ASSIGNMENT-2 Learning Outcomes: 1. Demonstrate overall Human Resource concepts, goals and strategies within the context of organizations goals and strategies (Lo 1.1). 2. Ability to carry out objective and scientific analysis of Employees’ performance management (Lo 2.3 & 2.6). Assignment Structure: A.No Assignment- 2 CASE STUDY Total Marks 10 10 Case Study Imagine you’re the VP of Human resources for a Fortunate 100 company. You’ve spent your entire career attempting to enhance the workplace for employees to support their productive work in the organization. While you understand that bottom-line decisions often dominate many of the matters you have to address. You have worked hard to ensure that the employees were treated with respect and dignity in all interactions that affected them. You aligned the hiring process to serve the strategic needs of the organization, as well as implemented an effective performance management system. You truly believe in the progress you’ve made in helping the organization achieve its goals. You simply couldn’t imagine doing things differently. However, concern that the performance management process is becoming less effective because managers are inflating employee ratings has led 15 percent of all large organizations to adjust their performance management to what is frequently called “rank and yank”. Under such a system, managers are evaluated as 1, 2, 3 or 4, with 1 being the highest rating and 4 the lowest. In many cases, managers are required to give a 4 rating to the lowest 10 percent of employees each year. Those individuals receiving a rating of 4 for two consecutive years are often let go from the organization. The intent behind this system is that the throughout the two year process, evaluators are to meet frequently with the four employees, counsel them and provide necessary development opportunities. Employees in organizations that employ such a performance management system often view this process unbearable. They view the performance management process as punitive, one in which the organization is attempting to rid itself of higher-paid older workers. In at least one case, Ford Motor Company employees have filed a lawsuit to stop this practice—and prevailed .Ford removed the punitive nature of its evaluation system—and focused it more on counselling and performance improvement of the lowestrated employees rather than elimination from the organization. Source: Textbook- DeCenzo, D. A., & Robbins, S. P. (2013). Human resource management ASSIGNMENT QUESTIONS: 1. What type of evaluation process would you say is being used in this case? Explain this evaluation process.[ Marks 2] 2. What effect, if any, do you believe rank and yank evaluations have on managers? Do you see these effects as positive or negative? Defend your position.[ 3] 3. What role does such a system have in distorting performance appraisals?[Marks 2.5] 4. Write your suggestions/opinions to create better performance appraisal system in the Organization. [Marks 2.5] Answer: 11TH EDITION Fundamentals of Human Resource Management DAVID A. DeCENZO STEPHEN P. ROBBINS SUSAN L. VERHULST This page is intentionally left blank Job b Analysis An nalysi sis i Fundamentals of Human Resource Management David A. DeCenzo Coastal Carolina University Conway, SC Stephen P. Robbins San Diego State University San Diego, CA Susan L. Verhulst, PHR Des Moines Area Community College Ankeny, IA Eleventh Edition VICE PRESIDENT & EXECUTIVE PUBLISHER EXECUTIVE EDITOR DEVELOPMENTAL EDITOR PROJECT EDITOR ASSOCIATE DIRECTOR OF MARKETING MARKETING MANAGER MARKETING ASSISTANT SENIOR PRODUCT DESIGNER MEDIA SPECIALIST SENIOR PRODUCTION AND MANUFACTURING MANAGER ASSOCIATE PRODUCTION MANAGER PHOTO DEPARTMENT MANAGER PHOTO RESEARCHER DESIGN DIRECTOR SENIOR DESIGNER COVER PHOTO CREDIT BACKGROUND WAVE PATTERN CREDIT George Hoffman Lisé Johnson Susan McLaughlin Brian Baker Amy Scholz Kelly Simmons Marissa Carroll Allison Morris Ethan Bernard Janis Soo Joel Balbin Hilary Newman Susan McLaughlin Harry Nolan Wendy Lai ©Onne van der Wal/Corbis Images ©Roman Okopny/iStockphoto This book was set in 10/12 Kepler Std by Aptara Corp, Inc. and printed and bound by Courier/ Kendallville. The cover was printed by Courier/Kendallville. This book is printed on acid free paper. Copyright © 2013, 2010, 2007, 2005, 2002 John Wiley & Sons, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc. 222 Rosewood Drive, Danvers, MA 01923, website Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, (201)748-6011, fax (201)748-6008, website To order books or for customer service please, call 1-800-CALL WILEY (225-5945). Library of Congress Cataloging-in-Publication Data DeCenzo, David A. Fundamentals of human resource management / David A. DeCenzo, Stephen P. Robbins, Susan L. Verhulst. — 11th ed. p. cm. Includes index. ISBN 978-0-470-91012-2 (paper/website) 1. Personnel management. I. Robbins, Stephen P., 1943- II. Verhulst, Susan L. III. Title. HF5549.D396 2013 658.3–dc23 2012030735 ISBN 978-0-470-91012-2 (Main Book) ISBN 978-1-118-37968-4 (Binder-Ready Version) Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 Brief Contents Part 1 UNDER S TANDI N G HR M 01 The Dynamic Environment of HRM 3 02 Functions and Strategy 29 Part 2 THE L EGAL AN D E T HI C AL C O N T E XT O F HR M 03 Equal Employment Opportunity 57 04 Employee Rights and Discipline 91 Part 3 S TAFFING THE O R G AN I Z AT I O N 05 Human Resource Planning and Job Analysis 119 06 Recruiting 141 07 Foundations of Selection 163 Part 4 TR AINING AND DE VE L O P ME N T 08 Socializing, Orienting, and Developing Employees 193 09 Managing Careers 221 Part 5 10 11 12 13 MAINTAINING HI G H P E R F O R MAN C E Establishing the Performance Management System 243 Establishing Rewards and Pay Plans 275 Employee Benefits 301 Ensuring a Safe and Healthy Work Environment 331 Part 6 L AB OR -M ANAG E ME N T E N VI R O N ME N T S 14 Understanding Labor Relations and Collective Bargaining 359 Endnotes 384 Glossary 408 Company Index 415 Subject Index 417 iii Contents Part 1 01 How HRM Can Support Improvement Programs 19 How HRM Assists in Work Process Engineering 20 Employee Involvement 20 UNDER S TANDING HRM The Dynamic Environment of HRM 3 Learning Outcomes 2 Introduction 4 Understanding Cultural Environments 4 The Impact of Technology 5 What Is a Knowledge Worker? 6 How Technology Affects HRM Practices 6 Recruiting 7 Employee Selection 7 Training and Development 7 Ethics and Employee Rights 7 Motivating Knowledge Workers 8 Paying Employees Market Value 8 Communications 8 Decentralized Work Sites 8 Skill Levels 8 A Legal Concern 9 How Organizations Involve Employees 20 Employee Involvement Implications for HRM 21 Other HRM Challenges 21 Recession 21 Offshoring 21 Mergers 22 A Look at Ethics 22 Summary 23 Demonstrating Comprehension: Questions for Review 24 Key Terms 24 HRM Workshop 25 Linking Concepts to Practice: Discussion Questions 25 Making a Difference: Service Learning Projects 25 Developing Diagnostic and Analytical Skills 26 Case 1: A War for Talent 26 Working with a Team: Understanding Diversity Issues 26 Learning an HRM Skill: Guidelines for Acting Ethically 27 Enhancing Your Communication Skills 27 Ethical Issues in HRM: Invasion of Privacy? 9 E th Contemporary Connection: We Are Now Entering C on the Blogosphere 10 Workforce Diversity 10 The Workforce Today 10 Div Diversity Topics: Chief Diversity Officer 11 How Diversity Affects HRM 11 Diversity D iv Topics: Valuing a Diverse Workplace 12 Contemporary Connection: 2020 Vision 13 C on What Is a Work/Life Balance? 13 Diversity D iv Topics: Glass Ceiling Still a Barrier for Women Globally 14 02 Functions and Strategy Learning Outcomes 28 Introduction 30 Why Is HRM Important to an Organization? 30 The Strategic Nature 31 Tips Ti T ips For Success: Reviewing the Functions of Management 32 The Labor Supply 14 The HRM Functions 32 Do We Have a Shortage of Skilled Labor? 14 Why Do Organizations Lay Off Employees during Shortages? 15 How Do Organizations Balance Labor Supply? 15 Issues Contingent Workers Create for HRM 16 Continuous Improvement Programs 18 Staffing Function 34 Training and Development Function 36 Motivation Function 36 Maintenance Function 37 How External Influences Affect HRM 38 Work Process Engineering 19 iv The Dynamic Environment of HRM 38 Laws and Regulation 38 29 Contents Labor Unions 38 Management Thought 40 Structure of the HR Department 40 Religious Discrimination 59 National Origin Discrimination 60 Sex or Gender Discrimination 60 EEOA/EEOC 62 Employment 41 Training and Development 41 Compensation and Benefits 42 Employee Relations 43 Contemporary Connection: Discrimination Claims C on Going Up 62 Relevant Executive Orders 63 Age Discrimination in Employment Act of 1967 63 Equal Pay Act 64 Pregnancy Discrimination 64 The Americans with Disabilities Act of 1990 and The ADA Amendments Act of 2008 65 The Civil Rights Act of 1991 66 The Family and Medical Leave Act of 1993 (FMLA) 66 Top Management Commitment 43 Effective Upward Communication 43 Tips T ips For Success: HRM Certification 44 Determining What to Communicate 44 Allowing for Feedback 44 Information Sources 45 Is a Career in HR for Me? 45 Does HRM Really Matter? 45 Contemporary Connection: When Our Troops C on Come Home 68 Eth Ethical Issues in HRM: Purposely Distorting Information 46 HR Trends and Opportunities 47 Outsourcing 47 Professional Employer Organization (PEO) 47 Shared Services 47 HRM in a Small Business 48 HRM in a Global Environment 48 HR and Corporate Ethics 49 Summary 50 Demonstrating Comprehension: Questions for Review 51 Key Terms 51 HRM Workshop 52 Linking Concepts to Practice: Discussion Questions 52 Making a Difference: Service Learning Projects 52 Developing Diagnostic and Analytical Skills 52 Case 2: Hungry for Productivity—Frito-Lay Links Strategy with Job Design 52 Working with a Team: Making a Layoff Decision 53 Learning an HRM Skill: HR Certification 54 Enhancing Your Communication Skills 54 Part 2 THE LEGAL AN D E T HI C AL CONTEXT OF HR M 03 Equal Employment Opportunity Learning Outcomes 56 Introduction 58 Laws Affecting Discriminatory Practices 58 The Importance of the Civil Rights Act of 1964 58 Race and Color Discrimination 59 v Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) 68 Genetic Information Nondiscrimination Act (GINA) of 2008 69 Preventing Discrimination 69 Uniform Guidelines on Employee Selection Procedures 69 Ti T ips For Success: Is a Problem Brewing? 69 Tips Determining Potential Discriminatory Practices 70 The 4/5ths Rule 70 Restricted Policy 71 Geographical Comparisons 71 McDonnell-Douglas Test 71 Affirmative Action Plans Affirmative Action 71 Tips Tips For Success: Suggestions for Recruiting Ti Minorities and Women 72 Responding to an EEO Charge 72 Business Necessity 72 Bona Fide Occupational Qualifications 72 Seniority Systems 73 Selected Relevant Supreme Court Cases 73 Cases Concerning Discrimination 73 Cases Concerning Reverse Discrimination 75 Enforcing Equal Opportunity Employment 76 The Role of the EEOC 76 C on Contemporary Connection: EEOC Reaches Out to Young Workers 77 57 Office of Federal Contract Compliance Program (OFCCP) 78 Current Issues in Employment Law 78 Sexual Harassment 78 Eth Ethical Issues in HRM: How Bad Does it Have to Be? 80 Comparable Worth and Equal Pay Issues 80 vi Contents Exceptions to the Doctrine 103 Sexual Orientation 82 English Only Laws and Policies 82 Appearance and Weight Discrimination 82 Ethical Issues in HRM: English-Only Rules 83 E th HRM in a Global Environment 83 China 84 Canada 84 India 84 Australia 84 Germany 85 Summary 85 Demonstrating Comprehension: Questions for Review 86 Key Terms 86 Contractual Relationship 104 Statutory Considerations 104 Public Policy Violation 104 Implied Employment Contract 104 Breach of Good Faith 104 Discipline and Employee Rights 105 What Is Discipline? 105 Factors to Consider When Disciplining 105 Ti T ips For Success: What to Know before Disciplining Tips Employees 106 Disciplinary Guidelines 108 Disciplinary Actions 109 Written Verbal Warning 109 Written Warning 110 Suspension 110 Dismissal 110 HRM Workshop 87 Linking Concepts to Practice: Discussion Questions 87 Making a Difference: Service Learning Projects 87 Developing Diagnostic and Analytical Skills 87 Case Application 3-A: Diversity Is Fashionable 87 Case Application 3-B: When Oversight Fails 88 Working with a Team: What’s Your Perception? 