CHAPTER 8

Socializing, Orienting, and Developing Employees

Define socialization. Socialization is a process of adaptation. Organization-entry socialization refers to the adaptation that takes place when one makes the first

move into an organization: the move from being an outsider to being an insider.

3 stages of employee socialization. The three stages of employee

Pre-arrival - recognizes that each individual arrives with a set of Organizational values,

attitudes, culture, and expectations.

Encounter - individuals confront the possible contrast between their expectations

about jobs, coworkers, supervisors, and the organization in general and reality.

Metamorphosis - The socialization stage during which the new employee must work

out inconsistencies discovered during the encounter stage

3. Identify the key personnel involved in orientation. The key people in orientation are the CEO and HRM representatives. The CEO welcomes the new employees,

reaffirms their choice of joining the company, and discusses the organization’s goals and objectives while conveying information about the organization’s culture.

Each function in HRM has a specific role in orientation to discuss what employee services they can offer in the future, when and where to report, assistance for future

employee needs (career guidance, training, etc.).

4. The Employee Handbooks serve as a source of information about company culture, policies, rules, and benefits.

5. Explain why employee training is important. Employee training has become increasingly important as jobs have become more sophisticated and influenced

by technological and corporate changes.

6. Define training. Training is a learning experience that seeks a relatively permanent change in individuals that will improve their ability to perform on the job. There are three kinds of training: class room training, Retraining, and Orientation.

Class room training - appropriate body language and speech, how you talk to employees, behaviors, Facilitate employee participation and discussion

Retraining - when employees performance drops below par, or when the worker has not mastered a particular technique. A positive one-

on-one approach to retraining is referred to a coaching. Coaching is a two part process.

o Observation of the employee’s performance.

o Conversation between manager and employee focusing on job performance.

Orientation - Introduces each new employee to the job and the workplace. Tells new staff members, Communicates information give out an employee

handbook. Creates positive employee attitudes toward the company and the job.

7. Describe how training needs evolve. An organization’s training needs will evolve from seeking answers to these questions:

Determining training needs –

• Specific training goals should be based on: organization’s needs, type of work to be done, skills necessary to complete the work

• Indicators of need for more training: drops in productivity, increased rejects, inadequate job performance, rise in the number of accidents

Training Methods

On-the-Job Training Methods

Job Rotation has long been considered a valuable tool to increase employee motivation. Job rotation involves lateral transfers that allow employees to

work at different jobs and provides exposure to a variety of tasks. As with any training, HRM should take care to make sure the trainers not only know the

job, but how to train others as well. Employers often move new hires through a rotation of different roles in the organization such as marketing, finance,

and operations before they settle into a permanent position.

Apprenticeships are frequently used to combine classroom instruction in combination with working alongside a seasoned veteran, coach, or mentor.

The combination of hands-on and classroom learning complement each other. Apprenticeships are frequently used in skilled trade or craft jobs such as

building trades. The experienced worker provides support and encouragement in addition to training.

Internships are opportunities for students in higher education to utilize their instruction and training in a chosen profession as part of their education.

Internships vary from very unstructured to highly structured and may include college credit. Organizations usually value internships as a way to reduce

recruitment expenses without creating an obligation of regular employment. Interns also provide a valuable source of new ideas and creativity. Students

participating in internships gain valuable real-world experience and greatly enhance their value to prospective employers.

Off-the-Job Training Methods

Classroom Lectures probably don’t need much explanation at this point of your education, but once you finish college, you may not have seen the

inside of your last classroom. Many organizations use classroom instruction along with other methods to provide a great deal of information in a limited

timeframe. Instructors need to understand the different learning characteristics of adult learners and the variety of types of instruction that create interest

in the specific technical, interpersonal, or problem-solving skills they are teaching.

Multimedia Learning can demonstrate technical skills not easily presented by other training methods. This may include videos and DVDs that may be

offered online.

Simulations involve learning a job by actually performing the work (or its simulation). Simulation methods may include case analyses, experiential

exercises, computer simulations, virtual reality, role playing, and group interaction.

Vestibule Training facilitates learning by using the same equipment that one actually will use on the job but in a simulated work environment.

8. Discuss the term organizational development and the role of the change agent. Organization development is the process of effecting change in

the organization. This change is facilitated through the efforts of a change agent.

Job rotation - Moving employees horizontally or vertically to expand their skills, knowledge, or abilities.

Assistant-To Positions Employees with demonstrated potential sometimes work under a seasoned and successful manager, often in different areas of the

organization.

Committee Assignment

Lecture Courses and Seminars Traditional forms of instruction revolve around formal lecture courses and seminars. These help individuals acquire

knowledge and develop their conceptual and analytical abilities. Many organizations offer these in-house, through outside vendors, or both.

Simulation - Any artificial environment that attempts to closely mirror an actual condition.

Outdoor training typically involves challenges which teach trainees the importance of teamwork.

What is change? - OD efforts support changes that are usually made in four areas: The organization’s systems

Technology

Processes

People

Two metaphors clarify the change process.

The calm waters metaphor describes unfreezing the status quo, change to a new state, and refreezing to ensure that the change is permanent.

The white-water rapids metaphor recognizes today’s business environment which is less stable and not as predictable.

The calm waters metaphor suggests that change is an occasional disruption in the normal flow events and can be planned and managed as it

happens. In the white-water rapids metaphor change is ongoing, and managing it is a continual process.

