Meeting Present and Emerging Strategic Human Resource Challenges

Manager is a person in charge of others and is responsible for the timely and correct execution of actions that promote his or her unit’s success. Line employees are involved directly in producing the company’s good(s) or delivering service(s). Staff employees are employees who support line employees, for example people who work in the HR department. Senior employees have been with the company longer and have more responsibility than junior employees. Exempt employees (salaried employees) do not receive extra pay for overtime work (beyond 40 hours per week). Nonexempt employees do receive overtime compensation. (Balkin et al, 2016, 30-31.)

Environmental Challenges

1. Rapid change
2. The internet revolution
3. Workforce diversity
4. Globalization
5. Evolving work and family roles
6. Skill shortages and the rise of the service sector
7. Natural disasters and terrorism

Environmental challenges are forces external to firm that affect the firm’s performance but are beyond the control of management. (1) Rapid change brings out many challenges such as competing with new companies, and managing the stress that change opposes. (2) The internet revolution is one of the most important environmental changes and challenges. Internet creates need for necessitating greater written communication skills, for example writing e-mails. Also dealing with information overflow and adapting to changing labor market. Internet is creating an open labor market globally and information may be obtained quickly and inexpensively. Online learning is becoming more usual, replacing the traditional classroom training. HR department’s focus is shifting more towards management, because the internet enables firms to handle many operational HR details much more quickly and efficiently. (3) Workforce diversity. (4) Globalization is opposes changes is company culture, arising worldwide recruiting, global alliances, a virtual workforce, and wage competition. (5) Legislation has become a more important challenge for companies to act in limits of the law. (6) Evolving work and family roles and for example the rise of dual career families in which both members or a couple work. (7) Skill shortages and the rise of the service sector, as technology has replaced occupations in manufacturing field. (8) Natural disasters and terrorism is also one of the considerable environmental challenges. Organizational challenges are concerns or problems internal to a firm, often a by-product if environmental forces. (Balkin et al, 2016, 31-38.)

Competitive Position: Cost, Quality, or Distinctive Capabilities

Effective HR policies can impact an organization’s competitive position by controlling costs, improving quality, and creating distinctive capabilities. Total quality management (TQM) is an organization-wide approach to improving the quality of all the processes that lead to a final product or service. Decentralization is transferring responsibility and decision-making authority from a central office to people and locations closer to the situation that demands attention. Downsizing is a reduction in a company’s workforce to improve its bottom line. Organizational restructuring refers to tall organization’s management levels becoming flatter as companies reduce the number of people between the chief executive officer (CEO) and the lowest-ranking employee in an effort to become more competitive. Self-managed work teams refers to traditional system of individual employees reporting to a single boss (who oversees a group of three to seven subordinates) is being replaced in some organizations by the self-managed team system. There has been also growth of small businesses considering the specific industry. Unfortunately, small businesses face a high risk of failure. (Balkin et al, 2016, 38-40.)

Organizational culture refers to the basic assumptions and beliefs shared by members of an organization. These beliefs operate unconsciously and define in a basic taken-for-granted fashion an organization’s view of itself and its environment. The key elements of organizational culture are: observed behavioral regularities, the norms in work groups, the dominant values in organization, the philosophy that quides organization’s policy, the rules of the game for getting along in the organization, and the feeling or climate that is conveyed in an organization. Firms that make cultural adjustments to keep up with environmental changes are likely to outperform those whose culture is rigid and unresponsive to external jolts. Rapidly changing technology, in specific informational technology, is changing human resources. These technologies, coupled with the rise of internet have impacted businesses in a number of ways: the rise of telecommuting; the ethics of proper data use; electronic monitoring; medical testing; and an increase in egalitarianism. Organizational structures are becoming more egalitarian, meaning that power and authority are spread more evenly among all employees. Implications of rapidly changing technologies brings many challenges for human resources. For example, internal security, data security, outsourcing (=subcontracting work to an outside company that specializes in and is more efficient at doing that kind of work), and product integrity. (Balkin et al, 2016, 41-45.)

Individual Challenges

Individual challenges are human resource issues that address the decisions most pertinent to individual employees. The most important individual challenges today are: matching people and organizations, ethics, and social responsibility, productivity, empowerment, brain drain, and job security. Productivity is a measure of how much value individual employees add to the goods or services that the organization produces. From HR perspective productivity is affected by ability, motivation, and quality of working life. Employee ability is competence in performing a job and can be improved through hiring and placement processes. Motivation refers to a person’s desire to do the best possible job or to exert maximum effort to perform assigned tasks. Motivation energizes, directs, and sustains human behavior. Employees are likely to choose a firm and stay there if they believe that if offers high quality of working life. Quality of working life is a measure of how safe and satisfied employees feel with their jobs. (Balkin et al, 2016, 45-47.)

Empowerment refers to providing workers with the skills and authority to make decisions that would traditionally be made by managers. Many firms have reduced employee dependence on superiors, placing more emphasis on individual control over the work that needs to be done. The goals is to have employees enthusiastic, committed, who perform their work ably because they believe in it and enjoy doing it (internal control). Brain drain is the loss of high-talent key personnel to competitors or start-up ventures. This is a major challenge, because organizational success in becoming more dependent on knowledge held by specific employees. Brain drain in national level is a major problem for developing countries, because the best educated tend to leave. Job insecurity refers to employees not able to count on steady job and regular promotions, in fast changing environment. Layoffs have become essential in age of cutthroat competition, regardless of the company’s success. (Balkin et al, 2016, 47-48.)

Strategic HR Planning: Benefits & Challenges

Strategic human resource (HR) planning refers to the process of formulating HR strategies and establishing programs or tactics to implement them. When done correctly strategic HR planning has many direct and indirect benefits to the company. For example, encouragement of proactive rather than reactive behavior. Proactive means looking ahead and developing a vision of where the company wants to be and how it can use its human resources to get there. Explicit communication of company goals, focused set of objectives that capitalizes on its special talents and know-how. Stimulation of critical thinking and ongoing examination of assumptions. Identification of gaps between current situation and future vision. Encouragement of line manager’s participation. Identification of HR constraints and opportunities. Creation of common bonds, strong sense of ‘’who we are’’. (Balkin et al, 2016, 49-50.)

Developing HR strategy includes several important challenges. Maintaining competitive advantage, which tends to be short-lived. Developing strategies that sustain competitive advantages, for example maximizing employees’ potential through carefully developed career ladders. Reinforcing overall business strategy. Avoiding excessive concentration on day-to-day problems but focusing on long-term direction of the business.  Developing HR strategies suited to unique organizational features for example culture, history, and leadership style. Coping with the environment and change. Securing management commitment, and support to HR strategies. Translating the strategic plan in to action. Combining the intended and emergent strategies together. Accommodating change to strategic HR plans to respond to changes quickly. (Balkin et al, 2016, 50-52.)

Strategic HR Choices

Strategic HR choices are the options available to a firm in designing its human resources system. Work flows are the ways tasks are organized to meet production or service goals. They can emphasize: efficiency or innovation, control or flexibility, explicit job descriptions or broad job classes, and detailed work planning versus loose work planning.  Staffing is HR activity that secures the right employees at the right place at the right time: recruiting, selecting, and socializing employees. These include internal recruiting versus external recruitment, supervisors making hiring decisions versus centralizing these decisions in the HR department, emphasizing good fit between the applicant and firm versus hiring most knowledgeable regardless of interpersonal considerations, and informal hiring versus formal and systematic approach to hiring. (Balkin et al, 2016, 52.)

Employee separations occur when employees leave the firm, either voluntarily or involuntarily. Separations can be handled by use of voluntary inducements (e.g. early retirement packages) to downsize versus layoffs. Hiring freeze to avoid layoffs versus recruiting employees as needed, and possibly laying off current employees. Providing continuing support to terminated employees versus leaving them for themselves. Making commitment to rehire versus avoiding any type of rehiring. Performance appraisals are managers assessing how well employees are carrying out their assigned duties. Strategic choices concerning appraisals include customized versus uniform appraisal procedures, developmental appraisals versus control-oriented appraisals, multipurpose appraisals versus narrow focus appraisals, multiple inputs for appraisals (supervisors, peers, subordinates) versus supervisory input only.  Training and development activities are designed to help organization to meet skill requirements and help employees to maximize their potential. Strategic choices include individual or team-based training, on-the-job training or external training, job-specific training versus generic training emphasizing flexibility, ‘’buy’’ skills by hiring experiences workers at higher wage or ‘’make’’ skills by providing training to less experiences workers hired with lower wage. (Balkin et al, 2016, 54.)

Compensation is the payment employee receives in exchange for their labor. Strategic HR choices include: fixed versus variable pay, job-based versus individual pay, seniority versus performance based pay, centralized versus decentralized pay decisions.Employee and labor relations refer to the interaction between workers and management. Strategic choices include top-down communication versus bottom-up communication and feedback, union suppression versus union acceptance, adversarial approach versus enlightened management. Employee rights concern the relationship between the organization and individual employees. Strategic choices include emphasis on discipline to reduce mistakes versus emphasis on preventive action to reduce mistakes, protecting employer’s interests versus policies that emphasize protecting employee’s interests, informal ethical standards versus explicit ethical codes and enforcement procedures. International management, how to manage human resources on a global basis. Creating global company culture versus adapting to local culture, relying on expatriates versus relying on country nationals, repatriation agreement versus no formal repatriation agreement, universal company policies versus country-specific company policies. (Balkin et al, 2016, 54-55.)

Fit with Organizational Strategies

Corporate strategy is the mix of businesses a corporation decides to hold and the flow of resources among these businesses. Business unit strategy is the formulation and implementation of strategies by a firm that is relatively autonomous, even if it is part of larger corporation. There are two major types of corporate strategies and matching HR strategies. (1) Corporations adopting evolutionary business strategy engage in aggressive acquisition of new businesses, even if these are totally unrelated to one another. (2) Corporations adopting a steady-state strategy are very choosy about how they grow. They avoid acquiring businesses outside their industry or even in companies within the same industry but different from them.

Porter (Porter’s business unit strategy) identified three types of business unit strategies that help a firm to cope with competitive forces and outperform other firms in the industry.  The overall cost leadership strategy is aimed at gaining a competitive advantage through lower costs. A differentiation business strategy attempts to achieve competitive advantage by creating a product or service that is perceived as being unique. The focus strategy relies on both low-cost position and differentiation, with the objective of serving a narrow target market better than other firms. The firm seeks to achieve differentiation either from better meeting the needs of particular target, or from lowering costs in serving this target, or both.Miles and Snow (Miles and Snows business strategies) created another classification of business unit strategies. They characterized successful businesses as adopting either a defender or a prospector strategy. Defenders are conservative business units that prefer to maintain a secure position in relatively stable product or service areas instead of looking to expand into uncharted territory. Unlike defenders, prospectors emphasize growth and innovation, development of new products, and an eagerness to be the first in new-product or market areas, even if some of these efforts fail. (Balkin et al, 2016, 56-57.)

Case

Unethical Practices

According to the article (BBC 2016) BBC Panorama investigation uncovered that in factories in Turkey Syrian refugee children have been making clothes for Marks and Spencer and online retailer Asos. Adult refugees were also  found working illegally on Zara and Mango jeans. All brands claim that they carefully monitor their supply chains and do not tolerate the exploitation of refugees or children. The refugees often earn well below the minimum wage. The youngest that was found was 15 years old working more than 12 hours a day. (BBC 2016.) Subcontracting work to an outside company involves many challenges for companies, especially if the supplier operates in a remote location. Companies have to monitor as well as possible continually the suppliers’ operations and practices. Companies should also carefully choose their suppliers and communicate their values and expectations to them. Establishing a code of conduct may be an effective approach to ensure the supplier commits to the practices on the company outsourcing.

