practices at USF Water Group. It describes how the company has successfully embraced the idea of a safety culture. ========================================================================== ENTREPRENEURS AND HR: Wellness at Bradford Progress Childcare Centres (page 382) Bradford Progress Childcare Centres operates five childcare locations. Part of their goal is to minimize turnover of staff in order to maintain consistency for the children. The box describes how the organization has created a focus on wellness amongst its staff. ========================================================================== ETHICAL DILEMMAS Is it ethical to provide safety training in English to immigrant workers who speak little English, in order to reduce costs? (page 378) It is not ethical to provide safety training in English to immigrant workers who speak little English. The purpose of safety training is to protect the health and safety of the firm’s employees, reduce safety-related costs, and prevent any legal action against the company. It is rather pointless to go through the motions of providing training, knowing that those in the program who speak little English will learn little or nothing from it. Doing so is definitely not living up to the employer’s “due diligence” responsibilities under occupational health and safety legislation. Furthermore, while there might be short-term cost savings involved in providing training in English only, accidents are extremely costly – in terms of human suffering, workers’ compensation expenses, training replacement workers, or potential lawsuits. Is it ethical to ignore the issue of job stress entirely? (page 386) It is not ethical to ignore job stress considering the fact that half of all Canadian workers feel that they are experiencing a great deal of stress at work and that the financial impact of stress on the Canadian workplace is on the increase. Stress has serious consequences for the organization, including reductions in the quantity and quality of job performance, increased absenteeism and turnover, increased grievances, and escalating short- and longterm disability claims and on the individual. Furthermore, employees who are denied workers’ compensation benefits for chronic stress that they believe to be work-related are successfully suing their employers. Courts are finding that a fundamental implied term of any employment relationship is that the employer will treat the employee fairly and with respect and dignity, and that the due diligence requirement includes protection of employees from psychological damage as well as physical. KEY TERMS Burnout The total depletion of physical and mental resources caused by excessive striving to reach an unrealistic work related goal. (page 388) Employee Wellness Program A program that takes a proactive approach to employee health and well-being. (page 380) Ergonomics The art of fitting the workstation and work tools to the individual. (page 389) Occupational Health and Safety Legislation Laws intended to protect the health and safety of workers by minimizing work-related accidents and illnesses. (page 365) Repetitive Strain Injuries (RSIs) Activity-related soft-tissue injuries of the neck, shoulders, arms, wrist, hands, back, and legs. (page 389) Workplace Hazardous Materials Information System (WHMIS) A Canada-wide legally mandated system designed to protect workers by providing information about hazardous materials in the workplace. (page 368) PART FIVE: BUILDING EFFECTIVE EMPLOYEE–EMPLOYER RELATIONSHIPS CHAPTER 15 FAIR TREATMENT: THE FOUNDATION OF EFFECTIVE EMPLOYEE RELATIONS LEARNING OUTCOMES • Explain three techniques for building effective two-way communication in organizations. • Discuss the three foundations of a fair and just disciplinary process. • Define wrongful dismissal and explain how to handle a wrongful dismissal lawsuit. • Explain the six steps in the termination interview. • Analyze important HR considerations in adjusting to downsizings and mergers. CHAPTER DESCRIPTION The chapter starts with an introduction to the strategic importance of effective employee relations. This is followed by discussion of various techniques that can be used to build two-way communication, and issues in regards to electronic monitoring of employees at work. Employee discipline and managing dismissals are explored next. The chapter concludes with a discussion of the issues involved in managing separations, specifically layoffs, mergers/acquisitions, and retirement. LECTURE OUTLINE • The objective of HRM includes establishing and maintaining a harmonious employer–employee relationship and retaining productive employees. • Strategic importance of effective employee relations o for competitive advantage, employees must be motivated and engaged in pursuing organizational goals o establish programs to foster commitment o ensure employees are treated ethically, fairly, and legally • Building effective two-way communication: • Suggestion programs – employees are able to provide well-informed, thoughtful and creative suggestions • Employee opinion surveys – communication devices that use questionnaires to ask for employees’ opinions about the company, management, and work life • Top-down communication programs – Communication activities include inhouse television centres, electronic bulletin boards, newsletters that provide continuing opportunities for the firm to update employees on important matters • Fair treatment programs – ensures that employees are treated in an equitable, fair, impartial, and unbiased manner • Fair Treatment Programs – aimed at ensuring that all employees are treated fairly by providing formalized, well-documented, and highly publicized vehicles through which employees can appeal any eligible issues • Distributive Justice – Fairness of a decision outcome • Procedural Justice – Fairness of the process used to make a decision • Interactional Justice – Fairness in interpersonal interactions by treating others with dignity and respect • Electronic Trespassing and Employee Privacy • employee right to privacy vs. employer right to know – justifications for monitoring include: o productivity measurement o harassment/defamation cases o activity involving obscenity and pornography o security issues o workplace investigations o protection of confidentiality • employers concerned with abuse of company property for possible illegal use • electronic monitoring easy, inexpensive; • legal if balanced with employee rights under privacy legislation (PIPEDA) • Electronic Monitoring Policy o company e-mail/Internet for business use only o no improper/illegal use of computer system o deleted messages may still be in the system o violation of policy will result in discipline o written acknowledgement of policy by employees • Employee Discipline • Discipline – a procedure intended to correct an employee’s behaviour because a rule or procedure has been violated. A fair disciplinary process is based on three foundations: o Rules and regulations – address matters such as theft, destruction of company, drinking on the job, and insubordination o System of progressive penalties – verbal warning, written warning, suspension, and discharge o Appeals process – to ensure that discipline is meted out fairly and equitably • Fairness in disciplinary discussion o Take a counselling approach to the problem o o o Provide a clear explanation of the problem behaviour o Ensure that the discussion occurs in private o Ensure that the discipline is not arbitrary; that is, it is consistent with other similar situations • Discipline without punishment • Discipline without punishment (or non-punitive discipline) is accomplished by gaining the employees’ acceptance of the rules and by reducing the punitive nature of the discipline itself. Key steps in the process are: o Step 1 – First, issue an oral reminder o Step 2 – Should another incident arise within six weeks, issue the employee a formal written reminder, a copy of which is placed in the HR file o Step 3 – The next step is a paid one-day “decision-making leave.” o Step 4 – If no further incidents occur in the next year or so, the one-day paid suspension is purged from the person’s file. If the behaviour is repeated, dismissal