OD Methods - Organizational development facilitates long-term organization-wide changes. OD techniques include:

Survey feedback - Assessment of employees’ perceptions and attitudes regarding their jobs and organization.

Process consultation - outside consultants help organizational members perceive, understand, and act on process events i.e. workflow, informal

relationships among unit members, and formal communications channels.

Team building - Team building helps work groups set goals, develop positive interpersonal relationships, and clarify the role and responsibilities of each

team member.

Intergroup development - intergroup development attempts to change attitudes, stereotypes, and perceptions that one group may have about

another group. Doing so can build better coordination among the various groups.

Explain the term learning organization. A learning organization continuously adapts and changes because all members take an active role in

identifying and resolving work-related issues. In a learning organization, employees practice knowledge management by continually acquiring and

sharing new knowledge, which they willingly apply.

Describe the methods and criteria involved in evaluating training programs. Training programs can be evaluated by post-training performance,

pre–post-training performance, or pre–post-training performance with control group methods. The evaluation focuses on trainee reaction, what

learning took place, and how appropriate the training was to the job.

Post-training performance method - Evaluating training programs based on how well employees can perform their jobs after training.

Pre-post-training performance method - Evaluating training programs based on the difference in performance before and after training.

Pre-post-training performance with control group method - Evaluating training by comparing pre- and post-training results with

individuals.

Cross-Cultural Training

• Cross-cultural training is necessary for expatriate managers and their families before, during, and after foreign assignments. It is crucial to

remember that when the expatriates arrive, they are the foreigners, not the host population. Before the employee and family relocate to

the overseas post, they need to absorb much cultural and practical background. Language training is essential for everyone in the family.

Involves learning about the culture’s:

• History

• Politics

• Economy

• Religion

• Social climate

• Business practices

May involve role playing, simulations and immersion in the culture.

Chapter 9

Managing Careers

1. Explain who is responsible for managing careers. The responsibility for managing a career belongs to the individual. The organization’s role is to

provide assistance and information to the employee, but it is not responsible for growing an employee’s career.

2. Describe the term career. A career is a sequence of positions occupied by a person during the course of a lifetime.

3. Discuss the focus of careers for both organizations and individuals. Career development from an organizational standpoint involves tracking

career paths and developing career ladders. From an individual perspective, career development focuses on assisting individuals in identifying their

major career goals and in determining how to achieve these goals.

4. Describe how career development and employee development differ. The main distinction between career development and employee

development lies in their time frames. Career development focuses on the long-range career effectiveness and success of organizational personnel.

Employee development focuses more on immediate and intermediate time frames.

5. Explain why career development is valuable to organizations. Career development is valuable to an organization because it

(1) ensures needed talent will be available;

(2) improves the organization’s ability to attract and

retain high talent employees;

(3) ensures that minorities and women have

opportunities for growth and development;

(4) reduces employee frustration;

(5) enhances cultural diversity;

(6) assists in implementing quality; and

(7) Promotes organizational goodwill.

Careers are both external and internal.

• The external career involves properties or qualities of an occupation or an organization. I.e. think of a career in business as a person’s

sequence of jobs or positions, External careers may also be characterized by career ladders within a particular organization.

• Internal career success is measured by the meaningfulness of one’s work and achievement of personal life goals

When a senior employee takes an active role in guiding another individual, we refer to this activity as mentoring or coaching.

• Disadvantages include: tendencies to perpetuate current styles and practices, reliance on the coach’s ability to be a good teacher

• Considerations for organizations: coaching between employees who do not have a reporting relationship, ways to effectively implement

cross-gender mentoring

6. Identify the five traditional stages involved in a career. The five stages in a career are exploration, establishment, mid-career, late-career, and

decline.

External Event Internal Event

Exploration A career stage that usually ends in the mid-twenties as one makes the transition from school to work.

Advice and examples of relatives, teachers, friends,

Exploration Establishment Mid-Career Late Career

Decline and coaches

Actual successes and failures in school, sport, and

hobbies

Development of self-image, what one might be,

what sort of work would be fun

Self-assessment of own talents and limitations

Development of ambitions, goals, motives, dreams

Tentative choices and commitments, changes

Establishment A career stage in which one begins to search for work and finds a first job.

Explicit search for a job, Acceptance of a job Induction and orientation, Assignment to further training or first job First job assignment, meeting the boss and co-workers, Learning period, indoctrination period of full performance—“doing the job”

Making a real choice: to take a job or not, which

job; first commitment Reality shock

mid-career A career stage marked by continuous improvement in performance, leveling off in performance, or beginning deterioration of performance.

Leveling off, transfer, and/or promotion Entering a period of maximum productivity Becoming more of a teacher/mentor than a learner Explicit signs from boss and co-workers that one’s progress has plateaued

Period of settling in or new ambitions based on self-assessment More feeling of security, relaxation, but danger of leveling off and stagnation

late-career A career stage in which individuals are no longer learning about their jobs nor expected to outdo levels of performance from previous years.

Job assignments drawing primarily on maturity of judgment More jobs involving teaching others

Psychological preparation for retirement Deceleration in momentum Finding new sources of self-improvement off the job, new sources of job satisfaction through teaching others

Decline The final stage in one’s career, usually Marked by retirement.

Formal preparation for retirement Retirement rituals

Learning to accept a reduced role and less responsibility Learning to live a less structured life New accommodations to family and community

7. List the Holland vocational preferences. Represents an

individual occupational personality as it relates to vocational themes.

