answer a questions
MAJOR QUESTION How do effective managers view the role of people in their organization’s success?
THE BIG PICTURE
Human resource management consists of the activities managers perform to plan for, attract, develop, and retain an effective workforce. Planning the human resources needed consists of understanding current employee needs and predicting future employee needs.
How do you get hired by one of the companies on Fortune magazine’s annual “100 Best Companies to Work For” list—companies such as Google, SAS Institute, Boston Consulting Group, Edward Jones, and Genentech, which are on the 2016 list? 12
You try to get to know someone in the company, suggests one guide. 13 You play up volunteer work on your resume. You get ready to interview and interview and interview. And you do extensive research on the company—far more than just online research, as by talking to customers.
And what kinds of things does an employee of a Fortune “Best” company get? At Google (now part of Alphabet), the Mountain View, California, search engine company (ranked No. 1 Best Company seven times in the last 10 years), you’re entitled to eat in 1 of 11 free gourmet cafeterias, take your dog to work, get haircuts on-site, work out at the gym, study Mandarin or other languages, have your laundry done free, and get virtual doctor visits. You may also be a candidate for millions of dollars in compensation incentives, special bonuses, and founders’ awards. 14
The reason for this exceptional treatment? “Happy people are more productive,” says Eric Schmidt, former Google CEO, now executive chairman of Alphabet. 15 That productivity has made the company an earnings powerhouse; for 2015, for example, it reported a 14% growth in revenue and 38% growth in profits for its core Internet businesses. 16 Google has discovered, in other words, that its biggest competitive advantage lies in its human resources—its people.
Human Resource Management: Managing an Organization’s Most Important Resource
Human resource (HR) management consists of the activities managers perform to plan for, attract, develop, and retain an effective workforce. Whether it’s McKenzie looking for entry-level business consultants, the U.S. Navy trying to fill its ranks, or churches trying to recruit priests and ministers, all organizations must deal with staffing.
The fact that the old personnel department is now called the human resources department is not just a cosmetic change. It is intended to suggest the importance of staffing to a company’s success. Although talking about people as “resources” might seem to downgrade them to the same level as financial resources and material resources, in fact, people are an organization’s most important resource.
Indeed, companies ranked No.1 on Fortune magazine’s Best Companies list in the past—which, besides Google, include SAS, NetApp, Genentech, Wegmans Food Markets, J. M. Smucker, Edward Jones, and The Container Store—have discovered that putting employees first has been the foundation for their success. “If you’re not thinking all the time about making every person valuable, you don’t have a chance,” says former General Electric head Jack Welch. “What’s the alternative? Wasted minds? Uninvolved people? A labor force that’s angry or bored? That doesn’t make sense!” 17
Clearly, companies listed among the best places to work become famous by offering progressive and valued programs, policies, and procedures. 18 Are you curious to see if a current or past employer is one of these progressive companies? You can find out by taking Self-Assessment 9.1 .
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SELF-ASSESSMENT 9.1
Assessing the Quality of HR Practices
This survey is designed to assess the quality of HR practices at your current place of employment. If you are not currently working, consider a previous job when completing the survey. Please be prepared to answer these questions if your instructor has assigned Self-Assessment 9.1 in Connect.
1. How did you rate the quality of the company’s HR practices?
2. Based on your responses, what advice would you give the senior HR leader about how to improve its HR practices? Be specific. What are the consequences of having poor-quality HR practices? Explain.
Human Resources as Part of Strategic Planning
Some companies—those with flat management structures, for instance—have done away with HR departments entirely, letting the regular line managers handle these tasks. But most workers say they feel the absence of an in-house HR staff, especially when it comes to resolving pay problems and mediating employee disputes. 19 So what should organizations do in regard to investing in human resources? Based on research findings, we come down on the side that people are an organization’s most important asset and it’s important to invest in human resources. All told, studies show that companies have higher levels of employee satisfaction, financial performance, and service performance when the company has high-quality human resource practices and programs. 20 At many companies, human resources has become part of the strategic planning process. Thus, HR departments deal not only with employee paperwork and legal accountability—a very important area, as we describe in Section 9.7 —but also with helping to support the organization’s overall strategy.
Example: Is it important, as Wegmans’s owners think, to have loyal, innovative, smart, passionate employees who will give their best to promote customer satisfaction (the grocery chain’s mission)? Who, then, should be recruited? How should they be trained? What’s the best way to evaluate and reward their performance? The answers to these questions should be consistent with the firm’s strategic mission.
The purpose of the strategic human resource process, then—shown in the gold shaded boxes at right—is to get the optimal work performance that will help the company’s mission and goals. 21 (See Figure 9.1 .)
FIGURE 9.1 The strategic human resource management process
Three concepts important in this view of human resource management are human capital, knowledge workers, and social capital.
Human Capital: Potential of Employee Knowledge and Actions
“We are living in a time,” says one team of human resource management authors, “when a new economic paradigm—characterized by speed, innovation, short cycle times, quality, and customer satisfaction—is highlighting the importance of intangible assets, such as brand recognition, knowledge, innovation, and most particularly human capital.” 22 Human capital is the economic or productive potential of employee knowledge, experience, and actions. 23
Scripps Health, a nonprofit health care system in San Diego and 42nd on Fortune’s 2016 list of “Best Places to Work For,” helps employees develop human capital by providing career coaching and up to $7,300 per year in tuition reimbursement and scholarships. The company also offers a wide variety of internal courses that focus on employee development. 24
It’s also important to take responsibility for your own human capital. You may find this surprising, but a recent study showed that lack of sleep depletes your human capital and lowers performance. 25 To perform at their best, people need their full ration of sleep.
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Knowledge Workers: Potential of Brain Workers
A knowledge worker is someone whose occupation is principally concerned with generating or interpreting information, as opposed to manual labor. Knowledge workers add value to the organization by using their brains rather than their muscle and sweat, and as such they are the most common type of worker in 21st-century organizations. 26 Over the past three decades, automation has threatened a lot of routine jobs, but the rise of knowledge workers has been accelerating.
Social Capital: Potential of Strong and Cooperative Relationships
Social capital is the economic or productive potential of strong, trusting, and cooperative relationships. It can help you land a job. For example, a national survey of recruiters revealed that 74% had found the highest-quality job applicants came through employee referrals. Employees hired through referrals also tend to stay longer at their jobs, a result of better person–organization fit. 27
Social capital is also beneficial beyond the early stages of your career, particularly when you are developing trusting relationships with others. Trusting relationships lead to more job and business opportunities, faster advancement, greater capacity to innovate, and more status and authority. 28 All told, it pays to have a rich network of good relationships, and social capital helps makes this possible.
Planning the Human Resources Needed
When a building contractor, looking to hire someone for a few hours to dig ditches, drives by a group of idle day laborers standing on a street corner, is that a form of HR planning? Certainly it shows the contractor’s awareness that a pool of laborers usually can be found in that spot. But what if the builder needs a lot of people with specialized training—to give him or her the competitive advantage that the strategic planning process demands?
Here we are concerned with something more than simply hiring people on an “as needed” basis. Strategic human resource planning consists of developing a systematic, comprehensive strategy for (a) understanding current employee needs and (b) predicting future employee needs. Let’s consider these two parts.
Understanding Current Employee Needs
To plan for the future, you must understand the present—what today’s staffing picture looks like. This requires that you (or a trained specialist) first do a job analysis and from that write a job description and a job specification. 29
· Job analysis. The purpose of job analysis is to determine, by observation and analysis, the basic elements of a job. Specialists who do this interview job occupants about what they do, observe the flow of work, and learn how results are accomplished. For example, UPS has specialists who ride with the couriers and time how long it takes to deliver a load of packages and note what problems are encountered (traffic jams, vicious dogs, recipients not home, and so on).
· Job description and job specification. Once the fundamentals of a job are understood, then you can write a job description, which summarizes what the holder of the job does and how and why he or she does it. Next you can write a job specification, which describes the minimum qualifications a person must have to perform the job successfully.
This process can produce some surprises. Jobs that might seem to require a college degree, for example, might not after all. Thus, the process of writing job analyses, descriptions, and specifications can help you avoid hiring people who are overqualified (and presumably more expensive) or underqualified (and thus not as productive) for a particular job.
In addition, by entering a job description and specification with their attendant characteristics into a database, an organization can do computer searching for candidates by matching keywords (nouns) on their resumes with the keywords describing the job. Page 283Enterprise Rent-A-Car, for example, sorts through 50,000 candidates a month to identify those with a bachelor’s degree, good driving record, and customer-service or leadership experience who might qualify for the company’s management training program. 30
What kind of job is this? A UPS driver’s problems of driving in a big city—traffic, double parking, addressees not at home—are different from those of driving in rural areas, where there may be long stretches of boredom. Specialists in job analysis can interview drivers about their problems in order to write job descriptions that allow for varying circumstances.© McGraw-Hill Education/John Flournoy, photographer
Predicting Future Employee Needs
Job descriptions change, of course: Auto mechanics, for instance, now have to know how computer chips work in cars. (Current 7-Series BMWs and S-class Mercedes have about 100 processors apiece.) And new jobs are created: Who could have visualized the position of “e-commerce accountant” 10 years ago, for example?
As you might expect, predicting future employee needs means you have to become knowledgeable about the staffing the organization might need and the likely sources for that staffing:
· The staffing the organization might need. You could assume your organization won’t change much. In that case, you can fairly easily predict that jobs will periodically become unoccupied (because of retirement, resignations, and so on) and that you’ll need to pay the same salaries and meet the same criteria about minority hiring to fill them.
Better, however, to assume the organization will change. Thus, you need to understand the organization’s vision and strategic plan so that the proper people can be hired to meet the future strategies and work. We discussed strategic plans in Chapter 6 .
· The likely sources for staffing. You can recruit employees from either inside or outside the organization. In looking at those inside, you need to consider which employees are motivated, trainable, and promotable and what kind of training your organization might have to do. A device for organizing this kind of information is a human resource inventory, a report listing your organization’s employees by name, education, training, languages, and other important information. In looking outside, you need to consider the availability of talent in your industry’s and geographical area’s labor pool, the training of people graduating from various schools, and such factors as what kinds of people are moving into your area. The U.S. Bureau of Labor Statistics and the U.S. Census Bureau issue reports on such matters. ●
One way to attract potential employees. One of the first places companies are apt to look for potential employees is online, such as the social networking sites Facebook, LinkedIn, and Glassdoor, as well as Twitter (although sometimes searches can lead to discrimination against some candidates). Creative users also post unusual digital resumes featuring eye-catching graphics, YouTube videos, and PowerPoint slides on Pinterest, the popular online pin board for photos. As for job seekers, they can find useful job-hunting apps on Monster.com. Are you up to speed on these job-hunting advantages?© dennizn/Shutterstock RF
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9.2
Recruitment and Selection: Putting the Right People into the Right Jobs
MAJOR QUESTION How can I reduce mistakes in hiring and find great people who might work for me?
THE BIG PICTURE
Qualified applicants for jobs may be recruited from inside or outside the organization. The task of choosing the best person is enhanced by such tools as reviewing candidates’ application forms, resumes, and references; doing interviews, either structured or unstructured; and screening with ability, personality, performance, and other kinds of employment tests.
“We know that 5% of your workforce produces 26% of your output, so you need to focus on hiring people who really make the difference,” says San Francisco State University professor John Sullivan, an expert in human resources strategy. Hiring has become a science, Sullivan states, but most people doing the recruiting think it is still an art. “Most people in HR have no clue. We don’t measure failed hires. There’s no feedback loop.” 31
However difficult it may be, then, it’s important to try to get hiring right. “We’re essentially in an innovation economy where good people come up with really good ideas,” says one CEO. “Companies want to hit home runs with the next greatest product, and the imperative is making sure you have great people to do that.” 32
Recruitment: How to Attract Qualified Applicants
At some time nearly every organization has to think about how to find the right kind of people. Recruiting is the process of locating and attracting qualified applicants for jobs open in the organization. The word qualified is important: You want to find people whose skills, abilities, and characteristics are best suited to your organization. Recruiting is of two types: internal and external.
1. Internal Recruiting: Hiring from the Inside
Internal recruiting means making people already employed by the organization aware of job openings. Indeed, most vacant positions in organizations are filled through internal recruitment, mainly through job posting, placing information about job vacancies and qualifications on bulletin boards, in newsletters, and on the organization’s intranet. Companies looking to make strategic changes do better hiring CEOs from within the ranks rather than from outside, according to a recent study. 33 In one twist on recruiting from within, more firms are now rehiring former workers who had left (a tactic once frowned upon), because so many employers are having difficulty finding qualified people. 34
2. External Recruiting: Hiring from the Outside
External recruiting means attracting job applicants from outside the organization. In years past, notices of job vacancies were placed through newspapers, employment agencies, executive recruiting firms, union hiring halls, college job-placement offices, and word of mouth. Today more and more companies are also using social media to recruit. 35 For example, experts estimate that 89% of U.S. organizations use social networks to find new employees. Recent research suggests, therefore, that it’s practically mandatory for job seekers to have a presence online. 36
In one survey of 3,500 U.S. college students, 80% said they use smartphones for job hunting or see themselves doing so in the future. 37 LinkedIn, a social network with more than 1.23 billion active users, accounts for 94% of the people hired via social media, followed by Facebook and Twitter. 38 LinkedIn Students, a mobile app, helps graduating collegians find what companies might be a good fit and suggests occupations they might not have previously considered. 39 Mobile recruiting, incidentally, is reportedly poised to become a primary global recruiting strategy. 40
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Both internal and external methods have advantages and disadvantages. 41 (See Table 9.1 , below.)