88 Learning an HRM Skill: Investigating a Harassment Complaint 88 Enhancing Your Communication Skills 89 04 Employee Rights and Discipline Tips Ti T ips For Success: Are You Part of the Problem? 111 Summary 112 Demonstrating Comprehension: Questions for Review 114 Key Terms 114 HRM Workshop 115 Linking Concepts to Practice: Discussion Questions 115 Making a Difference: Service Learning Projects 115 Developing Diagnostic and Analytical Skills 115 Case Application 4-A: Casino Has No Sense of Humor 115 Case Application 4-B: Off-the-Job Behaviors 116 Working with a Team: Dealing in Gray Areas 116 Learning an HRM Skill: Guidelines for Counseling Employees 117 Enhancing Your Communication Skills 117 91 Learning Outcomes 90 Introduction 92 Employee Rights Legislation and the HRM Implications 92 The Privacy Act 92 The Fair Credit Reporting Act 93 The Drug-Free Workplace Act 93 The Polygraph Protection Act 94 The Worker Adjustment and Retraining Notification Act 94 Current Issues Regarding Employee Rights 96 Social Media 96 Drug Testing 98 C Contemporary on Connection: Why Organizations Conduct Drug Tests 99 Honesty Tests 99 Whistle-Blowing 100 Employee Monitoring and Workplace Security 100 Contemporary Connection: By the Numbers 101 Con Workplace Romance 102 The Employment-at-Will Doctrine 103 Part 3 05 S TAF F I N G T HE O R G AN I Z AT I O N Human Resource Planning and Job Analysis Learning Outcomes 118 Introduction 120 An Organizational Framework 120 E Ethical th Issues in HRM: Shades of Green 121 Linking Organizational Strategy to Human Resource Planning 122 Assessing Current Human Resources 122 Human Resource Information Systems 123 Succession Planning 124 Determining the Demand for Labor 124 Ti T ips For Success: Where the Jobs Are 125 Tips 119 Contents Predicting the Future Labor Supply 125 Where Will We Find Workers? 126 Matching Labor Demand and Supply 126 The Job Analysis Process 128 Organization Image 143 Job Attractiveness 143 Internal Organizational Policies 144 Legal Influence 144 Tips Tips For Success: Employment Branding 144 Ti Job Analysis Methods 128 Observation Method 128 Individual Interview Method 128 Group Interview Method 128 Structured Questionnaire Method 128 Technical Conference Method 128 Diary Method 128 Diversity Topics: Job Advertisements and EEO 145 D iv Recruiting Costs 145 Recruiting Sources 145 The Internal Search 146 Employee Referrals and Recommendations 146 External Searches 147 Structured Job Analysis Techniques 129 O*NET and the Department of Labor 129 Position Analysis Questionnaire 130 Advertisements 147 Employment Agencies 148 Schools, Colleges, and Universities 150 Job Fairs 151 Professional Organizations 151 Unsolicited Applicants 152 Purpose of Job Analysis 131 Job Descriptions 131 Essential Functions 132 Job Specifications 132 Job Evaluations 132 Online Recruiting 152 The Multifaceted Nature of Job Analysis 132 Job Design 133 Job Enrichment 133 C on Contemporary Connection: Measuring Results, Not Face Time 134 Flexible Work Schedules 135 Job Design and Teams 135 Summary 136 Demonstrating Comprehension: Questions for Review 137 Key Terms 137 Linking Concepts to Practice: Discussion Questions 138 Making a Difference: Service Learning Projects 138 Developing Diagnostic and Analytical Skills 138 Case Application 5: Turnover and Morale Problems at TSA 138 Working with a Team: Job Analysis Information 139 Learning an HRM Skill: Conducting the Job Analysis 139 Enhancing Your Communication Skills 139 Recruiting Learning Outcomes 140 Introduction 142 Recruiting Goals 142 Factors That Affect Recruiting Efforts 142 Tips Tips For Success: Something for Everyone 143 Constraints on Recruiting Efforts 143 Employer Websites 152 Job Boards 152 Social Media 152 Specialized Job Boards 152 Effective Recruiting 153 Recruitment Alternatives 153 Temporary Help Services 153 Employee Leasing 153 Tips Ti T ips For Success: “Best Practice” Ideas Applicable to Recruitment and Hiring 154 Independent Contractors 154 Recruiting: A Global Perspective 154 Your Own Job Search 155 HRM Workshop 138 06 vii 141 Tips For Success: Posting Online Résumés 156 Ti Tips Preparing Your Résumé 156 Making Social Media Work for You 156 Summary 157 Demonstrating Comprehension: Questions for Review 158 Key Terms 158 HRM Workshop 159 Linking Concepts to Practice: Discussion Questions 159 Making a Difference: Service Learning Projects 159 Developing Diagnostic and Analytical Skills 159 Case Application 6-A: Policing Paradise: How the Honolulu Police Department Developed Its Brand 159 Case Application 6-B Priority Staffing 160 Working with a Team: A Question of Effective Recruiting 160 Learning an HRM Skill: Writing a Job Advertisement 160 Enhancing Your Communication Skills 161 viii Contents 07 Foundations of Selection 163 Learning Outcomes 162 Introduction 164 The Selection Process 164 Initial Screening 164 Completing the Application Form 165 Selection from a Global Perspective 185 Final Thoughts: Excelling at the Interview 186 Summary 187 Demonstrating Comprehension: Questions for Review 188 Key Terms 188 HRM Workshop 189 Linking Concepts to Practice: Discussion Questions 189 Making a Difference: Service Learning Projects 189 Developing Diagnostic and Analytical Skills 189 Case Application 7: Timing of the Job Offer 189 Working with a Team: Preparing for the Interview 190 Learning an HRM Skill: Creating Effective Interview Questions 190 Enhancing Your Communication Skills 190 Key Issues 165 Tips T ips For Success: Too Much Information 166 Weighted Application Forms 166 Successful Applications 167 Pre-employment Testing 167 Performance Simulation Tests 168 Work Sampling 168 Assessment Centers 168 Testing in a Global Arena 168 Comprehensive Interviews 168 D iv Diversity Topics: Interview Questions 169 Interview Effectiveness 170 Ti T ips For Success: Steps for Effective Interviewing 170 Tips R ea HR Encounters: Interview Headaches 171 Real First Impressions 171 Impression Management 171 E th Ethical Issues in HRM: The Stress Interview 172 Interviewer Bias 172 The Behavioral Interview 172 T ips For Success: Professionalism on the Phone 173 Tips Realistic Job Previews 173 Conditional Job Offers 174 Background Investigation 174 Medical/Physical Examination 177 Job Offers 177 The Comprehensive Approach 178 Now It’s Up to the Candidate 178 Tips For Success: Avoiding Hiring Mistakes 179 Tips Selection for Self-Managed Teams 180 Con Contemporary Connection: What Were They Thinking? 180 Key Elements for Successful Predictors 181 Reliability 181 Validity 182 Content Validity 182 Construct Validity 182 Criterion-Related Validity 182 Validity Analysis 183 Cut Scores and Their Impact on Hiring 184 Validity Generalization 185 Part 4 08 T R AI N I N G AN D DE VEL O P M E N T Socializing, Orienting, and Developing Employees 193 Learning Outcomes 192 Introduction 194 The Outsider–Insider Passage 194 Socialization 194 Assumptions of Employee Socialization 194 Socialization Strongly Influences Employee Performance and Organizational Stability 194 Organizational Stability Also Increases through Socialization 195 New Members Suffer from Anxiety 195 Socialization Needs to be Consistent with Culture 195 Individuals Adjust to New Situations in Remarkably Similar Ways 195 The Socialization Process 196 Tips For Success: Orientation Checklist 197 Ti Tips The Purpose of New-Employee Orientation 197 Learning the Organization’s Culture 198 R Real ea HR Encounters: HR’s Role in Creating and Sustaining Culture 198 The CEO’s Role in Orientation 199 HRM’s Role in Orientation 199 It’s All in Here: The Employee Handbook 200 Div Diversity Topics: Training, Development, and EEO 200 Why Use an Employee Handbook? 201 Employee Training 201 Determining Training Needs 202 Contents Training Methods 203 What Is a Career? 222 On-the-Job Training Methods 203 Off-the-Job Training Methods 204 Individual versus Organizational Perspective 223 Career Development versus Employee Development 223 Career Development: Value for the Organization 223 Employee Development 205 Employee Development Methods 205 Needed Talent Will Be Available 223 The Organization’s Ability to Attract and Retain Talented Employees Improves 224 Minorities and Women Have Comparable Opportunities for Growth and Development 224 Reduced Employee Frustration 224 Enhanced Cultural Diversity 224 Organizational Goodwill 224 Job Rotation 205 Assistant-To Positions 205 Committee Assignment 206 Lecture Courses and Seminars 206 Simulations 206 Contemporary Connection: Training C on Expenditures 206 Career Development: Value for the Individual 224 Mentoring and Coaching 225 Adventure Training 207 Organization Development 207 Change Is a Popular Topic 208 Eth Ethical Issues in HRM: Mentoring Programs for Women and Minorities 227 The Calm Waters Metaphor 208 The White-Water Rapids Metaphor 209 Traditional Career Stages 228 Exploration 229 Establishment 229 OD Methods 210 Organization Development 210 OD Techniques 210 R ea HR Encounters: Encouraging Managers 229 Real Ethical Issues in HRM: OD Intervention 210 Eth The Learning Organization 211 Evaluating Training and Development Effectiveness 212 Evaluating Training 212 Performance-Based Evaluation Measures 213 Post-Training Performance Method 213 Pre–Post-Training Performance Method 213 Pre–Post-Training Performance with Control Group Method 213 HRM Workshop 217 Linking Concepts to Practice: Discussion Questions 217 Making a Difference: Service Learning Projects 217 Developing Diagnostic and Analytical Skills 217 Case Application 8-A: The Underrated Checklist: Five Steps to Save Lives 217 Case Application 8-B: Delivering at UPS 218 Working with a Team: Orienting Employees 218 Learning an HRM Skill: Coaching Employees 218 Enhancing Your Communication Skills 219 Learning Outcomes 220 Introduction 222 Contemporary C on Connection: Where Are the Jobs? 231 Holland Vocational Preferences 232 The Schein Anchors 234 The Myers-Briggs Typologies 234 Cross-Cultural Training 214 Development 215 Summary 215 Demonstrating Comprehension: Questions for Review 216 Key Terms 216 Managing Careers Mid-Career 230 Late Career 230 Decline (Late Stage) 231 Career Choices and Preferences 232 International Training and Development Issues 214 09 ix 221 Ti T ips For Success: Entrepreneurship: Building Your Tips Own Career 234 Ti T ips For Success: Internships: Experience at Tips Work 236 Taking Responsibility for Building Your Career 236 Summary 237 Demonstrating Comprehension: Questions for Review 238 Key Terms 238 HRM Workshop 239 Linking Concepts to Practice: Discussion Questions 239 Making a Difference: Service Learning Projects 239 Developing Diagnostic and Analytical Skills 239 Case Application 9-A: Reducing Turnover at the Top 239 Working with a Team: Career Insights 240 Learning an HRM Skill: Making a Career Choice 240 Enhancing Your Communication Skills 241 x Contents Part 5 M AINTAINING HIGH PERFORMANC E 10 Establishing the Performance Management System 243 Learning Outcomes 242 Introduction 244 Performance Management Systems 244 Purposes of a Performance Management System 244 C on Contemporary Connection: Abolish Performance Appraisals? 245 Leniency Error 258 Halo Error 258 Similarity Error 259 Low Appraiser Motivation 259 Central Tendency 259 Inflationary Pressures 259 Inappropriate Substitutes for Performance 260 Attribution Theory 260 Creating More Effective Performance Management Systems 261 Use Behavior-Based Measures 261 Contemporary Connection: The “Anywhere” Con Performance Appraisal 262 Difficulties in Performance Management Systems 246 Focus on the Individual 246 Focus on the Process 247 Ethical Issues in HRM: “That’s Not Fair!” When E th Performance Appraisals Go Wrong 247 Combine Absolute and Relative Standards 262 Provide Ongoing Feedback 263 Use Multiple Raters 263 Use Peer Evaluations 263 Tips Tips For Success: Team Performance Appraisals 264 Ti Performance Management and EEO 248 The Appraisal Process 248 Establish Performance Standards 248 Communicate Expectations 249 Measure Actual Performance 249 Compare Actual Performance with Standards 249 Discuss the Appraisal with the Employee 249 360-Degree Appraisals 264 Rate Selectively 264 Train Appraisers 265 The Performance Appraisal Meeting 265 International Performance Appraisal 267 Who Performs the Evaluation? 