Three major components

• People have varying occupational preferences

• If you think your work is important, you will be a more

productive employee

• You will have more in common with people who have

similar interest patterns

The Schein Anchors - Personal value clusters determine what is

important to individuals.

• technical-functional competence

• managerial competence

• security-stability

• creativity

• autonomy-independence

Success of person-job match determines individual’s fit with the job.

Jung and the Myers-Briggs Typologies

a psychometric questionnaire designed to measure psychological

preferences in how people perceive the world and make decisions

Four personality dimensions

8. Describe the implications of personality typologies and jobs. Typology focuses on

personality dimensions including extroversion-introversion; sensing-intuition;

thinking-feeling; and judging-perceiving. These four pairs can be combined into

sixteen different combination profiles. With this information, job personality traits

can be matched to individual personality traits.

9. Identify several suggestions that can help you manage your career more

effectively.

Some suggestions for managing your career include (1) know yourself, (2) manage

your reputation, (3) build and maintain network contacts, (4) keep current, (5)

balance your specialist and generalist competencies, (6) document your

achievements, and (7) keep your options open.

Chapter 10

Establishing the Performance Management System

Identify the three purposes of performance management systems and whom they serve. The three purposes of performance management systems are

feedback, development, and documentation. They are designed to support employees, appraisers, and organizations.

Difficulties in Performance Management Systems

• Focus on the individual: Discussions of performance may elicit strong emotions and may generate conflicts when subordinates and supervisors do not

agree.

• Focus on the process: Company policies and procedures may present barriers to a properly functioning appraisal process. Additionally, appraisers may

be poorly trained. For example, if a company ties performance evaluations to pay increases,

consider the following potential difficulty: Sometime during the spring, the company’s managers

develop budgets for their units—budgets dictated and approved by upper management. Now, in

this budget for the next fiscal year, each manager’s salary budget increases by 3 percent. As the

company enters the new fiscal year, the managers evaluate their employees. One employee in

particular has done an outstanding job and is awarded a 6 percent raise. What does this do to the

budget? To average 3 percent, some employees will receive less than the 3 percent salary

increase. Consequently, company policies and procedures may present barriers to a properly

functioning appraisal process. Having an effective performance management system in the

organization can help reduce confrontations— emotional or otherwise. Everyone needs to

recognize that emotions may run high during a performance feedback session. However, a

properly designed system and effective implementation (including appraiser training and

continuous feedback) will help avoid emotional outbursts like this.

2. Explain the six steps in the appraisal process. Performance management systems are an integral

part of most organizations. Properly developed and implemented performance management processes can help an organization achieve its goals by developing

productive employees. The 6-step appraisal process is to

(1) Establish performance standards with employees, these performance standards should also be clear and objective enough to be understood and measured.

These should evolve out of the company’s strategic direction—and, more specifically, the job analysis and the job description

(2) Set measurable goals (manager and employee), Once performance standards are established, it is necessary to communicate these expectations; employees

should not have to guess what is expected of them. Too many jobs have vague performance standards, and the problem is compounded when these standards are

set in isolation and without employee input. Communication is a two-way street: mere information transfer from supervisor to employee is not successful

communication.

(3) Measure actual performance, to determine what actual performance is, we need information about it. We should be concerned with how we measure and what

we measure.

(4) Compare actual performance with standards, comparison of actual performance with standards. This step notes deviations between standard performance and

actual performance. The performance appraisal form should include a list and explanation of the performance standards. This provides a valuable feedback tool as

the manager moves on the next step, discussing the appraisal.

(5) Discuss the appraisal with the employee, and present an accurate assessment to the employee, the appraisal discussion can have negative as well as positive

motivational consequences.

(6) If necessary, initiate corrective action.

Appraisal Methods

• Absolute standards refer to a method in performance management systems whereby employees are measured against company-set performance

requirements. Measuring an employee’s performance against established standards.

o Essay Appraisal: Appraiser writes narrative describing employee performance & suggestions.

o Critical Incident Appraisal: A performance evaluation that focuses on key behaviors that differentiates between doing a job

effectively or ineffectively.

o Checklist Appraisal: A performance evaluation in which a rater checks off applicable employee attributes.

o Rating Scale Appraisal: A performance appraisal method that lists traits and a range of performance for each.

o Forced-Choice Appraisal: A performance evaluation in which the rater must choose between two specific statements about an

employee’s work behavior.

o Behaviorally anchored rating scales (BARS) a performance appraisal technique that generates critical incidents and develops

behavioral dimensions of performance. The evaluator appraises behaviors rather than traits.

• Relative standards evaluating an employee’s performance by comparing the employee with other employees.

o Individual ranking - Ranking employees’ performance from highest to lowest.

o Paired comparison - Ranking individuals’ performance by counting the times any one individual is the preferred member when compared with

all other employees.

How MBO can be an appraisal method. MBO becomes an appraisal method by establishing a specific set of objectives for an employee to achieve

and reviewing performance based on how well those objectives have been met. Common elements in an MBO program are: goal specificity,

participative decision making, an explicit time period, performance feedback

Explain why performance appraisals might be distorted.

LENIENCY ERROR - Performance appraisal distortion caused by evaluating

employees against one’s own value system.

HALO ERROR - The tendency to let our assessment of an individual on one trait

influence our evaluation of that person on other specific traits.