TABLE 9.1 Internal and External Recruiting: Advantages and Disadvantages
INTERNAL RECRUITING | |
ADVANTAGES | DISADVANTAGES |
1. Employees tend to be inspired to greater effort and loyalty. Morale is enhanced because they realize that working hard and staying put can result in more opportunities.
2. The whole process of advertising, interviewing, and so on is cheaper. 3. There are fewer risks. Internal candidates are already known and are familiar with the organization. |
1. Internal recruitment restricts the competition for positions and limits the pool of fresh talent and fresh viewpoints.
2. It may encourage employees to assume that longevity and seniority will automatically result in promotion. 3. Whenever a job is filled, it creates a vacancy elsewhere in the organization. |
EXTERNAL RECRUITING | |
ADVANTAGES | DISADVANTAGES |
1. Applicants may have specialized knowledge and experience.
2. Applicants may have fresh viewpoints. |
1. The recruitment process is more expensive and takes longer.
2. The risks are higher because the persons hired are less well known. |
Which External Recruiting Methods Work Best?
In general, the most effective sources are employee referrals, say human resource professionals, because, to protect their own reputations, employees are fairly careful about whom they recommend, and they know the qualifications of both the job and the prospective employee. 42 HR expert John Sullivan, mentioned above, states that this method is preferred by the better companies, which ask their own top-performing employees, “Who do you learn from? Who’s better than you? Who mentors you?” 43
Other effective ways of finding good job candidates are e-recruitment tools, such as “dot-jobs” websites; membership directories for associations and trade groups; social networking sites; and industry-specific blogs, forums, and newsgroups. 44
Among some newer ideas: San Francisco–based BlueCrew is a tech-enabled employment agency focused on hiring for warehouse workers, forklift operators, and other blue-collar temporary employees. 45 Barclays, the international bank, uses a free mobile videogame called Stockfuse, a stock-trading game, to attract and evaluate job applicants. 46 A cloud-storage firm named Compose and an employment firm named Woo, both in northern California, arrange “blind dates” between job seekers and employers, using resumes that feature only a person’s work, no names. 47 Devereux Cleo Wallace, a Colorado health care organization, also avoids relying on people’s credentials, pursuing instead “competency-based selection” strategies that measure whether job applicants have the competencies—such as the soft skills of empathy and listening ability—to fill specific roles in psychiatric facilities. 48 Netflix specializes in recruiting for trustworthiness, making a point of “hiring, rewarding, and tolerating only fully formed adults”—people who will put the company’s interests first. 49
How do you feel about the job you are in now, if you have one, or the last job you had? Do you feel like you are a “good fit” for the job? That is, do you like the work and does the work match your skills? Research shows that we are happier and more productive when our needs and skills fit the job requirements. If you would like to see whether or not you fit with your current (or last) job, complete Self-Assessment 9.2 . You may find the results very interesting.
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SELF-ASSESSMENT 9.2 
Assessing Your Person–Job Fit
This survey is designed to assess your job fit. If you are not currently working, consider a previous job when completing the survey. Please be prepared to answer these questions if your instructor has assigned Self-Assessment 9.2 in Connect.
1. What is your level of fit?
2. Whether you have high or low fit, what are the main causes for your level of fit? Explain.
3. What questions might you ask a future recruiter to ensure a higher level of person–job fit? Be specific.
Realistic Job Previews
A realistic job preview (RJP) gives a candidate a picture of both positive and negative features of the job and the organization before he or she is hired. This recruiting technique is very effective at reducing turnover within 30–90 days of employment. 50 For instance, hiring managers at the Hilton Baltimore demonstrate to housekeeping job applicants how to make a bed, then ask the applicants to do it themselves. With this realistic job preview, says Tishuana Hodge, regional director of HR, says, “We can see who is genuinely interested and physically up to the challenge.” 51
EXAMPLE
The Changing Job Market: Millennials, the Gig Economy, and the Episodic Career
Young adults (Millennials and Gen Z—those born between 1981 and the mid-2000s) are said to be less focused on finding jobs that nourish the wallet than those that nourish the soul, less concerned with finding financial success than on making a difference, as we said at the start of Chapter 3 . But will the economy and the job market cooperate?
“A lot of people are despairing about the future of America in different ways or about their ability to earn a good steady living,” says New York University professor and journalist Farai Chideya. “It’s a time of mixed opportunity.” 52
The Gig Economy. Most of the job growth among American workers during the past decade has been not in traditional jobs but rather among those who work as independent contractors, through temporary services or on-call, which rose 15.8% from 2005 to 2015, according to one study. 53 In this so-called gig economy, organizations contract with independent workers—usually through their smartphones—for short-term engagements, and the burden of providing workers’ compensation, health insurance, and the like falls on the workers themselves rather than on the employer. 54
More than 5% of adults younger than 35 earned some income from an online platform between October 2014 and September 2015, according to some research. 55 Regardless of age, low-earning gig workers tend to provide direct labor, such as being on-demand drivers for Uber or furniture movers for TaskRabbit. Top-income gig earners make money mostly from their assets, as by renting their vacation homes through VRBO or selling craft merchandise through Etsy.
Although the gig economy employs only 0.5% of the workforce at present, Intuit predicts that by 2020 contingent workers will exceed 40% of American workers, and traditional full-time, full-benefit jobs will be harder to find. 56
The Episodic Career. Chideya, mentioned above, is the author of The Episodic Career: How to Thrive at Work in the Age of Disruption. 57 Because of decades of wage stagnation, the effects of the Great Recession, and “an incredible sense that perhaps the future will not be better than the past,” she says, we have entered into the era of “the episodic career.” 58 Surviving this challenge will require three qualities, she suggests:
· Emotional resilience: “The reality is that we’re living in a time where there’s more and more disruption in the workplace and you absolutely have to roll with the punches,” she says.
· Understanding the job market: If the industry you’re contemplating entering or are in is starting to go downhill, you should know it. You may have to “reboot” several times.
· Self-knowledge: You need to make a list of all the skills you have, including those you don’t use for work. “You’re not just the job you have now or the job you had five years ago,” says Chideya, “you’re a compilation of skills and assets, which can be used in many contexts.”
YOUR CALL
What kind of good skills inventory could you bring to the job market? What networks are you keeping alive, including “the weaker ties and links in your network, … people on the fringes of your circle who live in completely different worlds,” who can be the most important in a job search?
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Selection: How to Choose the Best Person for the Job
Whether the recruitment process turns up a handful of job applicants or thousands, now you turn to the selection process, the screening of job applicants to hire the best candidate. Essentially, this becomes an exercise in prediction: How well will the candidate perform the job and how long will he or she stay?
Three types of selection tools are background information, interviewing, and employment tests.
1. Background Information: Application Forms, Resumes, and Reference Checks
Application forms and resumes provide basic background information about job applicants, such as citizenship, education, work history, and certifications.
Unfortunately, a lot of resume information consists of mild puffery and even outrageous fairy tales—as many as 35% of resumes, by one estimate. 59 It is risky to lie about your background information because it can be used later as a reason for terminating your employment. Nevertheless, lots of people try it. A 2015 survey of 2,500 hiring professionals reported that the most common lies found on resumes are about skill sets (62%), responsibilities (54%), employment dates (39%), job titles (31%), and academic degrees (28%). 60 No wonder the business of background checks is booming. 61
PRACTICAL ACTION
Would You Lie Like This on Your Resume?
What kind of lies do people put on their resumes? Consider the following examples.
Lying about Education. Lying about education may be the most prevalent distortion (such as pretending to hold a degree or an advanced degree). 62 A few years ago, RadioShack CEO David Edmondson achieved some notoriety and had to resign after a newspaper discovered he had falsely claimed on his resume to hold degrees in psychology and theology. 63 In 2012, Yahoo CEO Scott Thompson was revealed to not have earned a college degree in computer science, as claimed on his resume and on the company’s website. 64 Automatic Data Processing of Roseland, New Jersey, which has studied employee background verification, reported that 41% of education records showed a difference between the information provided by an applicant and that provided by the educational institution. 65
Lying about Employment Histories, Ages, Salaries, and Job Titles. Another common fabrication includes creative attempts to cover gaps in employment history (although there are straightforward ways an applicant can deal with this, such as highlighting length of service instead of employment dates). 66 Some people try to cover up taking years off from work to do child care, but it is better to explain than to hide these dates. 67 People also lie about their ages for fear of seeming to be too experienced (hence expensive) or too old. 68 As you might expect, people also embellish their salary histories, job titles, and achievements on projects.
Lying about Criminal Background or Immigration Status. In 2007, it came out that the foundation that runs online encyclopedia Wikipedia had neglected to do a basic background check before hiring Carolyn Doran as its chief operating officer; she had been convicted of drunken driving and fleeing the scene of a car accident. 69 Now, more and more job seekers are seeking to legally clear their criminal records—to have their arrests or convictions expunged, when possible. 70 Public efforts are also being made to remove hiring hurdles faced by felons trying to restart their lives, such as the National Reentry Resource Center. 71
In addition, as the number of illegal (undocumented) workers has risen, it has become incumbent on human resource officers to verify U.S. citizenship. 72 Use of E-Verify, the federal program that allows employers to quickly check the legal status of potential employees, has taken a big jump. 73 Still, perhaps half of illegal workers slip by the system. 74
YOUR CALL
What past events are you most worried potential employers will find out about you? What can you do to put them in a better light?
Many companies are finding conventional resumes not all that useful (because they don’t quantify an applicant’s accomplishments or are too full of fluff descriptors such as “outstanding” or “energetic”) and are increasingly relying on social networks such as LinkedIn, video profiles, or online quizzes to assess candidates. 75 The federal government, for instance, now scans security-clearance applicants’ posts on social media. 76 Other firms are so inundated with resumes that they now have to use resume-filteringPage 288 software, causing applicants to learn to game the system by loading their resumes with keywords from the job description. 77 Some applicants try “stunt resumes,” such as those delivered by a stuffed carrier pigeon. 78 College students often assemble e-portfolios, giant Web-based dossiers that showcase writing samples, class presentations, and other evidence of skills attractive to employers; unfortunately, says The Wall Street Journal, “few employers are actually looking at them.” 79
References are also a problem. Many employers don’t give honest assessments of former employees, for two reasons: (1) They fear that if they say anything negative, they can be sued by the former employee. (2) They fear if they say anything positive, and the job candidate doesn’t pan out, they can be sued by the new employer. 80 Despite liability worries, HR recruiters know that if they get a former supervisor on the phone, they can find out a lot—such as the way he or she answers the question “Can you enthusiastically recommend this person?” or “What were this person’s strengths and weaknesses?” 81
Many employers also like to check applicants’ credit references, although there is no evidence that people with weak credit scores are apt to be unqualified or dishonest employees. 82 (Note: Prospective employers need to get written consent to run credit checks on job applicants.) 83
PRACTICAL ACTION
Applying for a Job? Here Are Some Mistakes to Avoid
There are several mistakes that job candidates often make in initial interviews. Here are some tips. 84
Be Prepared—Very Prepared. Can you pronounce the name of the company with whom you’re interviewing? Of the person or people interviewing you? Do you understand the company and the position you’re interviewing for? Do you know the company’s competition? What new products or services are being offered? How about your reasons for leaving your present employer (or why you’re now unemployed)? What are your greatest strengths? Your weaknesses? What do you need to improve on to move ahead? Where do you want to be in five years, careerwise?
Go online and read the company’s website. Search for any news articles written about the firm. Call the company and ask about pronunciation. Determine how your strengths fit directly into the context of what the prospective employer does. Also, when asked about your weaknesses, state how you recognized a weakness, overcame a dilemma, and were improved by it. Take time to practice questions and answers, so you’ll sound confident. 85
Dress Right and Pay Attention to Your Attitude. Is the company dress code “business casual”? That doesn’t mean you should dress that way (or the way you dress on campus) for the interview.
Dress professionally for the interview. Be aware of your attitude as soon as you enter the building. Be on time. (Time your commute by doing a test run a day or so before the interview, and make sure you know the exact location of the interview.) If unforeseeable circumstances arise and cause you to be late, call to inform your interviewer. Be polite to the receptionist, and greet everyone who greets you. Turn off your cell-phone ringer.