267 Tips For Success: Performance Metrics in Ti Tips China 268 C on Contemporary Connection: The Feedback Fix 250 Initiate Corrective Action if Necessary 250 Appraisal Methods 250 Evaluating Absolute Standards 251 Critical Incident Appraisal 251 Checklist Appraisal 251 Graphic Rating Scale Appraisal 251 Forced-Choice Appraisal 252 Behaviorally Anchored Rating Scales 253 Summary 268 Demonstrating Comprehension: Questions for Review 269 Key Terms 269 HRM Workshop 270 Linking Concepts to Practice: Discussion Questions 270 Making a Difference: Service Learning Projects 270 Developing Diagnostic and Analytical Skills 270 Case Application 10: Growing Pains at Modern Office Supply 270 Working with a Team: Behaviorally Anchored Rating Scales 272 Working with a Team: The 360-Degree Performance Appraisal 272 Learning an HRM Skill: Writing Appraisal Comments 272 Enhancing Your Communication Skills 273 Relative Standards Methods 254 Group Order Ranking 254 Individual Ranking 254 Contemporary Connection: Forced Rankings: Con Are They Working? 255 Paired Comparison 255 Using Achieved Outcomes to Evaluate Employees 255 Common Elements in MBO Programs 256 Specific Goals 256 Participative Decision Making 256 Specific Time Period 256 Performance Feedback 256 Does MBO Work? 256 Contemporary C on Connection: Facts on Performance Evaluations 257 Factors That Can Distort Appraisals 257 11 Establishing Rewards and Pay Plans Learning Outcomes 274 Introduction 276 Intrinsic versus Extrinsic Rewards 276 275 Contents Ethical E th Issues in HRM: Salary Negotiation and Discrimination 276 Financial versus Nonfinancial Rewards 277 Performance-Based versus Membership-Based Rewards 277 Compensation Administration 278 Government Influence on Compensation Administration 278 Summary 295 Demonstrating Comprehension: Questions for Review 296 Key Terms 296 HRM Workshop 297 Linking Concepts to Practice: Discussion Questions 297 Making a Difference: Service Learning Projects 297 Developing Diagnostic and Analytical Skills 297 Case Application 11: What is Fair at Exactitude Manufacturing? 297 Working with a Team: Understanding Incentive Plans 298 Learning an HRM Skill: Pay-for-Performance Goal Setting 298 Enhancing Your Communication Skills 299 E th Ethical Issues in HRM: The Secret Paycheck 279 Fair Labor Standards Act 281 C on Contemporary Connection: The Minimum Wage Debate 281 The Civil Rights and Equal Pay Acts 282 Job Evaluation and the Pay Structure 282 Job Evaluation 282 Isolating Job Evaluation Criteria 283 Job Evaluation Methods 283 Ordering Method 283 Classification Method 283 Point Method 284 Establishing the Pay Structure 284 Compensation Surveys 284 Wage Curves 285 The Wage Structure 285 External Factors 286 Geographic Differences 286 Labor Supply 286 Competition 286 Cost of Living 287 Collective Bargaining 287 Communicating with Employees 287 Special Cases of Compensation 287 Incentive Compensation Plans 287 Individual Incentives 287 Group Incentives 288 Organization-Wide Incentives 288 Paying for Performance 289 Team-Based Compensation 290 Executive Compensation Programs 291 Salaries of Top Managers 292 Supplemental Financial Compensation 292 Eth Ethical Issues in HRM: Are U.S. Executives Overpaid? 292 Supplemental Nonfinancial Compensation: Perquisites 293 International Compensation 293 Base Pay 294 Differentials 294 Con Contemporary Connection: Compensation in a Global Environment 295 Incentives 295 Assistance Programs 295 xi 12 Employee Benefits 301 Learning Outcomes 300 Introduction 302 Costs of Providing Employee Benefits 302 Contemporary Benefits Offerings 302 Ethical Issues in HRM: Domestic Partner Benefits 304 Eth Legally Required Benefits 304 Social Security 304 Unemployment Compensation 305 Contemporary Connection: Look out for the Silver Con Tsunami 306 Workers’ Compensation 306 Rea HR Encounters: Abusing Worker’s Real Compensation 307 Family and Medical Leave Act 307 Voluntary Benefits 307 Health Insurance 309 Traditional Health Insurance 310 Health Maintenance Organizations 310 Preferred Provider Organizations 310 Point-of-Service 310 Consumer Driven Health Plan 310 Employer-Operated Coverage 312 Health Insurance Continuation 312 The HIPAA Requirement 312 Real R ea HR Encounters: Whiteboard Puts a Face on the Cost of Health Insurance 312 Patient Protection and Affordable Care Act 313 Retirement Benefits 313 E th Ethical Issues in HRM: Airline Pensions Crash and Burn 314 Defined Benefit Plans 315 Defined Contribution Plans 315 xii Contents Money Purchase Pension Plans 316 Profit-Sharing Plans 316 Individual Retirement Accounts 316 401(k)s 316 Paid Time Off 317 Vacation and Holiday Leave 317 Disability Insurance Programs 318 Sick Leave 318 Short-Term Disability Plans 319 Long-Term Disability Plans 319 Ethical Issues in HRM: Making Sick Leave a Eth Required Benefit? 319 Contemporary Connection: Leaving It Up to You: Con Paid Time Off Leave (PTO) 320 Survivor Benefits 320 Group Term Life Insurance 320 Travel Insurance 321 Employee Services and Family-Friendly Benefits 321 An Integrative Perspective on Employee Benefits 321 Flexible Spending Accounts 321 Modular Plans 323 Core-Plus Options Plans 323 Benefits in a Global Environment 323 Summary 324 Demonstrating Comprehension: Questions for Review 325 Key Terms 326 HRM Workshop 326 Linking Concepts to Practice: Discussion Questions 326 Making a Difference: Service Learning Projects 326 Developing Diagnostic and Analytical Skills 327 Case Application 12: Perks and Profits 327 Working with a Team: Benefit Selections 327 Learning an HRM Skill: Calculating a Long-Term Disability Payment 328 Enhancing Your Communication Skills 329 13 Ensuring a Safe and Healthy Work 331 Environment Learning Outcomes 330 Introduction 332 The Occupational Safety and Health Act 332 OSHA Inspection Priorities 332 Eth Ethical Issues in HRM: Legacy of a Tragedy 334 OSHA Record Keeping Requirements 335 Tips For Success: When OSHA Comes to Call 338 Tips OSHA Punitive Actions 339 OSHA: A Resource for Employers 339 Areas of Emphasis 340 Education and Training 340 Assisting Employers in Developing a Safer Workplace 340 Management Commitment and Employee Involvement 340 Worksite Analysis 341 Hazard Prevention and Control 341 Contemporary Connection: OSHA’s Top Ten C on Violations 342 Training for Employees, Supervisors and Managers 342 Contemporary Health and Safety Issues 343 Workplace Violence 343 Indoor Air Quality 344 The Smoke-Free Environment 344 Repetitive Stress Injuries 345 C ur Current Connection: Faith in the Slaughterhouse 345 Stress 346 Common Causes of Stress 347 Symptoms of Stress 348 Contemporary Connection: Is “Cyberloafing” C on Really a Good Thing? 349 Reducing Stress 349 A Special Case of Stress: Burnout 349 Causes and Symptoms of Burnout 350 Reducing Burnout 350 Employee Assistance Programs 350 A Brief History of EAPs 351 EAPs Today 351 Wellness Programs/Disease Management 351 E th Ethical Issues in HRM: Smokers and the Obese Need Not Apply 352 International Safety and Health 353 International Health Issues 353 International Safety Issues 354 Summary 354 Demonstrating Comprehension: Questions for Review 355 Key Terms 355 HRM Workshop 356 Linking Concepts to Practice: Discussion Questions 356 Making a Difference: Service Learning Projects 356 Developing Diagnostic and Analytical Skills 356 Case Application 13: Protection OSHA-Style 356 Working with a Team: Health and Safety 357 Learning an HRM Skill: Developing Safety Skills 357 Enhancing Your Communication Skills 357 Contents Part 6 Strikes versus Lockouts 372 LAB OR -MANAG E ME N T ENVIR ONMENTS 14 Understanding Labor Relations and Collective Bargaining E th Ethical Issues in HRM: The Striker Replacement Dilemma 373 Impasse-Resolution Techniques 374 359 Learning Outcomes 358 Introduction 360 Why Employees Join Unions 361 Higher Wages and Benefits 361 Greater Job Security 361 Influence Over Work Rules 361 Compulsory Membership 361 Dissatisfaction with Management 363 Labor Legislation 363 The Wagner Act 363 The Taft-Hartley Act 364 D iv Diversity Topics: Unions and EEO 365 Other Laws Affecting Labor-Management Relations 365 The Railway Labor Act of 1926 365 Landrum-Griffin Act of 1959 366 Executive Orders 10988 and 11491 366 Racketeer Influenced and Corrupt Organizations Act (RICO) of 1970 366 Civil Service Reform Act of 1978 366 Unionizing Employees 367 Tips For Success: The Union Drive 368 Tips Collective Bargaining 369 Objective and Scope of Collective Bargaining 369 Collective Bargaining Participants 369 The Collective-Bargaining Process 370 Preparing to Negotiate 370 Negotiating at the Bargaining Table 370 Contract Administration 371 Failure to Reach Agreement 372 xiii Critical Issues for Unions Today 374 Union Membership: Where Have the Members Gone? 374 C on Contemporary Connection: The Union Summer 375 Labor-Management Cooperation 375 Public Sector Unionization 376 C on Contemporary Connection: Union Split Creates “Change to Win” 376 International Labor Relations 377 Differing Perspectives toward Labor Relations 379 The European Union 379 Summary 380 Demonstrating Comprehension: Questions for Review 380 Key Terms 381 HRM Workshop 381 Linking Concepts to Practice: Discussion Questions 381 Making a Difference: Service Learning Projects 381 Developing Diagnostic and Analytical Skills 382 Case Application 14: Manager’s Concerns Spiral as Video Goes Viral 382 Working with a Team: Handling a Grievance 382 Learning an HRM Skill: Negotiation Skills 383 Enhancing Your Communication Skills 383 Endnotes 384 Glossary 408 Company Index 415 Subject Index 417 This page is intentionally left blank Preface The sailing crews on the cover face many of the same goals and challenges as any organization in an unpredictable business environment. Success, and possibly survival, depend on a well-designed boat with a carefully selected and thoroughly trained crew that understands the strategy of the race. They must be able to quickly adjust the sails, rigging and rudder to keep moving forward and somehow gain a competitive advantage in order to win the race. External factors may be visible and predictable, but invisible factors like the wind and waves may be unpredictable and require minor adjustments or a major change in strategy. When organizations face challenges they depend on thoroughly trained professionals who react quickly to the changes in the environment and create strategies for success. Human Resource Management (HRM) is responsible for carefully selecting and training people with the necessary skills to pursue the strategy effecLike a crew sailing an ocean race, tively. Some external factors can be predicted; others, such as the collapse success and possibly survival depend of large banks and insurance companies, can seemingly come out of on a good crew that understands the nowhere. The challenges have been coming fast and furious recently as organizations struggle to adjust strategy in the face of an unpredictable strategy and can adapt quickly to the stock market, a sluggish economic recovery, an increasingly global environunpredictable environment. ment, instability in the Eurozone and other global economies, changes brought by elections worldwide, and technology that has made social networking a mainstream tool for business—just to name a few! Welcome to the eleventh edition of Fundamentals of Human Resource Management. It is truly an exciting time to be studying Human Resource Management. We appreciate that you are taking time to read this preface to get a better understanding of the text and the resources for learning it includes. About the Book Students taking an HRM class are very likely to be taking it either as an elective or a first class toward an HRM major. Both of these groups need a strong foundation book that provides the essential elements of HRM and relevant applications of HR principles as well as a clear understanding of how HRM links with business strategy. It is becoming increasingly important for employees on every level of the organization to understand HRM elements such as