The brands are ultimately responsible for activities of their suppliers. It can be very hurtful to brands image if some unethical practices are uncovered and can label brand permanently in customers eyes. Marks and Spencer claimed that their inspector had not found a single Syrian refugee working in its supply chain in Turkey, but Panorama found seven Syrians working in one of their main factories (BBC 2016). I consider that the brand is trying to avoid taking responsibility in their actions. As soon as something like this is discovered brands should immediately act to change these problematic practices and admit that they were in the wrong. As Danielle McMullan from Business & Human Right Resource Center states ‘’It’s not enough to say we didn’t know about this, it’s not our fault’’ (BBC 2016).

Article 1

Ethical sourcing is sourcing activities at the highest standards of responsible, sustainable and socially aware business practice. Companies include ethical sourcing policies in their standards and principles. The goal of this is to ensure the ethical production.  One part of it is protecting brand reputation. It is also a possibility to gain competitive advantage, especially if the competitive companies fail to source ethically. Emphasize on ethical sourcing policies is essential, as there is globally low-cost sources of supply available. Kearney (2013) introduces 10 principles for ethical sourcing in supply management. Learn from industry case studies in applying proactive, dynamic supplier vetting and auditing of your suppliers and their vendors. Leverage available business information as a first pass risk assessment of your supply chain. Go beyond formal scheduled  site visits. Get an acceptance from your suppliers that you may audit their business (physically or remotely) unannounced. Mandate, or encourage best ethical sourcing practice among your tier one suppliers’ own management of their vendors. Leverage technology to audit and analyse supplier business practice. (Kearney 2013.)

Article 2

Unethical Sourcing

Due to pressure to meet fast fashion unrealistic deadlines, quick turnarounds and low overheads, women working in Asian factories supplying Gap ja H&M are being sexually and physically abused (). More than 540 workers from those factories have described incidents of threats and abuse according to Global Labor Justice reports on gender-based violence in Gap and H&M garment supply chains. Most of the cases are not reports due to the fear of retaliation in the workplace. Gap and H&M told that they would investigate the allegations and welcome initiatives to address violence. Jennifer Rosenbaum, US director of Global Labour Justice said, that this is an outcome of the global supply chain structure, and the fast fashion supply chain model creates unreasonable production targets resulting in workers unpaid overtime and working fast under extreme pressure. In one factory in India a female worker says that she was grabbed by the hair and punched, and then abused verbally. (Hodal, 2018.) When I first found out this information and H&M unethical practices, I was shocked. I had been a regular customer for the brand, and I felt very remorseful for supporting that kind of practice. Since the unethical practices were revealed to the media, I have not bought anything form this brand since it now labelled in my brain as a unethical company.

References

Balkin, D.B., Cardy, R.L. & Gomez-Mejia, L.R. 2016. Managing Human Resources.  Global Edition 8th ed. Pearson. London. pp. 29-64.

BBC 2016. Child refugees in Turkey making clothes for UK shops. URL: https://www.bbc.com/news/business-37716463. Accessed: 10 May 2020.

Hodal, K. 2018. Abuse in daily reality for female garment workers for Gap and H&M says report. URL: https://www.theguardian.com/global-development/2018/jun/05/female-garment-workers-gap-hm-south-asia. Accessed: 10 May 2020.

Kearney, D. 2013. Ten tips and principles for ethical sourcing in supplier management URL: https://www.cips.org/documents/about%20cips/news/ten-tips.pdf. Accessed: 10 May 2020.

Managing Workplace Safety and Health

Workplace Safety and the Law

Decline in workplace injuries and fatalities is due to improved safety and health conditions, but also the change of less people working in industries that high incidence of injuries. Numerous laws have been established to regulate workplace safety, specifically for industries with work hazards, such as coal mining. (Balkin et al, 2016, 530.)

Workers’ Compensation

Due to work-related injuries worker’s compensation law was established, which is based on the theory that work-related accidents and illnesses are costs of going business that the employer should pay for and pass on to the consumer. Workers’ compensation programs are designed to provide financial and medical assistance to employees injured on the job. The employee injury must occur in the course of employment, but may not be directly due to the performance of the job. (Balkin et al, 2016, 531.)

The benefits of workers’ compensation include: partial replacement of income lost as the result of total disability; impairment benefits for temporary or partial disability, based on the degree or duration of impairment; a burial allowance and income benefits for worker’s survivor in cases of work-related deaths; medical expense benefits; rehabilitation benefits for injured workers, and possibly vocational training if the employee can’t work at their previous occupation as a result of the injury (Balkin et al, 2016, 531).

The cost to employers of workers’ compensation insurance is directly affected by accidents (premiums) and may be higher in industries such as construction. The insurance is based on payroll, but premiums modified by an organization’s safety record. The system is subject to fraud, for example employers might not insure their employees or employees commit fraud. Data analytics software is being used by many insurance firms to detect possible fraud, and managers have a responsibility to confirm workers’ compensation claims. Legitimate workers’ compensation claims should be a central focus of responsible management. If causes for injuries can be identified, addressed, and reduced, the costs of injuries can be reduced.  (Balkin et al, 2016, 533.)

The Occupational Safety and Health Act (OSHA)

Occupational Safety and Health Act of 1970 (OSHA), is a federal law that requires employers to provide a safe and healthy work environment, comply with special occupational safety and health standards, and keep records of occupational injuries and illnesses. Under OSHA employees must comply with relevant safety, and health standards, and report all hazardous conditions, and work-related injuries to employer. The employer must provide employees information about hazardous substance in the workplace (Hazard Communication Standard). (Balkin et al, 2016, 533-534.)

Managing Contemporary Safety, Health, and Behavioral Issues

Managing workplace safety and health requires more that reducing number of accidents and injuries. Managers must deal with variety of practical, legal, and ethical issues, regarding individual rights (particularly the right to privacy), such as AIDS in the workplace. Many organizations also face the challenge of employees not committing to safety and health programs and measures, and the employers might view them intrusive. Commitment can be generated through communicating rationale for relevant safety and health practices, for example cost of accidents to organizations. (Balkin et al, 2016, 538.)

AIDS

AIDS, acquired immunodeficiency syndrome, has become an important workplace health challenge. The OSHA Bloodborne Pathogens Standards provide steps that workplaces where employees employees can be expected to come in contact with blood or other bodily fluids. OSHA requires workers to be educated about bloodborne pathogens and trained how to reduce the risks on infection. (Balkin et al, 2016, 538.)

ADA and the Manager’s role

According to ADA, having HIV infection or AIDS does not necessarily prevent people from performing the essential functions of most jobs, thus reasonable accommodations must be made, for example adjustments to work schedule. According to ADA guidelines, employer can not ask job candidates about their HIV or AIDS status or require them to make HIV test before making the job offer. The job offer can’t be withdrawn on the basis of positive HIV, unless the person would pose a direct threat to coworkers or customers, and the threat can’t be eliminated through accommodations. (Balkin et al, 2016, 539.)

Organizations’ educational programs can provide information about the disease and how it’s transmitted. However, there are restrictions to addressing the issue. According to ADA, confidential medical information can be disclosed to supervisory only for purposes of providing reasonable accommodation or safety personnel who might be required to provide emergency medical services to the employee. An employer who discloses an employee’s medical conditions, risks violating their right to privacy and right to work without discrimination. Open discussion of the issue of AIDS in the workplace can help to create a positive environment, but disclosure of an employee’s AIDS status is legally prohibited. (Balkin et al, 2016, 541.)

Violence in the Workplace

Violence in the workplace can be lethal or nonlethal and can take variety of forms, including assaults, threats, and sabotage. There should be proactive management that assesses risks and generates a policy. Domestic violence can impact the workplace by affecting the employee’s wellbeing and performance, for example by absenteeism. Some companies are proactive about domestic violence, for instance clothing retailer Macy’s West trains managers and sales associates how to detect signs of domestic violence and how to respond to the issue. Sabotage is form of workplace violence. It can be directed at a person, such as an attempt to damage someone’s career, or at an organization, such as damaging equipment or reputation. Commonly the motive is revenge. Many saboteurs are disgruntled former employees who feel unfairly treated. (Balkin et al, 2016, 542.)

Many people feel pressured in their jobs and fear layoffs, so events such as negative performance appraisals may add to the stress level and a potentially trigger a violent reaction. Managers should make sure employees are treated fairly. Addressing performance problems should focus on behavior and future improvement, and employees should never be disciplined in front of coworkers and humiliated. Also reducing the possibility of hiring workers prone to violence. Avoiding a negligent hiring charge requires thorough background checks (negligent hiring, is hiring an employee with a history of violent or illegal behavior without conducting background checks or taking proper precautions). (Balkin et al, 2016, 542-543.)

Cumulative Trauma Disorder (CTD)

Cumulative Trauma Disorder (CTD), or repetitive stress (or motion or strain) injuries (or illnesses or syndromes) is an occupational injury that occurs from repetitive physical movements, such as assembly-line work or data entry. Managers should take steps to reduce CTD by educating workers and altering the physical arrangements if necessary. (Balkin et al, 2016, 543.)

Hearing Impairment

Loud noise can lead to hearing impairment, disorientation and reduction of eye focus, which can lead to other accidents and injuries. OSHA developed the Occupational Noise Exposure standard, that requires organizations to provide hearing protectors free to employees exposed to an average of 85 decibels of noise or greater. Efforts to prevent hearing loss should include consideration of both system (machinery) and person (employee) factors. (Balkin et al, 2016, 544.)

Hazardous Chemicals and Genetic Testing

According to OSHA’s hazard communication standard requires that manufacturers and users or hazardous chemicals to identify the chemicals, provide employees with information about them, and train employees in understanding the dangers and how to handle them.  Determining whether a substance has hazardous effects and the levels at which toxicity is a concern can be difficult, however online resources are available such as Haz-Map, which is an online decision support system for recognizing and preventing diseases caused by chemical and biological agents in the workplace. Genetic testing is a form of biological testing that identifies employees who are genetically susceptible to illness or disability. (Balkin et al, 2016, 538.)

Safety and Health Programs

Effective safety programs are well-planned and thorough. Concern for safety should start at the highest level of organization and all levels should demonstrated safety awareness, have safety training, and rewarded for maintaining a safe workplace. The input and participation of line workers, who know the risks and what could be improved, is critical to effective safety program. Organization often establish a safety committee, which intents to have employees and managers to collaborate; to evaluate the adequacy of safety procedures; monitor findings and trends; review accidents, illnesses, and safety suggestions; and recommend and evaluate hazard solutions. (Balkin et al, 2016, 547.)

Employee Assistance Programs (EAPs)

Employee assistance programs (EAPs) are designed to help employees whose job performance is suffering because of physical, mental, or emotional problems. Organizations create EAPs because of their ethical and legal obligations to protect their workers’ physical and mental health. The causes of organizational stress (for instance climate, change, rules, management style) are frequently the causes of behavioral, psychological, and physiological problems for employees. Employees might sue the company or file workers’ compensation claims for stress-related illness. (Balkin et al, 2016, 548.)

Stress often results in burnout, which is a stress syndrome characterized by emotional exhaustion, depersonalization, and reduced personal accomplishment. Various health problems can result from burnout; mental health problems such as depression; physical problems such as fatigue, headaches, and insomnia; and organizational outcomes include turnover, absenteeism, and deceased job performance. Depression is a serious mental illness and a big problem in workplaces. Research suggests that depressed workers may be more prone to accidents due to for example lack of concentration, and slower reaction time. Depression can be treated with counseling and medication, but by professionals. (Balkin et al, 2016, 548.)