Don’t Get Too Personal with the Interviewer. Don’t be overfriendly and share too much, especially in the initial interview. Although the interviewer will try to make you feel comfortable, you should focus on the position. Rehearse questions to ask the interviewer, such as the challenges for the position in the future. Don’t make negative comments about your old company or boss. Rather, figure out the positives and convey what you learned and gained from your experience. If asked an inappropriate question (about age, marital status, whether you have children or plan to), politely state you don’t believe the question is relevant to your qualifications. Be enthusiastic; enthusiasm is contagious. Incidentally, be sure to mention any organizational citizenship behavior, which scores well with interviewers. 86 After the interview, within 24 hours, send an e-mail (with no misspellings or faulty grammar) thanking the interviewer. If you think you messed up part of the interview, use the e-mail to smooth over your mistakes. 87
Be Aware That Your Background and Social Networks Will Be Checked. Because it seems to be getting harder to distinguish honest job applicants from dishonest ones, companies now routinely check resumes or hire companies that do so. 88 Most employers conduct background checks—in fact, two-thirds conduct criminal background checks, according to one study. 89 Some may also ask for your SAT scores. 90 Some have been known to scrutinize checking accounts. 91
As mentioned earlier, if you are a Facebook, YouTube, or Twitter user, be aware that employers now frequently use search engines to do continuous and stealthy background checks on prospective employees to see if they’ve posted any racy content. “Many job hunters,” says one report, “are … continuing to overlook the dangers of posting provocative photos and other dubious content on social-media sites.” 92 Checking your Facebook page is also a way employers can make an end run around discrimination laws. 93 Indeed, you may be asked in the interview for your Facebook user name and password so the interviewer can access your private settings—a practice whose legality is questionable but nevertheless being done by more companies. 94 Page 289 (More and more people are getting savvy about privacy and pruning their friend lists and removing unwanted comments on their social networks.) 95 Some companies are slashing the time it takes to get new workers, as by skipping reference checks (which can lead to costly mistakes). 96 Most of the time, however, the process of getting hired seems to be taking longer than ever—the average is about 23 days, though it can be as long as 6–12 months—but while you’re waiting for the company’s decision you should avoid the temptation of telephoning and demanding to know your status. 97
YOUR CALL
What kind of advice do you see here that you wish you’d followed in the past?
2. Interviewing: Unstructured, Situational, and Behavioral-Description
The interview, which is the most commonly used employee-selection technique, may take place face to face, by videoconference, or—as is increasingly the case—via the Internet. (In-depth phone interviews of an hour or more are also frequently used. 98 However, face-to-face interviews have been perceived as being more fair and leading to higher job acceptance intentions than videoconferencing and telephone interviews.) 99 To help eliminate bias, interviews can be designed, conducted, and evaluated by a committee of three or more people.
The most commonly used employee-selection technique, interviewing, takes three forms: unstructured interviews and two types of structured interviews. 100
Unstructured Interview
Like an ordinary conversation, an unstructured interview involves asking probing questions to find out what the applicant is like. There is no fixed set of questions asked of all applicants and no systematic scoring procedure. As a result, the unstructured interview has been criticized as being overly subjective and apt to be influenced by the biases of the interviewer. Equally important, it is susceptible to legal attack because some questions may infringe on non-job-related matters such as privacy, diversity, or disability. 101 However, compared with the structured interview method, the unstructured interview has been found to provide a more accurate assessment of an applicant’s job-related personality traits. 102
Structured Interview Type 1: The Situational Interview
The structured interview involves asking each applicant the same questions and comparing their responses to a standardized set of answers.
In one type of structured interview, the situational interview, the interviewer focuses on hypothetical situations. Example: “What would you do if you saw two of your people arguing loudly in the work area?” The idea here is to find out if the applicant can handle difficult situations that may arise on the job.
Structured Interview Type 2: The Behavioral-Description Interview
In the second type of structured interview, the behavioral-description interview, the interviewer explores what applicants have actually done in the past. Example: “What was the best idea you ever sold to a supervisor, teacher, peer, or subordinate?” This question (the U.S. Army asked it of college students applying for its officer training program) is designed to assess the applicants’ ability to influence others.
PRACTICAL ACTION
The Right Way to Handle an Interview: What the Employer Is looking For
Because hiring people who later have to be let go is such an expensive proposition, companies are now putting a great deal of emphasis on effective interviewing. The previous Practical Action box provided a few tips for job applicants, but here let us explain how the interview process is being conducted from the interviewer’s point of view. 103
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Before the Interview: employers define their needs and review applicants’ resumes. It’s been said that looking to hire somebody is like going to the supermarket; the employer needs to have a list and know what he or she needs. Thus, the HR department will write out (or be told) what skills, traits, and qualities the job requires that the company is trying to fill. The interviewer will also look at the applicant’s resume or application form to determine relevant experience, gaps, and discrepancies.
The interviewer prepares the questions to be asked. The interviewer should use a structured approach that asks all candidates the same set of questions, so that their answers can be compared. (This helps keep the company out of legal trouble, too, as in being accused of racial or gender bias.) In general, the questions should be designed to elicit the following types of information.
· What drawbacks does the applicant’s previous work experience show? Examples: “Why are you leaving your current job, or why are you currently unemployed?”
· Does the applicant have the knowledge to do the job? Examples: “Give an example where you came up with a creative solution.” “How would you distinguish our product from competitors’?”
· Can the applicant handle difficult situations? Examples: “What is your greatest weakness?” “Tell me about a time when you dealt with an irate customer. How did you handle the situation and what was the outcome?”
· Is the applicant willing to cope with the job’s demands? Examples: “How do you feel about making unpopular decisions?” “Are you willing to travel 30% of the time?”
· Will the applicant fit in with the organization’s culture? Examples: “Where do you see yourself in five years?” “How would your last supervisor describe you?” “How much leeway did they give you in your previous job in charging travel expenses?”
Interviewers Often Follow a Three-Scene Interview Scenario. The interview itself may follow a three-scene script.
· Scene 1: The first three minutes—small talk and “compatibility” test. The first scene is really a “compatibility test.” It takes about three minutes and consists of exchanging small talk, giving the interviewer a chance to establish rapport and judge how well the candidate makes a first impression.
Note: As many as four out of five hiring decisions are made within the first 10 minutes of an interview, according to some research. Thus, be aware that if you, the job applicant, have immediately impressed the interviewer, he or she may spend more time talking than listening—perhaps even trying to sell you on the job rather than screen your qualifications. 104
· Scene 2: The next 15–60 minutes—asking questions and listening to the applicant’s “story.” In the next scene, the interviewer will ask you the questions he or she previously wrote out (and answer those that you have). A good interviewer will allow you, the interviewee, to do 70%–80% of the talking, and he or she will take notes to remember important points. Be aware that the interviewer’s intuition can play a strong role in the hiring decision.
· Scene 3: The final two minutes—closing the interview and setting up the next steps. In the final minutes, the interviewer will listen to determine whether the candidate expresses interest in taking the job.
After the Interview. After you have left, the interviewer will probably write a short report making some sort of quantitative score of your qualifications and indicating reasons for the decision. If he or she decides to invite you back for a second interview (or pass you along to another interviewer), your references will also be checked.
YOUR CALL
What additional questions would you like to be asked that would showcase you as the best candidate? How would you work what you want to say into the interview?
3. Employment Tests: Ability, Personality, Performance, Integrity, and Others
Employment selection tests used to consist of paper-and-pencil, performance, and physical-ability tests. Now, however, employment tests are legally considered to consist of any procedure used in the employment selection decision process, even application forms, interviews, and educational requirements. 105 Indeed, today applicants should expect just about anything, such as spending hours on simulated work tasks, performing role-playing exercises, or tackling a business case study. 106
Probably the most common employment tests are the following.
Ability Tests
Ability tests measure physical abilities, strength and stamina, mechanical ability, mental abilities, and clerical abilities. Telephone operators, for instance, need to be tested for hearing, and assembly-line workers for manual dexterity. Intelligence tests are also catching on as ways to predict future executive performance. 107 The military tests for physical qualifications, along with behavioral and educationalPage 291 abilities (71% of 17- to 24-year-olds don’t qualify for military service, a surprisingly high figure). 108 Corporate-event company Windy City Fieldhouse uses a test that measures attention to detail, asking takers to do such things as “do a count of the letter ‘l’ in a three-sentence paragraph to measure how carefully a respondent works,” according to one account. 109
Performance Tests
Performance tests, or skills tests, measure performance on actual job tasks—so-called job tryouts—as when computer programmers take a test on a particular programming language such as C++ or middle managers work on a small project. 110 Some companies have an assessment center, in which management candidates participate in activities for a few days while being assessed by evaluators. 111
Personality Tests
Personality tests measure such personality traits as adjustment, energy, sociability, independence, and need for achievement. Career-assessment tests that help workers identify suitable jobs tend to be of this type. 112 One of the most famous personality tests, in existence for 65-plus years, is the 93-question Myers–Briggs Type Indicator, with about 2.5 million tests given each year throughout the world. Myers–Briggs endures, observers say, “because it does a good job of pointing up differences between people, offers individuals a revealing glimpse of themselves, and is a valuable asset in team-building, improving communication, and resolving personality-conflict.” 113 However, this and other personality tests need to be interpreted with caution because of the difficulty of measuring personality characteristics and of making a legal defense if the results are challenged. 114
EXAMPLE
Personality Tests: How a Sporting-Goods Chain Screens Job Applicants Online
More than 80% of midsize and large companies use personality and ability assessments for entry- and mid-level jobs, according to one executive at a global human resources consulting firm. 115
Southwest Airlines, for instance, has found the Myers–Briggs test helps build trust in developing teams. 116 Hewlett-Packard uses a personality test to see if employees are temperamentally suited to working alone at home—that is, telecommuting—and can handle limited supervision. 117 At Children’s Healthcare of Atlanta, personality tests are used to find employees who will be “nice people”—those with “the qualities of being nurturing, kind, and warm-hearted,” in the words of a human resources vice president. 118
Online Personality Tests. At Finish Line, a nationwide chain of sporting-goods stores, store managers use the results of web-based personality tests developed by Unicru, of Beaverton, Oregon, to screen applicants for jobs as retail sales clerks. Candidates may apply through Unicru’s kiosks or computer phones, which are installed in the stores. One Finish Line store in Chicago screens as many as 70 applicants a week during the store’s preholiday season.
Unicru’s computer scores test takers according to how strongly they agree or disagree (on a four-point scale) with statements such as “You do not fake being polite” and “You love to listen to people talk about themselves.” High scores on attributes such as sociability and initiative reward applicants with a “green” rating that allows them to move on to an interview with a human manager. Scores in the middle earn a “yellow,” and a lesser chance of landing a job; low-scoring “reds” are not considered.
Measurable Results. “The kinds of people who do well,” says Unicru psychologist David Scarborough, “obviously have to have good self-control. They have to be patient. They have to enjoy helping people. All those characteristics are quite measurable.” 119 Finish Line says that Unicru’s system has reduced turnover by 24%.
YOUR CALL
There are, by some estimates, around 2,500 cognitive and personality employment tests on the market, and it’s important that employers match the right test for the right purpose. 120 Moreover, tests aren’t supposed to have a disparate impact on a protected class of people, such as certain racial or ethnic groups. 121 What questions would you want to ask about a personality test before you submitted yourself to it? (Note: Don’t try to psych the test. You might wind up being miserable in a job that doesn’t suit you.)
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Integrity Tests
Integrity tests assess attitudes and experiences related to a person’s honesty, dependability, trustworthiness, reliability, and prosocial behavior. 122 The tests are designed to identify people likely to engage in inappropriate, antisocial, or dishonest workplace behavior. Typically, integrity tests ask direct questions about past experiences related to ethics and integrity. You might be asked, for example, “What is the most you have ever stolen? (a) $0; (b) $1–$200; (c) $201–$500; (d) more than $500.” Or interviewers may ask questions about preferences and interests from which inferences may be drawn about future behavior—so-called covert tests, where the answers give a sense of the person’s conscientiousness, emotional maturity, and so on. 123
Other Tests
The list of employment testing techniques has grown to include—in appropriate cases—drug testing, polygraph (lie detectors), genetic screening, and even (a questionable technique) handwriting analysis. 124 Human resource professionals need to be aware, incidentally, that there are a variety of products available on the Internet to help employees beat many kinds of drug tests. 125 Recently, however, the hair test (of hair follicles) has begun to find favor, since it’s said to be able to detect a pattern of repetitive drug use over a period of up to 90 days. 126 Even so, failure to pass illicit drug tests has been edging up (from 4.3% in 2013 to 4.7% in 2014), according to one compiler of employer-testing data. 127
Reliability and Validity: Are the Tests Worth It?
With any kind of test, an important legal consideration is the test’s reliability—the degree to which a test measures the same thing consistently—so that an individual’s score remains about the same over time, assuming the characteristics being measured also remain the same.
Another legal consideration is the test’s validity—the test measures what it purports to measure and is free of bias. If a test is supposed to predict performance, then the individual’s actual performance should reflect his or her score on the test. Using an invalid test to hire people can lead to poor selection decisions. It can also create legal problems if the test is ever challenged in a court of law. ●
No drugs. Many jobs, such as those in warehousing and trucking, require that job applicants take a drug test to see if they test positive for marijuana, heroin, and other opioid drugs. However, many potential applicants simply skip tests they think they cannot pass. Would this be a concern for you?© Cultura/Getty Images RF
Geeks, Robots, and People Analytics: How Hiring Is Being Changed
“Recruitment decision making is rife with behavioral biases,” says Kate Glazebrook, a principal advisor to the London-based company Behavioral Insights Team, “but most organizations haven’t embedded any of that knowledge of best practice into what they do.” 128
That is now changing with the rise of “talent analytics” or “people analytics,” as engineers, statisticians, and computer scientists (“geeks,” in a word) begin applying analytics and robotics to HR. 129 For instance, some companies use automated recruiters to canvass the Web for ideal employees, based on an algorithm (computerized step-by-step operations) that applies the same job-fit criteria to applicants that managers use to rate their best employees. 130 As mentioned earlier, other companies have robots scanning resumes, looking for the right keywords—and with great success. For instance, a study of 300,000 hires for low-skill service-sector jobs (data entry, phone answering) found that workers picked by an algorithm tended to stay in the job 8% longer and were more productive than those picked by a hiring manager. 131 We suspect that the use of talent analytics and Big Data will continue to grow throughout many aspects of HR management.