SIMILARITY ERROR - Evaluating employees based on the way an evaluator

perceives himself or herself.

CENTRAL TENDENCY - The tendency of a rater to give aver- age ratings.

INFLATIONARY PRESSURES - Inflationary pressures have always existed but

appear to have increased as a problem over the past three decades.

INAPPROPRIATE SUBSTITUTES FOR PERFORMANCE - It is the unusual job that has an

absolutely clear performance definition and direct measures for appraising the

incumbent. It is more often difficult to find consensus on what is “a good job,” and it

is even more difficult to produce agreement on what criteria determine performance.

Low Appraiser Motivation - If the evaluator knows that a poor appraisal could

significantly hurt the employee’s future

Particularly opportunities for promotion or a salary increase

The evaluator may be reluctant to give a realistic appraisal. Evidence indicates that it is more difficult to obtain accurate appraisals when important

rewards depend on the results.

ATTRIBUTION THEORY - A theory of performance evaluation based on the perception of who is in control of an employee’s performance.

IMPRESSION MANAGEMENT: - If employee positively influences the relationship with the supervisor, he/she is likely to receive a higher rating.

CREATING MORE EFFECTIVE PERFORMANCE MANAGEMENT SYSTEMS

Use Behavior-Based Measures: - Measures based on specific descriptions of behavior are more job-related and elicit more inter-rater agreement than traits, such

as “loyalty” or “friendliness”.

Combine Absolute and Relative Standards:

• Absolute standards tend to be positively lenient; relative standards suffer when there is little variability.

• Combining the standards tends to offset the weaknesses of each.

Provide Ongoing Feedback:

• Expectations and disappointments should be shared with employees on a frequent basis.

Use Multiple Raters:

• Increasing the number of raters leads to more reliable and valid ratings.

– Use peer evaluations: Coworkers offer constructive insights and more specific evaluations.

– Upward appraisals allow employees to give their managers feedback.

– 360-Degree appraisals: Supervisors, peers, employees, team members, customers and others with relevant information evaluate the

employee.

Rate Selectively

– Appraisers only evaluate in those areas about which they have sufficient knowledge.

– Appraisers should be organizationally as close as possible to the individual being evaluated.

– More effective raters are asked to do the appraisals.

Train Appraisers:

• Untrained appraisers who do poor appraisals can demoralize employees and increase legal liabilities.

INTERNATIONAL PERFORMANCE APPRAISAL

• Who performs the evaluation? – Different cultural perspectives and expectations between the parent and local country may make evaluation difficult.

– Evaluation forms may not be translated accurately.

– Quantitative measures may be misleading.

• Evaluation Formats

– May make sense to use different forms for parent-country nationals and host-country nationals.

– Performance criteria for a particular position should be modified to fit the overseas position and site.

– Include a current expatriate’s insights as part of the evaluation.

Identify ways to make performance management systems more effective. More effective appraisals can be achieved with behavior-based

measures, combined absolute and relative ratings, ongoing feedback, multiple raters, selective rating, trained appraisers, peer assessment, and

rewards to accurate appraisers.

Describe the term 360-degree appraisal. In 360-degree performance appraisals, evaluations are made by oneself, supervisors, employees, team

members, customers, suppliers, and the like. In doing so, a complete picture of one’s performance can be assessed.

Explain the criteria for a successful performance appraisal meeting. Performance appraisal meetings require manager preparation, a supportive

environment, clear purpose, employee involvement; focus on work behaviors, specific work examples, positive and negative feedback, employee

understanding, and an employee development plan.

Discuss how performance appraisals may differ in a global environment. Performance management systems used away from the home country

may differ in who performs the evaluation and the format used. Cultural difference may dictate that changes in the U.S. performance management

system are needed.

Chapter 11

Establishing Rewards and Pay Plans

Reward is pay, but there are many others, including: promotions,

desirable work assignments, peer recognition, work freedom

(1) Intrinsic Rewards – Personal Satisfactions derived from

the job itself, such as pride in one’s work, a feeling of

accomplishment, or being part of a team. Extrinsic

Rewards - Benefits provided by the employer, usually

money, promotion, or benefits.

(2) Financial- through wages, bonuses, or profit sharing—or

indirectly, through employer-subsidized benefits such as

retirement plans, paid vacations, paid sick leaves, and purchase

discounts. Nonfinancial – These do not directly increase

the employee’s financial position, but rather add attraction to

life on the job.

(3) Performance-based rewards use commissions, piecework pay

plans, incentive systems, group bonuses, merit pay, or other

forms of pay for performance. Membership based rewards, on

the other hand, include cost-of-living increases, benefits, and

salary increases attributable to labor-market conditions,

seniority or time in rank, credentials (such as a college degree

or a graduate diploma), a specialized skill, or future potential

(for example, the recent MBA graduate from a prestigious university). The key point here is that membership-based rewards are generally extended

regardless of an individual’s, groups, or organization’s performance. In any case, performance may be only a minor determinant of rewards, despite

academic theories holding that high motivation depends on performance-based rewards.

3. Define the goal of compensation administration. Compensation administration seeks to design a cost-effective pay structure that will not only

attract, motivate, and retain competent employees but also seem fair to them.

Fair Labor Standards Act (FLSA) - Passed in 1938, this act established laws outlining minimum wage, overtime pay, and maximum hour requirements for most U.S.

workers.

Exempt employees - Employees in positions that are exempt from most employee protection outlined in the Fair Labor Standards Act, especially overtime pay.