Wellness Programs

Whereas EAPs focus on treating troubled employees, wellness programs focus on preventing health problems. A complete wellness program consists of three components (1) helps employees to identify potential health risks through screening and testing, (2) educates employees about health risks, (3) encourages employees to change their habits. A newer cost effective approach for implementing a wellness program, is using technology and social media. Although there are costs to a wellness program, the return in terms of reduced health care costs and absenteeism can greatly offset the investment. According to resent study of wellness program in Midwest utility company, which looked at a nine-year period, suggest that the return for investment was 157 percent, with financial savings from reduced health care costs and less time away from work. (Balkin et al, 2016, 549-550.)

Case 1

Thomas (2013) writes that 21-year-old intern, in the Bank of America Merrill Lynch, died of an epileptic fit that was possibly triggered by fatigue after working ‘exceptional’ hours. He had not told anyone at the workplace about his condition. Moritz Erhardt’s death emerged conversation about the culture of punishingly long hours (Thomas, 2013). Coroner Mary Hassell said, that ‘one of the triggers for epilepsy is exhaustion and it may be that because Moritz had been working so hard his fatigue was a trigger for the seizure that killed him’. Erhard had never complained about his working hours (Thomas, 2013). This was a devastating case of hard-working, and ambitious young man however no job-related matter should come before health and is worth risking it.

Juergen Schroender, Erhardt’s development officer at Merrill Lynch, told the court that he had never known Erhardt to be unwell, and revealed that, in a questionnaire about health, Erhardt said he had no medical conditions, and was not taking any medication (Thomas, 2013). He told the inquest that it was difficult to know exactly what hours the student was working, and that interns generally work long hours, due to workload, peer pressure, and competition between employees to work longer hours than each other(Thomas, 2013). The case is very unfortunate, but it shows that employees should look after themselves and know their limits. Especially when dealing with a specific and dangerous health condition, the employer should always be aware of it. The bank was in the wrong for letting interns work for such exceptionally long hours, which can cause physical, mental and other health problems. There should’ve been a limit and the working hours should have been monitored.

Dennis Wierer, Mr Erhardt’s mentor at Merrill Lynch, said that ‘’In general I think well-being is very important in the bank’’, and he added ‘’exceptional hours Erdardt had reportedly been working in the days running up to his death were ‘to my knowledge, unheard-of hours’’(Thomas, 2013). Bob Elfring, co-head of the bank Merrill Lynch, said that there was not a current system for monitoring working hours at the bank. He continued that a global review had been launched, looking at issues including staffing and working hours at several levels’’ and said that this is a very serious effort (Thomas, 2013).

Case 2

Morgaine (2015) suggests, that wellness programs are more popular than ever and more than two-thirds of U.S. employers offer some wellness program. Wellness program is ‘’a program intended to improve and promote health and fitness that’s usually offered through the workplace’’ (HealthCare.gov). Employers offer employees healthy lifestyle habits and prevent future health issues (Morgaine, 2015). The programs may include discounts on monthly health insurance premiums, cash rewards, providing gym memberships, and offering healthier food options at work (Morgaine, 2015). Morgaine (2015) suggests that key to making the program successful is communicating to employees about the program, and how to participate. Dedicate time to help familiarize your employees with the program, and where to ask further information. (Morgaine, 2015.)

Morgaine (2015) argues, that heavy-handed and mandatory wellness programs are common reasons for employee dissatisfaction are generally not successful. For example, before Lowes initiated their tobacco-free policy in 2015, they gave employees plenty of advance warning (Morgaine, 2015). In 2011 they began offering 50-dollar monthly insurance discounts to employees that agreed to not use tobacco products, and gently introduced their tobacco-free policy, without alienating employees or leaving them struggling with an addiction (Morgaine, 2015). Morgaine (2015) suggests that employees should be rewarded for healthy behaviors, offer help, and reframe initiatives to help rather than punish. Pushing and mandatory wellness programs may be unmotivating, can cause pressure and dissatisfaction, and result in discouraging healthy habits. It is important that the employee can choose the activities to take part in and do it willingly, and that way it will be most effective.

Some wellness programs shift the cost onto employees, instead of ‘’saving’’ money. Under the Affordable Care Act, employers can charge penalties for health-contingent wellness programs up to 30 percent of the total cost of an employee’s premium. That means that in some cases employees can be charged for things like smoking. So, while charging certain employees more is legal (in the case of smokers, up to 50 percent more than the price of the premium), your employees may view this as unnecessary, unethical, and in some cases discriminatory. Morgaine (2015) suggests that programs should be offered to help your employees become healthier, developing healthier habits, rather than charging for unhealthy behaviors. Unhealthy behaviors such as smoking can be a very difficult process to get rid of, so putting pressure to change habits quickly is likely to result just as dissatisfaction and turnover.

According to American Journal of Managed Care ‘’no corporate weight control program has ever reported savings or even sustained weight loss’’ (Morgaine, 2015). Weight loss -based wellness programs also have seen backlash as they penalize employees who do not or can’t meet weight requirements, and in some cases end up encouraging unhealthy weight loss practices (Morgaine, 2015). Morgaine (2015) suggests that avoid making it about weight and focus on encouraging healthy behaviors and emphasize the rewards for healthy eating and exercise. Approach healthy weight loss as a positive side effect, rather than the main goal (Morgaine, 2015). I consider the concept of weight control program completely inappropriate, and absurd. In my opinion encouraging these types of programs will destroy self-esteem and cause mental problems such as unhealthy weight loss. Over any physical focused wellness program, I consider the best and most important approach to be focus on mental health.

Too many wellness programs focus only on physical wellbeing. Mental health challenges, like depression and stress have a huge effect on the overall wellness, productivity, and employee output. Workplaces that encourage wellbeing beyond physical, also consider social, emotional, financial, and community wellbeing have fewer sick days and more likely to retain employees, for example offering services like stress-management. The Society for Human Resource Management suggests that stress is responsible for absenteeism in over half of the 550 million working days lost annually in the U.S (Morgaine, 2015). Morgaine (2015) suggests that the focus on wellbeing should be beyond physical, and consider offering access to relaxation tools, such as meditation or yoga, and well-rounded access to mental health services.

Wellness programs are more effective when considering long-term return for investment. Wellness programs are truly effective over long term (Morgaine, 2051). Cost savings are debatable, and they take time to pay out. However, having less stressed, healthier, and more engaged employees and shared company culture that values well-being, wellness program is more likely to prove successful (Morgaine, 2015).

Article 1

Fini (2020) argues that motivating individuals to participate in a workplace wellness program is a challenge for health and wellness professionals. In addition to engaging employees, securing participation has become challenging, especially when employees work from a remote location. To achieve successful wellness programs managers should embrace incentives, pair programs with educational outreach and leverage the Web (Fini, 2020).

All programs are different, but the to all applies that more engaged individuals equals to long-term behavior changes (Fini, 2020). Fini (2020) argues that engagement is most often increased when it is tied to incentives for participation and meeting goals. Incentives can be for instance gym membership discounts, cash, and gift cards. It can be challenging to offer incentive package for employees working remotely, but by evaluating the work force, the right kind of incentives (possibly different) can be determined to employees in different areas (Fini, 2020).

Fini (2020) suggests that wellness programs should have an educational component, for instance courses and coatching, which will help employees to reinforce the benefits of a healthy lifestyle. Through the Web wellness education programs and information online can be delivered also to employees working remotely, for example by uploading videos, recorded sessions, and streaming webcasts. Online solutions are also much more affordable than traditional programs, such as on-site nutrition training (Fini, 2020). By hosting a wellness program online, employers can use a number of interactive tools, for instance health risk assessments (HRA) and educational health modules, that are affordable. They also allow companies to customize information for employees, for example HRAs can identify current health issues and recommend actions for specific employee (Fini, 2020). Fini (2020) suggests that online wellness programs offer comprehensive reporting capabilities. Fini (2020) argues that the privacy and convenience of the Internet eliminates the hesitation some employees might have about sharing personal information with the managers and allows the wellness goals of the individual to remain private. An online program might not be a solution for companies with additional reporting and privacy requirements placed on employers, and laws should be taken into consideration (Fini,2020). To get the best results for investment, companies should incorporate online solutions as part of a wellness program and consider engaging employees in the process when designing a wellness program (Fini, 2020).

Article 2

Nitta (2017) argues that workplace wellness programs reduce employee sick days and medical costs, and can improve productivity and overall mood and well-being of your staff. Nitta (2017) points out examples of how companies can foster wellness in the workplace. (1) The David Suzuki Foundation offers its employees a 4-day workweek and flexible working hours, which empowers employees to have a work-life balance (Nitta, 2017). In addition, the company also provides possibility to shower for employees that run or ride their bikes to work, walking meetings, and a beautiful west coast-inspired office space (Nitta, 2017).

Zappos offers its employees a robust workplace wellness program, including yoga, fitness studios, nap room, and mini golf course (Nitta, 2017). Nitta (2017) argues that additionally, the company reimburses its employees for their fitness-related activities such as gym membership tor marathon registrations, and encourage employees to stay active. Nitta (2017) also suggests that the company provides ‘’Wellness Adventures’’, where the teams do something entertaining outside of the office, for example golf lessons. Also on certain days during lunch the company offers games such as basketball or volleyball (Nitta, 2017). I would love to work in a company that offers multiple options for wellness activities.

References

Balkin, D.B., Cardy, R.L. & Gomez-Mejia, L.R. 2016. Managing Human Resources.  Global Edition 8th ed. Pearson. London. pp. 528-550.

Fini, A. 2020. Successfully Engaging Employees in Wellness Programs. https://www.corporatewellnessmagazine.com/article/successfully-engaging-employees-in-wellness-programs. Accessed: 4 March 2020.

Morgaine, B. 2015. Do Corporate Wellness Programs Really Work? URL: https://www.liveplan.com/blog/does-corporate-wellness-work-the-surprising-truth-about-employee-wellness-programs/. Accessed: 1 March 2020.

Nitta, C. 2017. 3 Examples of Companies Who Prioritize Wellness in the Workplace. URL: https://risepeople.com/blog/3-companies-that-prioritize-wellness-in-the-workplace/. Accessed: 4 March 2020.

Thomas, E. 2013. ‘Exhausted’ Merrill Lynch intern died from epileptic fit in shower after he ‘pulled three all-nighters at bank where employees compete to work the longest hours’. URL: https://www.dailymail.co.uk/news/article-2511911/Moritz-Erhardt-exhausted-Merrill-Lynch-intern-died-epileptic-fit.html#ixzz4RTj2xoP1. Accessed: 1 March 2020.

Respecting Employee Rights and Managing Discipline

Employee Rights

Right is the ability to engage in conduct that is protected by law or social sanction, free from interference by another party (such as employer). For example, the right to form a union. Saturation rights are a rights protected by specific laws enacted by government. For example, a saturation right for employees: protection from discrimination based on race, sex, religion, national origin, age, handicap. Another employee saturation right: protection from unhealthy working conditions. Employees also have a legal right to from unions and participate in union activities. (Balkin et al, 2016, 457-458.)

Contractual rights are based on the law of contracts. A contract is a legally binding promise between two or more competent parties. An employment contract, is a contract that spells out explicitly the terms of the employment relationship for both employee and employer. In general, such contracts state, that employee is expected to work competently over a stipulated period of time and employer expected to provide agreed pay, specific working conditions, over this time period. (Balkin et al, 2016, 458.)