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9.3
Managing an Effective Workforce: Compensation and Benefits
MAJOR QUESTION What are the various forms of compensation?
THE BIG PICTURE
Managers must manage for compensation—which includes wages or salaries, incentives, and benefits.
Do we work only for a paycheck? Many people do, of course. But money is only one form of compensation.
Compensation has three parts: (1) wages or salaries, (2) incentives, and (3) benefits. In different organizations one part may take on more importance than another. For instance, in some nonprofit organizations (education, government), salaries may not be large, but health and retirement benefits may outweigh that fact. In a high-technology start-up, the salary and benefits may actually be somewhat humble, but the promise of a large payoff in incentives, such as stock options or bonuses, may be quite attractive. Let’s consider these three parts briefly. (We expand on them in Chapter 12 , when we discuss ways to motivate employees.)
Wages or Salaries
Base pay consists of the basic wage or salary paid employees in exchange for doing their jobs. The basic compensation is determined by all kinds of economic factors: the prevailing pay levels in a particular industry and location, what competitors are paying, whether the jobs are unionized, if the jobs are hazardous, what the individual’s level is in the organization, and how much experience he or she has.
Incentives
To attract high-performing employees and to induce those already employed to be more productive, many organizations offer incentives, such as commissions, bonuses, profit-sharing plans, and stock options. We discuss these in detail in Chapter 12 .
Stock options. Companies like to offer favored employees stock options rather than higher salaries as benefits. Not only do employees place a high value on options, but companies can issue as many as they want without hurting corporate profits because, under present accounting rules, they don’t have to count the options’ value as an expense. However, some critics believe that making stock options a big part of CEO compensation does not spur better performance. When the stock is up, the CEO benefits. When the stock is down, he or she doesn’t really lose money but rather just makes less money.© Comstock Images RFPage 294
PRACTICAL ACTION
Why Rewards May Fail to Motivate
Incentive compensation plans, ranging from cash awards and gifts to profit sharing and stock ownership, are intended to recruit top performers and to spur their best efforts once they are hired. Despite the huge investments of time and money, such incentives do not achieve their desired results. Here are eight possible reasons: 132
· “I don’t work just for the money.” Sometimes there is too much emphasis on monetary rewards.
· “They don’t care what I do.” There may be the absence of an “appreciation effect.”
· “It’s no more than what I deserve.” The benefits may be extensive, but employees feel they are entitled to them just as part of the job.
· “Let’s see how little work we can get away with.” The rewards may have the unintended consequence of producing nonproductive, even counterproductive, work behavior. (Example: Albuquerque, New Mexico, city officials decided to pay trash truck crews for eight hours regardless of time spent, so as to encourage quick completion of the work and lower overtime costs. However, the policy only led crews to work fast and cut corners, missing pickups, speeding and causing accidents, and generating extra dump fees for overloading vehicles.) 133
· “Why bother? It takes forever to get paid.” There is too long a delay between performance and rewards.
· “Another $25 gift card? Who needs it?” There are too many one-size-fits-all rewards.
· “A half day off on Friday—so what.” Managers use one-shot rewards with a short-lived motivational impact.
· “There they go again. …” Management continues to use demotivating practices such as layoffs, across-the-board pay cuts, and excessive compensation for executives but not workers. 134
Five keys to a successful incentive-pay plan are the following: 135
1. Simplicity. Does the plan pass the simplicity test? Can you explain it on an elevator ride?
2. Clear goals. Are the goals clear? Are the goals fully supported by management?
3. Realistic goals. Are the goals realistic—that is, neither too difficult nor too easy to achieve?
4. Consistency with present goals. Is the plan in line with the organization’s present goals? Company goals change. Few organizations have the same business objective for more than five to seven years.
5. Regular communication. Do managers regularly communicate with employees about the plan? People want a scorecard.
Benefits
Benefits, or fringe benefits, are additional nonmonetary forms of compensation designed to enrich the lives of all employees in the organization, which are paid all or in part by the organization. We discuss benefits in more detail in Chapter 12 , but examples are many: health insurance, dental insurance, life insurance, disability protection, retirement plans, holidays off, accumulated sick days and vacation days, recreation options, country club or health club memberships, family leave, discounts on company merchandise, counseling, credit unions, legal advice, and education reimbursement. For top executives, there may be “golden parachutes,” generous severance pay for those who might be let go in the event the company is taken over by another company.
Communication is everything. Human resource managers need to keep these questions in mind: What good does it do a company to have attractive incentive plans if employees don’t understand them? Will an employee exert the extra effort in pursuit of rewards if he or she doesn’t know what the rewards are?© ColorBlind Images/Blend Images RF
Benefits are no small part of an organization’s costs. In December 2015, private industry spent an average of $31.70 per hour worked in employment compensation, of which wages and salaries accounted for 68.7% and benefits for the remaining 31.3%. 136 ●
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9.4
Orientation, Training, and Development
MAJOR QUESTION Once people are hired, what’s the best way to see that they do what they’re supposed to do?
THE BIG PICTURE
Three ways newcomers are helped to perform their jobs are through orientation, to fit them into the job and organization; training, to upgrade the skills of technical and operational employees; and development, to upgrade the skills of professionals and managers.
On your first day of work at a new job, you will probably have to fill out a bunch of forms. (Don’t forget to take your documentation—driver’s license, Social Security card, perhaps passport—so you’ll get the paperwork right and be paid on time.) After that, the process of orientation begins.
Today when a hire is made, companies often perform what is known as onboarding, programs that help employees to integrate and transition to new jobs by making them familiar with corporate policies, procedures, cultures, and politics by clarifying work-role expectations and responsibilities. 137 Thus, a company may roll out a welcome by assigning “buddies,” providing detailed orientations, even sending goody baskets, to bring rookies up to speed quickly and give them a fast introduction to company culture. 138
This is because, as we said, the emphasis is on “human capital.” Only a third to half of most companies’ stock-market value is accounted for by hard assets such as property, plant, and equipment, according to a Brookings Institution report. Most of a firm’s value is in such attributes as patents, processes, and—important to this discussion—employee or customer satisfaction. 139 The means for helping employees perform their jobs are orientation, training, and development.
Group training. In large companies, orientation and ongoing training are often conducted in group sessions led by a presenter while the employees follow along. Do you see any problems with this approach?© Rawpixel.com/Shutterstock RFPage 296
Orientation: Helping Newcomers Learn the Ropes
The finalist candidate is offered the job, has accepted it, and has started work. Now he or she must begin, in that old sailor’s phrase, to “learn the ropes.” This is the start of orientation, helping the newcomer fit smoothly into the job and the organization.
Helping New Employees Get Comfortable: The First Six Months
“How well will I get along with other employees?” “What if I screw up on a project?” Going into a new job can produce a lot of uncertainty and anxiety. In part this is because, depending on the job, it may take 2–24 months for an average employee to be fully productive. 140
The first six months on a job can be critical to how one performs over the long haul, because that’s when the psychological patterns are established. Thus, employers have discovered that it’s far better to give newcomers a helping hand than to let them learn possibly inappropriate behavior that will be hard to undo later. 141
The Desirable Characteristics of Orientation
Like orientation week for new college students, the initial socialization period is designed to give new employees the information they need to be effective. In a large organization, orientation may be a formal, established process. In a small organization, it may be so informal that employees find themselves having to make most of the effort themselves.
Following orientation, the employee should emerge with information about three matters (much of which he or she may have acquired during the job-application process):
· The job routine. At minimum, the new employee needs to have learned what is required in the job for which he or she was hired, how the work will be evaluated, and who the immediate coworkers and managers are. This is basic.
· The organization’s mission and operations. Certainly all managers need to know what the organization is about—its purpose, products or services, operations, and history. And it’s now understood that low-level employees perform better if they, too, have this knowledge.
· The organization’s work rules and employee benefits. A public utility’s HR department may have a brochure explaining formalized work rules, overtime requirements, grievance procedures, and elaborate employee benefits. A technology start-up may be so fluid that many of these matters will not have been established yet. Even so, there are matters of law (such as those pertaining to sexual harassment) affecting work operations that every employee should be made aware of.
Training and Development: Helping People Perform Better
Companies with high-impact learning programs delivered profit growth three times greater than competing firms during a recent four-year period, according to one business learning analyst. “Why is this?” he asks. “Simply put—if you can keep your employees current and skilled, you can evolve and perform better than your competitors.” 142 In addition, because 70% of employees say they are dissatisfied with career growth opportunities at their companies, training programs can keep people engaged with their work—and not looking for jobs elsewhere. 143 Unfortunately, this message hasn’t caught up with a lot of employers: A 2015 manpower shortage survey found only 20% of businesses offer training to their employees. 144
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Of course, in hiring, an employer always tries to get people whose qualifications match the requirements of the job. Quite often, however, there are gaps in what new employees need to know. These gaps are filled by training. The training process involves five steps, as shown below. (See Figure 9.2 .)
FIGURE 9.2 Five steps in the training process
HR professionals distinguish between training and development.
· Training—upgrading skills of technical and operational employees. Electronics technicians, data processors, computer network administrators, and X-ray technicians, among many others, need to be schooled in new knowledge as the requirements of their fields change. Training, then, refers to educating technical and operational employees in how to better do their current jobs.
· Development—upgrading skills of professionals and managers. Accountants, nurses, lawyers, and managers of all levels need to be continually educated in how to do their jobs better not just today but also tomorrow. Development is educating professionals and managers in the skills they need to do their jobs in the future.
Typical areas for which employee training and development are given are customer service, safety, leadership, computer skills, quality initiatives, communications, human relations, ethics, diversity, and sexual harassment.
The Different Types of Training or Development
There are all kinds of training and development methods, and their effectiveness depends on whether facts or skills are being taught. If people are to learn facts—such as work rules or legal matters—lectures, videotapes, and workbooks are effective. If people are to learn skills—such as improving interpersonal relations or the use of new tools—then techniques such as discussion, role-playing, and practice work better.
Another way to categorize training methods is to distinguish on-the-job from off-the-job methods.
· On-the-job training. This training takes place in the work setting while employees are performing job-related tasks. Four major training methods are coaching, training positions, job rotation, and planned work activities.
· Off-the-job training. This training consists of classroom programs, workbooks, videos, and games and simulations. Today, of course, lots of off-the-job training consists of technology-enhanced learning—online learning, or e-learning (for electronic learning). 145 A relatively new approach is microlearning, or bite-size learning, which segments learning into bite-size content, enabling a student to master one piece of learning before advancing to anything else. Most microlearning mixes video and interactive lessons that take under five minutes to complete and include a quiz. 146
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EXAMPLE
Technology-Enhanced Learning: Getting Ahead through Microlearning
How do you train workers who are constantly distracted by smartphones, social media, and on-demand entertainment?
For some companies, writes former Wall Street Journal reporter Lora Kolodny, “the answer is short digital learning sessions that are available at employees’ convenience.” 147 This kind of on-demand, bite-size learning—short lessons transmitted via microlearning apps and websites—has become a principal method of training now that the average attention span in North America has dropped from 12 seconds in 2000 to 8 seconds in 2015. Microlearning is one form of technology-enhanced learning, also known as online or e-learning.
The Surge in E-Learning. E-learning has also become a well-established fact in company training. According to a 2015 survey, although instructor-led classrooms were still the dominant training method, at about 46% of total student hours, 26.5% of training was delivered by online or computer-based technologies, 1.8% by mobile devices, and 31.9% by blended techniques. 148 The benefits of e-learning in general and microlearning in particular are that no transportation is needed and you can follow a flexible schedule and often work at your own pace.
Possible Drawbacks. However, microlearning has some drawbacks. “Micro-learning is not useful when people need to acquire/learn complex skills, processes, or behaviors,” says one critic. Imagine, she says, learning a musical instrument, project management, sales, teamwork management, or any software tool in only 4.5 minutes a day. 149 Microlearning, she believes, is probably best used for reinforcement rather than for skill building. Stanford University neuroscientist Priya Rajasethupathy also agrees that microlearning is effective but limited, with bite-size lessons not likely to carry emotional weight—an important component of learning—for students compared to practicing something learned in a workshop or classroom. 150
Off-the-job training. How does receiving feedback from an instructor affect your retention of knowledge?© stevecoleimages/Getty Images RF
YOUR CALL
Neuroscientists are finding out that the human brain is a “social animal” that needs interaction with others. 151 How do you think this fact relates to e-learning? Do you think you learn better in a classroom rather than online?
What If No One Shows Up?
Many employers offer employee training, whether internal or external, or funding to attend seminars. But research has shown that a surprisingly high percentage of employees simply don’t know about it. For instance, while 92% of employers in one survey offered funding to attend seminars and trade shows, only 28% of employees were aware the funding existed. 152 Clearly, then, employers need to find out whether the training offered fits with the majority of employee development goals.
You now have learned about the different HR programs and practices, such as recruiting, training, and compensation. Do careers in these fields interest you? Not everyone is suited for HR work, but it is very rewarding for some. The following self-assessment will help you decide whether or not a career in HR fits for you. ●
SELF-ASSESSMENT 9.3 
Is a Career in HR Right for You?