is required. • Dismissal – Involuntary termination of an employee’s employment • Grounds for dismissal: • unsatisfactory performance – persistent failure to perform assigned duties or meet prescribed standards on the job • misconduct – deliberate and wilful violation of the employer’s rules and may include stealing, rowdyism • lack of qualifications for the job – an employee’s incapability of doing the assigned work although the person is diligent • changed requirements of (or elimination of) the job – an employee’s incapability of doing the assigned work after the nature of the job has been changed • Insubordination – Wilful disregard or disobedience of the boss’s authority or legitimate orders; criticizing the boss in public • Insubordination includes: o Direct disregard of the boss’s authority o o Deliberate defiance of clearly stated company policies, rules, regulations, and procedures o Public criticism of the boss o Blatant disregard of the boss’s reasonable instructions o Contemptuous display of disrespect o Disregard for the chain of command, shown by going around the immediate supervisor or manager with a complaint, suggestion, or political manoeuvre. Although the employee may be right, that may not be enough to save him or her from the charges of insubordination o Participation in (or leadership of) an effort to undermine and remove the boss from power • Employment Contracts – employer–employee relationship is governed by an employment contract – a formal agreement • Implied contract – the understanding that employment is for an indefinite period of time and may be terminated by either party only when reasonable notice is given • Employers cannot hire and fire employees at will • can only terminate an employee’s employment without reasonable notice when just cause exists • Wrongful dismissal – an employee dismissal that does not comply with the law or does not comply with a written or implied contractual arrangement • Employees can allege wrongful dismissal if: o notice is not provided o notice is not considered reasonable • Avoiding wrongful dismissals: • Avoid “luring” a new employee away from stable employment elsewhere • Use employment contracts with a termination clause and with wording clearly permitting the company to dismiss without cause during the probationary period • Document all disciplinary action • Do not allege just cause for dismissal unless it can be proven • Time the termination so that it does not conflict with special occasions such as birthdays or holidays • Use termination letters in all cases, clearly stating the settlement offer • Schedule the termination interview in a private location at a time of day that will allow the employee to clear out belongings with a minimal amount of contact with other employees • Include two members of management in the termination meeting • Constructive dismissal – the employer makes unilateral changes in the employment contract that are unacceptable to the employee, even though the employee has not been formally terminated • The most common changes in employment status that are considered to constitute constructive dismissal are demotion, reduction in pay and benefits, forced resignation, forced early retirement, forced transfer, and changes in job duties and responsibilities • Dismissal procedures • Hold warning discussions before taking any final action • Get written confirmation of the final warning • Prepare a checklist of all company property that should be accounted for • Change security codes and locks previously used by discharged individuals • Always prepare for the possibility that the discharged individual may act irrationally or even violently, either immediately or in weeks to come • Decide beforehand how other employees will be informed about this person’s dismissal • Termination Interviews – the interview in which an employee is informed of the fact that he or she has been dismissed • Step 1: Plan the Interview Carefully • Step 2: Get to the Point • Step 3: Describe the Situation • Step 4: Listen • Step 5: Review All Elements of the Severance Package • Step 6: Identify the Next Step • Outplacement Counselling – a systematic process by which a terminated person is trained and counselled in the techniques of self-appraisal and securing a new position • Outplacement counselling is usually conducted by outplacement firms • Managing layoffs and downsizing: • Group termination laws – require an employer to notify employees in the event that an employer decides to terminate a group of employees • Layoff – the temporary withdrawal of employment to workers for economic or business reasons • Bumping/layoff procedures – detailed procedures that determine who will be laid off if no work is available, generally allowing employees to use their seniority to remain on the job • Most bumping/layoff procedures have the following: • Seniority is the ultimate determinant of who will remain • Seniority can give way to merit or ability • Seniority is usually based on the date the employee joined the organization • Because seniority is usually company-wide, an employee in one job is usually allowed to bump or displace an employee in another job provided that the more senior employee is able to do the job in question without further training • Alternatives to layoffs: o voluntary reduction in pay plan o voluntary time off o use of contingent employees o Work Sharing Program • Downsizing – refers to the process of reducing, usually dramatically, the number of people employed by the firm • A critical responsibility of human resources managers in any downsizing is to ensure that the bad news is delivered in a humane manner • In mergers/acquisitions, managers should: • Avoid the appearance of power and domination • Avoid win/lose behaviour • Remain businesslike and professional in all dealings • Maintain as positive a feeling about the acquired company as possible • Remember that the degree to which the organization treats the acquired group with care and dignity will affect the confidence, productivity, and commitment of those remaining • Managing Retirement • By 2025, more than 20 percent of the Canadian population will be over age 65, and the labour force will shrink dramatically • As baby boomers retire over the next two decades, there will be a labour shortage • Companies will promote late retirement to deal with the labour shortage • Retirement can become traumatic, as the once-busy employee tries to cope with suddenly being “non-productive” • For many retirees, maintaining a sense of identity and self-worth without a full-time job is the single most important task they will face • Pre-retirement counselling – counselling provided to employees some months (or even years) before retirement, which covers matters such as benefits advice, second careers, and so on • Retirement education and planning firms provide services to assist upcoming retirees with issues such as: o lifestyle goals, (including part-time or volunteer work and/or moving to another country) o financial planning o relationship issues o health issues • the first half of the class time can be used to introduce employee relations and the importance of fair treatment; then discuss ways to build two-way communication and implement fair treatment programs; and finally cover fairness in employee discipline • the LearnInMotion.com case provides a good illustration of disciplinary issues, and the third experiential exercise can be used very effectively to focus class discussion on disciplinary issues • the second half of the class time can be used to discuss issues around fairness in employee dismissals and the management of employee separations • the Case Incident can be used to illustrate issues around dismissals DISCUSSION BOX SUMMARIES GLOBAL HRM: Employment Contracts in Europe (page 402) This box describes the differences in employment contracts in Europe compared to those found in the US and Canada. It states that Europe requires more stringent communication to employees regarding their employment relationship. Though employment contract requirements differ from one European country to another, employers must be very explicit about the nature of the employer–employee