recruitment, training, motivation, retention, safety, and the legal environment. These fundamentals will not create experts in HRM, yet for those who wish to become experts, this book will provide that strong foundation upon which additional coursework in HRM can be built. The objectives and content in this text have been created to be compatible with the content areas and curriculum templates developed and suggested by the Society of Human Resource Management (SHRM). The minimum HR content areas as identified by SHRM include: ■ Compensation, benefits, and total rewards Employee and labor relations ■ Employment law ■ History of HR and its role ■ HR and globalization ■ HR and mergers and acquisitions ■ HR and organizational strategy ■ xv xvi Preface ■ Human resource information systems (HRIS) Measuring HR outcomes and the bottom line ■ Occupational health, safety, and security ■ Performance appraisal and feedback ■ Recruiting and selection ■ Workforce planning and talent management ■ The content of the text has been developed to provide a background in the functional areas identified by the HR Certification Institute (HRCI) for the exams for certification for Professional in Human Resources (PHR), Senior Professional in Human Resources (SPHR), and Global Professional in Human Resources (GPHR). Our goal has been to produce a text that addresses these critical foundations of HRM, yet provides the most current reference possible for the dynamic present and unpredictable future environment of HRM. All research has been updated, and examples have been kept as current as possible, considering the timeline necessary for publishing a textbook. Some examples will undoubtedly change quickly and unexpectedly. Please consider this an opportunity to research how and why these changes took place and their implications for HRM. Many sources for research and updates have been included in the chapter content and HRM Workshop learning activities. Several Content Topics New in This Edition Ninety percent of the chapters begin with new opening vignettes to add interest and application of concepts as well. End-of-chapter case applications that challenge a student’s understanding of the chapter’s material are also included. Updates and additions to research, current examples, and assignments are too numerous to mention. New topics and other substantial additions to the text include: ■ Suggested service learning activities designed to make a positive difference in the world, while increasing students’ ability to apply HR functions and student employability. ■ Examination of the impact of social media in recruiting, selection, employee rights, and discipline. ■ The impact on the economy and economic recovery on HR including rebuilding a workforce. ■ Updates on HR as a career including pay and employment opportunities. ■ Updated coverage of Global HR practices. ■ Major revisions to Chapter 3 on Equal Employment Opportunity focuses on the increasingly complex application of discrimination laws including retailiation. ■ New discussion on slackers in the workplace—how to reduce, eliminate, or not hire them in the first place. ■ Updated discussion of flexible work scheduling. ■ New look at executive compensation and benefits. ■ Americans with Disabilities Act coverage has been updated. ■ New discussion of changes to employee health plans and evolving healthcare legislation. ■ Significant overhaul of Chapter 13 on safety and OSHA. ■ Updates on unions, labor relations, mediation, and scrutiny of public employee unions New to Chapter 1: New chapter opener on how HR handles natural disasters and global upheaval. New feature on the future of Global HR, updated treatment on labor shortages, new end of chapter case on HR in the Navy. New to Chapter 2: Updated explanation of Strategic HR, expanded coverage of Shared Services, new end of chapter case on how organizational mission and strategy are linked to job design at Frito-Lay. New to Chapter 3: Extensively revised to include a new opener on Retaliation, new section on the protections in Title VII of the Civil Rights act, updated coverage of EEOC role and most common claims filed, updated examples for age discrimination, Preface expanded coverage of the Lilly Ledbetter Fair Pay Act, added coverage of ADA Amendments Act of 2008, expanded coverage of FMLA, and a new section on Genetic Information Nondiscrimination Act (GINA). New to Chapter 4: New chapter opener on unique employee discipline issues. Updated coverage of laws that protect employee rights in the workplace, extensive coverage of Social Media in Current Issues section, new Contemporary Connection box concerning managers who are insecure about using discipline policies. New to Chapter 5: New opener on NASA changes and how they affect HR, new Ethical Issues on Green Jobs and how they are defined, update on HRIS technology and Saas (Software as a Service), new feature on hard to fill jobs, new Contemporary Connection feature on non-traditional schedules. New to Chapter 6: Extended coverage of online recruiting efforts, new coverage of recruiting effectiveness, new section on using social media to the job seeker’s advantage. New to Chapter 7: New chapter opener on employee selection procedures at Bon Ton Department Stores. New Contemporary Connection feature on professionalism on the phone, expanded and updated coverage of I-9 forms and Employment Eligibility Verification, expanded coverage of Negligent Hiring, New to Chapter 8: New chapter opener on a unique and successful Welfare-to-Work program. New features on the best practices in onboarding new employees and orientation checklists. New section on training methods. New to Chapter 9: Increased coverage of internships. New learning activities and new case on career development at Newell Rubbermaid. New to Chapter 10: New student-centered examples, expanded coverage of unethical practices and discrimination during performance appraisals, new Workplace Issues on HR movement to eliminate traditional appraisals in favor of better communication and frequent feedback, and Millenials’ need for constant feedback. New Case Application that outlines the issues an organization encounters when the performance appraisal process is neglected. New to Chapter 11: Updated coverage of the Lilly Ledbetter Fair Pay Act, new Workplace Issues on unpaid internships, updated coverage of Executive Compensation and Golden Parachutes. New coverage on hardship differentials in compensation for expat employees. New Case Application that focuses on a company that realigns compensation to fit organizational strategy with mixed results. New to Chapter 12: Coverage of Michelle’s Law updated to show influence on the Affordable Care Act, Social Security and Silver Tsunami discussions updated, and new section on employer efforts to cut healthcare costs. New to Chapter 13: New Contemporary Connection feature on the Triangle Shirtwaist Factory Fire in 1911 and its continuing impact on employee safety. Expanded coverage of the General Duty Clause and its importance. Coverage of OSHA top ten violations, workplace violence, smoke free environment coverage, and cyberloafing updated. New to Chapter 14: New chapter opener on public opinion of unions and the rights of public sector unions. Railway Labor Act section expanded, union organizing efforts coverage updated and expanded, new section on unions in China, two new learning activities added. New Case Application that looks at issues employers encounter when workers are considering talking to union organizers. Features to Encourage Learning Our experience has shown us that students are more likely to read a text when the reading is straightforward and conversational, the topics flow logically, and the authors make extensive use of examples to illustrate concepts. Students also remember and understand the concepts and practices most clearly when they are illustrated through examples, so we’ve used a wealth of examples to clarify ideas and build interest. The last year has provided unusual challenges to providing current examples. The U.S. Presidential election, political challenges to the Affordable Care Act (Obamacare), and the political and economic future of several countries including Greece, Italy, Spain, Ireland and Egypt xvii xviii Preface are among the issues that remain unsettled as this text goes into print. You will probably discover that the circumstances of a particular company have changed dramatically since the text was published. Please consider it an opportunity to research and learn why the change occurred and the role HR has in the change. We have also tried to write this edition in a clear, concise, and conversational style. Students taking the class online may appreciate a text that is more conversational since they usually do not have regular face-to-face interaction with faculty or classmates. These factors guided us in developing this text as a highly effective learning tool. Let’s take a look as some of the features of the text that facilitate learning: Learning Outcomes Learning outcomes identify what the reader should gain after reading the chapter. These outcomes are designed to focus students’ attention on major topics within each chapter. Each outcome is a key learning component for our readers. Learning outcomes were carefully examined and updated for this eleventh edition. Chapter Summaries Just as outcomes tell the readers where they are going, chapter summaries remind readers where they have been. Each chapter of the book concludes with a concise summary linked to the learning outcomes identified at the beginning of each chapter. Key Terms Throughout the chapter, key terms are highlighted where they first appear in the text and are defined in the margin as well as in the Glossary section in the back of the book. Key terms are also listed at the end of each chapter as a reminder of the major terms defined in the material just read. Review and Discussion Questions Every chapter in this book contains a set of review and discussion questions. If students have read and understood the concepts of the chapter, they should be able to answer the review questions. These reading-for-comprehension questions are drawn directly from the chapter material. The discussion questions go beyond comprehension. They’re designed to foster higher order thinking skills by requiring readers to apply, integrate, synthesize, or evaluate an HRM concept. The Linking Concepts to Practice discussion questions will allow students to demonstrate that they not only know the facts in the chapter, but they can also use those facts to deal with more complex issues. They also make great “lecture break” discussion questions for small or large groups. HRM Workshop It’s not enough to just know about Human Resource Management. Students entering HRM today need a variety of skills for career success. The HRM Workshop sections at the end of each chapter are designed to help students build analytical, diagnostic, teambuilding, investigative, presentation, communication, and writing skills. We address these skill areas in several ways. “Making a Difference: Service Learning Activities” is a new addition to the HRM Workshop for the 11th edition. Suggestions are included with the hopes that students will develop and participate in activities that make a difference in their community or the world. They require application of human resource management concepts and have the added benefit of enhancing students’ resume and employability. A section called “Developing Diagnostic and Analytical Skills” consists of current case studies of real companies with questions designed to build critical thinking and decision-making skills along with diagnostic and analytical skills. “Working with a Team” includes thought-provoking scenarios for team discussions in class or team projects outside of class. A section called “Learning an HRM Skill” is comprised of skillbuilding activities that concentrate on the personal competencies necessary for HRM career success as identified by the Society of Human Resource Management (SHRM). Finally, “Enhancing Your Communication Skills” includes activities that develop important research, writing, and presentation skills. Many of these activities