This survey is designed to assess your skills and interests and determine if a career in human resources is right for you. Please be prepared to answer these questions if your instructor has assigned Self-Assessment 9.3 in Connect.
1. Are you suited for a career in human resources? Which specific aspect of human resources do you prefer?
2. Look at the top two areas of HR for which you tested as being best suited. Look over the descriptions of these fields and then identify what skills you need to have to be successful.
3. Even if you do not pursue a career in HR, which skills do you feel you should continue to develop? Explain.
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9.5
Performance Appraisal
MAJOR QUESTION How can I assess employees’ performance more accurately and give more effective feedback?
THE BIG PICTURE
Performance appraisal, assessing employee performance and providing them feedback, may be objective or subjective. Appraisals may be by peers, subordinates, customers, or oneself. Feedback may be formal or informal.
Want to know how well your managers think you’re doing at work? Be prepared to be disappointed: 60% of employees say they don’t get adequate feedback, according to a 2015 study, and 43% say they don’t get enough feedback to improve performance. 153 Feedback about how you’re doing in your job is part of performance management.
Performance Management in Human Resources
No doubt you’ve had the experience at some point of having a sit-down with a superior, a boss or a teacher, who told you how well or poorly you were doing—a performance appraisal. A performance appraisal is a single event, as we discuss later in this section. Performance management, by contrast, is a powerful ongoing activity that has produced such spectacular results as 48% higher profitability, 22% higher productivity, 30% higher employee engagement scores, and 19% lower turnover. 154
Performance management is defined as a set of processes and managerial behaviors that involve defining, monitoring, measuring, evaluating, and providing consequences for performance expectations. 155 It consists of four steps: (1) define performance, (2) monitor and evaluate performance, (3) review performance, and (4) provide consequences. (See Figure 9.3 .)
FIGURE 9.3 Performance management: four stepsSource: Adapted from A. J. Kinicki, K. J. L. Jacobson, S. J. Peterson, and G. E. Prussia, “Development and Validation of the Performance Management Behavior Questionnaire,” Personnel Psychology, Vol. 66 (2013), pp. 1–45.
EXAMPLE
Performance Management: How Domino’s Pizza Built a Billion-Dollar Business
The founder of Domino’s Pizza, Tom Monaghan, grew the business, which he later sold for $1 billion, by using performance management, as follows: 156
1. Define Performance. In order to meet Domino’s promise of delivering customers a pizza within 30 minutes or no payment required, Monaghan made clear to his employees in his performance expectations the importance of speed, even showing employees how to run out the door.
2. Monitor and Evaluate Performance. Domino’s employees filled out a form showing they understood what was expected of them; then every one of them met with their manager and listed goals for the month and action plans for achieving them. Employees also described what the manager was supposed to do for them to support their efforts.
3. Review Performance. Employees met with their managers every three months to review their performance, and managers met with their own superiors once a month to do the same.
4. Provide Consequences. Monaghan is a big believer in rewarding performance and retaining talent. Thus, Domino’s store managers received not only salaries but also 30% of profits. To retain talent, Monaghan rewarded franchisees (individual store owners who had purchased the right to use the Domino’s trademark and business model) by encouraging them to develop their managers into store owners themselves, for which the original franchisees were rewarded with a percentage of the earnings from the new store.
YOUR CALL
In your current job—being a student—how effective do you think the Domino’s approach to performance management could be in helping you excel at college? Whom would you designate as your “manager,” how often would you meet, and what kind of goals and action plans would you set?
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Performance management, which is often exerted through an organization’s managers and human resources policies and practices, is a powerful means for improving individual, group, and organizational effectiveness. 157
Performance Appraisals: Are They Worthwhile?
A performance appraisal, or performance review, consists of (1) assessing an employee’s performance and (2) providing him or her with feedback. Unlike performance management, which is an ongoing, interactive process between managers and employees, a performance appraisal is often dictated by a date on the calendar rather than need and is a “one-sided, boss-dominated” assessment that comes down to whether your superior “likes” you, according to some critics. 158
No wonder, then, that so many performance reviews are worthless, in the opinion of UCLA management professor Samuel Culbert, coauthor of Get Rid of the Performance Review! 159 One worldwide survey of 1,300 workers also revealed that 7 in 10 people believed that their managers did not remain calm and constructive when discussing performance. This is why 20% of the respondents dreaded having difficult conversations with their boss. 160 Management expert W. Edwards Deming (see Chapter 2 ) felt that such reviews were actually harmful because people remember only the negative parts. 161 Ninety-five percent of managers in one study declared they were dissatisfied with their performance review/management systems. 162 “The best kind of performance review is no performance review,” says psychologist Aubrey Daniels, who coined the term “performance management.” 163 It thus is no surprise that some firms (about 12% of Fortune 1000 companies in 2014) have scrapped the practice altogether. 164 Nevertheless, let us take a look at performance appraisals, since they are still used frequently.
Two Kinds of Performance Appraisal: Objective and Subjective
There are two ways to evaluate an employee’s performance—objectively and subjectively.
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1. Objective Appraisals
Objective appraisals, also called results appraisals, are based on facts and are often numerical. In these kinds of appraisals, you would keep track of such matters as the numbers of products the employee sold in a month, customer complaints filed against an employee, miles of freight hauled, and the like.
There are two good reasons for having objective appraisals:
· They measure results. It doesn’t matter if two appliance salespeople have completely different personal traits (one is formal, reserved, and patient; the other is informal, gregarious, and impatient) if each sells the same number of washers and dryers. Human resource professionals point out that, just as in business we measure sales, profits, shareholder value, and other so-called metrics, it is likewise important to measure employee performance, benefit costs, and the like as an aid to strategy. 165
· They are harder to challenge legally. Not being as subject to personal bias, objective appraisals are harder for employees to challenge on legal grounds, such as for age, gender, or racial discrimination.
We discussed an objective approach in Chapter 5 under management by objectives (MBO), which can encourage employees to feel empowered to adopt behavior that will produce specific results. MBO, you’ll recall, is a four-step process in which (1) managers and employees jointly set objectives for the employee, (2) managers develop action plans, (3) managers and employees periodically review the employee’s performance, and (4) the manager makes a performance appraisal and rewards the employee according to results. For example, an objective for a copier service technician might be to increase the number of service calls 15% during the next three months.
“Here’s the deal …” One of the most important tasks of being a manager is giving employees accurate information about their work performance. Which would you be more comfortable giving—objective appraisals or subjective appraisals?© Asia Images Group/Getty Images RF
2. Subjective Appraisals
Few employees can be adequately measured just by objective appraisals—hence the need for subjective appraisals, which are based on a manager’s perceptions of an employee’s (1) traits or (2) behaviors.
· Trait appraisals. Trait appraisals are ratings of such subjective attributes as “attitude,” “initiative,” and “leadership.” Trait evaluations may be easy to create and use, but their validity is questionable because the evaluator’s personal bias can affect the ratings.
· Behavioral appraisals. Behavioral appraisals measure specific, observable aspects of performance—being on time for work, for instance—although making the evaluation is still somewhat subjective. An example is the behaviorally anchored rating scale (BARS), which rates employee gradations in performance according to scales of specific behaviors. For example, a five-point BARS rating scale about attendance might go from “Always early for work and has equipment ready to fully assume duties” to “Frequently late and often does not have equipment ready for going to work,” with gradations in between.
Who Should Make Performance Appraisals?
If one of your employees was putting on a good show of solving problems that, it turned out, she had actually created herself so that she could be an “office hero” and look good, how would you know about it? (This phenomenon has been dubbed “Munchausen—pronounced mun-chow-zen—at work” because it resembles the rare psychological disorder in which sufferers seek attention by making up an illness.) 166 Most performance appraisals are done by managers; however, to add different perspectives, sometimes appraisal information is provided by other people knowledgeable about particular employees.
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Peers, Subordinates, Customers, and Self
Among additional sources of information are coworkers and subordinates, customers and clients, and the employees themselves.
· Peers and subordinates. Coworkers, colleagues, and subordinates may well see different aspects of your performance. Such information can be useful for development, although it probably shouldn’t be used for evaluation. (Many managers will resist soliciting such information about themselves, of course, fearing negative appraisals.)
· Customers and clients. Some organizations, such as restaurants and hotels, ask customers and clients for their appraisals of employees. Publishers ask authors to judge how well they are doing in handling the editing, production, and marketing of their books. Automobile dealerships may send follow-up questionnaires to car buyers.
· Self-appraisals. How would you rate your own performance in a job, knowing that it would go into your personnel file? Probably the bias would be toward the favorable. Nevertheless, self-appraisals help employees become involved in the whole evaluation process and may make them more receptive to feedback about areas needing improvement.
360-Degree Assessment: Appraisal by Everybody
We said that performance appraisals may be done by peers, subordinates, customers, and oneself. Sometimes all these may be used in a technique called 360-degree assessment.
In a “theater in the round,” the actors in a dramatic play are watched by an audience on all sides of them—360 degrees. Similarly, as a worker, you have many people watching you from all sides. Thus has arisen the idea of the 360-degree assessment, or 360-degree feedback appraisal, in which employees are appraised not only by their managerial superiors but also by peers, subordinates, and sometimes clients, thus providing several perspectives.
Typically, an employee chooses evaluators from 6 to 12 other people to make evaluations, who then fill out anonymous forms, the results of which are tabulated by computer. Or using a Facebook-style program such as Performance Multiplier or Twitter-like software called Rypple, employees can solicit evaluations through social networking–style systems. 167 The employee then goes over the results with his or her manager and together they put into place a long-term plan for performance goals.
All told, collecting performance information from multiple sources helps the person being evaluated get a broad view of his or her performance, and it highlights any biases and perceptual errors that are occurring. Finally, using multiple raters also makes it much more difficult for managers to unfairly favor or punish particular employees.
Forced Ranking: Grading on a Curve
To increase performance, an estimated 60% of Fortune 500 companies (such as General Electric, Ford, Cisco, and Intel) have some variant of performance review systems known as forced ranking (or “rank and yank”) systems. 168 In forced ranking performance review systems, all employees within a business unit are ranked against one another and grades are distributed along some sort of bell curve—just like students being graded in a college course. Top performers (such as the top 20%) are rewarded with bonuses and promotions; the worst performers (such as the bottom 20%) are given warnings or dismissed.
This type of performance review system is rapidly losing favor, with presently about 27% (down from 44% in 2013) of Fortune 1000 companies measuring the performance of some part of their workforce using a forced ranking (also known as “stacked ranking,” “rank and yank,” or “rack and whack”) system. 169 Another survey found that 200 mostly mid- to large-size companies still use the system. 170
Proponents of forced ranking say it encourages managers to identify and remove poor performers and structures a predetermined compensation curve, which enables them to reward top performers. However, opponents contend that the system eventually gets rid of talented as well as untalented people. 171 There may also be legal ramifications, as when employees file class-action lawsuits alleging that the forced ranking methods hadPage 303 a disparate effect on particular groups of employees. 172 In addition, numeric ratings, rankings, and formal evaluations without positive feedback may produce the opposite of their intended results—namely, create a culture of reduced performance, according to recent neurological and psychological research. 173
Finally, forced ranking systems—originally conceived at the turn of the 20th century to measure the performance of manual laborers and factory workers—seem inappropriate today, when over 70% of workers are employed in service or knowledge-intensive jobs in which skills, attitudes, and abilities are hard to evaluate along a bell curve. Forced ranking is particularly damaging at talent-intensive companies, in the opinion of Lisa Barry of Deloitte Touche Tohmatsu. “Regardless of whether they work for banks or software companies, technology professionals are expected to innovate, work effectively in teams, and adapt to an ever-accelerating rate of change,” she points out. “They need incentives to collaborate and be creative, yet forced ranking typically produces the opposite behavior.” 174 Even General Electric, famously known for “rank and yank” performance reviews under former CEO Jack Welch, has replaced its five-category ratings system (from “role model” to “unsatisfactory”) with a mobile app to help employees share feedback. 175
Effective Performance Feedback
The whole point of performance appraisal, of course, is to stimulate better job performance. But, says Lawrence Bossidy, former CEO of AlliedSignal, the typical appraisal is often three pages long and filled with vague, uncommunicative language and is useless to ensure that improvement happens. 176 Bossidy recommends an appraisal take up half a page and cover just three topics: what the boss likes about your performance, what you can improve, and how you and your boss are going to make sure that improvement happens.
Bossidy’s suggestions are much in the spirit of recent thinking, in which more companies are choosing a qualitative approach to employee appraisals. 177 Now managers are trained on how to coach and regularly check in with employees, giving them continuous, real-time feedback and solutions, the cornerstone of performance management. To help increase employee performance, a manager can use two kinds of appraisals—formal and informal.
1. Formal Appraisals
Formal appraisals are conducted at specific times throughout the year and are based on performance measures that have been established in advance. An emergency medical technician might be evaluated twice a year by his or her manager, using objective performance measures such as work attendance time sheets and more subjective measures such as a behaviorally anchored rating scales (BARS) to indicate the employee’s willingness to follow emergency procedures and doctors’ and nurses’ orders.
As part of the appraisal, the manager should give the employee feedback, describing how he or she is performing well and not so well and giving examples. Managers are sometimes advised to keep diaries about specific incidents so they won’t have to rely on their memories (and so that their evaluations will be more lawsuit-resistant). Facts should always be used rather than impressions.