relationship. ============================================================================ STRATEGIC HR: FedEx Attributes Success to People-First Philosophy (page 403) FedEx has developed a unique relationship with its employees, based on a people-first corporate philosophy. The company has established a Guaranteed Fair Treatment Procedure (GFTP) which goes beyond most grievance procedures. It contains three steps – management review, officer review, and executive appeals review – and each step is described in detail. ============================================================================ ETHICAL DILEMMAS Is it ethical to use video surveillance of employees? (page 404) There can be arguments for and against the use of video surveillance of employees. Some employers install video surveillance to prevent theft and vandalism and to monitor productivity. If it is used for the right purpose, then it cam be argued to be ethical. However, employees must be made aware of the surveillance. In general, courts in Canada have permitted electronic surveillance as long as there is proper balancing of opposing interests. However, unions have typically filed grievances against video surveillance, and arbitrators have been reluctant to support this type of surveillance due to privacy concerns. As long as employee privacy is maintained and appropriate policies are established and communicated to the employees, and as long as it’s used where there were not reasonable alternatives to be used, then it would be ethical for employers to use video surveillance. Is it ethical to apply disciplinary action in cases of ongoing absenteeism and tardiness due to family responsibilities? What other approach could be used? (page 407) While firms cannot function if there are employees who are frequently late or absent, most will agree that disciplinary action should be a last resort, especially in cases where the underlying reason is family responsibilities or something of a similar nature, and not simply a lack of employee commitment or sense of responsibility to the firm. The approach taken will need to be individualized, based on the employee’s circumstances and needs. Sometimes, for example, a leave of absence may be the best solution – until the crisis at home has been resolved. In other situations, flexible hours or working shorter hours for a period of time may assist the employee to more effectively balance his or her work and family responsibilities. Is it ethical to “buy out” an undesirable employee with severance pay and a good letter of reference in order to avoid prolonged wrongful dismissal litigation, even if you know the letter is misleading to potential future employers? (page 414) While many firms choose to “buy out” an undesirable employee with severance pay to avoid prolonged wrongful dismissal litigation, most students will argue that providing such an employee with a good letter of reference that will be misleading to potential future employers is not ethical. Although the firm should not stand in the way of the terminated employee’s future employment, deliberately misleading future employers is not an appropriate strategy to adopt. If the employee is insistent that he or she will not accept the severance package unless the firm agrees that it will not provide negative reference information, it is far better to agree that the firm will adopt a “no reference” policy for this particular employee, rather than supplying misleading information that could result in negligent hiring on the part of another firm. KEY TERMS Constructive Dismissal The employer makes unilateral changes in the employment contract that are unacceptable to the employee, even though the employee has not been formally terminated. (page 414) Discipline A procedure intended to correct an employee’s behaviour because a rule or procedure has been violated. (pages 406–407) Distributive Justice Fairness of a decision outcome. (page 401) Dismissal Involuntary termination of an employee's employment. (page 409) Downsizing Refers to the process of reducing, usually dramatically, the number of people employed by the firm. (page 419) Employee Opinion Surveys Communication devices that use questionnaires to ask for employees’ opinions about the company, management, and work life. (page 400) Fair Treatment Programs Employer programs that are aimed at ensuring that all employees are treated fairly, generally by providing formalized, well-documented, and highly publicized vehicles through which employees can appeal any eligible issues. (page 402) Group Termination Laws Laws that require an employer to notify employees in the event that an employer decides to terminate a group of employees. (page 417) Insubordination Wilful disregard or disobedience of the boss's authority or legitimate orders; criticizing the boss in public. (page 410) Interactional Justice Fairness in interpersonal interactions by treating others with dignity and respect. (page 402) Layoff The temporary withdrawal of employment to workers for economic or business reasons. (page 418) Outplacement Counselling A systematic process by which a terminated person is trained and counselled in the techniques of self-appraisal and securing a new position. (page 417) Pre-retirement Counselling Counselling provided to employees some months (or even years) before retirement, which covers matters such as benefits advice, second careers, and so on. (page 420) Procedural Justice Fairness of the process used to make a decision. (page 401) Termination Interview The interview in which an employee is informed of the fact that he or she has been dismissed. (page 415) Top-down Communication Programs Communication activities including in-house television centres, electronic bulletin boards, and newsletters that provide continuing opportunities for the firm to update employees on important matters. (page 400) Wrongful Dismissal An employee dismissal that does not comply with the law or does not comply with a written or implied contractual arrangement. (pages 411–412) PART FIVE: BUILDING EFFECTIVE EMPLOYEE–EMPLOYER RELATIONSHIPS CHAPTER 16 LABOUR RELATIONS LEARNING OUTCOMES • Discuss the key elements of Canada’s labour laws. • Outline the five steps in the labour relations process. • Describe the five steps in a union organizing campaign. • Outline the three ways to obtain union recognition. • Describe the three steps in the collective bargaining process. • Explain the typical steps in a grievance procedure. CHAPTER DESCRIPTION In the introduction section, the term labour-management relations is defined, the purposes of unionization are discussed, and the two basic labour relations strategies are defined. Canada’s labour laws and the labour movement in Canada are discussed next. Then the five-step labour relations process is introduced. Following this, each of the five steps is explained in detail. The chapter concludes with a discussion about the impact of unionization on HRM. LECTURE OUTLINE • this chapter introduces the topic of labour relations and the labour-management relationship • the legal and procedural frameworks in which labour relations is managed are reviewed • Labour union is an officially recognized association of employees, practicing a similar trade or employed in the same company or industry, who have joined together to present a united front and collective voice in dealing with management • The purposes of unionization are to influence HR policies and practices affecting bargaining unit members, such as pay and benefits; to achieve greater control over the jobs being performed, greater job security, and improved working conditions; and to increase job satisfaction and meet employees’ affiliation needs • Labour-management relations refers to the ongoing economic and social interaction between labour unions and management • Collective agreement (union contract) is a formal agreement between an employer and the union representing a group of its employees regarding terms and conditions of employment • Collective bargaining is the negotiations between a union and an employer to arrive at a mutually acceptable collective agreement • Bargaining unit is a group of employees in a firm, plant, or industry that has been recognized by an employer or certified