include writing Preface short research papers or creating class presentations using presentation software or short videos found online. PowerPoint One piece of feedback we received was that many of professors were using PowerPoint slides and students were spending considerable time copying the slides. Students requested that we help them take better notes by including copies of the slides on our website. Accordingly, we’ve provided these PowerPoint slides that accompany each chapter on the student companion site. Supplemental Material This book is supported by a comprehensive learning package that helps instructors create a motivating environment and provides students with additional instruments for understanding and reviewing major concepts. The following resources can be found on the instructor and student companion sites at Instructor’s Resource Guide This includes a chapter overview, description of additional features within the chapter, chapter outline, additional lecture and activity suggestions, answers to class exercises, answers to case applications, and additional review and discussion questions for each chapter. PowerPoint A robust set of PowerPoint slides developed to help enhance your lectures are provided for each chapter. An image bank, containing all of the illustrations from the text, is also provided for inclusion in PowerPoint presentations. The slides have also been provided in handout form on the student companion site. Test Bank This resource contains approximately eighty questions per chapter, including multiple choice, true/false, matching, and completion questions. Computerized Test Bank This test bank, powered by Diploma, allows instructors to customize quizzes and exams for each chapter. Video Package A DVD has been developed for this course that contains a selection of video clips that relate to various topics throughout the text. These can be used to introduce topics, provide group activities during class, or provide background for class discussion. A learning guide for the videos is available on the instructor companion website. Student Web Quizzes Online quizzes, varying in level of difficulty, are designed to help students evaluate their individual chapter progress. Here, students will have the ability to test themselves with fifteen questions per chapter. Acknowledgments Getting a finished book into a reader’s hands requires the work of many people. The authors do their part by efficiently developing an outline, thoroughly researching topics, writing about the topics, and developing learning activities. We would like to recognize just a few of the people who contributed to this text. First are our reviewers. Authors cannot survive without good feedback from reviewers. Ours were outstanding, and we appreciate the feedback they gave us. We do recognize that the book before you is better because of the insight they provided. We’d like to recognize reviewers of this edition: Denise H. Barton, Wake Technical Community College; xix xx Preface Mary Anne Edwards, College of Mount Saint Joseph; Laurie Giesenhagen, California State University-Fullerton; Kelly Anne Grace, Georgia Institute of Technology; Jennie Johnson, University of Texas-Brownsville; Gundars Kaupins, Boise State University; Margaret Rechter, University of Pittsburgh, Greensburg; Valerie L. Robinson, Bakersfield College; Andrea Smith-Hunter, Siena College; Gary Stroud, Franklin University; Peter Szende, Boston University; Kostas Voutsas, Dickinson State University. A book doesn’t simply appear automatically on bookstore shelves. It gets there through the combined efforts of many people. For us, this is the outstanding publishing team at John Wiley & Sons, consisting of George Hoffman, Publisher; Lisé Johnson, Acquisitions Editor; Susan McLaughlin, our very gifted and patient editor; Brian Baker, Project Editor; Melissa Solarz, Editorial Assistant; and Joel Balbin, Associate Production Manager. Brenda Moorehead also deserves a special thanks for generously sharing experience and knowledge that was woven into many chapters, especially the thoroughly revised Chapter 13. The management and human resource management students of Des Moines Area Community College also deserve a big thank you for their endless supply of issues, examples and suggestions. Last, we want to acknowledge a few people individually. From Dave: To my wife, Terri, for all her support and love—and for simply putting up with me. And to my children—Mark, Meredith, Gabriella, and Natalie—thank you for all you do. It gives me great pride to say I am your father. You each have made me very proud in your own special way by the person you have become. You continue to be the “light of my life.” From Steve: To Laura for all that she brings to my life. From Susan: To my endlessly supportive husband John, my amazingly talented daughter Katie, and my wonderful Mom. I love you all more than I can say. About the Authors Courtesy of Costal Carolina University DAVID A. DECENZO received his Ph.D. from West Virginia University. He is the president at Coastal Carolina University. His major teaching and research interests focus on the general areas of human resource management, management, and organizational behavior. He has published articles in such journals as Harvard Business Review, Business Horizons, Risk Management, Hospital Topics, and Performance and Instruction. Dr. DeCenzo has spent the past two-plus decades writing textbooks. His books include Supervision Today and Fundamentals of Management with Stephen Robbins; Human Relations with Beth Silhanek; Essentials of Labor Relations (1992) with Molly Bowers; and Employee Benefits (1990) with Stephen Holoviak. These books are used widely at colleges and universities in the United States, as well as schools throughout the world. Dr. DeCenzo also has industry experience as a corporate trainer, and has served as a consultant to a number of companies. He also serves on the Board of Directors of the AVX Corporation. Courtesy of Stephen P. Robbins STEPHEN P. ROBBINS received his Ph.D. from the University of Arizona. He previously worked for the Shell Oil Company and Reynolds Metals Company and has taught at the University of Nebraska at Omaha, Concordia University in Montreal, the University of Baltimore, Southern Illinois University at Edwardsville, and San Diego State University. Dr. Robbins’s research interests have focused on conflict, power, and politics in organizations; behavioral decision making; and the development of effective interpersonal skills. His articles on these and other topics have appeared in such journals as Business Horizons, California Management Review, Business and Economic Perspectives, International Management, Management Review, Canadian Personnel and Industrial Relations, and Journal of Management Education. Dr. Robbins is the world’s number one selling textbook author in the areas of management and organizational behavior. His books have sold in excess of six million copies; are currently used by students in more than 1,500 U.S. colleges and universities; and have been translated into nineteen languages. Dr. Robbins also actively participates in masters’ track competition. Since turning fifty in 1993, he has set numerous indoor and outdoor age-group world sprint records; and won eighteen national championships and twelve world titles. In 2005, he was inducted into the Masters Track & Field Hall of Fame. Courtesy of Paul Blaser, Blaser Photography SUSAN L. VERHULST, PHR received her M.B.A. from Drake University. She is a Professor of Management at Des Moines Area Community College where she has received the “Distinguished Teaching Award.” Susan teaches human resource management and management classes and has researched, developed, and taught online courses in management and human resource management. Her previous work with John Wiley & Sons includes being a contributing author to Fundamentals of Human Resource Management 10th edition and instructor’s guides in the areas of management and organizational behavior. She is a member of the Society of Human Resource Management and has achieved Professional in Human Resources (PHR) certification through the HR Certification Institute. xxi To: Our Readers From: Dave DeCenzo, Steve Robbins, and Susan Verhulst Subject: How to Get the Most Out of This Text All authors of a textbook generally include a preface that describes why they wrote the book and what’s unique about it, and then thank a lot of people for the role they played in getting the book completed. Well, we’re no different. We just did that, too. But it has become crystal clear to us that two things are common about a book’s preface. First, it’s usually written for the professor, especially one who’s considering selecting the book. Second, students usually don’t read the preface. That’s unfortunate because it often includes information that students would find useful. As authors, we do listen to our customers. And many of ours have told us that they’d enjoy some input from us. So we’ve written this memo. Our purpose is to provide you with our ideas about the book, how it was put together, and more important how you can use it to better understand the field of HRM and do better in this class! This book was written to provide you with the foundations of HRM. Whether you intend to work in HRM or not, most of these elements will affect you at some point in your career. How? Take, for example, the performance appraisal. Although you might not currently be in a position to evaluate another individual’s work performance, if you are working, you’re more than likely to have your performance appraised. For that matter, each time you take an exam in a class, your performance is being evaluated. Consequently, it’s important for you to have an understanding of how it should work, and the potential problems that may exist. We begin Part 1 of this book with an emphasis on providing you with an overview of the ever-changing world of work and the effect it is having on HRM. With that as a foundation, we then proceed to introduce you to HRM, its approach, the link to organizational strategy, and the different roles HR plays. In Part 2, we turn our attention to the laws that affect HRM activities. Much of how HRM operates is guided by legislation and court decisions that prohibit practices that adversely affect certain groups of people. Without a good understanding of these laws, an organization’s performance can suffer, and the organization can be vulnerable to costly lawsuits. Part 2 ends with a discussion of several areas focusing on employee rights. Parts 3 through 5 provide coverage of the fundamental activities that exist in HRM. Part 3 explores the staffing function, with discussions on employment recruiting and selection. Part 4 addresses means for socializing, training, and developing employees. Part 5 looks at how organizations encourage high performance by evaluating, paying, and rewarding its employees. Much of the discussion in Parts 2 through 5 reflects typical activities in an organization that is not unionized. When a union is present, however, many of these practices might need modification to comply with another set of laws. As such, we reserved the final chapter for dealing with labor-management relations. While we are confident that completing the fourteen chapters contained in this book will provide the fundamentals of HRM, a text has to offer more. It should not only cover topics (we hope, in an interesting and lively way), it should also assist in the learning process. It should be written in such a way that you can understand it, it keeps your attention, and it provides you an opportunity for feedback. We think we’ve met each of these goals. Of course, only you can be the judge of our claim. But let’s look at how we arrived at our conclusion. xxii To Our Readers To be understandable and lively means that we need to communicate with you. We make every attempt in this text to have it sound as if we were in front of your class speaking with you. Writing style is important to us. We use examples whenever possible—real companies, so you can see that what we talk about is happening in the real world. In the past, people using our books have indicated that our