Some industries have standard contract provisions to protect their interests. For instance, employers in competitive technology and service industries often have several employment contract provisions that forbid employees to (1) disclose trade secrets information during or after employment, (2) solicit business from former customers, or (3) attempt to hire former coworkers after leaving the company. For some high-profile jobs, the contract will not follow the standard pattern and is negotiated individually. (Balkin et al, 2016, 458-459.)

Union contracts do not provide the same level of security as individually negotiated, but provide some job security through seniority and union grievance procedures. seniority provisions protect senior workers through ‘’last in, first out’’ layoff criterion commonly in union contract. Union grievance procedures subject all disciplinary actions (including discharge) to due process, which is equal and fair application of a policy or law. Wrongful discharge is discharge for reasons that are either illegal or inappropriate, such as age or refusal to engage in illegal activities. (Balkin et al, 2016, 459.)

If formal contract does not exist, employer and employee are said to have entered into an implied contract. Employees who have lost their jobs because of layoffs have successfully obtained legal remedies when such promises were made. Employee handbooks can be a source of implied employment contracts if they offer job security, they can include distinction between ‘’probationary’’ and permanent’’ employees. Employee handbooks can be interpreted as enforceable contracts. (Balkin et al, 2016, 459.)

Other rights

Employees have the right to ethical treatment. Employees are expected to be treated fairly and ethically in return for providing their employer with fair and reasonable amount of work, psychological contract. One way to sealing psychological contract is developing a code of ethics. (Balkin et al, 2016, 459.)

Employees have limited right to privacy. The right protects people from unreasonable or unwarranted intrusions into their personal affairs. A sensitive issue involving employee privacy rights is the maintenance of personnel files. Employees personnel file contains documentation of critical information, such as performance appraisals, salary history, disciplinary actions, and career milestones. Access should be denied from all people except managers with job-related need to know the information. Employees should also have right to review the information to ensure its accuracy. (Balkin et al, 2016, 460.)

Employees have limited right to free speech. A company can discipline employees who say something damaging to the company or its reputation, or using demeaning language that insults a manager based on his or her race or gender. (Balkin et al, 2016, 460.)

Management Rights

The rights of the employer are called management rights: rights to run the business and to retain any profits that result. Management rights include: the right to manage workforce and right to hire, promote, assign, discipline, and discharge employees. Management’s rights are moderated by the right of employees. Managers have the right to make decisions that affect the business and the workforce in the limitations of laws and contract provisions. (Balkin et al, 2016, 462.)

Employment at Will is a common-law rule used by employers to assert their right to and an employment relationship with an employee at any time for any cause. Particularly important in small businesses. Because of employment-at-will doctrine many employees who are wrongfully discharged have no legal remedies. Employment-at-will is not accepted in European Union, where laws make it difficult for employers to discharge employees without a good cause. (Balkin et al, 2016, 462.)

Employee Rights Challenges: A Balancing Act

The practice of random drug testing screens employees for the use of drugs, and some employees consider it unreasonable and illegal invasion in their privacy. However, it is required by law in specific occupations where safety is critical. A preemployment drug test is part of hiring process, and a probable cause drug test is given to employees who have accidents, engage in unsafe job behavior, or show behavioral signs of drug use. Both of these are not given randomly, but at a predetermined time. Alternative to drug testing that does not invade employee privacy and more reliable for determining fitness for work: the performance test. (Balkin et al, 2016, 465.)

Electronic monitoring: employee theft includes theft of merchandise, embezzlement, industrial espionage, computer crime, acts of sabotage, and misuse of time on the job. Companies attempt to fight these various forms of theft by using electronic surveillance to monitor employees, for example tracking employees’ job performance by calculating how many keystrokes an employee makes on a computer. Electronic monitoring has raced concerns about employee privacy and dehumanizing, and according to research monitored employees feel more stressed and have more stress-induced illnesses. Managers should avoid secret monitoring, expect on individuals that are believed to be stealing from the company. (Balkin et al, 2016, 467.)

Whistle-blowing occurs when an employee discloses and employer’s illegal, immoral, or illegitimate practices to persons or organizations that may be able to take corrective action. Although the employee often has altruistic motives, they may be shunned, harassed, even fired for their efforts. Dealing with whistle-blowing requires balancing employees’ right to free speech with the employer’s right to prevent employees from disregarding managers’ authority or disclosing sensitive information to outsiders, and employee-at-will rule. Whistle-blower should have good documentation of the evidence and be prepared to deal with employer retaliation. (Balkin et al, 2016, 469.)

Restrictions on moonlighting: holding a second job outside normal working hours. For example, to earn extra income, during recession because of pay freezes, work-hour reductions, or pay reductions. Restrictions to employees who moonlight may be appropriate in some situations to protect the employer’s interests. Management should manage moonlighting individually on a case-by-case basis rather than have a common policy and rely on job performance and conflict-of-interest policies. Employer may need to restrict a specific employee from moonlighting when the second employer is a direct competitor and a conflict of interests exists. (Balkin et al, 2016, 469.)

Restrictions on office romance: the challenge of dealing with an office romance forces management to balance the need to protect the company from its liability for preventing sexual harassment with the need to protect the privacy of employees during their off-duty hours. How organizations deal with office romances depends on the goals and culture of the organization. Some companies restrict romantic relationships and enact no-dating policies. Some companies view it positively, as it may lead to marriage and effect employee morale, and some companies even condole it. (Balkin et al, 2016, 471.)

Disciplining Employees

Employee discipline is a tool, managers rely on to communicate to employees that they need to change behavior. For example, warning that such behavior coming late to work will be followed with specific actions. Employee discipline is usually performed by supervisors, but in self-managed work it may be a team responsibility. There are two approaches widely used (1) progressive discipline, and (2) positive discipline. (Balkin et al, 2016, 472.)

Progressive discipline consists of a series of management interventions that gives employees opportunities to correct undesirable behaviors before being discharged. Progressive discipline procedures are warning steps each of which involves a punishment. Serious violations, gross misconduct, can result in elimination of several steps.

1. Verbal warning, and if the problem continues within a specific time period, harsher punishment will follow. Supervisor should provide clear expectations for improvement.
2. Written warning, which goes to employee’s records.
3. Suspension if the employee fails to respond to warnings, the employee is suspended from employment without pay for specific amount of time.
4. Discharge.

(Balkin et al, 2016, 473-474.)

Positive discipline is a discipline procedure that encourages employees to monitor their own behaviors and assume responsibility for their actions. It uses series of steps that increase in urgency and severity until the last step which is discharge. However, punishment is replaced with counselling sessions, collaborative problem solving, between employee and supervisor, to motivate employees to change. (1) The first counselling session that ends in verbal solution that is accepted by both parties. (2) If that does not work, the supervisor and employee meet again to develop a written new plan and timetable to solve the problem. (3) The third step is the warning of a possible discharge. (4) The final step is discharge. Counselling is time consuming, however it results in greater willingness to change undesirable behaviors than discipline does. (Balkin et al, 2016, 475.)

Administering and Managing Discipline

Managers have to ensure that employees who are disciplined receive due process, which means fair and consistent treatment. Two important elements managers should consider (1) the standards of discipline used to determine whether employee was treated fairly, and (2) whether employee has a right to appeal a disciplinary action. All disciplinary actions should include the following procedures: communication of rules and performance criteria, and employees should have an opportunity to correct their behavior; documentation of the evidence, and employees should have the opportunity to refute this evidence and correct documentation in self-defense; consistent response to rule violations without discrimination. According to the hot-stove model of disciplinary action discipline should be immediate, provide ample warning, and be consistently applied to all. (Balkin et al, 2016, 476.)

Managing Difficult Employees

Common problems such as poor attendance, poor performance, insubordination, workplace bullying, and substance abuse, often lead to disciplinary action. Poor attendance includes absenteeism and/or tardiness. Some employees may have legitimate reasons for that such as sickness or child-care problems. When disciplining employee for poor attendance managers need to consider is the attendance rule reasonable, has the employee been warned of the consequences of poor attendance, and are there any mitigating circumstances that should be taken into consideration. (Balkin et al, 2016, 479.)

Poor performance can be corrected by performance appraisal. Companies and managers should follow these guidelines when applying discipline for poor performance: (1) performance standards should be reasonable and communicated to all employees, (2) poor performance should be documented, and poor performers should be told how they are not meeting the standards, and (3) employees should be given an opportunity to improve their performance before disciplining them. It is illegal to use discipline to correct poor performance when an employee has a physical or mental disability. (Balkin et al, 2016, 479.)

Sometimes poor performance is the result of factors beyond employee’s control, for example incompetence. Some organizations use a probationary employment period, a period that allows the employer to discharge any an employee at will, to weed out incompetent employees early. Probationary employment periods usually last one to three months. In Europe, where permanent employment is the norm, many companies insist on six-month trial period. (Balkin et al, 2016, 479.)

Insubordination, an employee’s refusal to obey a direct order from a supervisor or verbal abuse of a supervisor, is a direct challenge of management’s right to run the company. The discipline for insubordination varies according to the seriousness and mitigating factors, such as employee’s work history and length of service. To discipline employee for insubordination managers should document (1) the supervisors direct order to subordinate, and (2) the employee refused to obey the order by indicating verbally or not doing what was asked. Two exceptions allow an employee to disobey a direct order: illegal activities and safety considerations. Companies should create internal systems and cultures (open-door policies, appeal systems) that allow employees to appeal charges of insubordinate behavior. (Balkin et al, 2016, 480.)

Workplace Bullying is a form of harassment that consists of a persistent pattern of offensive, abusive, intimidating, malicious, or insulting behavior focused at a target employee. That may result in employees experiencing mental distress, physical illness, loss of productivity, a higher propensity to quit. Workplace bullying is not considered illegal even though it may be very harmful. A persistent pattern of specific behaviors to a targeted employee is considered bullying. Organizations should have a communication channel such as an open-door policy that encourages the reporting of workplace bullying behavior and provides remedies for it. For example, developing policies that promote zero tolerance for bullying and other forms of employee-to-employee incivility (rude conduct). Once there is consensus, incidents of bullying can be treated as any other discipline problem. (Balkin et al, 2016, 481.)

Alcohol-related misconduct: presents two challenges: managing an employee who is alcoholic, and challenge of managing an employee who uses alcohol or is intoxicated on the job. Supervision may perceive an alcoholic employee as someone who has an attendance or performance problem rather than an alcoholic problem, and discipline accordingly. Sometimes an employee can claim to be alcoholic to cover up their misconduct. Using alcohol on the job and coming to work intoxicated are serious misconducts and can lead to harsh discipline. The best way to prove alcohol use is administer a blood alcohol content test. A first intoxication offense may result in suspension or discharge because of the potential for damage that an alcohol-impaired employee can create. (Balkin et al, 2016, 482.)

Illegal drug use and abuse: refers to use of prohibited substances as well as the illegal use of prescription drugs such as Valium. The key difference to alcohol use is that the use of drugs is socially unacceptable, whereas alcohol use in moderation is socially acceptable. Drug use is often masked by symptoms such as inattention and unexplained absences. If it is necessary to terminate the employee because of failure to overcome the substance abuse problem, should there first be counseling and treatment. (Balkin et al, 2016, 482.)

Preventing Need for Discipline with Human Resource Management

Recruitment and selection: by spending more time and resources on recruiting and selection, managers can make better matches between individuals and the organization. Workers can be selected for fit in the organization as well as the job. Checking references and gathering background information on applicants. Multiple interviews that involve diverse groups in the company can reduce biases that lead to poor hiring decisions. Personality tests and honesty tests can be administered on job candidates. (Balkin et al, 2016, 483.)