2. Informal Appraisals
Formal appraisals are the equivalent of a student receiving a grade on a midterm test and a grade on a final test—weeks may go by during which you are unaware of how well you’re doing in the course. Informal appraisals are the equivalent of occasional unscheduled pop quizzes and short papers or drop-in visits to the professor’s office to talk about your work—you have more frequent feedback about your performance. Informal appraisals are conducted on an unscheduled basis and consist of less rigorous indications of employee performance.
As a manager, you may not feel comfortable about critiquing your employees’ performance, especially when you have to convey criticism rather than praise. Nevertheless, giving performance feedback is one of the most important parts of the manager’s job.
Some suggestions for improvement appear in the table. (See Table 9.2 .) ●
TABLE 9.2 How to Give Performance Feedback to Employees Think of yourself as a coach, as though you were managing a team of athletes.
· Take a problem-solving approach, avoid criticism, and treat employees with respect. Recall the worst boss for whom you ever worked. How did you react to his or her method of giving feedback? Avoid criticism that might be taken personally.
Example: Don’t say, “You’re picking up that bag of cement wrong” (which criticizes by using the word wrong). Say, “Instead of bending at the waist, a good way to pick up something heavy is to bend your knees. That’ll help save your back.” |
· Be specific in describing the employee’s present performance and in the improvement you desire. Describe your subordinate’s current performance in specific terms and concentrate on outcomes that are within his or her ability to improve.
Example: Don’t say, “You’re always late turning in your sales reports.” Say, “Instead of making calls on Thursday afternoon, why don’t you take some of the time to do your sales reports so they’ll be ready on Friday along with those of the other sales reps.” |
· Get the employee’s input. In determining causes for a problem, listen to the employee and get his or her help in crafting a solution.
Example: Don’t say, “You’ve got to learn to get here by 9:00 a.m. every day.” Say, “What changes do you think could be made so that your station is covered when people start calling at 9:00?” |
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9.6
Managing Promotions, Transfers, Disciplining, and Dismissals
MAJOR QUESTION What are some guidelines for handling promotions, transfers, disciplining, and dismissals?
THE BIG PICTURE
As a manager, you’ll have to manage employee replacement actions, as by promoting, transferring, demoting, laying off, or firing.
“The unemployment rate is an abstraction, an aggregation of bodiless data,” writes journalist/novelist Walter Kirn, “but losing a job is a lived experience, written on the nerves. … Some blame themselves and some blame everybody. Still others, not knowing whom to blame, explode.” 178
Among the major—and most difficult—decisions you will make as a manager are those about employee movement within an organization: Whom should you let go? promote? transfer? discipline? All these matters go under the heading of employee replacement. And, incidentally, any time you need to deal with replacing an employee in a job, that’s a time to reconsider the job description to see how it might be made more effective for the next person to occupy it.
As regards replacement, HR specialists distinguish between turnover (employee is replaced) and attrition (employee is not replaced), both of which occur when an employee leaves the company. Turnover occurs when an employee abandons, resigns, retires, or is terminated from a job, and the employer seeks to replace him or her. Attrition occurs when an employee retires or when the company eliminates his or her job, and the employer leaves the vacancy unfilled. 179 You’ll have to deal with replacement whenever an employee quits, retires, becomes seriously ill, or dies. Or you may initiate the replacement action by promoting, transferring, demoting, laying off, or firing. 180
Promotion: Moving Upward
Promotion—moving an employee to a higher-level position—is the most obvious way to recognize that person’s superior performance (apart from giving raises and bonuses). Three concerns are the following.
Fairness
It’s important that promotion be fair. The step upward must be deserved. It shouldn’t be for reasons of nepotism, cronyism, or other kind of favoritism.
Nondiscrimination
The promotion cannot discriminate on the basis of race, ethnicity, gender, age, or physical ability.
Others’ Resentments
If someone is promoted, someone else may be resentful about being passed over. As a manager, you may need to counsel the people left behind about their performance and their opportunities in the future. In fact, if you are passed over yourself, it is important not to let your anger build. Instead, you should gather your thoughts, then go in and talk to your boss and find out what qualities were lacking, suggests one report. You should also create a career action plan and look for ways to improve your knowledge, skills, and abilities. 181
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Transfer: Moving Sideways
Transfer is movement of an employee to a different job with similar responsibility. It may or may not mean a change in geographical location (which might be part of a promotion as well).
Employees might be transferred for four principal reasons: (1) to solve organizational problems by using their skills at another location; (2) to broaden their experience in being assigned to a different position; (3) to retain their interest and motivation by being presented with a new challenge; or (4) to solve some employee problems, such as personal differences with their bosses. In 2015, top Volkswagen managers considered implementing a mandatory rotation of key executives to new positions in order to disrupt what they perceived was “a culture of tolerance for breaking rules [that was] at the heart of its emissions crisis,” according to The Wall Street Journal. 182
Disciplining and Demotion: The Threat of Moving Downward
Poorly performing employees may be given a warning or a reprimand and then disciplined. That is, they may be temporarily removed from their jobs, as when a police officer is placed on suspension or administrative leave—removed from his or her regular job in the field and perhaps given a paperwork job or told to stay away from work.
Alternatively, an employee may be demoted—that is, have his or her current responsibilities, pay, and perquisites taken away, as when a middle manager is demoted to a first-line manager. (Sometimes this may occur when a company is downsized, resulting in fewer higher-level management positions.)
Dismissal: Moving Out of the Organization
Dismissals are of three sorts: layoffs, downsizings, and firings. We will also describe exit interviews and nondisparagement agreements, which often go along with dismissals.
Layoffs
The phrase being laid off tends to suggest that a person has been dismissed temporarily—as when a carmaker doesn’t have enough orders to justify keeping its production employees—and may be recalled later when economic conditions improve. Layoffs are cited by many companies (recently Nordstrom, Sprint, and American Express) as needed to improve profitability, although research suggests they do not, in fact, improve profits. 183
Downsizings
A downsizing is a permanent dismissal; there is no rehiring later. An automaker discontinuing a line of cars or on the path to bankruptcy might permanently let go of its production employees.
Firings
The phrase being fired, with all its euphemisms and synonyms—being “terminated,” “separated,” “let go,” “sacked,” “axed,” “canned”—tends to mean that a person was dismissed permanently “for cause”: absenteeism, sloppy work habits, failure to perform satisfactorily, breaking the law, and the like. (A CEO “never gets fired,” comments one writer dryly; rather, he or she leaves “to pursue other opportunities” or “spend more time with the family.”) 184
It used to be that managers could use their discretion about dismissals. Today, however, because of the changed legal climate, steps must be taken to avoid employeesPage 306 suing for “wrongful termination.” That is, an employer has to carefully document the reasons for dismissals. You also need to take into account the fact that survivors in the company can suffer just as much as, if not more than, their colleagues who were let go. 185
Incidentally, in terms of your own career, be aware that dismissals rarely come as a surprise. Most bosses are conflict-averse, and you may see the handwriting on the wall when your own manager begins to interact with you less. 186
In some industries, such as those in information technology, “treating workers as if they are widgets to be used up and discarded is a central part of the revised relationship between employers and employees,” in the view of one former employee of a Cambridge, Massachusetts, “digital sweatshop.” 187 Start-ups are also quick to fire if new hires don’t measure up quickly. 188
The Practical Action box below offers some suggestions for handling dismissals. ●
Fired. Being fired can be one of the most stressful events of one’s life—more than the death of a close friend, separation from one’s spouse over marital problems, or an injury requiring hospitalization. Some people who have been let go from their jobs suffer major health consequences. If you as a manager ever had to fire someone, what would you do to try to soften the blow?© Vgstockstudio/Shutterstock RF
PRACTICAL ACTION
The Right Way to Handle a Dismissal
“Employment at will” is the governing principle of employment in the great majority of states, which means that anyone can be dismissed at any time for any reason at all—or for no reason. Exceptions are whistle-blowers and people with employment contracts. Civil-rights laws also prohibit organizations’ dismissing people for their gender, skin color, or physical or mental disability. 189
Four suggestions for handling a dismissal follow.
Give the Employee a Chance First. If you’re dealing with someone who has a problem with absenteeism, alcohol/drug dependency, or the like, articulate to that employee what’s wrong with his or her performance; then set up a plan for improvement (which might include counseling). Or if you’re dealing with an employee who has a bad cultural or personality fit with the company—a buttoned-down, by-the-book style, say, that’s at odds with your flexible, fast-moving organization—have a conversation and give the employee time to find a job elsewhere. 190
Don’t Delay the Dismissal, and Make Sure It’s Completely Defensible. If improvements aren’t forthcoming, don’t carry the employee along because you feel sorry for him or her. Your first duty is to the performance of the organization. Make sure, however, that you’ve documented all the steps taken in advance of the dismissal. Also be sure that the steps taken follow the law and all important organizational policies. 191
Be Aware How Devastating a Dismissal Can Be—Both to the Individual and to Those Remaining. To the personPage 307 being let go, the event can be as much of a blow as a divorce or a death in the family. Dismissals can also adversely affect those remaining with the company. This is what psychiatrist Manfred Kets de Vries calls layoff survivor sickness, which is characterized by anger, depression, fear, guilt, risk aversion, distrust, vulnerability, powerlessness, and loss of motivation. Indeed, a five-year study by Cigna and the American Management Association found an enormous increase in medical claims, particularly for stress-related illnesses, not only among those dismissed but among continuing employees as well. 192
Offer Assistance in Finding Another Job. Dismissing a long-standing employee with only a few weeks of severance pay hurts not only the person let go but also the organization itself, as word gets back to the employees who remain, as well as to outsiders who might be prospective employees. Knowledgeable employers offer assistance in finding another job.
“The best demonstration that a company’s values are real,” says management scholar Rosabeth Moss Kanter, “is to act on them today even for people who will not be around tomorrow. A company, like a society, can be judged by how it treats its most vulnerable. … Bad treatment of departing employees can destroy the commitment of those who stay.” 193
On this score, current thinking is that the best day to lay people off is not Friday (the traditional day, when often managers didn’t want to deal with other employees’ reactions) and not Monday (when leaders may not have time to prepare for the aftermath) but rather the middle of the week, which gives former employees a chance to look for work before the week is over. 194
Getting Yourself Back Together after a Job Loss. “Losing a job can be a blow to your confidence and pride,” says writer Debra Auerbach. But you can put yourself back on your feet more quickly, she suggests, if you take the following steps: Take time to grieve, as in taking a week to process what happened—but don’t take much longer than that. Assess your finances, accept any assistance or outplacement counseling from your previous employer, set a daily schedule that keeps you from feeling adrift, start networking by getting referrals from former clients or vendors, add to your skills, and find a support group that will “cheer you through each [new job] possibility and lament each dead end.” 195
Exit Interview and Nondisparagement Agreement
An exit interview is a formal conversation between a manager and a departing employee to find out why he or she is leaving and to learn about potential problems in the organization. For example, one company looked at the exit interviews of four employees and learned they all told the same story: their manager “lacked critical leadership skills, such as showing appreciation, engendering commitment, and communicating vision and strategy,” according to one article. Moreover, “the organization was promoting managers on the basis of technical rather than managerial skill.” 196
A departing employee may want to pound the desk during an exit interview and shout about all that went wrong, but that’s not a good idea. “The last impression is the one people remember,” suggests a Wall Street Journal article. “A graceful exit can burnish an employee’s reputation and shore up valuable relationships. A bad one can do serious damage to both.” 197
A nondisparagement agreement is a contract between two parties that prohibits one party from criticizing the other; it is often used in severance agreements to prohibit former employees from criticizing their former employers. Employees who are laid off or whose jobs have been eliminated are often obliged to sign nondisparagement agreements in return for receiving severance pay—pay an employer may give a worker who leaves, such as the equivalent of two weeks of salary for each year he or she was employed. A nondisparagement clause at Abbott Laboratories in Libertyville, Illinois, reads “You agree to make every effort to maintain and protect the reputation of Abbott and its products and agents.” However, some former Abbott employees say the provision “stopped them from speaking openly with elected officials or appearing at congressional hearings” about what they say was the misuse of temporary work visas (H-1B visas) to replace American workers with foreign-born workers, according to one account. 198
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9.7
The Legal Requirements of Human Resource Management
MAJOR QUESTION To avoid exposure to legal liabilities, what areas of the law do I need to be aware of?
THE BIG PICTURE
Four areas of human resource law any manager needs to be aware of are labor relations, compensation and benefits, health and safety, and equal employment opportunity.
Laws underlie all aspects of the human resource process discussed so far. Whatever your organization’s human resource strategy, in the United States (and in U.S. divisions overseas) it has to operate within the environment of the American legal system. Four areas you need to be aware of are as follows. Some important laws are summarized in the table opposite. (See Table 9.3 .)