by a Labour Relations Board (LRB) as appropriate for collective bargaining purposes • Labour relations strategies are twofold: union acceptance and avoidance • Union acceptance strategy views the union as the legitimate representative of the firm’s employees. Such a relationship can lead to innovative initiatives and win–win outcomes • Union avoidance strategy believes that it is preferable to operate in a non-unionized environment. In order to avoid unions, companies can either adopt a union substitution approach where they become so responsive to employees’ needs that there is no incentive for them to unionize, or adopt a union suppression approach when there is a desire to avoid a union at all costs • Canada’s labour laws have two main objectives: (1) to provide a common set of rules for fair negotiations (2) to ensure the protection of the public interest by preventing the impact of labour disputes from inconveniencing the public • about 90 percent of Canadian employees are covered under the provincial/territorial jurisdiction and legislation regarding labour relations • the remaining 10 percent are covered under the federal jurisdiction and legislation • there are a number of commonalities between the labour relations legislation in different Canadian jurisdictions: • procedures for the certification of a union • required minimum one-year term for collective agreements • procedures to be followed by both parties before a strike or lockout • prohibition of strikes or lockouts permitted during the life of the contract • final and binding arbitration required to settle contract interpretation disputes • prohibition of unfair labour practices by labour and management • labour relations boards established to enforce legislation • Labour movement in Canada • there are many different types of unions: • Business unionism – activities of labour unions focusing on economic and welfare issues, including pay and benefits, job security, and working conditions • Social unionism – activities of unions directed at furthering the interests of their members by influencing the social and economic policies of governments at all levels, such as speaking out on proposed legislative reforms • unions can be categorized by the type of worker eligible for membership: - craft unions for workers practicing the same craft or trade, such as carpentry - industrial unions for all workers in a particular company or industry • unions can be categorized by geographic scope: - international (U.S. and Canada) - national (Canada only) - local (directly chartered by the CLC or completely independent and unaffiliated) • unions can be categorized by labour congress affiliation: - Canadian Labour Congress (CLC) - Confédération des syndicats nationaux (CSN) - American Federation of Labour–Congress of Industrial Organizations (AFL–CIO) • Local – a group of unionized employees in a particular location • Union steward – a union member elected by workers in a particular department or area of a firm to act as their union representative • Current challenges to the Canadian Labour Movement: o global competition and technological change o technology o privatization and unionization of white-collar employees o innovative workplace practices • Labour relations process: o employees decide to seek collective representation o the union organizing campaign begins o the union receives official recognition o union and management negotiate a collective agreement o day-to-day contract administration. • Reasons for employee desire to unionize include: o job dissatisfaction o lack of job security o perceived inequities in pay o unfair administration of policies o lack of opportunity for advancement o lack of influence on work-related decisions o belief that unions can improve pay and working conditions • job dissatisfaction alone will not lead to unionization • it is only when workers are dissatisfied and believe that they are without the ability to change the factors causing dissatisfaction, except through collective action, that they become interested in unionizing • the union organizing process consists of five steps: • initial employee–union contact, which can be initiated by either party, often a union organizer • initial organizing meeting between union representatives and interested employees • the formation of an in-house committee of employees dedicated to the goal of unionization and to trying to get other employees interested in unionizing • the formal organizing campaign to get employees to sign authorization cards indicating their willingness to have the union act as their representative for the purposes of collective bargaining; the Web provides an easy method of contacting many employees • the outcome – rejection of the union or formal certification of the union by a labour relations board • employers have specific rights during a union organizing drive: - to express their views on unions - to state their position on remaining a non-union organization - to prohibit union activity on company time and property - to increase wages in the normal course of business - to gather employees to state the company’s position if: (a) the purpose is stated in advance (b) attendance is optional (c) no threats or promises are made • union recognition can occur in three ways: 1. Voluntary recognition by the employer of the union as the official bargaining agent for a group of employees 2. Regular certification by a labour relations board once the legislated minimum number of employees have signed authorization cards – automatic certification if the number of authorization cards exceeds a legislated level; representation vote otherwise • Certification procedure whereby a labour union obtains a certificate from the relevant LRB declaring that the union is the exclusive bargaining agent for a defined group of employees in a bargaining unit that the LRB considers appropriate for collective bargaining purposes • Representation vote – a vote conducted by the LRB in which employees in the bargaining unit indicate, by secret ballot, whether or not they wish to be represented, or continue to be represented, by a labour union 3. Pre-hearing vote in the case of irregularities in the organizing campaign, an alternative mechanism for certification, used in situations in which there is evidence of violations of fair labour practices early in the organizing campaign • Decertification – the process whereby a union is legally deprived of its official recognition as the exclusive bargaining agent for a group of employees • Collective bargaining is the process by which a formal collective agreement is established between labour and management • Both union and management representatives are required to bargain in good faith. This means that they must communicate and negotiate, that proposals must be matched with counterproposals, and that both parties must make every reasonable effort to arrive at an agreement • Steps involved in the bargaining process: 1. preparation for negotiations 2. face-to-face negotiations 3. obtaining approval for the proposed contract 1. Preparing for negotiations: • planning the bargaining strategy and process, and assembling data to support bargaining proposals • gather data on general economic trends, and analyze other collective agreements and trends in collective bargaining • conduct an analysis of grievances, review the existing contract or the union’s organizing campaign promises • conduct wage and salary surveys at competitor organizations • prepare cost estimates of monetary proposals, and make plans for a possible strike or lockout • management negotiators will obtain input from supervisors • Union negotiators will obtain input from union stewards, obtain the company’s financial information (if it is a public company), gather demographic information on their membership, and obtain input from members 2. Face-to-face negotiations: • Bargaining Zone – the area defined by the bargaining limits (resistance points) of each side, in which compromise is possible, as is the attainment of a settlement satisfactory to both parties (See Figure 16.2) • Caucus session is a session in which only the members of one’s own bargaining team are present • Distributive bargaining – a