Training and Development: investing in training and development can save a company from having to deal with incompetents or workers whose skills are obsolete down the road. An effective orientation program communicates to new employees the values important to the organization, and employees can manage their own behavior better. Training programs for new employees can reduce skill gaps and improve competencies. Retraining for employees whose skills have become obsolete. Training supervisors to coach and provide feedback to their subordinates encourages supervisors to intervene with counseling rather than discipline. Career ladders can be developed to give employees incentives to develop a long-term commitment to the organization’s goals. (Balkin et al, 2016, 483.)

Human resource planning: jobs, job families, and organizational units can be designed to motivate and challenge employees. Jobs should be designed to use the best talents of each employee. Putting flexibility and greater variety into jobs. Jobs descriptions and work plans should be developed to communicate effectively to employees the performance standards to which they will be held accountable. (Balkin et al, 2016, 483-484.)

Performance appraisals: performance problems can be avoided by designing effective performance appraisal systems, which lets people know what is expected of them, how well they are meeting those expectations, and what they can do to improve on their weaknesses. (Balkin et al, 2016, 484.)

Compensation: employees who believe that rewards are allocated unfairly, are likely to lose respect for the organization, and if employee believes their contributions are not recognized, withhold future contributions. Pay policies should be perceived as fair by all employees, and an appeal mechanism that gives employees the opportunity to challenge a pay decision should be established. (Balkin et al, 2016, 484.)

Case 1

Deputy Inspector Charged With Sexual Abuse

A deputy inspector with the New York Police Department was charged with sexually abusing a female officer he supervised. Inspector Keith Walton was charged with sexual abuse, forcible touching, official misconduct and harassment. Inspector Walton forcefully pulled the officer’s hair, tried to kiss her and placed his hands on her genitals over her clothing, the complaint states. The woman repeatedly attempted to push his hand off her and told him to stop, according to the records. The inspector was relieved of his gun and badge and placed on paid modified duty, J. Peter Donald, a department spokesman, said on Friday. The inspector’s lawyer says that his client ‘’vehemently denies these allegations’’. A month before his promotion to deputy inspector he received attention for helping to raise money for a 7-year-old boy’s trip to Walt Disney World after the boy’s father killed himself and the boy’s mother. (Baker & Mele, 2016.)

Case 2

McCarthy (2015) writes that the comments, that are put to restaurant’s computer system by servers, and can show on the check, are often offensive, sexually suggestive or racist. Most of these cases play out in the court of public opinion, especially on social media (McCarthy, 2015). Paul Paz, a career waiter says, that it is possible that many servers are not in tune with cultural sensitivity, and there could be fewer incidents with more effective staff training (McCarthy, 2015). Using descriptive, often offensive, words like ‘’Asian’’ on receipts to identify customers, should not be a practice, because there should be a system to identify costumers in some other way for example numbers corresponding to tables. It will also help to avoid bad publicity and lawsuits (McCarthy, 2015). Attorney Stuart Shanus says that cashier identifying someone by race wouldn’t be sufficient grounds to sue, however calling out customer’s size or assumptions about sexual orientation could constitute a valid case for emotional distress (McCarthy, 2015).

Case 3

Ganim & Kaufman (2016) write that Lee Anne Walter and her family discovered that there were astronomically high levels of lead in the water in Flint, Michigan, and alerted the Environmental Protection Agency. As a result their criticism and advocacy during the water crisis has resulted in workplace retaliation and harassment against her husband Dennis Walters, a sailor with the US Navy, even threatened of discharge (Ganim & Kaufman, 2016

Dennis Walters, a 17-year Navy veteran filed a complaint claiming mistreatment at work due to his wife’s role in the Flint water crisis. Walters claims in his suit that he had been ‘’subjected to a systematically hostile work environment’’, including unreasonably long working hours without breaks and denied training opportunities (Ganim & Kaufman, 2016). He claims that the stressful working environment has resulted in physical symptoms such as nausea while on duty, and he was also threatened to be subjected to ‘’period of involuntary commitment for a psychiatric evaluation’’ (Ganim & Kaufman, 2016

Ganim and Kaufman (2016) write that Lee Anne Walters said that the family has been careful to respect protocol and keep her husband out of the advocacy efforts. Dennis Walters claims that he has been experiencing public and private humiliation vat work, including ‘’derogatory comments’’ about his wife (Ganim & Kaufman, 2016). According to the court documents he was demoted and reduced to administrative details that had the effect of completely removing him from any leadership role within the command (Ganim & Kaufman, 2016).

Article 1

Employment-at-will

Many Americans work under the employment-at-will, according to which the employer can dismiss the employee at any time, just about any reason (barring a handful of termination causes that are illegal) (Carnevale, 2020). In unionized work employees are typically more protected by a collective bargaining agreement (Carnevale, 2020). What you can’t be fired for? Carnivale (2020) lists reasons that it is illegal to fire for; termination made on the grounds of discrimination (race, religion, sex, or national origin); pregnancy; and if the employer has 20 or more employees (in order to qualify as an employer in this context) firing someone age 40 or older solely on the basis of age. The law extends further on the federal, state, and local levels (Carnivale, 2020).

Under employment-at-will you are not protected from the wrath of your boss (Carnivale, 2020). It might be hard to prove things like discrimination, and employer might for example claim that you are fired for poor performance (Carnivale, 2020). Carnivale (2020) also points out that employers under at-will-employment also face a risk of incurring lawsuits when firing people. However, most people don’t have the money for lawyer or to go after lawsuit (Carnivale, 2020). It is also bad morale if employees are constantly paranoid about being terminated, and they focus on walking on eggshells rather than thinking about improving the company, and the progress will stagnate in favor of keeping one boss feeling good about themselves (Carnivale, 2020). ‘’It is a never-ending game of ‘’The Emperor’s New Clothes’’ (Carnivale, 2020). Carnivale (2020) refers to author Liz Ryan, who stated in her article that employees driven by fear rather than confidence are going to make up less productive, creative, and worthwhile workforce.

Article 2

Termination of the employment relationship in Finland

Employment relationship may be terminated because of the expiry of fixed term, dismissal, cacellation or in in special circumstances being deemed cancelled. Both employer and employee may terminate the employment in the limits of the law: Employment Contracts Act (55/2001), Act on Co-operation within Undertakings (334/2007), and Non-discrimination Act (1325/2014). (Työnsuojelu, 2017.)

Except for trial period, an employment contract may only be cancelled for an extremely weighty reason when wither party commits such a serious breach or negligence of the terms of employment, that the other party can’t reasonably be expected to continue the employment even for the length of the period of notice. The employer must consult the employee before cancelling the employment relationship and if the employee requests in written statement including the grounds for termination. The employee must be given an opportunity to present his/her opinion and is entitled to use an assistant. (Työnsuojelu, 2017.)

The employee does not have to provide a reason for termination, but is required to observe the period of notice. However, the employer can’t terminate an employee without a weighty reason and must also observe the period of notice. During a trial period at the beginning of the employment either party may cancel the employment relationship without notice, and in that case, there is no period of notice. However, cancellation may happen on discriminatory grounds or inappropriate ground considering the trial period. As an employee terminate the contract at any time, without grounds for giving notice. However, the period of notice should be observed specified in the Employment Contracts Act and/or the collective agreement applicable to your work. (Työnsuojelu, 2017.)

References

Baker, A., & Mele, C. 2016. New York Police Inspector Is Charged With Sexually Abusing Female Officer. URL:  https://www.nytimes.com/2016/11/19/nyregion/new-york-police-sexual-abuse-of-officer.html?_r=0. Accessed: 8 March 2020.

Balkin, D.B., Cardy, R.L. & Gomez-Mejia, L.R. 2016. Managing Human Resources.  Global Edition 8th ed. Pearson. London. pp. 456-485.

Carnevale, R. 2020. At will employment: What it is and why it can be dangerous for employees. URL: https://www.theladders.com/career-advice/at-will-employment-what-it-is-and-why-it-can-be-dangerous-for-employees. Accessed: 11 March 2020.

Ganim, S., & Kaufman, E. 2016. Flint family says Navy is retaliating for speaking out about water crisis. URL: https://edition.cnn.com/2016/11/29/health/whistleblower-complaint-us-navy-flint/index.html. Accessed: 9 March 2020.

McCarthy, S. 2015. Receipt rage: Why food is being served with a side of hate. URL: https://www.foxnews.com/food-drink/receipt-rage-why-food-is-being-served-with-a-side-of-hate. Accessed: 9 March 2020.

Työnsuojelu 2017. Termination of the employment relationship. URL: https://www.tyosuojelu.fi/web/en/employment-relationship/termination. Accessed 11 March 2020.

Chapter 10: Managing Compensation

Elements of Total Compensation

Total compensation is the package of quantifiable rewards an employee receives for their labors, and it includes three components: base compensation, pay incentives, and indirect compensation/benefits. Base compensation is the fixed pay an employee receives regularly, either a salary (for instance weekly or monthly paycheck) or an hourly wage. Pay incentives are programs designed to reward employees for good performance for example bonuses and profit sharing. Indirect compensation or benefits include for instance health insurance, vacations, and unemployment compensation. Specific benefits called perquisites or pers are available only to employees with special status in the organization such as upper-level managers. (Balkin et al, 2016, 315.)

Designing Compensation System

Internal Versus External Equity

1. Distributive justice model
2. Labor market model

Fair pay is pay that employees generally view as equitable. Internal equity refers to fairness of the pay structure within a firm and external equity refers to fairness relative to what other employers are paying for the same labor. Individual equity is the perceived fairness of individual pay decision, which is based on the value to the institution of specific people rather than job group, position title, or class which they belong. When considering internal and external equity managers can use models such as the distributive justice model and labor market model. (Balkin et al, 2016, 317-318.)

The distributive justice model of pay equity: employees exchange contributions or input, for example skills, effort, time, to the firm for set of outcomes. Pay is the most significant outcome. This perspective suggests that employees (1) compare what they bring to the firm to what they receive in return, and (2) compare this input/outcome ratio with other employees within the firm. The labor market model of pay equity, states that the wage rate for any given occupation is the point where supply of labor equals the demand for labor in the marketplace. However, people value other things in addition to pay, and pay offered is based on many factors beyond the number of people available with the skills and abilities for the job. They are affected by local, domestic, and global forces. (Balkin et al, 2016, 317.)

Fixed versus variable pay

Firm can pay a high proportion of total compensation in the form of base pay or in form of variable pay that fluctuates according to some preestablished criteria. In general, the proportion of variable pay increases as an employee’s base pay increases, indicating that those in high-level positions earn more, but their overall compensation is more subject to risk. (Balkin et al, 2016, 319.)

Performance Versus Membership

A company emphasizes performance when a substantial portion of its employees’ pay is tied to individual or group contributions. Extreme forms of performance-contingent compensation are piece-rate plans, pay based on units produces, and sales commissions. Firms that emphasize membership-contingent compensation provide similar pay to every employee in the same job if they achieve at least satisfactory performance. Usually, salary progression occurs when moving up in the organization not by doing the present job better. (Balkin, Cardy, & Gomez-Mejia 2016, 321.)

Job Versus Individual Pay

According to traditional compensation systems firms should evaluate the value of contributions of each job, not how well the employee performs it. In knowledge-based pay or skill-based pay systems, employees are payed on the basis of the jobs they can do or talents they have that can be successfully applied to variety of tasks and situations. (Balkin, Cardy, & Gomez-Mejia 2016, 322.)

Elitism Versus Egalitarianism

In egalitarian pay system most employees are part of the same compensation system and in elitist pay system different compensation systems are established for employees or groups at different organizational levels. (Balkin, Cardy, & Gomez-Mejia 2016, 324.)