writing style does help hold their attention. But although good communication is critical, is only half of the equation. The ultimate tests for you are: Does the book help you do well on exams? Does it help prepare you for a job? We start every chapter with learning outcomes. We view these as the critical learning points. They present a logic flow from which the material will be presented. If you can explain what is proposed in each learning objective, you’ll be on the right track to understanding the material. But memory sometimes fools us. We read the material, think we understand it, see how the summaries directly tie the learning outcomes together, then take the exam and receive a grade that is not reflective of what we knew we knew. We have given a lot of thought to that issue, and think we’ve come up with something that will help—putting a feedback test on, the website that supports our book! The typical textbook ends each chapter with a set of review questions. Sometimes, your tests look much like these types of questions. But exams also have a tendency to emphasize multiple-choice questions. So we’ve included sample test questions on our website ( to help you prepare for exams in this class. These questions are actual questions that we’ve used to test our students’ understanding of the material. If you can correctly answer these questions, then you’re one step closer to enhancing your understanding of HRM. Recognize, of course, that these are only a learning aid. They help you to learn but don’t replace careful reading or intensive studying. And don’t assume that getting a question right means you fully understand the concept covered. Why? Because any set of multiple-choice questions can only test a limited range of information. So don’t let correct answers lull you into a false sense of security. If you miss a question or don’t fully understand why you got the correct response, go back to the material in the chapter and reread the material. Learning, however, goes beyond just passing a test. It also means preparing yourself to perform successfully in tomorrow’s organizations. You’ll find that organizations today require their employees to work more closely together than at any time in the past. Call it teams, horizontal organizational structures, matrix management, or something similar, the fact remains that your success will depend on how well you work closely with others. To help model this group concept for you, we have included class exercises in this text. Each of these team experiential learning efforts is designed to highlight a particular topic in the text and give you an opportunity to work in groups to solve the issue at hand. One last thing before we close: What can you take out of this course and use in the future? Many business leaders have complained about how business schools train their graduates. Although business schools have made many positive accomplishments, one critical component appears lacking—practical skills. The skills you need to succeed in today’s business environment are increasing. You must be able to communicate (both verbally and in a written format), think creatively, make good and timely decisions, plan effectively, and deal with people. In HRM, we have an opportunity to build our skills bank. As you go through this text, you’ll find a dozen or more practical skills that you can use on your job. We hope you give them special attention, practice them often, and add them to your repertoire. We’ve also included suggestions for writing and presentation assignments that cover an important aspect of the chapter’s material. Look at these as a learning tool, not as an assignment that you have to do. We think you’ll find working on these will help prepare you for dealing with the kinds of writing requests you get on the job. Finally, if you’d like to tell us how we might improve the next edition of this book, we encourage you to write Dave DeCenzo at Coastal Carolina University, P.O. Box 261954, Conway, SC 29528; or email him at [email protected] To those of you who have done so in the previous editions, we appreciate you taking the time to write us. Thanks for helping us out. xxiii (Source: Mark Schiefelbein/©AP/Wide World Photos) LEARNING OUTCOMES After reading this chapter, you will be able to 1. Discuss how cultural environments affect human resource management (HRM) practices. 2. Describe how technology is changing HRM. 3. Identify significant changes that have occurred in workforce composition. 4. Describe the HRM implications of a labor shortage. 5. Describe how changing skill requirements affect HRM. 6. Explain why organizational members focus on quality and continuous improvements. 7. Describe work process engineering and its implications for HRM. 8. Identify who makes up the contingent workforce and the HRM implications. 9. Define employee involvement and list its critical components. 10. Explain the importance of ethics in an organization. 2 The Dynamic Environment of HRM D isaster has struck your community. The power is out, phone lines are down, and you are having trouble getting to your company headquarters. Roads are blocked with debris and the streets are flooded. When you finally arrive, you cannot enter the building because the power is out and electronic key cards won’t work. It may be days before you’re able to return to your office. As the company HR director, you wonder where your employees are, if they are safe, and how you will manage to pay them in the midst of a disaster. This scenario has been played out in many communities worldwide during recent disasters including tornadoes, flooding, hurricanes, earthquakes, tsunamis, economic meltdowns, and overthrown governments. These disasters have a ripple effect and are challenging not only for local employers, but also for a host of multinational companies that have interests in the country affected. The role of the HR professional can vary widely depending on the magnitude of the disaster and the size of the company. In a large organization, HR may work with the risk management, security, communications, and PR departments to coordinate a comprehensive response. This may include providing employees with protection, communication, shelter, food, and possibly even evacuation. HR professionals in smaller organizations may find themselves with the central role of meeting the immediate needs of employees and their families. The devastating Japanese earthquake and tsunami, for example, provided challenges for the many Japanese and multinational companies with interests in the region. The U.S.-based insurance company Aflac Inc. had a disaster plan in place, but the extent of the devastation from 3 1 the earthquake, tsunami, and resulting nuclear reactor failure tested the limits of even their well-thought-out plan. Food and personal supplies were brought to employees who were encouraged to stay at Aflac’s Tokyo headquarters until they felt it was safe to return home. FedEx also has extensive operations in Japan, including one facility that was wiped out by the tsunami. Although all employees survived the initial disasters, FedEx employed a radiation health physicist to help with future decisions regarding their Japanese operations.1 HR departments at other Japanese companies provided employee services ranging from counseling to handing out potassium iodide tablets for protection from the health risks of exposure to radiation. Natural disasters are only part of the complex environment faced by HR professionals operating in a global environment. Political unrest can also put employees in peril. In countries like Egypt, Libya, Yemen, and Syria, HR professionals have had to track down missing or kidnapped employees or arrange to evacuate employees to safety by ferry or chartered aircraft.2 The complicated scenarios involved in managing a worldwide workforce will only multiply as more businesses have global interests and multinational corporations continue to grow. Welcome to the dynamic environment of Human Resource Management in our changing world. Fasten your seat belts, you’re in for a wild ride. Looking Ahead How have environmental factors such as technology, the economy, or natural disasters affected your work experience already? 4 Chapter 1 The Dynamic Environment of HRM Introduction Most of the disasters discussed in the chapter opener occurred with little or no warning. The impact on the people and businesses affected has been profound and lasting. When disaster strikes a community, affecting the workplace, employees often turn to their employers for support, stability, and safety. This places enormous pressure on Human Resource Management (HRM) to anticipate and prepare for the unexpected, whether it is a natural disaster, technological change, or economic volatility. Fortunately, the majority of environmental changes faced in global business are not of the life-or-death variety. Businesses must recognize forces in our business environment that affect the expectations of employees as well as customers. HRM is a subset of the study of management that focuses on how to attract, hire, train, motivate, and maintain employees. Strong employees become a source of competitive advantage in a global environment facing complex and rapid changes. As part of an organization, HRM must be prepared to deal with the effects of these changes. This means understanding the implications of globalization, global economies, technology changes, workforce diversity, labor shortages, changing skill requirements, continuous improvement initiatives, the contingent workforce, decentralized work sites, company mergers, offshore sourcing of goods and services, and employee involvement. Let’s look at how these changes are affecting HRM goals and practices in organizations functioning in a global environment. Understanding Cultural Environments globalization A process of interaction and integration among the people, companies, and governments of different nations, driven by international trade and investment, accelerated by information technology. multinational corporations (MNCs) Corporations with significant operations in more than one country. As part of the rapidly changing environment, organizational members face the globalization of business. Organizations are no longer constrained by national borders in producing goods and services. For example, BMW, based in Germany, builds cars in South Carolina. Similarly, Walmart is rapidly expanding their retail operations in China, and General Electric expects to receive 60 percent of its revenue growth from developing countries in the next ten years.3 Toyota makes cars in Kentucky; Mercedes sport utility vehicles are made in Alabama.4 Quintessentially American company John Deere makes farm equipment in Illinois to ship to Russia, makes equipment in China to ship to the Middle East, and its German-and Indian-made tractors to the United States. Tractors made in the United States are assembled with parts received from twelve countries and are shipped to over 110 countries.5 These examples illustrate the extent of globalization’s effect on manufacturing and labor. To be effective in this boundless world, organizational members and HRM professionals need to adapt to cultures, legal systems, and business practices in many different countries. International businesses have been with us for a long time. For instance, Siemens, Remington, and Singer were selling their products in many countries in the nineteenth century. By the 1920s, some companies, including Fiat, Ford, Unilever, and Royal Dutch/ Shell, had gone multinational. Not until the mid-1960s, however, did multinational corporations (MNCs) become commonplace. These corporations, which maintain significant operations in two or more countries simultaneously but are based in one home country, initiated the rapid growth in international trade. Today, companies such as Ford, Walmart, Procter & Gamble, Apple, Disney, and Coca-Cola are among a growing number of U.S.