win–lose negotiating strategy, such that one party gains at the expense of the other • Integrative bargaining – a negotiating strategy in which the possibility of win–win, lose–win, win–lose, and lose–lose outcomes is recognized, and there is acknowledgement that achieving a win–win outcome will depend on mutual trust and problem solving • Mutual gains (interest-based) bargaining – a win–win approach, based on training in the fundamentals of effective problem solving and conflict resolution, in which the interests of all stakeholders are taken into account 3. Contract approval process: • Memorandum of settlement is a summary of the terms and conditions agreed to by the parties that is submitted to the constituent groups for final approval • Ratification – formal approval by secret-ballot vote of the bargaining unit members of the agreement negotiated between union and management • Third-party assistance • Legislation in all Canadian jurisdictions provides for conciliation and mediation services • Conciliation – the use of a neutral third party to help an organization and the union representing a group of its employees to come to a mutually satisfactory collective agreement. The conciliator is not permitted to have any direct input into the negotiation process, or to impose a settlement • The aim of conciliation is to try to help the parties avoid the hardship of a strike or lockout • Mediation – the use (usually voluntary) of a neutral third party to help an organization and the union representing its employees to reach a mutually satisfactory collective agreement. The mediator is allowed to have direct input into the negotiation process, but cannot impose a settlement • Bargaining impasses in negotiations • Strike – the temporary refusal by bargaining unit members to continue working for the employer • Strike vote – Legally required in some jurisdictions, it is a vote seeking authorization from bargaining unit members to strike if necessary. A favourable vote does not mean that a strike is inevitable • When a union goes on strike, bargaining unit members often picket the employer. Picket is stationing groups of striking employees, usually carrying signs, at the entrances and exits of the struck operation to publicize the issues in dispute and discourage people from entering or leaving the premises • Boycott is an organized refusal of bargaining unit members and supporters to buy the products or utilize the services of the organization whose employees are on strike, in an effort to exert economic pressure on the employer • Lockout is a temporary refusal of a company to continue providing work for bargaining unit employees involved in a labour dispute, which may result in closure of the establishment for a period of time • Unlawful strikes and lockouts are those that contravene the relevant LR legislation, and lay the union and its members open to charges and possible fines and/or periods of imprisonment if found guilty • Wildcat strike is a spontaneous walkout, not officially sanctioned by the union leaders, which is illegal if it occurs during the term of a collective agreement • Arbitration is the use of an outside third party to investigate a dispute between an employer and union and impose a settlement. Arbitration decisions are final and binding and cannot be changed or revised • interest arbitration is the imposition of the final terms of a collective agreement • The Collective Agreement: Typical Provisions • Union Recognition Clause clarifies the scope of the bargaining unit by specifying the employee classifications included therein or listing those excluded • Union Security/Checkoff Clause – the contract provisions protecting the interests of the labour union, dealing with the issue of membership requirements and, often, the payment of union dues. For example Union Shop, Rand Formula, Closed Shop, etc. • No-Strike-or-Lockout Provision is to guarantee some degree of stability in the employment relationship during the life of the collective agreement, which must be at least one year • Management Rights Clause clarifies the areas in which management may exercise its exclusive rights without agreement from the union and the issues that are not subject to collective bargaining. Any rights not limited by the clause are reserved to management • Arbitration Clause – All Canadian jurisdictions require that collective agreements contain a clause providing for the final and binding settlement, by arbitration, of all disputes arising during the term of a collective agreement • Union Security Clause – This clause deals with the issue of membership requirements and, often, the payment of union dues. There are various forms of union security clauses: o A closed shop is the most restrictive form of union security. Only union members in good standing may be hired by the employer to perform bargaining unit work o A union shop, membership, and dues payment are mandatory conditions of employment. Although individuals do not have to be union members at the time that they are hired, they are required to join the union on the day on which they commence work or on completion of probation o A modified union shop – the individuals who were bargaining unit members at the time of certification or when the collective agreement was signed are not obliged to join the union, although they must pay dues, but all subsequently hired employees must do both o A maintenance-of-membership arrangement – individuals voluntarily joining the union must remain members during the term of the contract o The Rand formula is the most popular union security arrangement. It does not require union membership, but does require that all members of the bargaining unit pay union dues • Contract administration: • Seniority – Length of service in the bargaining unit. Unions prefer the principle of seniority as an equitable and objective decision-making criterion, ensuring there is no favouritism. Managers often prefer to place greater weight on ability or merit • Discipline – Almost all collective agreements give the employer the right to make reasonable rules and regulations governing employees’ behaviour and to take disciplinary action if the rules are broken. • Most collective agreements restrict an employer’s right to discipline employees by requiring proof of just cause for the disciplinary action imposed • Grievance resolution and rights arbitration: • Grievance – a written allegation of a contract violation, filed by an individual bargaining unit member, the union, or management • The primary purpose of the grievance procedure is to ensure the application of the contract with a degree of justice for both parties • Steps in the Grievance Procedure: o Step 1 – filing of a written complaint with the employee’s immediate supervisor o Step 2 – if the issues are not resolved in step 1, the employee takes the problem to HR/labour relations specialist and union steward o Step 3 – senior management, senior labour relations specialist, and top union official discuss the grievance o Step 4 – grievance is submitted to arbitration. Arbitrator hears evidence and renders decision • Rights dispute – a disagreement between an organization and the union representing its employees regarding the interpretation or application of one or more clauses in the current collective agreement • Rights arbitration – the process involved in the settlement of a rights dispute • the impact of unionization on HRM includes: o changes to organization structure with the addition of labour relations specialists and a labour relations department o management decision-making must include union representatives on matters pertaining to bargaining unit members o centralization of record keeping and standardization of decision-making as all union members must be treated equally o reduction in supervisory authority and responsibility as all decisions must abide by the collective agreement • in the first quarter of class time, review the introductory material and management’s labour relations strategy; use examples of companies with different approaches to this strategy • the experiential exercises provide good insight into how to plan to remain non-union • use the second quarter of class time to review labour