Below-Market Versus Above-Market Compensation

Employees’ pay relative to alternative employment opportunities directly affects the firm’s ability to attract employees. Pay satisfaction is correlated with pay level, and dissatisfaction with employee turnover. Companies that pay above-market wages are usually trying to grow rapidly and in a tight labor market. Recent trend has been to provide a base salary pegged to the market median, combined with more aggressive incentives. (Balkin, Cardy, & Gomez-Mejia 2016, 325.)

Monetary Versus Nonmonetary Rewards

Cash or payments can be converted into cash in the future (such as stocks or retirement plan), however nonmonetary rewards are intangible, for example interesting work, challenging assignments, and public recognition. According to recent research that pay is low in importance to employees. Balkin, Cardy, and Gomez-Mejia (2016, 324) give an example of eBay company, that offers perks such as golf lessons, bike repair, dental services, and prayer and meditation rooms. One type of nonmonetary rewards are part of ‘’family-friendly policies’’ or ‘’work-life balance programs’’, which include for example flexible work hours, personal time, fitness centers, day care, and backup care when children are sick. In general companies that emphasize monetary rewards, reinforce individual achievement and responsibility: firms in volatile market with low job security. Companies that emphasize nonmonetary rewards reinforce commitment to the organization: companies with relatively stable workforce. (Balkin, Cardy, & Gomez-Mejia 2016, 325.)

Open Versus Secret Pay

In extreme cases firms require employees to sign an oath that they will not divulgate their pay to coworkers, and at the other extreme every employee’s pay is a matter of public record. However, many organizations do not publish individual data, but provide information about pay and salary ranges. Greater pay openness in more successful in organizations with extensive employee involvement and an egalitarian culture that engenders trust and commitment. (Balkin, Cardy, & Gomez-Mejia 2016, 328.)

Compensation Tools

(1) Job-based approaches assume that people are paid to perform well-defined jobs (such as bookkeeper), and each job include specific tasks (such as recordkeeping), and normally performed by multiple people. The system allocates pay so that the most important jobs pay the most. Pay grades are groups of jobs that are paid within the same pay range. (2) The skill-based approach assumes that workers are not paid according to the job they hold, but how flexible and capable they are at performing multiple tasks (the greater the variety of job-related skills). (Balkin, Cardy, & Gomez-Mejia 2016, 328.)

Job-Based Compensation Plans

Key components in developing job-based compensation plans are (1) achieving internal equity, (2) achieving external equity, and (3) achieving individual equity (Balkin, Cardy, & Gomez-Mejia 2016, 328).

1. Achieving internal equity: job evaluation

Job-based compensation assesses the relative value or contributions of different jobs to an organization. Job evaluation consists of six steps that intend to provide rational, orderly, and systematic judgement of how important each job is to the firm. Job evaluation is performed internally and does not take into account wage rates in the market or other firms and focuses only to the value of tasks not the people performing them. (Balkin, Cardy, & Gomez-Mejia 2016, 330.)

1. Conducting a job analysis: gathering and organization of information concerning the tasks, duties, and responsibilities of specific jobs.
2. Write job descriptions: the job analysis data is documented to identify, define, and describe each job in terms of its duties, responsibilities, working conditions, and specifications.
3. Determine job specifications: which consists of worker characteristics that are needed to perform the job successfully, for instance prior work experience, education level, and certificates.
4. Rating worth of all jobs by using predetermined system. Compensable factors are used to evaluate jobs, and they are work-related criteria that an organization considers most important in assessing the relative value of different jobs, for example knowledge. Each compensable factor is assigned a scale of numbers and degrees.
5. Creating a job hierarchy: listing of jobs in order of their importance to the organization from highest to lowest.
6. Classifying jobs by grade levels: typically, the job hierarchy is reduced to a manageable number of grade levels, with the assigned points used to determine where to set up dividing lines between

(Balkin, Cardy, & Gomez-Mejia 2016, 330-334.)

Other job-evaluation systems are the ranking system, in which a hierarchy of job descriptions from highest to lowest based on overall judgement of value; in the classification system job descriptions are sorted into grades without using point system; factor comparison, which is a variation of point and ranking system; and policy capturing, where mathematical analysis is used to estimate the relative value of each job based on the firm’s practices. (Balkin, Cardy, & Gomez-Mejia 2016, 334.)

2. Achieving External Equity: Market Surveys

The purpose of market surveys is to determine the pay ranges for each grade level. Consulting firms conduct surveys for purchase, for almost every type of job and geographic area. Using market surveys to link job-evaluation results to external wage/salary data generally requires two steps: benchmarking and establishing a pay policy. (Balkin, Cardy, & Gomez-Mejia 2016, 335.)

1. Identifying benchmark or key jobs: benchmarks and key jobs are jobs, that are similar or comparable in content across firms, and then check salary surveys to determine how much these jobs are worth to other employers. Then pay rates are set for non-key jobs (for which market data are not available) by assigning them the same pay range as key jobs that are in
2. Establish a pay policy: pay policy is the firm’s decision to pay above, below, or at the market rate for its jobs, so how it chooses to position itself in the pay market.

(Balkin, Cardy, & Gomez-Mejia 2016, 335)

 3. Achieving Individual Equity: Within-Pay-Range Positioning Criteria

After the pay structure is finalized, employees are assigned a pay rate within the range established for his or her job. Previous experience, seniority, and performance appraisal ratings are used for determining the pay. Individual equity refers to fairness in pay decisions for employees holding the same job. (Balkin, Cardy, & Gomez-Mejia 2016, 336.)

Evaluating Job-Based Compensation Plans

Drawbacks to job-compensation programs include: do not take into account the nature of the business and its unique problems; the establishing process is subjective and arbitrary; less appropriate in higher levels of an organization, where the job is difficult to separate from the individual contributions; job descriptions are often awash in generalities; bureaucratic, mechanistic, and inflexible for rapidly changing economic environment; and wage and salary data obtained from market surveys are not definitive. (Balkin, Cardy, & Gomez-Mejia 2016, 337.)

Suggestions for practice: think strategically in making policy decisions concerning pay; secure employee input and include employees in designing and managing of the compensation plan; increase each job’s range of pay while expanding its scope of responsibility (job banding, the practice of replacing narrowly defined job descriptions with broader categories (bands) of related jobs); examine statistical evidence periodically to ensure that the job-evaluation system is doing what it is supposed to; expand the proportion of employees’ pay that is variable (bonuses, stock plans, and so on) which provides the firm flexibility; develop policies for so-called knowledge workers that specify the types od paid external opportunities they may pursue while still remaining employed by the firm; establish dual-career ladders for different types of employees so that moving into management ranks or up the organizational hierarchy is not the only way to receive a substantial increase in pay. (Balkin, Cardy, & Gomez-Mejia 2016, 338.)

Skill-Based Compensation Plans

In skill-based compensation plans skills are the basis of pay: depth skills, where they learn more about specialized area; horizontal or breadth skills, where they learn more jobs and tasks within the firm; vertical skills, when they acquire ‘’self-management’’ abilities, such as scheduling. Skill-based pay creates more flexible workforce, promotes cross-training, need for fewer supervisors, and increases employees’ control over their compensation. This system is used by new and small businesses because flexibility is crucial for continued growth, however at some point compensation structure should be systemized. (Balkin, Cardy, & Gomez-Mejia 2016, 339.)

Special Compensation Issues in Small Firms

Smaller firms may not have enough positions to justify a pay structure, they may not have the time or employees to create and administer a compensation program, and jobs are broadly defined, and employees are expected to perform multiple tasks. The value of contributions in more relevant than job title or job content. Smaller firms should provide sufficient inducements to have a qualified and motivated workforce and pay system should be administered in a way that employees believe pay decisions have adequate distributive and procedural justice. (Balkin, Cardy, & Gomez-Mejia 2016, 340.)

Chapter 11: Rewarding Performance

Challenges in Pay for Performance Systems

Pay for performance systems or incentive systems, reward employee performance on the assumption that (1) individual employees and work teams differ in how much they contribute to the firm; (2) the firm’s overall performance depends to a large degree on a performance of individuals and groups within the firm; and (3) to attracts, retain, and motivate high performers and to be fair to all employees, the firm needs to reward employees on the basis of their relative performance. (Balkin, Cardy, & Gomez-Mejia 2016, 353.)

To avoid subjective judgements or favoritism, pay-for-performance systems rely on objective indicators of performance. The drawback of that is that employees tend to focus on those indicators and neglect other important job components that are more difficult to measure (the ‘’do only what you get paid for’’ syndrome). By creating pressure to produce and to ‘’keep score’’ incentives may induce employees to engage in unethical behavior, cut corners, deceive, misinform, hide negative information, and take more credit than they deserve, as long as they ‘’meet or exceed’’ targets. Pay-for-performance systems might have a negative effect on the spirit of cooperation, provoke conflict and competition. One challenge is the lack of control employee’s have for example on the supervisor, performance of other work group members, the quality of materials, working conditions, the amount of support from the management, and environmental factors. (Balkin, Cardy, & Gomez-Mejia 2016, 355.)

One challenge is the difficulties in measuring performance accurately. At the employee level, the individual contributions should be separated from those of the work group while avoiding judgements based on personality bias, likes and dislikes, and political agendas. At the group level, the specific group contributions should be separated when all teams are interdependent. The same difficulties are associated with determining the performance of plants or units that are interrelated among themselves and with corporate headquarters. Pay-for-performance systems create a phycological contract (the set of expectations based on prior experience) between the employee and the firm, and it is very resistant to change. The credibility gap means, that employees do not believe that pay-for-performance programs are fair or truly reward performance, which may affect negatively on their behavior. Unless an effective performance appraisal and feedback system is in place, incentive programs unlikely produce expected results. Pay-for-performance systems may lead to higher productivity, but lower job satisfaction and stress. According to research, the more pay is tied to performance, the more dissatisfied employees become. Pay-for-performance programs, and too much emphasis on pay to influence behaviors, may lead to potential reduction of intrinsic drivers or internally driven motivation. The more the firm stresses pay as an incentive for high performance, the less likely employees engage in activities that benefit the organization, unless they are promised a reward. (Balkin et al, 2016, 358.)

Enhancing the Success of Performance Programs

Develop a complementary relationship between extrinsic and intrinsic rewards; hybrid intrinsic-extrinsic rewards may be effective motivators, and they serve as complements to each other rather that compete. Pay should be linked to performance appropriately. Traditional piece-rate systems, in which workers are paid per unit produced, represent the tightest link between pay and performance. The primary requirement is that the employee has complete control over the speed and quality of work. Pay-for-performance programs should be used as part of a broader HRM system. For instance, performance appraisals, supervisory training, employee training, and staffing practices play have an impact on success or failure of pay-for-performance plan. Pay-for-performance systems are more likely to be successful if managers build employee trust, for instance consider from employees’ perspective if their extra effort in noticed, and keep employees informed and involved when making changes in management or compensation plan. The organization should also create an atmosphere in which performance makes difference. (Balkin et al, 2016, 358.)

Providing different types of pay incentives for different work situations and using multiple layers or rewards, is likely to produce better results. By doing that the organization can realize the benefits of each incentive plan and minimize its negative side effects. Employee involvement in design of the pay plan, will result in greater understanding of the rationale behind the plan, greater commitment to the plan, and better match between individual needs and pay-plan design. Such actions are likely to enhance the perceived fairness of the system. Ethics as a corporate value can’t be emphasized enough, and training programs should provide examples of unethical behaviors, because employees may be tempted to manipulate the criteria that is used to trigger incentives. Companies should use motivation and nonfinancial incentives. Pay is not the most important motivator for everyone, and some are more interested in nonfinancial aspects of their work. Companies could use a mix of monetary and nonmonetary rewards (for instance public or nonpublic praise, honorary titles, expanded job responsibilities, and mentoring programs) for employees, or indirect financial benefits such as lower health insurance premiums. (Balkin et al, 2016, 361.)