Nonexempt employees - Employees who are covered by the Fair Labor Standards Act, including overtime pay and minimum wage provisions of the act.

Equal Pay Act of 1963 -This act requires equal pay for equal work.

Civil Rights Act: Salaries should be established on the basis of skill, responsibility, effort, and working conditions. broader than Equal Pay Act, prohibits discrimination

on the basis of gender, used to support comparable worth concept

4. Discuss job evaluation and its three basic approaches. Job evaluation systematically determines the value of each job in relation to all jobs within

the organization. The three basic approaches to job evaluation are (1) the ordering method, (2) the classification method, and (3) the point method.

The ordering method - According to this method, jobs are arranged from highest to lowest, in order of their value or merit to the organization.

The classification method - a predetermined number of job groups or job classes are established and jobs are assigned to these classifications. This

method places groups of jobs into job classes or job grades.

The point method - jobs are expressed in terms of key factors. Points are assigned to each factor after prioritizing each factor in order of importance. The

points are summed up to determine the wage rate for the job. Jobs with similar point totals are placed in similar pay grades.

• Isolating Job Evaluation Criteria - Judgment is involved in defining what factors should be used to compare jobs.

– Typical criteria:

• mental requirements

• supervisory control

• complexity

• physical demands

• personal contacts

– Typically jobs are grouped according to type and compared within their group

• clerical jobs

• sales jobs

• professional jobs

Establishing the Pay Structure

• Compensation surveys - Used to gather factual data on pay practices among firms and companies

within specific communities. Share comprehensive descriptions of these jobs with other firms in the

industry.

• Wage curves A Wage Curve - Wage curves like this one plot a position’s value in points against the

wages paid for each of those positions. Jobs that do not fall within an accepted range may be “red circled.”

Drawn by plotting job evaluation data (such as job points or grades) against pay rates (actual or from survey

data). Indicate whether the pay structure is logical

• Wage structure - A pay scale showing ranges of pay within each grade.

• Designates pay ranges for groups of jobs which are

• similar in value to the organization

• Grouped by their classifications, grades or points.

5. Explain the evolution of the final wage structure. The final wage structure evolves from job

evaluation input, compensation survey data, and the creation of wage grades.

Incentive Compensation Plans - Incentives can be added to the basic pay structure to provide rewards for

performance. Work best where clear objectives can be set and tasks are independent. Many organizations today

require employees to place a percentage of their salary “at risk” so that merit pay does not become a substitute for

automatic cost-of-living raises.

• Individual Incentives include

– merit pay plans (annual increase, based on performance) An increase in pay, usually determined annually.

– Piecework plans (pay based on number of units produced typically in a specified time period.)

– time-savings bonuses and commissions

• Group Incentives - Incentives can be offered to groups, rather than individuals, when employees' tasks are interdependent and require cooperation.

• Plant-wide Incentives: Direct employee efforts toward organizational goals (such as cost reduction)

– Scanlon Plan an organization-wide incentive program focusing on cooperation between management and employees through sharing

problems, goals, and ideas.

– IMPROSHARE - An incentive plan that uses a specific mathematical formula for determining employee bonuses. Formula is used to determine

bonuses based on labor cost savings

Paying for Performance - Rewarding employees based on their job performance. Common performance measures are: piece-rate plans, gain sharing, wage incentive

plans, profit sharing, lump sum bonuses

• Competency-based compensation - Rewarded for skills, knowledge and behaviors i.e. leadership, problem solving, decision making, strategic planning.

Competency-based compensation views employees as a competitive advantage in the organization. Compensation systems are established in terms of

employee knowledge, skills, and demonstrated behaviors. Possession of these three factors is evaluated and compensated according to a broad-banded

salary range established by the organization.

– Broad-banding - pre-set pay levels that determine what people are paid based upon the type and level of competencies they possess.

Team-Based Compensation - Pay based on how well the team performed.

– Depends on:

• clarity of team purpose and goals

• ability of the team to obtain needed resources

• effective team communication skills and trust

Executive Compensation Programs

Salaries of Top Managers - Executive salaries, bonuses and stock options may seem high. Top twenty CEOs average more than $100 million in total

compensation. Competition for executive talent raises the price of hiring an executive. High salaries can be a motivator for executives and lower-level

managers

Supplemental Financial Compensation –

o Deferred bonuses – paid to executives over extended time periods, to encourage them to stay with the company.

o Stock options – allow executives to purchase stock in the future at a fixed price.

o Hiring bonuses – compensate for the deferred compensation lost when leaving a former company.

Supplemental Nonfinancial Compensation

o Perquisites - Attractive benefits, over and above a regular salary, granted to executives, also known as “perks.” Perks may include: paid life

insurance, club memberships, company cars, expense accounts, interest-free loans, free financial, legal and tax counseling, mortgage assistance

Golden parachutes - protect executives when a merger or hostile takeover occurs by providing severance pay or a guaranteed

position.

International Compensation - Important to understand the statutory requirements of each country. International compensation packages generally utilize

the “balance-sheet approach,” using the four factors below:

– Base Pay: The pay of employees in comparable jobs at home.

– Differentials: Compensation given to offset higher costs of living abroad.

– Incentives: Inducements given to encourage employees to accept overseas assignments.

– Assistance Programs: Payment for expenses involved in moving a family abroad and in providing some services overseas.