TABLE 9.3 Some Important Recent U.S. Federal Laws and Regulations Protecting Employees
YEAR | LAW OR REGULATION | PROVISIONS |
Labor Relations | ||
1974 | Privacy Act | Gives employees legal right to examine letters of reference concerning them |
1986 | Immigration Reform & Control Act | Requires employers to verify the eligibility for employment of all their new hires (including U.S. citizens) |
2003 | Sarbanes-Oxley Act | Prohibits employers from demoting or firing employees who raise accusations of fraud to a federal agency |
Compensation and Benefits | ||
1974 | Employee Retirement Income Security Act (ERISA) | Sets rules for managing pension plans; provides federal insurance to cover bankrupt plans |
1993 | Family & Medical Leave Act | Requires employers to provide 12 weeks of unpaid leave for medical and family reasons, including for childbirth, adoption, or family emergency |
1996 | Health Insurance Portability & Accountability Act (HIPPA) | Allows employees to switch health insurance plans when changing jobs and receive new coverage regardless of preexisting health conditions; prohibits group plans from dropping ill employees |
2007 | Fair Minimum Wage Act | Increased federal minimum wage to $7.25 per hour on July 24, 2009 |
Health and Safety | ||
1970 | Occupational Safety & Health Act (OSHA) | Establishes minimum health and safety standards in organizations |
1985 | Consolidated Omnibus Budget Reconciliation Act (COBRA) | Requires an extension of health insurance benefits after termination |
2010 | Patient Protection & Affordable Care Act | Employers with more than 50 employees must provide health insurance |
Equal Employment Opportunity | ||
1963 | Equal Pay Act | Requires men and women be paid equally for performing equal work |
1964, amended 1972 | Civil Rights Act, Title VII | Prohibits discrimination on basis of race, color, religion, national origin, or sex |
1967, amended 1978 and 1986 | Age Discrimination in Employment Act (ADEA) | Prohibits discrimination in employees over 40 years old; restricts mandatory retirement |
1990 | Americans with Disabilities Act (ADA) | Prohibits discrimination against essentially qualified employees with physical or mental disabilities or chronic illness; requires “reasonable accommodation” be provided so they can perform duties |
1991 | Civil Rights Act | Amends and clarifies Title VII, ADA, and other laws; permits suits against employers for punitive damages in cases of intentional discrimination |
1. Labor Relations
The earliest laws affecting employee welfare had to do with unions, and they can still have important effects. Legislation passed in 1935 (the Wagner Act) resulted in the National Labor Relations Board (NLRB), which enforces procedures whereby employees may vote to have a union and for collective bargaining. Collective bargaining consists of negotiations between management and employees about disputes over compensation, benefits, working conditions, and job security.
A 1947 law (the Taft-Hartley Act) allows the president of the United States to prevent or end a strike that threatens national security. (We discuss labor-management issues further in Section 9.8 .)
2. Compensation and Benefits
The Social Security Act in 1935 established the U.S. retirement system. The passage of the Fair Labor Standards Act of 1938 established minimum living standards for workers engaged in interstate commerce, including provision of a federal minimum wage (currently $7.25 an hour; 29 states have higher minimums, 5 states do not have minimums) and a maximum workweek (now 40 hours, after which overtime must be paid), along with banning products from child labor. Salaried executive, administrative, and professional employees are exempt from overtime rules.
Proponents of a $15 minimum wage say it would help people pay their bills, because existing minimum wages have not kept up with inflation, and it would create a fairer working environment, since different states now pay wildly different minimums. Detractors say that higher wages would produce job losses, hurt low-skilled workers, have little effect on reducing poverty, and result in higher prices to consumers. 199
3. Health and Safety
From miners risking tunnel cave-ins to cotton mill workers breathing lint, industry has always had dirty, dangerous jobs. Beginning with the Occupational Safety and Health Act (OSHA) of 1970, a body of law has grown that requires organizations to provide employees with nonhazardous working conditions (most recently augmented by an update to the Toxic Substances Control Act of 1976). 200 Later laws extended health coverage, including 2010 health care reform legislation, which requires employees with more than 50 employees to provide health insurance. 201 (More than 60% of working-age Americans who signed up for Medicaid or a private health plan through the Affordable Care Act get health care they previously couldn’t get.) 202
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4. Equal Employment Opportunity
The effort to reduce discrimination in employment based on racial, ethnic, and religious bigotry and gender stereotypes began with Title VII of the Civil Rights Act of 1964. This established the Equal Employment Opportunity (EEO) Commission, whose job is to enforce antidiscrimination and other employment-related laws. Title VII applies to all organizations or their agents engaged in an industry affecting interstate commerce that employs 15 or more employees. Contractors who wish to do business with the U.S. government (such as most colleges and universities, which receive federal funds) must be in compliance with various executive orders issued by the president covering antidiscrimination. Later laws prevented discrimination against older workers and people with physical and mental disabilities. 203
Workplace Discrimination, Affirmative Action, Sexual Harassment, and Bullying
Three important concepts covered by EEO laws are workplace discrimination, affirmative action, and sexual harassment, which we discuss in this section. We also consider bullying, which is not covered by EEO laws.
Workplace Discrimination
A large gap exists in perceptions between the sexes as to whether men or women have more opportunities for advancement. In a survey of 1,834 business professionals worldwide, 66% of men said opportunities to move to top management were gender neutral, compared with 30% of women who stated that. 204 (In actuality, only 4.2% of CEOs at S&P 500 companies were women. 205 Just 21 CEOs of the Fortune 500 companies were women in 2016, down from 24 in 2014.) 206
Workplace discrimination occurs when people are hired or promoted—or denied hiring or promotion—for reasons not relevant to the job, such as skin color or eye shape, gender, religion, national origin, and the like. Two fine points to be made here are that (1) although the law prohibits discrimination in all aspects of employment, it does not require an employer to extend preferential treatment because of race, color, religion, and so on and (2) employment decisions must be made on the basis of job-related criteria.
There are two types of workplace discrimination:
· Adverse impact: Adverse impact occurs when an organization uses an employment practice or procedure that results in unfavorable outcomes to a protected class (such as Hispanics) over another group of people (such as non-Hispanic whites). For example, requiring workers to have a college degree can inadvertently create adverse impact against Hispanics because fewer Hispanics graduate from college than whites. This example would not be a problem, however, if a college degree was required to perform the job.
· Disparate treatment: Disparate treatment results when employees from protected groups (such as disabled individuals) are intentionally treated differently. An example would be making a decision to give all international assignments to people with no disabilities because of the assumption that they won’t need any special accommodations related to travel.
When an organization is found to have been practicing discrimination, the people discriminated against may sue for back pay and punitive damages. In 2015, among complaints to the Equal Employment Opportunity Commission (EEOC), the most frequently cited basis for charges of discrimination was retaliation (44.5%), followed by race discrimination (34.7%); sex discrimination, including sexual harassment and pregnancy discrimination (29.5%); and discrimination based on disability (30.2%). 207
In recent years, pay discrepancies between women and men improved slightly, but as of 2014 women overall still earned only 79 cents to every $1 for a man, according toPage 311 a Wall Street Journal analysis, or 83 cents, according to the U.S. Census Bureau. 208 In some occupations, such as financial managers, women earn as little as 67 cents to a man’s dollar, but among dental hygienists, travel agents, and lodging managers, the pay is equal between men and women. In other words, the gap widens in higher-paying occupations such as business, medicine, and law. American women in elite jobs earn well below men, with doctors, compensation managers, and personal financial advisors showing the greatest earnings differences. 209
Women are more likely to suffer from depression and anxiety compared to men, and one study suggests an important reason: American women make significantly less money than their male counterparts, besides having to assume greater responsibility in child care and housework. 210
EXAMPLE
Gender Discrimination: Silicon Valley and the “Brogrammer” Culture
Since 1997, women have started 608 new businesses every day, making up 30% of all U.S. businesses and providing one out of seven jobs among privately owned firms. 211 Moreover, venture capital firms that invested in women-led companies during the decade 2000–2010 outperformed those that didn’t. 212 Women-led venture-backed companies earn 12% more revenue than male-led companies. 213
Women in Tech. Despite such achievements, women are significantly underrepresented among the tech companies of Silicon Valley, long a male stronghold. Google’s global staff is only 30% female, Facebook’s 31%, and Yahoo’s 38%. 214 In part, suggests one writer, women may not be going into tech to begin with because so many are brought up to assume that girls are not good at science or math and so do not see themselves as computer scientists. 215
Frat-Boy Behavior. Lack of gender diversity doesn’t necessarily result in a culture of sexism and sexual harassment. But sometimes it is exceedingly so. Sexist attitudes start in computer science classes, women say, and are reinforced by the tech industry’s “brogrammer” (“bro” + “programmer”) fraternity-house attitudes and behavior of some male software engineers and executives. 216 “Bro culture” also is said to lock many minorities out. 217
YOUR CALL
Recently, regulators, venture capitalists, tech companies, and women themselves have been making serious efforts to achieve more diversity in the tech sector. 218 Still, do you see sexist and demeaning behavior in the culture of your campus, which you worry you might encounter later in a future workplace?
Affirmative Action
Affirmative action focuses on achieving equality of opportunity within an organization. It tries to make up for past discrimination in employment by actively finding, hiring, and developing the talents of people from groups traditionally discriminated against. Steps include active recruitment, elimination of prejudicial questions in interviews, and establishment of minority hiring goals. It’s important to note that EEO laws do not allow the use of hiring quotas. 219
Affirmative action has created tremendous opportunities for women and minorities, but it has been resisted more by some white males who see it as working against their interests. 220 Affirmative action plans are more successful when employees view them as being fair and equitable and when whites are not prejudiced against people of color. 221 In addition, research shows that women and minorities hired on the basis of affirmative action felt stigmatized as unqualified and incompetent. 222
Sexual Harassment
Sexual harassment consists of unwanted sexual attention that creates an adverse work environment. This means obscene gestures, sex-stereotyped jokes, sexually oriented posters and graffiti, suggestive remarks, unwanted dating pressure, physical nonsexualPage 312 contact, unwanted touching, sexual propositions, threatening punishment unless sexual favors are given, obscene phone calls, and similar verbal or physical actions of a sexual nature. 223 The harassment may be by a member of the opposite sex or a member of the same sex, by a manager, by a coworker, or by an outsider. 224 If the harasser is a manager or an agent of the organization, the organization itself can be sued, even if it had no knowledge of the situation. 225
Two Types of Sexual Harassment
There are two types of sexual harassment, both of which violate Title VII of the 1964 Civil Rights Act.
In the quid pro quo harassment type, the person to whom the unwanted sexual attention is directed is put in the position of jeopardizing being hired for a job or obtaining job benefits or opportunities unless he or she implicitly or explicitly acquiesces.
Sexual harassment. If this woman is unaware of the man ogling her legs, does that make his behavior acceptable? Or does it still contribute to an offensive work environment?© Phanie/Superstock
More typical is the hostile environment type, in which the person being sexually harassed doesn’t risk economic harm but experiences an offensive or intimidating work environment. According to one survey, 38% of women said they had heard sexual innuendos, wisecracks, or taunts at the office. 226 Anti-female remarks are particularly prevalent on social media. 227
The table below presents some guidelines for preventing sexual harassment. (See Table 9.4 .)
TABLE 9.4 Preventing Sexual Harassment
· Don’t suggest sexual favors for rewards related to work or promotion. |
· Don’t do uninvited touching, patting, or hugging of others’ bodies—especially if they wince, frown, or pull away. |
· Don’t make sexually suggestive jokes, demeaning remarks, slurs, or obscene gestures or sounds. |
· Don’t display sexual pictures in your workplace or write notes of a sexual nature. |
· Don’t laugh at others’ sexually harassing words or behaviors. |
What Managers Can Do
To help prevent harassment from occurring, managers can make sure their companies have an effective sexual harassment policy in place. The policy should be shown to all current and new employees, who should be made to understand that sexual harassment will not be tolerated under any circumstances. A formal complaint procedure should be established, which should explain how charges will be investigated and resolved. Supervisors should be trained in Title VII requirements and the proper procedures to follow when charges occur. If charges occur, they should be investigated promptly and objectively, and if substantiated, the offender should be disciplined at once—no matter what his or her rank in the company.
Bullying
If college professors can be bullied, can’t anyone?