Individual-Based Pay-for-Performance Plans

Pay-for-performance plans can reward the performance of individual, team, business unit or plant, or any combination of these. Induvial-based plans; the contributions of individual employees are identified and rewarded. Merit pay consists of an increase in base pay, normally given once a year, and typically supervisors’ ratings of employees’ performance are used to determine the amount of merit pay granted. Individual bonus programs or lump-sun payments is a financial incentive that is given on a one-time basis and does not raise the employee’s base pay permanently. Awards are one-time reward usually given in the form of tangible prize, such as a paid vacation. (Balkin, Cardy, & Gomez-Mejia 2016, 363.)

Individual-based plans have four major advantages: (1) performance that is rewarded is likely to be repeated (expectancy theory, a theory of behavior holding that people tend to do those things that are rewarded), (2) individuals are goal oriented and financial incentives can shape an individual’s goals over time, and help make employees’ behavior consistent with organization’s goals, (3) assessing the performance individually helps the firm to achieve individual equity, (4) individual-based plans fit in with an individualistic culture. (Balkin, Cardy, & Gomez-Mejia 2016, 363.)

Disadvantages of individual plans include particularly (1) may create competition and destroy cooperation among peers, and (2) sour working relationships between subordinates and supervisors. Other drawbacks include: tying pay to goals may promote single-mindedness, narrow focus, and avoidance of important tasks; many employees do not believe that pay and performance are linked; individual pay plans may work against achieving quality goals, because of focusing on the production goals; individual-based programs promote inflexibility in some organizations, and dependence on supervisors. (Balkin, Cardy, & Gomez-Mejia 2016, 364.)

Rewards based on individual performance can be highly motivating, and succeed when; the contributions of individual employees can be accurately isolated; when the job demands autonomy the individuals are easier to asses; when cooperation is less critical to successful performance or when competition is to be encouraged. (Balkin et al, 2016, 364.)

Team-Based Pay-for-Performance Plans

Team-based plans typically reward all team members equally, based on the group outcome, which may me measured objectively (for instance completing a given number of team projects on time) or subjectively (for instance using the collective assessment of a panel of managers). The rewards can be in the form of cash bonus or noncash awards such as trips or time off. (Balkin et al, 2016, 364.)

Advantages of team-based pay-for-performance plans include; foster group cohesiveness rather than individuals competing with one another; and they aid performance measurement, which can be done more accurately and reliably, because less precise measurement is needed of each individual’s performance in relation to others in group. Disadvantages of team-based pay-for-performance plans are; possible lack of fit with individualistic cultural values, for instance if personal contributions are not recognized individual efforts may take a back seat to the group effort, when all team members are rewarded equally; the free-riding effect causes unfairness when all team members are rewarded equally (the free-riders are the ones that contribute little to the team); social pressure to limit performance, effort, and working to full potential; difficulties in identifying meaningful groups, because various groups may be highly interdependent and the teams may change or one person might be part of multiple groups; and intergroup competition leading to a decline in overall performance. (Balkin, Cardy, & Gomez-Mejia 2016, 366.)

Team-based plans are most likely to succeed when; work tasks are so intertwined that it is difficult to single out who did what; the firm’s organization facilitates the implementation of team-based incentives (1) there are few levels in the hierarchy, and teams of individuals at the same level are expected to complete most of their work with little dependence on supervisors or upper management, (2) technology allows for the separation of work into relatively self-contained or independent groups, (3) employees are committed to their work and are intrinsically motivated, (4) the organization needs to insist on common group goals, and (5) team-based incentives can help blend employees with diverse backgrounds and perspectives and focus their efforts on goals important to the organization; when the objective is to foster entrepreneurship in self-management work groups, and extensive autonomy is given to achieve the objectives. (Balkin, Cardy, & Gomez-Mejia 2016, 367.)

Plantwide Pay-for-Performance Plans

Plantwide pay-for-performance plans reward all workers in a plant or business unit based on the performance of the entire plant of unit, and the key performance indicator used in plant or business unit efficiency, which is measured in terms of labor or material cost savings compared to earlier period. These programs are referred to as gainsharing programs, in which a portion of the company’s cost savings is returned to workers, usually in the form of lump-sum bonus. Plantwide pay-for-performance plans assume that costs savings result from treating employees better and involving them intimately in the firm’s management. Competition between individuals should be avoided, and, all employees should be encouraged to use their talents for the plant’s good, and the financial gains generated when those ideas are implemented should be shared with employees. (Balkin, Cardy, & Gomez-Mejia 2016, 368.)

Disadvantages of plantwide pay-for-performance plans include: protection of low performance (the free-rider problem); problems with the criteria used to trigger rewards (1) employees may expect the formula to remain the same, (2) improving cost savings will not necessarily improve profitability, (3) when gainsharing is first instituted it is easier for inefficient  than efficient plants or business units to post a gain; management-labor conflict, when managers might be reluctant to give up their authority to committees, and only hourly workers are included in many gainsharing plans and salaried employees excluded. (Balkin, Cardy, & Gomez-Mejia 2016, 369.)

Factors that affect the successful implementation of gainsharing programs are; firm size, gainsharing is more likely to work in small-to-medium plants; technology, which might limit efficiency; historical performance, with multiple plants with varying levels of efficiency the past data should be used to establish future performance standards; corporate culture, gainsharing is less likely to be successful in firms with traditional hierarchy of authority, heavy dependence on supervisors, and value system that is antagonistic to employee participation, and works better for more participative management style; stability of the product market, gainsharing is most appropriate when demand for the firm’s product or service is relatively stable, and historical data can be used to forecast future sales reliably. (Balkin, Cardy, & Gomez-Mejia 2016, 369.)

Corporatewide Plans

Corporatewide pay-for-performance plans reward employees based on the entire corporation’s performance, and the most widely used is the profit sharing program, which uses a formula to allocate a portion of declared profits to employees and typically profit distributions under a profit-sharing plan are used to fund employees’ retirement plans. Employee stock ownership plans (ESOPs) are a corporatewide pay-for-performance plan, that is based on entire corporation’s performance, and rewards employees with company stock either as an outright grant or at a favorable price that may be below market value. (Balkin, Cardy, & Gomez-Mejia 2016, 369.)

Advantages of corporatewide pay-for-performance plans include; financial flexibility for the firm, their cost to the firm is automatically adjusted downward during economic downturns; increased employee commitment by sharing of profits; tax advantages associated with profit sharing plans and ESOPs. Disadvantages of corporatewide pay-for-performance plans include: employees being at considerable financial risk beyond their control and awareness, because the factors affecting profits or stock prices can be very complex; high exposure to macroeconomic forces as firms have switched form fixed pensions to 401(k) accounts which are mostly funded through profit sharing and are unsecure investments; not likely to improve productivity because the connection between individual goal achievement and firms performance in small and difficult to measure; long-run financial difficulties when managers get too generous with these types of compensations, leaving less cash available in the future, lower profits to distribute to investors, and a firm that has decreased in value. (Balkin, Cardy, & Gomez-Mejia 2016, 371.)

Corporatewide plans work best for: larger organizations; corporates with multiple interdependent plants or business units, because it is difficult to isolate the financial performance of any given segment; firms facing highly cyclical sales levels, and the these incentives help the firm to cut costs during downturns; effective when using corporatewide pay-for-performance plans in conjunction with other incentives. (Balkin, Cardy, & Gomez-Mejia 2016, 372.)

Designing Pay-for-Performance Plans for Executives and Salespeople

Salary and short-term incentives: the amount of executives’ base pay increases as firms get larger. Executives’ bonuses are usually short-term incentives linked to the firm’s specific annual goals, and the bonuses are usually paid annually. Long term incentives: either in the form of equity in the firm (stock-based programs) or a combination of cash awards and stock. However long-term incentives are not closely linked to executive performance. Golden parachutes: provides a CEO with a large lump-sum payment if he or she is terminated by the firm. (Balkin, Cardy, & Gomez-Mejia 2016, 379.)

Pay-For-Performance programs in Small Firms, Challenges & Suggestions

Challenges small firms face when rewarding employees based on their performance. Small firms seldom have trained personnel capable of designing and administering complex pay-for-performance systems or not afford such professional help. In small group settings it is difficult to treat a grievance confidentially or anonymously. In smaller groups one disgruntled employee can have a major impact on the morale of the entire organization. In smaller firm’s division between work and personal relations tend to be thin, and if incentives are allocated differently it may cause resentment. It also might be difficult to link incentives to team performance, because the work is seldom divided by teams and employees often perform multiple tasks. In most small firms opportunities for promotion are rather limited, so it might be challenging to find ways for good employees to earn extra income. (Balkin, Cardy, & Gomez-Mejia 2016, 380.)

Active employee participation in development of the pay-for-performance system, can generate greater commitment and increase perceptions of fairness. In smaller firms it is easier for employees to discern his or her personal contributions to the achievement of organizational goals, which (1) encourages employees to work harder to improve overall firm performance, and (2) bring employees closer together and cooperate. Smaller firms should be generous in sharing profits and offering stocks with employees, which is efficient way to attract and retain good employees while reducing fixed costs, because of possibly lower salaries. (Balkin, Cardy, & Gomez-Mejia 2016, 380.)

Case 1

Kruse (2012) argues that employee engagement does not mean employee happiness or satisfaction. Employee engagement is the emotional commitment the employee has to the organization and its goals, and care about their work and the company (Kruse, 2012). When employees are engaged, they use discretionary effort, for instance working overtime when needed without being asked (Kruse, 2012). Kruse (2012) states that engaged employees leads to better business outcomes: higher service, quality, and productivity, which eventually leads to higher levels of profit. Employee engagement is also the key to activating a high performing workforce (Kruse, 2012).

Case 2

Motivation, Incentives, and Management

Career analyst Dan Pink held a speech at Ted Conference in 2009, where he talked about motivation and traditional rewards. Pink (2009) introduced ‘the candle problem’ created by psychologist Karl Duncker (1945), who discovered that people generally solved the problem much easier when they viewed the box of thumb tacks as an object to use, instead of just a container. Pink (2009) then refers to the research based on the candle problem by Sam Glucksberg, which showed the power of incentives. One group of people were offered monetary incentive; and they solved the problem quicker but only when the object (box) was laid out separately from the tacks (Pink, 2009). When the tacks were in the box; the group which was not offered cash reward, solved it faster. Pink (2009) argues that if-then rewards destroy creativity, and the secret to high performance is intrinsic drive, the drive to do things for their own sake, and because they matter.

Pink (2009) argues that the business operating system today, how people are motivated, bases entirely on extrinsic motivators, not intrinsic motivators. Pink (2009) suggests that for 21st century tasks reward- and punishment approach doesn’t work. Routine, rule-based, and work that does require as much thinking can be outsourced and automated (Pink, 2009). Pink (2009) argues that the concept of management is good for compliance, but for engagement self-direction works better. For example, at Google the engineers can use 20% of their time working on anything they want, and have autonomy of their time, task, team, and technique. Over half of the new products in a typical year are invented during that 20 % time such as Gmail and Google News (Pink, 2009). The corporation culture is generally moving towards more empathizing meaning of work, and employee engagement and autonomy. The ‘’carrots and sticks’’ method is ineffective in other than routine and rule-based work, and motivation is the key driver for better performance. Employees today value more other things beyond pay, and for me the most important factors are: creativity, defined meaning of the work, and encouraging corporate culture.