legislation and unfair labour practices; use recent LRB decisions for illustration • in the third quarter of the class time, review the labour movement in Canada today, and introduce the five-step labour relations process • in the fourth quarter of the class time, go over the first three steps in the process, decertification, and the impact of unionization on HRM • recent arbitration decisions around organizing and certification can be used to illustrate the complexities of this part of the process • the LearnInMotion.com case provides a useful example around union organizing • the video case is a good way to bring the chapter together at the end of the class DISCUSSION BOX SUMMARIES WORKFORCE DIVERSITY: May 17, 2006 – National Day Against Homophobia (page 428) This box describes the significant step Canada took when it legalized same-sex marriage in 2005. It describes the key role the Canadian trade union movement played in winning this impressive victory. ============================================================================= STRATEGIC HR: Labour–Management Partnership at the City of Saskatoon (page 445) The box discusses how the City of Saskatoon and its nine unions and employee associations worked together to take advantage of the federal government’s Labour–Management Partnerships Program, which funds a variety of pilot or demonstration projects involving labour–management cooperation. ============================================================================= ETHICAL DILEMMAS Knowing that head office plans to close the facility should a unionization bid be successful, how should you as a manager respond to inquiries from employees about the impact of a union? (page 432) The best course of action is to answer honestly, stating the belief that the firm wishes to remain union-free and will close the facility should the unionization bid be successful. Failure to answer such a question can be perceived to be a subtle, but intentional, threat to employee job security. Great care must be taken, however, to ensure that this response does not sound like a threat. As the HR Manager, how would you handle a situation in which a supervisor has knowingly violated the collective agreement when scheduling overtime? (page 434) Given the HR manager’s role in building and maintaining effective labour-management relations, and in ensuring that managers and bargaining unit members abide by the collective agreement, s/he has an ethical obligation to deal with this situation, even if none of the union members have noticed or complained about the violation. The HR manager should speak to the supervisor in private, and permit him or her to provide an explanation of why the overtime was scheduled as it was. The employee should be made aware of the serious consequences associated with violating the collective agreement, including the potential for a grievance, a loss of employee trust, and thus deterioration in the union-management relationship. The HR manager should try to assist him or her to come up with an alternative schedule that would comply with the collective agreement and ensure that the revised schedule is posted immediately. If he or she is not prepared to cooperate and has violated the collective agreement in the past, disciplinary action may be required. If the current provisions of the collective agreement pertaining to the scheduling of overtime are causing problems for a number of supervisors, the HR manager should ensure that this issue is raised at the next round of negotiations. Is it ethical for a firm to close the establishment during a labour dispute if that results in non-striking employees being laid off? (page 439) A strike situation is never easy on an employer. Strikes cause serious losses to business in terms of loss of production, loss of valued clients, loss of reputation, and many more. If the bargaining power of the union is high during a strike situation, the employer will be at a disadvantage and that could potentially lead to serious financial losses which could threaten the viability of the business. If a company is unable to sustain itself during a strike, it may decide to close the business resulting in the loss of jobs for those employees who were not involved in strike action. Though this is unfair on the part of the employees, the company has the right to decide whether it wants to continue the business. However this should be done as a last resort. Given the fact that some workers have religious or other objections to unions, is the Rand formula ethical? (page 440) The Rand formula is the most popular union security arrangement. It does not require union membership, but does require that all members of the bargaining unit pay union dues. It is a compromise arrangement that recognizes the fact that the union must represent all employees in the bargaining unit and should therefore be entitled to their financial support, but also provides the choice to join or not join the union. As a result, those who have religious or other objections to unions have the option of joining or not joining the union subject to them paying union dues, which can be considered as a fair compromise. KEY TERMS Arbitration The use of an outside third party to investigate a dispute between an employer and union, and to impose a settlement. (page 439) Authorization Card A card signed by an employee indicating his or her willingness to have the union act as his or her representative for purposes of collective bargaining. (page 431) Bargaining Unit The group of employees in a firm, plant, or industry that has been recognized by the employer and certified by a Labour Relations Board (LRB) as appropriate for collective bargaining purposes. (page 426) Bargaining Zone The area defined by the bargaining limits (resistance points) of each side, in which compromise is possible, as is the attainment of a settlement satisfactory to both parties. (page 435) Boycott An organized refusal of bargaining unit members and supporters to buy the products or use the services of the organization whose employees are on strike, in efforts to exert economic pressure on the employer. (page 438) Business Unionism The activities of labour unions focusing on economic and welfare issues, including pay and benefits, job security, and working conditions. (page 427) Caucus Session A session in which only the members of one’s own bargaining team are present. (page 435) Certification The procedure whereby a labour union obtains a certificate from the relevant LRB (or Quebec equivalent) declaring that the union is the exclusive bargaining agent for a defined group of employees in a bargaining unit that the Board considers appropriate for collective bargaining purposes. (page 433) Collective Agreement (Union Contract) A signed, written agreement between an employer (or employer's organization) and the union representing a group of the organization's employees, containing provisions outlining the terms and conditions of their employment. (page 426) Collective Bargaining The negotiations that take place between a labour union, collectively representing the employees of a firm or industry, and the employer or employer's association, to arrive at a mutually acceptable collective agreement. (page 426) Conciliation The use of a neutral third party to help an organization and the union representing a group of its employees to come to a mutually satisfactory collective agreement. (page 437) Craft Union Traditionally, a labour organization representing workers practising the same craft or trade, such as carpentry or plumbing. (page 427) Decertification The process whereby a union is legally deprived of its official recognition as the exclusive bargaining agent for a group of employees. (page 433) Distributive Bargaining A win–lose negotiating strategy, such that one party gains at the expense of the other. (page 436) Grievance A written allegation of a contract violation, filed by an individual bargaining unit member, the union, or management. (page 442) Industrial Union A labour organization representing all workers eligible for union membership in a particular company or industry, including skilled tradespersons. (page 427) Integrative Bargaining A negotiating strategy