Discuss why executives receive significantly higher salaries than other employees in an organization. Executive compensation is higher

than that of rank-and-file personnel and also includes other financial and nonfinancial benefits not otherwise available to operative employees. This is done to attract

and retain executives and motivate them to higher performance levels.

Identify the balance-sheet approach to international compensation. The balance sheet approach to international compensation takes into account

base pay, differentials, incentives, and assistance programs.

Chapter 13

Ensuring a Safe and Healthy Work Environment Discuss the organizational effect of the Occupational Safety and Health Act. The Occupational Safety and Health Act (OSH Act) outlines comprehensive and specific

safety and health standards. Requires employers to keep records of illnesses and injuries, and calculate accident ratios.

2. List Occupational Safety and Health Administration (OSHA) enforcement priorities. OSHA has an established five-step priority enforcement process consisting of

imminent danger, serious accidents, employee complaints, inspection of targeted industries, and random inspections.

• Imminent danger: Where an accident is about to occur. Accidents that have led to serious injuries or death. Employer must report within 8 hours.

• Employee complaints: Employees have right to call OSHA.

3. Explain what punitive actions OSHA can impose on an organization. OSHA can fine an organization up to a maximum penalty of $70,000 if the violation is severe,

willful, and repetitive. For violations not meeting those criteria, the maximum fine is $7,000. OSHA may, at its discretion, seek criminal or civil charges against an

organization’s management if they willfully violate health and safety regulations.

Marshall v. Barlow’s, Inc. - Supreme Court case that stated an employer could refuse an OSHA inspection unless OSHA had a search warrant to enter the premises.

4. Describe what companies must do to comply with OSHA record-keeping requirements. Companies in selected industries must complete OSHA Form 300 to

record job-related accidents, injuries, and illnesses. This information is used to calculate the organization’s incidence rate.

OSHA Punitive Actions

• Omnibus Budget Reconciliation Act of 1990 allows fines up to $70,000 if violation is severe, willful and repetitive. Fines can be for safety violations or

failure to keep adequate records. Courts have backed criminal charges against executives when they have willfully violated health and safety laws.

• National Institute for Occupational Safety and Health (NIOSH) has been researching and setting standards for new areas blood-borne pathogens,

chemical process safety, motor vehicle safety, protective equipment, ergonomics.

• Hazard Communication Standard, (1983), requires organizations to communicate information about hazardous chemicals by: labeling containers,

distributing data sheets, training employees in their safe handling, Since 9/11 has provided assistance on contingency planning to deal with emergencies

Costs of Accidents - Workers’ compensation premiums. Time lost due to injury. Time to investigate/report accidents. Damage to equipment/materials. Work

stoppages/personnel changeover.

Causes of Accidents - Accidents are generally classified as human or environmental. Human causes responsible for majority of accidents. Environmental causes

include

• tools

• equipment

• physical plant

• general work environment

Preventative Measures

• Education

• Skill training

• Engineering

• Protection devices

• Regulation enforcement

Ensuring Job Safety

– Management needs feedback from inspections, reports, and observations.

– Safety should be part of organizational culture.

– Top management must be committed to safety.

– Safety committees empower employees to maintain a safe environment.

5. Identify ways that OSHA assists employers in creating a safer workplace. OSHA helps employers through education, training programs, and developing a four-part

program for businesses that includes: developing management commitment and employee involvement, worksite analysis to identify problems, hazard prevention

and control, and training for employees, supervisors, and managers.

Maintaining a Healthy Work Environment • Sick buildings are office environments that contain harmful airborne chemicals, asbestos, or indoor pollution. Suggestions for keeping the environment

healthy include:

• Making sure workers get enough fresh air.

• Avoiding suspect building materials and furnishings.

• Testing new buildings for toxins before occupancy.

• Providing a smoke-free environment.

• Keeping air ducts clean and dry.

• Paying attention to workers’ complaints

• The Smoke-Free Environment - Costs of smokers include

• increased health premiums

• Absenteeism

• lost productivity due to smoke breaks

• maintenance costs

• harm to coworkers by second-hand smoke

• Smoke-free policies at work include banning smoking or restricting it to properly ventilated designated areas.

• Employees should be involved in phase-in of programs.

• Some employers offer incentives and help for employees to stop smoking.

• Repetitive Stress Injuries

• Injuries resulting from continuous, repetitive movements, such as typing.

• Also referred to as musculoskeletal disorders (MSDs).

• The most frequent injury is carpal tunnel syndrome, which occurs in the wrist.

• Ergonomics, or fitting the work environment to the individual, can prevent repetitive motion injuries.

• Includes design of environment and furniture to fit the individual.

Defining Stress - A dynamic condition in which an individual confronts an opportunity, constraint, or

demand related to a desire and perceives the outcome both uncertain and important.

Common Causes of Stress

• Organizational Factors

– Task demands include job design, working conditions, the physical layout, and

work quotas.

– Role demands include role conflicts, role overload and role ambiguity.

– Interpersonal demands include lack of social support and poor interpersonal

relationships.

– Organizational structure causes include excessive rules and lack of opportunity

to participate.

– Organizational leadership causes include supervisory styles which cause

unrealistic pressures, tight controls, and the threat of job loss.

• Personal Factors

– Family issues

– Personal economic problems

– Inherent personality characteristics

Symptoms of Stress

• Physiological symptoms (increased blood pressure, headaches, increased pulse rate, etc.) are the most difficult to observe.