-based firms that derive significant portions of their annual revenues from foreign operations.6 The rise of multinational and transnational corporations7 places new requirements on human resource managers. For example, human resource departments must ensure that employees with the appropriate mix of knowledge, skills, and cultural adaptability are available and ready to handle global assignments. Every country is different. The extreme variety of values, ethics, religious practices, customs, economic environments, and political and legal systems in the world puts enormous pressure on HR professionals to understand the circumstances of each country in its own context. For example, status is perceived differently in different countries. In France, status is often the result of factors important to the organization, such as seniority and education. This emphasis is called ascribed status. In the United States, status is more a function of what individuals have personally accomplished, also known as achieved status. The Impact of Technology 5 Exhibit 1-1 Countries That Value Individualism and Acquiring Things Countries That Value Collectivism, Relationships, and Concern for Others United States Great Britain Australia Canada Netherlands New Zealand Japan China Pakistan Singapore Venezuela Philippines Human resource managers need to understand societal issues, such as status, that might affect operations in another country. Countries also have different laws. For instance, in the United States, laws guard against an employer taking action against an employee solely on the basis of an employee’s age. Not all countries have similar laws. Organizations that view the global environment from any single perspective may be too narrow and potentially problematic. A more appropriate approach is to recognize the cultural dimensions of a country’s environment. Although it is not our intent here to provide the scope of cultural issues needed for an employee to go to any country, we do want to recognize that some similarities do exist (see Exhibit 1-1). Research findings allow us to group countries according to such cultural variables as status differentiation, societal uncertainty, and assertiveness.8 These variables indicate a country’s means of dealing with its people and how the people see themselves. For example, in an individualistic society such as the United States, people are primarily concerned with their own family. In a collective society (the opposite of an individualistic one) such as that in Japan, people care for all individuals who are part of their group. A strongly individualistic U.S. employee may not work well if sent to a Pacific Rim country where collectivism dominates. Accordingly, flexibility and adaptability are key components for employees going abroad. To make this a reality, human resource managers must have a thorough understanding of the culture of the areas around the globe to which they send employees. HRM must also develop mechanisms that will help multicultural individuals work together. As background, language, custom, or age differences become more prevalent, employee conflict is likely to increase. HRM must make every effort to acclimate different groups to each other, finding ways to build teams and thus reduce conflict. It’s important to note that not all HRM theories and practices are universally applicable to managing human resources around the world. This is especially true in countries where work values differ considerably from those in the United States. Human resource managers must take cultural values into account when trying to understand the behavior of people from different countries as well as those in different countries. In every chapter of this text we will examine how globalization affects HRM practices. The Impact of Technology Think about the technology you’ve used today. Did you use a smart phone to check voicemail or Facebook? Check driving directions on a GPS? Check your e-mail? Use a wireless Internet connection on a laptop or iPad? Take a digital picture on a camera or phone? Maybe you’re even taking this class online. It’s hard to imagine daily life without these, but they are all on CNN’s list of the top twenty-five innovations of the last twenty-five years.9 Cultural Values Countries differ greatly on the emphasis they place on the individual versus the collective. Organizations that plan to enter the global environment need to do their homework to understand the culture and workers. Many organizations have explored expansion to other countries to find new markets and labor sources. McDonald’s started expanding internationally in 1967. They now have over 30,000 restaurants in 118 countries. (Source: Uriel Sinai/Getty Images, Inc.) 6 Chapter 1 The Dynamic Environment of HRM The Internet was the clear winner in CNN’s reader poll of the most influential innovations of the last quarter century. The influence of the Internet on our lives, employers, the way we work, and the economy was on the mind of Thomas Friedman, a Pulitzer Prize-winning New York Times author, as he explored the foundations of globalization in his best-selling book, The World Is Flat. Friedman contends that there are three eras of globalization, the first driven by transportation, the second by communication, and the third by technology. The first is called Globalization 1.0 and extends from Columbus’s 1492 discovery of the new world to 1800. During this time, countries tried to establish their place in the world by conquering or collaborating with other countries and territories. The emphasis was national identification and economic domination. During this era, the world shrank from a size large to a size medium. Globalization 2.0 began in 1800 and ended in 2000. Multinational companies emerged, seeking labor and markets for the goods of the industrial revolution. Expansion was fueled by lower costs and increased speed of transportation and communication, shrinking the world from a size medium to a size small. Globalization 3.0 arrived around 2000 as countries, companies, and individuals were able to compete on an almost level playing field, aided by cheap, instantaneous communication via fiber optics and the Internet. Fast, inexpensive transportation of people and goods aided this transition of power that further shrank the world from a size small to a size tiny. Individuals are now empowered to compete globally regardless of country of origin. Friedman projects that world economies will be dominated by empowered individuals, creating a business environment that is more diverse and less dominated by organizations in Western countries. You’ve already experienced the impact of Globalization 3.0. A shift has taken place in geographic labor supply and demand. Just as the industrial revolution changed national economies by shifting jobs from craftsmen to mass manufacturing, Globalization 3.0 has shifted demand for manufacturing and services such as customer service to low-cost providers in Mexico, India, and China. Friedman points out that these forces can’t be turned back and will only grow in their impact. Organizations operating in this global environment recognize that this diverse world includes many different nationalities, languages, and cultures. HR professionals need to be prepared for the challenge in welcoming diversity and adapting training.10 What Is a Knowledge Worker? Technology has been a good news/bad news proposition for workers. While technology has h reduced the demand for manufacturing jobs through automation and increased in competition with other countries, it has also generated an Knowledge-work jobs are designed increase in in the demand for service producing and technology positions. around the acquisition and application Employment E in information technology is expected to be among the fastest e growing job sectors in the next decade, along with Internet publishing of information. and a wireless telecommunications.11 Peter Drucker, the late management scholar and consultant, held that knowledge workers the key to the productivity of knowledge workers depends on the ability to use technolIndividuals whose jobs are ogy to locate and use information for decision making.12 Knowledge workers include prodesigned around the acquisition fessionals such as registered nurses, accountants, teachers, lawyers, and engineers. It also and application of information. includes technologists—people who work with their hands and with theoretical knowledge—commonly referred to as information technologists. Computer programmers, software designers, and systems analysts are examples of jobs in this category. Knowledge workers as a group—individuals in jobs designed around the acquisition and application of information—currently make up about a third of the U.S. workforce. How Technology Affects HRM Practices Technology has had a positive effect on internal operations for organizations, but it has also changed the way human resource managers work. HRM professionals have become the primary source of information in many organizations. Information can be communicated quickly and easily via company websites and intranets, e-mail, Facebook, and Twitter. The Impact of Technology 7 Human Resource Information Systems (HRIS) allow HRM professionals to better facilitate human resource plans, make decisions faster, clearly define jobs, evaluate performance, and provide cost effective benefits that employees want. Technology helps to strengthen communications with both the external community and employees. How? Let’s look at some specific examples. Recruiting Contacting a pool of qualified applicants is one of the most critical aspects of recruiting. Word of mouth, newspaper advertisements, and college visits have largely been replaced by job postings on the Internet. Posting jobs on company websites, or through specific job-search websites such as and, help human resource managers reach a larger pool of potential job applicants and assist in determining if an applicant possesses basic technology skills. Additionally, rather than ask for a paper copy of a résumé, many organizations are asking applicants to submit an electronic résumé—one that can be quickly scanned for “relevance” to the job in question. Employee Selection Hiring good people is particularly challenging in technologybased organizations because they require a unique brand of technical and professional skills. Employees must be smart and able to survive in the demanding cultures of today’s dynamic organizations. In addition, many such “qualified” individuals are in short supply and may be offered a number of opportunities for employment. Once applicants have been identified, HRM must carefully screen final candidates to ensure they fit well into the organization’s culture. Many Internet tools make background searches of applicants quick and easy. The realities of organizational life today may focus on an informal, teamspirited workplace, one in which intense pressure to complete projects quickly and on time is critical, and a 24/7 work mentality dominates. HRM selection tools help to “select out” people who aren’t team players, can’t handle ambiguity and stress, or are a poor fit with company culture. Companies like Southwest Airlines and Four Seasons Resorts recruit employees who convey a positive attitude, which to them is a better indicator of job success and fit with company culture than experience. Training and Development Technology is also dramatically changing how human resource managers orient, train, and develop employees and help them manage their careers. The Internet has provided HRM opportunities to deliver web-based training and development to employees on demand, whenever the employee has the time to concentrate on the material. Four Seasons Resorts, for example, has discovered the advantages of delivering language training and management development classes online. Teleconferencing technology allows employees to train and collaborate in groups regardless of their location. Organizations that rely heavily on technology find an increased need for training. Online training and teleconferencing also allow HR departments to deliver cost effective training that helps stretch the HR budget. Ethics and Employee Rights Electronic surveillance of employees by employers is an issue that pits an organization’s desire for control against an employee’s right to privacy. The development of increasingly sophisticated surveillance software only