in which the possibility of win–win, lose–win, win–lose, and lose–lose outcomes are recognized, and there is acknowledgement that achieving a win–win outcome will depend on mutual trust and problem solving. (page 436) Interest Arbitration The imposition of the final terms of a collective agreement. (page 439) Interest Dispute A dispute between an organization and the union representing its employees over the terms of a collective agreement. (page 439) Labour–Management Relations The ongoing economic and social interactions between labour unions and management in organizations. (page 426) Labour Union (Union) An officially recognized association of employees, practising a similar trade or employed in the same company or industry, who have joined together for the purpose of presenting a united front and collective voice in dealing with management. (page 426) Local The basic unit of the labour union movement in Canada, formed in a particular plant or locality. (page 428) Lockout Temporary refusal of a company to continue providing work for bargaining unit employees involved in a labour dispute, which may result in closure of the establishment for a period of time. (page 438) Mediation The use (usually voluntary) of a neutral third party to help an organization and the union representing its employees to reach a mutually satisfactory collective agreement. (page 437) Memorandum of Settlement Summary of the terms and conditions agreed to by the parties, which is submitted to the constituent groups for final approval. (page 437) Mutual Gains (Interest-based) Bargaining A win–win approach, based on training in the fundamentals of effective problem solving and conflict resolution, in which the interests of all stakeholders are taken into account. (page 436) Picket Stationing groups of striking employees, usually carrying signs, at the entrances and exits of the struck operation to publicize the issues in dispute and discourage people from entering or leaving the premises. (page 438) Pre-hearing Vote An alternative mechanism for certification, available in most jurisdictions, used in situations in which there is evidence of irregularities early in the organizing campaign, such as unfair management practices. (page 433) Ratification Formal approval by secret-ballot vote of the bargaining unit members of the agreement negotiated between union and management. (page 437) Representation Vote A vote conducted by the LRB in which employees in the bargaining unit indicate, by secret ballot, whether or not they wish to be represented, or continue to be represented, by a labour union. (page 433) Rights Arbitration The process involved in the settlement of a rights dispute. (page 442) Rights Dispute A disagreement between an organization and the union representing its employees regarding the interpretation or application of one or more clauses in the current collective agreement. (page 442) Seniority Length of service in the bargaining unit. (page 441) Social (or Reform) Unionism Activities of unions directed at furthering the interests of their members by influencing the social and economic policies of governments at all levels, such as speaking out on proposed legislative reforms. (page 427) Strike The temporary refusal by bargaining unit members to continue working for the employer. (page 438) Strike Vote Legally required in some jurisdictions, it is a vote seeking authorization from bargaining unit members to strike if necessary. A favourable vote does not mean that a strike is inevitable. (page 438) Union Steward A union member elected by workers in a particular department or area of a firm to act as their union representative. (page 428) Union Security Clause The contract provisions protecting the interests of the labour union, dealing with the issue of membership requirements and, often, the payment of union dues. (page 439) Wildcat Strike A spontaneous walkout, not officially sanctioned by the union leadership, which may be legal or illegal, depending on its timing. (page 439) PART SIX: GLOBAL ISSUES IN HUMAN RESOURCES MANAGEMENT CHAPTER 17 MANAGING HUMAN RESOURCES IN A GLOBAL BUSINESS LEARNING OUTCOMES • Explain how inter-country differences have an impact on HRM. • Explain how to improve global assignments through employee selection. • Discuss the major considerations in formulating a compensation plan for overseas employees. • Describe the main considerations in repatriating employees from abroad. • Answer the question: “Is it realistic for a company to try to institute a standardized HR system in all or most of its facilities around the world. CHAPTER DESCRIPTION In the first part of this chapter, the internationalization of business is discussed, along with HR challenges related to international business. The focus then shifts to the impact of inter-country differences on HRM, followed by hints for improving international assignments through selection. The chapter concludes with a discussion of appropriate techniques for training and maintaining international employees. LECTURE OUTLINE • this chapter introduces some of the complexities of managing human resources in an international business • this is a difficult area to manage, as a large percentage of international assignments fail (the employee returns home prematurely) • Figure 17.1 shows the value added by HR in executing global strategy, indicating how important human resources are for international business success • there are three broad global HR challenges: 1. deployment of skills where needed 2. knowledge and innovation dissemination to operations around the world 3. identifying and developing talent on a global basis • there are many practical HR issues when sending employees abroad, including: - candidate identification, assessment, and selection - global assignment cost predictions - specific assignment letters - compensation, benefits, and tax programs - relocation assistance - family support • major inter-country differences that affect HRM include: • cultural factors such as Hofstede’s power distance, individualism/collectivism, and masculinity/ femininity dimensions • economic factors such as free enterprise and socialist systems • labour cost factors such as differences in average wages, hours of work, vacation, and severance pay requirements • industrial relations factors such as the relationship between the worker, the union, the employer, and the government • some differences still remain between countries in the European Union such as minimum annual holidays. Social legislation by the European Parliament and the administration by the European Commission are slowly narrowing the gaps • it is very important for the expatriate selection process to consider family and personal issues because this is the most common reason for expatriate assignment failure • the level of cultural skills of potential expatriates must be assessed carefully as this is a critical factor for success of foreign assignments • other important success factors are flexibility, language ability, and family adjustment • major work/life balance relocation challenges include career assistance for the spouse, and education and school selection assistance for the children. • there are four major sources of staff for international assignments: 1. locals, who are citizens of the foreign country 2. expatriates, who are non-citizens of the foreign country 3. home-country nationals, who are citizens of the home or parent country 4. third country nationals, who are not citizens of the parent country or the host country • international staffing policy often falls into one of three categories: 1. ethnocentrism, where it is assumed that the home country management style is superior to that of the host country 2. polycentrism, where it is assumed that the host country management style is most appropriate for the host country 3. geocentrism, where it is assumed that the best managers may come from anywhere around the world • five important factors for international assignee success are: 1. job knowledge and motivation 2. relational skills 3. flexibility and adaptability 4. extra-cultural openness 5. secure family situation • it is important to screen applicants for international positions very carefully • past experience with foreign situations should be considered carefully • realistic job previews should be provided • paper and pencil tests such as the Overseas Assignment Inventory can be helpful in predicting success on foreign assignments • it is important to provide thorough orientation and training for international assignments • employees who will be moving to an international position need to be fully aware of cultural differences and their impact on the workplace and working relationships • it is critical to understand the attitudes of others and their effect on people’s behaviour • the employee should receive as much factual knowledge about the other country as possible • language skills are very useful, particularly non-verbal communication • other information about adjustment and adaptation to the foreign country is very important • Figure 18.4 provides information in the prevalence of various types of relocation services • there are several ways to approach international compensation • a common approach is the balance sheet approach • this approach is based on the premise that international employees should maintain the same standard of living as at home • employees are provided with a base salary, a foreign service premium for working overseas, and allowances for expenses related to housing and children’s education; sometimes tax adjustment allowances are also provided • incentives for international employees are most effective when tied to the performance of the foreign operation for which the employee is responsible; incentives based on the home office results or the entire multinational corporation are too far from line of sight • this approach builds a sense of ownership among local managers • this approach also helps to attract and retain overseas managers • international EAPs help with the stress of relocation • there is always some degree of culture shock, no matter how well the employee has been prepared • common reactions to culture shock include homesickness, boredom, depression, and family tension and conflict • performance appraisal must be done very carefully for employees on foreign assignment, with careful consideration of what the employee can and cannot control • the difficulty level of the assignment should be considered based on differences in culture, legal environment, business practices, and so on in the foreign country • in general, the on-site manager’s appraisal should be weighted higher than that of the home-site manager • the home-country manager should seek advice from former expatriates before making a final decision on a performance rating • performance criteria should be modified for the expatriate employees based on the specific conditions under which they are doing their job • qualitative criteria such as staff morale should be used as well as quantitative criteria such as financial results • international labour relations can be very different from the situation in North America in a variety of ways including: - more industry or regionally oriented - locals may be less autonomous - employer associations may negotiate together - union recognition can be less formal - union security can be less formal - some collective agreements can be made outside the legal framework for labour relations • further labour relations differences include: - brief, simple collective agreements - less frequent occurrence of grievances - less frequent occurrence of strikes - less government regulation and more direct intervention by government agencies - more worker participation in decision-making, including works councils and codetermination (union representation on the board of directors) • safety and fair treatment are important, sometimes critical issues abroad • kidnapping of foreign executives is a way of life in some countries, and therefore security measures should include: - arrive close to airport departure time - invest in home and car security systems - vary departure and arrival times for work - keep up to date on crime - project confident body language • repatriation of the returning employee can be even more difficult than the expatriate experience, and many expatriates never readjust to the home office, resulting in them leaving the company • to try to prevent repatriation problems, it’s important to consider: • writing repatriation agreements detailing what will happen once the employee returns home • assign a sponsor to the employee when s/he leaves • provide career counselling • keep communication open with the expatriate employee; this is easier now that email is available • offer financial support • develop reorientation programs for returning employees to acquaint them with changes made in their absence • build in return trips when the employee is away so that s/he can keep visible around the home office • Best Global HR Practices are summarized as Do’s and Don’ts in Table 17.2 (page 471) • use the first half of the class time to review the globalization of business and to discuss how inter-country differences affect HRM; more material on Hofstede could be used here • use the second half of the class time to review the importance of selection procedures and the importance of training and maintaining global employees • the LearnInMotion case can be used to demonstrate how all of these issues must be dealt with in establishing a global operation DISCUSSION BOX SUMMARIES GLOBAL HRM: Doing Business in China Has Everything to do with People (page 453) The traditional notions of collectivism and “saving face” remain important in Chinese society. Guanxi (the Chinese term for “relationship”) plays an important part in how the business and personal world operates in China. The importance of building relationships and respect is described in this box. Strong trust relationships are central to developing stable and effective business dealings. ============================================================================ STRATEGIC HR: Most-Admired Companies Use Expatriates (page 458) This box reports on the findings of a Hay Group study of the most-admired companies operating globally. Such companies are far more effective in identifying talent on a global basis than their peers. These global companies with top reputations are far more likely to make use of planned career assignments to develop global experience. They are also more likely to have executive teams of members who have held positions outside their home countries and to have boards of directors that are diverse in terms of members’ nationalities. ============================================================================ ETHICAL DILEMMAS How ethical is it for a multinational organization to recruit expatriate staff for managerial positions when similarly qualified staff can be identified in the host country? (page 457) The demands of the assignment may be such where an expatriate manager is required. A critical concern would be to avoid conflicts of interest, especially when it comes to the budgeting and allocation of financial resources, and representing/implementing a global strategy. In situations which are not prone to such conflicts, it would not only be ethical to appoint host country staff to managerial positions, but it also would make sense to optimize on local knowledge and experience. Is it ethical to pay expatriates using the balance sheet approach when local staff, at the same level, receive far less compensation? (page 463) Some students may argue that, in absolute terms, it may be unethical to use the balance sheet approach for expatriate staff compensation. Expatriate staff are normally on an assignment with the expectation of returning to their home country, even if the assignment stretches into several years. Also, they are dislodged from their normal social environment of (extended) family and friends, and from their cultural environment. As such, a higher level of compensation can be arguably ethical. Where organizations are open to assigning local staff to other expatriate offices and apply the same principles in a transparent and even-handed way, their ethical position would be strengthened. Instructor Manual for Human Resources Management in Canada Gary Dessler, Nina D. Cole 9780132270878, 9780134005447