• Psychological symptoms (increased tension and anxiety, boredom, procrastination, etc.) can lead to productivity decreases.

• Behavioral symptoms (increased smoking or substance consumption, sleep disorders, etc.) also affect the organization

Reducing Stress HRM approaches include

– matching individuals to their jobs

– clarifying expectations

– redesigning jobs

– offering involvement and participation

Dilemmas for HRM include:

– balancing the need to energize people with the need to minimize dysfunctional stress

– deciding how much an employer can intrude on employees’ personal lives

• A Special Case of Stress: Burnout - Burnout is a function of three concerns:

– Chronic emotional stress with emotional and/or physical exhaustion

– Lowered job productivity

– Dehumanizing of jobs

Causes and symptoms of burnout:

– Organization characteristics

– Perceptions of organization

– Perceptions of role

– Individual characteristics

– Outcomes

Reducing burnout - four techniques are proposed:

– Identification

– Prevention

– Mediation

– Remediation

The Employee Assistance Program – Extension of 1940’s programs to help employees with alcohol-related problems.

– Cost-effective counseling to help employees overcome problems such as:

• substance abuse

• bereavement

• child-parent problems

• marriage problems

– EAPs Today

– Provides employees visits with counselors at company expense; usually visits are off-site.

– Help control rising health insurance costs.

– Employees and supervisors must be familiar with and trust the program and perceive EAPs as worthwhile.

– Confidentiality is guaranteed.

For every dollar spent on EAP programs, studies estimate a return of $5.00 to $16.00 in savings

Wellness Programs

– Programs to keep employees healthy; include smoking cessation, physical fitness, weight control, etc.

– Designed to cut employer health costs and lower absenteeism.

– Employees must view programs as having value.

– Must have top management support.

– Should also provide services for employees’ families.

– Need opportunities for employee input?

International Safety and Health Cultural differences exist in laws and expectations regarding safe working conditions.

International Health Issues

– An up-to-date health certificate providing records of employee vaccinations

– A General First Aid Kit should include over-the-counter and prescription medications and other supplies that might not be available to U.S.

workers abroad.

– Emergency plans help expatriates anticipate medical needs and locate resources.

– U.S. Department of State “hotline” provides travel alerts about such issues as terrorist activity or disease outbreaks.

– Security concerns prompt recommendations regarding travel modes, attire, and “blending in”.

Role conflicts - Expectations that are difficult to reconcile or achieve.

Role overload - When an employee is expected to do more than time permits.

Role ambiguity - When an employee is not sure what work to do.

Type A behavior - Personality type characterized by chronic urgency and excessive competitive drive.

Type B behavior - Personality type characterized by lack of either time urgency or impatience.

Describe the most cited OSHA safety violations. The ten most cited safety violations include: scaffolding, fall protection, hazard communication, control of hazardous

energy, respiratory protection, electrical wiring, powered industrial trucks, ladders, machine guarding, and electrical systems.

7. Explain what companies can do to prevent workplace violence. A company can help prevent workplace violence by ensuring that its policies are not adversely

affecting employees, by developing a plan to deal with the issue, and by training its managers in identifying troubled employees.

8. Define stress and the causes of burnout. Stress is a dynamic condition in which an individual is confronted with an opportunity, constraint, or demand for which

the outcome appears important and uncertain. Burnout is caused by a combination of emotional and/or physical exhaustion, lower job productivity, or dehumanizing

jobs.

9. Explain how an organization can create a healthy work site. Creating a healthy work site involves removing any harmful substance, such as asbestos, germs, mold,

fungi, cigarette smoke, and so forth, thus limiting employee exposure.

10. Describe the purposes of employee assistance and wellness programs. Employee assistance and wellness programs offer employees a variety of services to

support mental and physical health, which in turn helps contain organization health-care costs.

Chapter 14

Understanding Labor Relations and Collective Bargaining

Define the term unions. A union is an organization of workers, acting collectively, seeking to promote and protect their mutual interests through collective

bargaining.

Why Employees Join Unions

• Higher wages and benefits: The strength of large numbers and negotiating skills of professional bargainers give unions an advantage over individuals.

• Greater job security: Collective bargaining contracts limit management’s ability to arbitrarily hire, promote or fire.

• Influence over work rules: Unions represent workers and define channels for complaints and concerns.

• Compulsory membership

• Union shops require that all employees hired into positions covered under the collective-bargaining agreement must join the union.

• Agency shops require nonunion employees to pay an amount equal to union fees and dues.

• Open shops allow union membership to be totally voluntary.

• Maintenance of membership clauses require union members to remain for the duration of the contract.

• Dues checkoff provisions require employers to withhold union dues from members’ paychecks.

2. Discuss the effects of the Wagner and the Taft-Hartley Acts on labor-management relations. The Wagner (National Labor Relations) Act of 1935 and the Taft

Hartley (Labor-Management Relations) Act of 1947 represent the most direct legislation affecting collective bargaining. The Wagner Act gave unions the freedom to

exist and identified employer unfair labor practices. Taft-Hartley balanced the power between unions and management by identifying unfair union labor practices.

National Labor Relations Board (NLRB) Established to administer and interpret the Wagner Act, the NLRB has primary responsibility for conducting union

representation elections.

Wagner Act - Also known as the National Labor Relations Act of 1935, this act gave employees the right to form and join unions and to engage in collective

bargaining.

Taft-Hartley Act - Amended the Wagner Act by addressing employers’ concerns in terms of specifying unfair union labor practices.