adds to the ethical dilemma of how far an organization should go in monitoring the behavior of employees who work on computers (see Ethical Issues in HRM). One major example is our increased reliance on technology, providing a good news/bad news situation in the workplace. As mentioned earlier, technology is a valuable resource for knowledge workers, yet it provides ample opportunity for misuse and nonproductive work behaviors. The American Management Association reports that 66 percent of employers monitor employee’s Internet use and 28 percent have fired employees for e-mail misuse.13 We will take an extensive look at the privacy rights of employees in Chapter 4, and we will study the ethics of HRM throughout this book. Wireless Internet and smart phones help companies maximize productivity and effectiveness of workers regardless of their location. Mobile workers need access to the same applications and corporate data that they have in the office. (Source: Masterfile) 8 Chapter 1 The Dynamic Environment of HRM Motivating Knowledge Workers What are some of the unique challenges in motivating knowledge workers in organizations? Knowledge workers appear more susceptible to distractions that can undermine their work effort and reduce their productivity. Employers often believe they must monitor what employees are doing because employees are hired to work, not to surf the web checking stock prices, placing bets at online casinos, or shopping for presents for family or friends. “Cyber Monday,” or the Monday after Thanksgiving, as a day to do personal holiday shopping has increased dramatically in recent years, and recreational on-the-job web surfing costs over a billion dollars in wasted computer resources and billions more in lost work productivity annually. That’s a significant cost to businesses in terms of time and money. Paying Employees Market Value It’s becoming more difficult today for organizations to find and retain technical and professional employees. Many companies have implemented an extensive list of attractive incentives and benefits rarely seen by nonmanagerial employees in typical organizations: for instance, signing bonuses, stock options, cars, free health club memberships, full-time on-site concierges, and cell phone bill subsidies. These incentives may benefit their recipients, but they have downsides. One is the perception of inequity if they are not offered to all employees. Another is the problem created by offering stock options as a benefit to employees. While they look good when a firm is growing and the stock market is performing favorably on the company’s future, stock options can reduce employee motivation when market conditions reduce the value of the stock. Pay plans and employee benefits will be addressed in depth in Chapters 11 and 12. Communications Technology allows employees to communicate with any individual directly without going through traditional channels. Instantly, anytime, with anyone, anywhere. These open communication systems break down historical organizational communication pattern flows. They also redefine how meetings, negotiations, supervision, and watercooler talk are conducted. For instance, Facebook, LinkedIn, Twitter, and other social media allow employees to keep in close contact regardless of position or location. Moreover, it’s now easier for employees in Baltimore and Singapore to covertly share company gossip than for offline employees who work two cubicles apart. Decentralized Work Sites For human resource managers, much of the challenge regarding decentralized work sites revolves around training managers to establish and ensure appropriate work quality and on-time completion. Decentralized work sites remove traditional “face time,” and managers’ need to “control” the work must change. Instead, greater employee involvement will allow workers the discretion to make decisions that affect them. For instance, although a due date is established for the work assigned to employees, managers must recognize that offsite employees (or telecommuters) will work at their own pace. Instead of focusing work efforts over an eight-hour period, the individual may work two hours here, three hours at another time, and another three late at night. The emphasis, then, will be on the final product, not on the means by which it is accomplished. Working from home may also require HRM to rethink its compensation policy. Will it pay workers by the hour, on a salary basis, or by the job performed? More than likely, jobs such as claims processing that can be easily quantified and standardized will earn pay for actual work done. Skill Levels What are the skill implications of this vast spread of technology? For one, employees’ job skill requirements will increase.14 Workers will need the ability to read and comprehend software and hardware manuals, technical journals, and detailed reports. Another implication is that technology tends to level the competitive playing field.15 It provides organizations, no matter their size or market power, with the ability to innovate, bring products to market rapidly, and respond to customer requests. Remember that Globalization 3.0 allows individuals to compete worldwide in purchasing or providing services. Many companies have found that services in technology, programming, The Impact of Technology 9 radiology, and financial analysis can be provided by skilled employees in India as easily as an employee in the United States. A Legal Concern Every organization needs a clear policy that thoroughly explains what is appropriate and inappropriate use of company Internet use, e-mail, and social media. Employees need to understand that there is no privacy when they use e-mail, blogs, and social media, and that personal comments and photos are often grounds for discipline if they can be interpreted as discriminatory, harassing, or defamatory. We will address employee privacy rights further in Chapter 4. ET HI CAL ISSUE S IN HRM Invasion of Privacy? Technological advances have made the process of operating an organization much easier, but these advancements have also provided employers with a means of sophisticated employee monitoring. Although most of this monitoring is designed to enhance worker productivity, it could become, and has been, a source of concern over worker privacy. These advantages have also brought with them difficult questions regarding what managers have the right to know about employees and how far they can go in controlling employee behavior both on and off the job. What can your employer find out about you and your work? You might be surprised by the answers! Consider the following: ■ ■ ■ ■ The mayor of Colorado Springs, Colorado, reads the e-mail messages that city council members send to each other from their homes. He defended his actions by saying he was making sure that their e-mails to each other were not being used to circumvent his state’s “open meeting” law that requires most council business to be conducted publicly. The U.S. Internal Revenue Service’s internal audit group monitors a computer log that shows employee access to taxpayers’ accounts. This monitoring activity allows management to see what employees are doing on their computers. American Express has an elaborate system for monitoring telephone calls. Daily reports are provided to supervisors that detail the frequency and length of employee calls, as well as how quickly incoming calls are answered. Employers in several organizations require employees to wear badges at all times while on company premises. These badges contain a variety of data that allows employees to enter certain locations in the organization. Smart badges, too, can transmit where the employee is at all times! Just how much control should a company have over the private lives of its employees? Where should an employer’s rules and controls end? Does the boss have the right to dictate what you do on your own free time and in your own home? Could, in essence, your boss keep you from riding a motorcycle, skydiving, smoking, drinking alcohol, or eating junk food? Again, the answers may surprise you. Employer involvement in employees’ off-work lives has been going on for decades. For instance, in the early 1900s, Ford Motor Company sent social workers to employees’ homes to determine whether their off-the-job habits and finances were deserving of year-end bonuses. Other firms made sure employees regularly attended church services. Today, many organizations, in their quest to control safety and health insurance costs, are once again delving into their employees’ private lives. Although controlling employees’ behaviors on and off the job may appear unjust or unfair, nothing in our legal system prevents employers from engaging in these practices. Rather, the law is based on the premise that if employees don’t like the rules, they have the option of quitting. Recently, companies with policies that prohibit employees smoking off the job have been supported in the courts after firing employees that were found to be smoking. Managers typically defend their actions in terms of ensuring quality, productivity, and proper employee behavior. For instance, an IRS audit of its southeastern regional offices found that 166 employees took unauthorized peeks at the tax returns of friends, neighbors, and celebrities. Ethical Questions: When does an employer’s need for information about employee performance cross over the line and interfere with a worker’s right to privacy? Is any employer’s action acceptable as long as employees are notified ahead of time that they will be monitored? What about the demarcation between monitoring work and non-work behavior? When employees engage in workrelated activities at home during evenings and weekends, does management’s prerogative to monitor employees remain in force? What’s your opinion? 10 Chapter 1 The Dynamic Environment of HRM CONT EMPORARY CONNECTION We Are Now Entering the Blogosphere Technology continues to change the way many people communicate with one another. Blogs have become a way to express personal thoughts and political viewpoints and have become popular throughout corporate America—proving to be both a valuable tool as well as a potential means of disaster. Let’s look at both sides. On the positive side, blogs enable companies to discuss ideas among organizational members and allow consumers a means of easy feedback. It’s a quick and efficient means of advertising a company’s products, as well as a way to provide softer, more believable public relations information. Blogs also offer opportunities for employees to discuss “good things” that are happening to them—personalizing the “faceless” company to readers. But not all blogs are advantageous. Disgruntled employees, dissatisfied customers, and the like can also use blogs to write about anything that they don’t like. For example, consider an employee who doesn’t like the organization’s policies and practices. Rather than discuss his discontentment with someone in the organization, he vents his frustration on a blog he’s created. In another example, as a prank, an employee posts sexually explicit short stories on a blog for all to see. Are these permissible, given they were written when the employee was not at work? More than likely, they are. Organizations should have a policy in place on the use of blogs. For example, an employee needs to understand that confidential company information is not to be placed in a blog. Even blogging about what one does on the job could provide competitive intelligence to another organization interested in finding out how a competitor designs a certain product. A recent study by Forrester Research found that 19 percent of companies surveyed had disciplined employees for communicating proprietary or confidential information online in violation of company policy, and 9 percent had fired employees for these infractions. As blogging has grown in popularity for both individuals and organizations, companies such as Coca-Cola, IBM, and Marriott have created their own blogs with the goal of improving communication with employees and customers. It’s simply another communications tool that organiza…


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