For years, mathematics professor Bill Lepowsky experienced abusive behavior at the San Francisco Bay Area community college where he taught. It began with a group of managers spreading rumors and false accusations that threatened his job—for instance, saying he was holding class in the wrong classroom and was skipping important meetings (meetings he actually wasn’t supposed to attend). It was emotionally draining—like “being a soldier in a foxhole with shells exploding,” he said—and took time and focus away from his job. It didn’t end until his tormentors left the college. 228
The Meaning of Mean
Bullying is repeated mistreatment of one or more persons by one or more perpetrators; it is abusive physical, psychological, verbal, or nonverbal behavior that is threatening, humiliating, or intimidating. “People have only thought about bullying related to children,” says one expert, “but the fact is that right now adult bullying is rampant.” 229
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Indeed, bullying on the job has been experienced by 27% of employees, according to one survey; 37%, according to another; and 51%, according to yet another. 230 Bullying by supervisors that takes the form of forcing long hours on workers or yelling and behaving in a threatening way is more apt to occur in small businesses (50 or fewer employees), where the education level of bosses is often less high than in larger firms and where one person’s bad behavior may have greater influence. 231
Bullies can be male or female, although the majority (about 60%) are men and most are bosses. Women tend to be bullied more than men. Bullying can occur between colleagues, managers, and employees. Bullying on the job may be physically aggressive, such as pushing, pinching, or cornering someone. However, it is more apt to be verbal, including shouting, swearing, and name calling. Or it may be relational, including malicious gossip, rumors, and lies that may cause someone to feel isolated or cut off. Bullying through technology (cyberbullying), such as Facebook, Twitter, or e-mail, accounts for about one in five incidents. 232
The Effects of Bullying
Unfortunately, many workplace bullies are quite charming and manipulative and so receive positive evaluations from their supervisors and achieve high levels of career success, according to one dispiriting study. 233 “If people are politically skilled, they can do bad things really well,” says one of the study authors. 234 Of course, that doesn’t make this behavior right. Indeed, bullying can devastate a workplace. 235
Bullying. A surprisingly common activity, bullying is apt to be verbal, involving shouting and name calling, or relational, including spreading malicious rumors and lies. In some cases, however, it can be physically aggressive, involving pinching or pushing. Perhaps as many as half of all employees have experienced some sort of bullying on the job. Have you? What did you do about it?© Jetta Productions/The Image Bank/Getty Images
Bullying, says Gary Namie, director of the Workplace Bullying Institute, can be especially damaging in work sites where the bullied may be trapped in close proximity to their bully. 236 Bullied employees are less satisfied at work, more likely to spend time gossiping and not putting in their full effort, and more likely to quit. 237 Victims also tend to experience stress-related health problems, such as anxiety, panic attacks, depression, even suicide. 238
The table below presents some guidelines for combating bullying. (See Table 9.5 .) ●
TABLE 9.5 Beating Back the Bully
· Recognize the mistreatment as bullying: Don’t blame yourself. |
· Get others on your side: Don’t become socially isolated. |
· Don’t strike back: It might get you fired. Ask to be treated with fairness and respect. |
· Stay calm and confident: Don’t feed the bully’s sense of power by showing fear. |
· Avoid being alone with the bully: Make sure someone can hear your interactions. Or record them on your smartphone. |
· Document the events—and be truthful: When reporting bullying to supervisors, give them the FACTS, not just the emotional effects. Save examples of online bullying, notes, and other physical evidence. Remember, the bully will probably deny your accusations. |
Sources: A. Bruzzese, “Workplace Becomes New Schoolyard for Bullies,” USA Today, August 24, 2011, http://usatoday30.usatoday.com/money/jobcenter/workplace/bruzzese/2011-08-24-bully-bosses-overtake-workplace_n.htm (accessed June 6, 2016); K. V. Brown, “Far beyond School Playground, Bullying Common in Workplace,” San Francisco Chronicle, November 6, 2011, pp. A1, A10; and Robert Half International, “6 Tips for Dealing with the Office Bully,” The Arizona Republic, November 29, 2015, p. 4E.
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9.8
Labor-Management Issues
MAJOR QUESTION What are the principal processes and issues involved in organizing labor unions?
THE BIG PICTURE
We describe the process by which workers get a labor union to represent them and how unions and management negotiate a contract. This section also discusses the types of union and nonunion workplaces and right-to-work laws. It covers issues unions and management negotiate, such as compensation, cost-of-living adjustments, two-tier wage systems, and givebacks. It concludes by describing mediation and arbitration.
Starting in 1943, James Smith worked his way up from washing dishes in the galley of a passenger train’s dining car to waiter, earning tips on top of his wages of 36 cents an hour. The union job with the Brotherhood of Sleeping Car Porters, the first African American union, enabled him to go to college, and when he left the railroad he was hired as a civil engineer for the city of Los Angeles. “His story,” says one report, “is emblematic of the role the railroads and a railroad union played in building a foundation for America’s black middle class.” 239 Unions also helped to grow the American (and European) middle classes in general, bringing benefits to all, organized or not.
Labor unions are organizations of employees formed to protect and advance their members’ interests by bargaining with management over job-related issues. The union movement is far less the powerhouse that it was in the 1950s—indeed, its present membership is the lowest since 1916—but it is still a force in many sectors of the economy. (See Table 9.6 , left.) Nearly half (48%) of Americans hold a favorable view of unions, while 39% hold an unfavorable view. 240
TABLE 9.6 Snapshot of Today’s U.S. Union Movement
Who’s in a union (2015)? |
· 11.1% of full-time U.S. workers—down from 35.5% in 1945 |
· 6.7% of private-sector workers (7.6 million) |
· 35.2% of public-sector workers (7.2 million) |
· Most members, public sector: local government (41.3%), including teachers, police officers, and firefighters |
· Most members, private sector: utilities (21.4%), transportation and warehousing (18.9%), educational services (13.7%), telecommunications (13.3%), construction (13.2%) |
Source: Bureau of Labor Statistics, “Union Members Summary,” Economic News Release, January 28, 2016; www.bls.gov/news.release/union2.nr0.htm (accessed June 6, 2016).
How Workers Organize
When workers in a particular organization decide to form a union, they first must get each worker to sign an authorization card, which designates a certain union as the workers’ bargaining agent. When at least 30% of workers have signed cards, the union may ask the employer for official recognition.
Usually the employer refuses, at which point the union can petition the National Labor Relations Board (NLRB) to decide which union should become the bargaining unit that represents the workers, such as the Teamsters Union, United Auto Workers, American Federation of Teachers, or Service Employees International Union, as appropriate. (Some workers, however, are represented by unions you would never guess: Zookeepers, for instance, are represented by the Teamsters, which mainly organizes transportation workers. University of California, Berkeley, graduate student instructors are represented by the United Auto Workers.) An election is then held by the NLRB, and if 50% or more of the votes cast agree to unionization, the NLRB certifies the union as the workers’ exclusive representative.
How Unions and Management Negotiate a Contract
Once a union is recognized as an official bargaining unit, its representatives can then meet with management’s representatives to do collective bargaining—to negotiate pay and benefits and other work terms.
When agreement is reached with management, the union representatives take the collective bargaining results back to the members for ratification—they vote to accept or reject the contract negotiated by their leaders. If they vote yes, the union and management representatives sign a negotiated labor-management contract, which sets the general tone and terms under which labor and management agree to work together during the contract period.
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The Issues Unions and Management Negotiate About
The key issues that labor and management negotiate are compensation, employee benefits, job security, work rules, hours, and safety matters. However, the first issue is usually union security and management rights.
Union Security and Types of Workplaces
A key issue is, Who controls hiring policies and work assignments—labor or management? This involves the following matters:
· The union security clause. The basic underpinning of union security is the union security clause, the part of the labor-management agreement that states that employees who receive union benefits must join the union, or at least pay dues to it. In times past, a union would try to solidify the union security clause by getting management to agree to a closed shop agreement—which is illegal today—in which a company agreed it would hire only current union members for a given job.
· Types of unionized and nonunionized workplaces. The four basic kinds of workplaces are closed shop, union shop, agency shop, and open shop. (See Table 9.7 .)
· Right-to-work laws. Individual states are allowed (under the 1947 Taft-Hartley Act) to pass legislation outlawing union and agency shops. As a result, 22 states have passed right-to-work laws, statutes that prohibit employees from being required to join a union as a condition of employment.
TABLE 9.7 Four Kinds of Workplace Labor Agreements
WORKPLACE | DEFINITION | STATUS |
Closed shop | Employer may hire only workers for a job who are already in the union. | Illegal |
Union shop | Workers aren’t required to be union members when hired for a job but must join the union within a specified time. | Not allowed in 22 states (right-to-work states) |
Agency shop | Workers must pay equivalent of union dues but aren’t required to join the union. | Applies to public-sector teachers in some states, prohibited in others |
Open shop | Workers may choose to join or not join a union. | Applies in 22 states (right-to-work states) |
Business interests supporting such laws argue that forcing workers to join a union violates their rights and makes a state less attractive to businesses considering moving there. Union supporters say that states with such laws have overall lower wages and that all workers benefit from union gains, so everyone should be compelled to join.
The 22 work-to-right states are shown in the map on the next page. (See Figure 9.4 .)
FIGURE 9.4 States with right-to-work laws What kind of state do you live in? (Alaska and Hawaii are non–right-to-work states.)
Compensation: Wage Rates, COLA Clauses, and Givebacks
Unions strive to negotiate the highest wage rates possible, or to trade off higher wages for something else, such as better fringe benefits. Some issues involved with compensation are as follows:
· Wage rates—same pay or different rates? Wage rates subject to negotiation include overtime pay, different wages for different shifts, and bonuses. In the past, unions tried to negotiate similar wage rates for unionized employees working in similar jobs for similar companies or similar industries. However, the pressure of competition abroad and deregulation at home has forced many unions to negotiate two-tier wage contracts, in which new employees are paid less or receive lesser benefits than veteran employees have.
Example: In 2011, when automakers began to create new jobs, new union hires were offered about half the pay ($14 an hour) that autoworkers werePage 316 getting before ($28). Such two-tier wage systems can be attractive to employers, who are able to hire new workers at reduced wages, but it also benefits veteran union members, who experience no wage reduction. However, among autoworkers, at least, such contracts may be on the way out. 241 One study found that the two-tier setup wasn’t, in fact, any more profitable for companies. 242
· Cost-of-living adjustment. Because the cost of living is always going up (at least so far), unions often try to negotiate a cost-of-living adjustment (COLA) clause, which during the period of the contract ties future wage increases to increases in the cost of living, as measured by the U.S. Bureau of Labor Statistics’s consumer price index (CPI). (An alternative is the wage reopener clause, which allows wage rates to be renegotiated at certain stated times during the life of the contract. Thus, a 10-year contract might be subject to renegotiation every 2 years.)
· Givebacks. During tough economic times, when a company (or, in the case of public employee unions, a municipality) is fighting for its very survival, management and labor may negotiate givebacks, in which the union agrees to give up previous wage or benefit gains in return for something else. Usually the union seeks job security, as in a no-layoff policy.
Settling Labor-Management Disputes
Even when a collective-bargaining agreement and contract have been accepted by both sides, there may likely be ongoing differences that must be resolved. Sometimes differences lead to walkouts and strikes, or management may lock out employees. However, conflicts can be resolved through grievance procedures and mediation or arbitration.
Grievance Procedures
A grievance is a complaint by an employee that management has violated the terms of the labor-management agreement. Example: An employee may feel he or she is being asked to work too much overtime, is not getting his or her fair share of overtime, or is being unfairly passed over for promotion.
Grievance procedures are often handled initially by the union’s shop steward, an official elected by the union membership who works at the company and represents the interests of unionized employees on a daily basis to the employees’ immediatePage 317 supervisors. If this process is not successful, the grievance may be carried to the union’s chief shop steward and then to the union’s grievance committee, who deal with their counterparts higher up in management.
If the grievance procedure is not successful, the two sides may decide to try to resolve their differences by one of two ways—mediation or arbitration.
Mediation
Mediation is the process in which a neutral third party, a mediator, listens to both sides in a dispute, makes suggestions, and encourages them to agree on a solution. Mediators may be lawyers or retired judges or specialists in various fields, such as conflict resolution or labor matters.
Arbitration
Arbitration is the process in which a neutral third party, an arbitrator, listens to both parties in a dispute and makes a decision that the parties have agreed will be binding on them. Arbitrators are often retired judges. Many corporations, including recently tech start-ups, have vigorously embraced arbitration as a business tool with consumers and employees, and some for-profit colleges have even required it of their students, forbidding them from resolving their complaints through class-action suits (when a large number of plaintiffs with similar complaints band together to sue a company). 243 Critics, however, contend that forcing consumers to sign agreements that require arbitration and prevent lawsuits has the effect of biasing resolutions in favor of business and constitutes a “privatization of the justice system.” 244
Leo Kanne, head of Local 440 for the United Food & Commercial Workers International Union in Denison, Iowa, home of a Smithfield meat-processing plant, says plant workers earn enough to take their children to Pizza Ranch or maybe Dairy Queen every week and go on vacation once a year. “That’s all these people want,” he says. “Nobody is getting rich working in these plants.” Word that a Chinese company had acquired Smithfield had everyone worried. Would they cut costs and not honor past labor agreements? 245 Considering these kinds of concerns, what is your feeling about labor unions? Self-Assessment 9.4 enables you to answer this question by assessing your general attitudes toward unions.
SELF-ASSESSMENT 9.4
Assessing Your Attitudes toward Unions
This survey is designed to assess your attitude toward unions. Please be prepared to answer these questions if your instructor has assigned Self-Assessment 9.4 in Connect.
1. Where do you stand on your attitude toward unions—positive, neutral, or negative?
2. What experiences or events in your life have led to your attitude toward unions? Describe. What do you think lies in the future for labor unions?
3. Why has there been growing dislike for unions in the United States?
New Ways to Advance Employee Interests
From time to time, labor organizations take on new permutations. For instance, fast-food, construction, and contract workers are now able to more easily unionize, following a National Labor Relations Board decision that recognizes that the modern U.S. economy increasingly relies on shift work and temporary employees. 246 In 2015, carwash workers in Santa Fe, New Mexico, formed a workers committee (not a union), which is protected under the National Labor Relations Act from employer retaliation when employees are engaged in “concerted” activity to improve wages and conditions. 247 In 2016, Uber started a guild for its drivers in New York, which would provide limited benefits and protections, but would stop short of unionization and would not allow drivers to turn to the National Labor Relations Board to intervene on issues. 248 Finally, many employers are trying to advance workplace democracy by giving employees the chance to vote (as through digital survey tools such as TinyPulse and Know Your Company) “on issues from hiring to holiday parties,” which, according to one report, “helps spark loyalty to the company.” 249
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