The Railway Labor Act - Gave workers in the transportation industry the right to bargain collectively and allowed congressional and presidential

intercession in the event of an impasse.

Landrum-Griffin Act - Also known as the Labor and Management Reporting and Disclosure Act, this legislation protected union members from possible

wrongdoing on the part of their unions. It required all unions to disclose their financial statements. Required that all members be allowed to vote by secret

ballot.

3. Identify the significance of Executive Orders 10988 and 11491 and the Civil Service Reform Act of 1978. Executive Orders 10988 and 11491 paved the way for

labor relations to exist in the federal sector. Additionally, Executive Order 11491 made federal labor relations similar to its private-sector counterpart. The Civil

Service Reform Act of 1978 removed federal-sector labor relations from under the jurisdiction of the president and established a forum for its continued operation.

Racketeer Influenced and Corrupt Organizations Act (RICO) Law passed to

eliminate any influence on unions by members of organized crime.

Civil Service Reform Act Replaced Executive Order 11491 as the basic law

governing labor relations for federal employees.

4. Describe the union-organizing process. The union-organizing process officially begins

with the completion of an authorization card. If the required percentage of potential

union members shows their intent to vote on a union by signing the authorization card,

the NLRB will hold an election. If 50 percent plus one of those voting votes for the union,

then the union is certified to be the bargaining unit.

Authorization card - A card signed by prospective union members indicating that they

are interested in having a union election held at their work site.

Representation certification (RC) - The election process whereby employees vote in a union as their representative.

Representation decertification (RD) - The election process whereby union members vote out their union as their

representative.

Collective bargaining - Collective bargaining typically refers to the negotiation, administration, and interpretation of a

written agreement between two parties that covers a specific period of time. the negotiation, administration, and

interpretation of a written agreement between two parties, at least one of which represents a group that is acting

collectively, and that covers a specific period of time. The collective-bargaining process is comprised of the following steps:

preparation for negotiations, negotiations, and contract administration.

Grievance procedure - A complaint-resolving process contained in union contracts.

Failure to Reach Agreement

• economic strike- An impasse that results from labor and management’s

inability to agree on the wages, hours, and terms and conditions of a new

contract.

• wildcat strike - An unauthorized and illegal strike that occurs during the

terms of an existing contract.

• Lockout - A situation in labor–management negotiations whereby

management prevents union members from returning to work.

• Conciliation and mediation – Impasse resolution techniques using an

impartial third party to help management and the union to resolve the

conflict.

Impasse-Resolution Techniques

– Conciliation and mediation involve a third party to either

keep negotiations going or make non-binding settlement

recommendations.

– Fact-finding involves a neutral third-party who conducts a

hearing and recommends a non-binding settlement

– Interest arbitration - Involves a panel of one neutral, one

management and one union representative who hear

testimony and render a decision to settle a contract negotiation dispute. Primarily in public-sector bargaining. Binding only if there is

unanimous agreement.

Critical Issues for Unions Today

Union membership: Where have the members gone? Union membership in the U.S. reached a high of 36% in the early 1940s; there has been a steady decline since

then.

Union membership: Where have the members gone? Reasons for decline in membership include:

– new concerns of a growing middle-class

– greater diversity of the work force

– growth of the service sector

– diminished financial resources of unions

– anti-union pressures resulting from increased competitiveness

– layoffs of large numbers of union workers

– hiring of replacement workers for strikers

Labor-Management Cooperation

– Some unions recognize that they can gain more by cooperating with management rather than fighting.

– The Electromation Inc. case illustrates the potential legal difficulties of cooperative efforts: The NLRB ruled that employee committees were an

unfair labor practice.

Public-Sector Unionization

– Membership of government workers in unions has increased from 11% in 1970 to nearly 38% in 2002.

– Public sector labor relations differs from private sector labor relations.

Sunshine laws in some states mandate that labor-management negotiations be open to the public

Unionizing the Nontraditional Employee

– New targets for unionization include service, government and management workers.

– As restructuring, delayering and de-jobbing change economic conditions of workers, interest in unions may grow, as exemplified by the

successful unionization of health care workers.

Differing Perspectives Toward Labor Relations

– Countries differ in their labor relations histories, government involvement, and public acceptance of labor unions.

– The labor relations function for international companies is more likely to be centralized with the parent company when domestic sales are

larger than those overseas.

The European Community

– Brings together a dozen or more labor relations systems.

– Countries wishing to do business in Europe must keep up with changing labor legislation.

7. Explain the various types of union security arrangements. The various union security arrangements are the closed shop (made illegal by the Taft-Hartley Act); the

union shop, which requires compulsory union membership; the agency shop, which requires compulsory union dues; and the open shop, which enforces workers’

freedom of choice to select union membership or not.

8. Describe the role of a grievance procedure in collective bargaining. The grievance procedure provides a formal mechanism in labor contracts for resolving issues

over the interpretation and application of a contract.

9. Identify the various impasse-resolution techniques. The most popular impasse resolution techniques include mediation (a neutral third party informally attempts

to bring the parties to agreement); fact-finding (a neutral third party conducts a hearing to gather evidence from both sides); and interest arbitration (a panel of

individuals hears testimony from both sides and renders a decision).

10. Discuss how sunshine laws affect public-sector collective bargaining. Sunshine laws require parties in the public sector to make their collective-bargaining

negotiations open to the public.