Article 1

Sireau (2011) summary from Kohn’s (1993) article ‘’Why Incentive Plans Cannot Work’’, published in Harward Business Review.  Rewards succeeded at securing one thing only: temporary compliance. Once the rewards run out, people revert to their old behaviors. Incentives or extrinsic motivators do not alter the attitudes that underline behavior, don’t create commitment to a value or action. However, training and goal setting programs have a far greater impact on productivity than pay-for-performance plans. Little money can be demotivating and irritating, but more money does not mean increased motivation. Punishing may produce movement, but never motivation, and that applies to rewards too. When putting people in competitive situation or ranking them against each other, is likely to destroy cooperation. Some people might carry with them the feeling of having lost, and the employees will most likely see each other as obstacles to their own success. Rewards motivate people but motivate them only to get rewards. People are likely to do precisely what they are told to do to get the reward, and it might discourage risk taking and creativity. No incentive can match the power of intrinsic motivation. People that do excellent work do so because they love what they do. Managers should stop manipulating employees with rewards and punishments, and help them to forget about money. Excellence comes from three C’s; choice, employees participating in making decisions about what they do (self-direction); collaboration, structured teams to facilitate an exchange of ideas and atmosphere of support; content, refers to what is asked to do. Innovation and excellence are the result of helping people experience intrinsic motivation, without treating employees like ‘’pets’’. (Sireau, 2011.)

Article 2

Health insurance is very expensive in the U.S unlike for example most of Europe, where universal health care provides a basic level of coverage to all citizens. The U.S has a mixture of private and two kinds of government-run programs. Basic coverage in California for example can cost 450 dollars per month, and New York up to 600 dollars per month. The public programs Medicare and Medicaid are for elderly, people with disabilities, and low-income families and individuals. Everyone else needs to obtain private insurance either through employer or on their own. Without insurance the medical bills can be enormous.  Even when having an insurance plan, you may still get surprise bills. Most insurance plans require you to make co-payments at every doctor, and co-insurance—the percentage you pay alongside your insurer. If you are employed by a U.S. company, you are likely covered through an insurance plan offered by your employer. Some employers pay for the plan in full, while others pay part of the fee and require you to pay the remaining part. (BBC StoryWorks.) Reading through this article I understood the system of employers offering health care insurance in United Stated as a form of compensation.

References

Balkin, D.B., Cardy, R.L. & Gomez-Mejia, L.R. 2016. Managing Human Resources.  Global Edition 8th ed. Pearson. London. pp. 314-382.

BBC StoryWorks. Navigating the US Healthcare System. URL: http://www.bbc.com/storyworks/specials/moving-to-america/navigating-the-us-health-system.html?cid=PPG0043236&SearchEngine=GOOGLE&Keyword=%2Bus+%2Bhealth+%2Binsurance&MatchType=b&AdID=43700052078440697&gclid=Cj0KCQjwzN71BRCOARIsAF8pjfizObi2V013U68lKPDtKjV3yRI9fqRXqwmQmwU-tqHLLA7X7QrdxGIaApehEALw_wcB&gclsrc=aw.ds. Accessed: 10 May 2020.

Kohn, A. 1993. Why Incentive Plans Cannot Work. Harvard Business Review (September-October). URL: https://hbr.org/1993/09/why-incentive-plans-cannot-work. Accessed: 27 February 2020.

Kruse, K. 2012. What Is Employee Engagement. URL: https://www.forbes.com/sites/kevinkruse/2012/06/22/employee-engagement-what-and-why/#4944178b7f37. Accessed: 26 February 2020.

Pink, D. 2009. The Puzzle of Motivation [online]. TED Conference. URL: https://www.ted.com/talks/dan_pink_the_puzzle_of_motivation?language=en. Accessed: 26 February 2020.

Sireau, J.Y. 2011. Why Incentive Plans Cannot Work [Article Summary]. URL: https://blog.binary.com/why-incentive-plans-cannot-work/. Accessed: 27 February 2020.

Chapter 8: Training Workforce

Difference Between Training & Development

Training is the process of providing employees with specific skills or helping them correct deficiencies in their performance. Training focuses on the current job and on individual employees. Training is job specific and focus is on particular performance deficits or problems. The goal is quick improvements in workers’ performance. Training can be negative, removing performance deficiencies or improvement opportunity. To have more positive attitudes towards training, it can be portrayed as development and offering potential improvement. Training is a necessity because of the changing nature in many workplaces. Development is defined as the effort to provide employees with abilities the organization will need in the future. Development focuses on both current job and jobs in the future, and long-term requirements. The scope is on entire work group or organization. In development the focus is on workforce’s skills and versatility. The goal is overall enrichment of the organization’s human resources. (Balkin, Cardy, & Gomez-Mejia 2016, 265.)

Challenges in Training

Training might not be always the solution. Performance deficits can’t be improved through training such as unclear and conflicting requests and morale problems. Training can be executed poorly. Goals should be clearly articulated and targeted. Effective designed training needs to be related to organizational goals. Balkin, Cardy, and Gomez-Mejia (2016, 265) suggest that training is a good investment and pays off as more capable and loyal workers and higher profitability. However, before beginning training the cost of training should be compared with the trainings’ potential economic benefits and extent to which training impacts job performance. (Balkin, Cardy, & Gomez-Mejia 2016, 265.)

The Training Process

Formal training process consist of three phases: needs assessment, development and conduct of training, and evaluation. (1) Determining is training is needed and identifying the problems and needs that training will address. Needs assessment consists of analysis: organizational, task, and person. Organizational analysis’ purpose is defining overall needs and level of support for training. Analysis of external environment, for instance labor resources or changes in technology, and analysis of organization’s goals and values to determine if training is needed. Task analysis involves thorough job analysis to understand job requirements and determining the kinds of training needed. Person analysis determines which employees need training assessing their performance. (2) Effective training is designed based on the assessment phase and then offering training. Objectives should be precise, achievable, understood by all, and objectives should be stated in behavioral terms. Specific behaviors are identified to guide training effort and evaluate if the training was successful. (Balkin, Cardy, & Gomez-Mejia 2016, 265.)

Conduct of Training

On-the-job training (OJT) happens in actual job setting, usually under guidance of experienced worker, supervisor, or trainer. Different forms of OJT are job rotation, apprenticeships, and internships. In job rotation the employee gains experience in different kinds of narrowly defined jobs in the organization to get a broad overview. Apprenticeships are typically for skilled trades and certain blue-collar jobs. Practice of apprentice learning a trade from an experienced worker. Internships are common for white-collar or managerial jobs. Opportunity for students to gain job experience and possibly the offer of a full-time job. Examples of off-the-job training are courses, simulations, and role-playing exercises in a classroom setting. Different presentation techniques are used such as slides and videotapes, teletraining (useful option when trainees dispersed in various physical locations), computers, simulations, virtual training, classroom instruction, and role-plays. (Balkin, Cardy, & Gomez-Mejia 2016, 265.)

Types of Training

• In skills-training the need of deficit is identified through assessment. Based on that training objectives are generated. Based on those objectives training content is developed. Often a specific task is given to employees that provides the needed knowledge.
• A performance support system or job aids are external sources of information, such as pamphlets or reference guides, that workers can access when they need help in making a decision or performing a specific task.
• Retraining gives the employees the skills they need for job’s changing requirements.
• Cross-functional training is training employees to perform operations in areas other than their assigned job. Organization’s today emphasize versality rather than specialization.
• Peer trainer can provide instructions for workers who are being cross-trained into peer’s area. Peer trainers are high performing employees as internal on-the-job trainers.
• Team-training can be divided into content tasks and group processes. Content tasks directly relate to team’s goals and group processes focus on how the members function as a team.
• Creativity training is based on the assumption that creativity can be learned, and it can help problem solving. One approach is brainstorming and generating ideas. Creativity has two phases: imaginative and practical. The ideas are then assessed based on their cost and feasibility.
• Literacy training focuses on the basic skills such as reading, writing, arithmetic, and their uses in problem solving. General literacy is a person’s general skill level and functional literacy is person’s skill level in specific content area. Balkin, Cardy, & Gomez-Mejia (2016, 276) suggest that functional literacy training focuses on basic skills to perform a particular job.
• Diversity training is a method to ensure that diverse groups of people get along and cooperate, which is especially important in team structures. It involves teaching employees about cultural and sex differences, and how to respond to these in workplaces.
• Crisis training is teaching employees how deal with accidents, disasters, and violence that can occur. In addition to after-the-fact crisis management, crisis training can focus on prevention, which often includes stress management, conflict resolution, and team building.
• Ethics training can clarify organization’s policies and help to apply them to work. Ethics training should make the translation from company’s principles to actual on-the-job behavior. It involves also training workers to recognize and confront unethical actions for instance unsafe work practices or bullying.
• Customer service training involves establishing philosophies, standards, systems, and giving employees skills to improve customer service.

(Balkin, Cardy, & Gomez-Mejia 2016, 276-279.)

Evaluating Training Process

Balkin, Cardy, & Gomez-Mejia (2016, 282) suggest that in the evaluation phase the effectiveness of training process is assessed in monetary or nonmonetary terms. There are four measurement levels for evaluating effectiveness of the training. (1) Subjective reaction to training, such as perceived usefulness. (2) Objective measure of learning, such as a test of concepts covered in training. (3) Application of training back on the job, such as behaviors and decisions made on the job. (4) Financial impacts of the training, such as return of investment estimate. (Balkin, Cardy, & Gomez-Mejia 2016, 282.)

Legal Issues and Training

The major requirement is that employees must have access to training and development programs in nondiscriminatory manner. Equal opportunity regulations and antidiscrimination laws apply to training process. (Balkin, Cardy, & Gomez-Mejia 2016, 282.)

Orientation & Socialization

Orientation is the process of informing new employees about what is expected of them in the job and helping them cope with the stress of transition. Balkin, Cardy, and Gomez-Mejia (2016, 282) define socialization as long-term process with several phases that helps employees acclimate to the new organization and understand its culture and expectations. The authors define orientation as a short-term program that informs employee about their new position and the company. Socialization is often informal, but a more systematic approach involves three phases (1) anticipatory, (2) encounter, and (3) settling in. (1) A realistic job preview (RJP), is a method to of creating realistic expectations about the job and work environment. (2) In the encounter phase involves giving information about policies and procedures, reporting relationships, rules and so on after the new hire has started work. (3) In settling-in phase new workers begin to feel like part of the organization. In employee mentoring program an established worker serves as an adviser to new employee. (Balkin, Cardy, & Gomez-Mejia 2016, 283.)

Chapter 9: Developing Careers

Career development is an organized and formalized effort that focuses on developing enriched and more capable workers. Career development is a different type of training, with wider focus, longer time frame and broader scope. Career opportunities and paths are less structures today. Jos security and loyalty are replaced by marketability of skills. The emphasis of career development has changed from meeting only employers needs to address organizational and individual needs. Career development must be a key business strategy for it to survive in an increasingly competitive and global business environment. Balkin, Cardy, and Gomez-Mejia (2016, 291) argue that in the Information Age, companies will compete more with workers’ knowledge, skills, and innovation levels rather on the basis of labor costs or manufacturing capacity. (Balkin, Cardy, & Gomez-Mejia 2016, 289-290.)

Challenges in Career Development

• Who will be responsible for career development activities? Organizations have concluded that employees should take active role in planning and implementing their own development plans. Taking an employee-empowered approach and encouraging employees to take responsibility of their own personal development.
• How much emphasis is appropriate? Too great emphasis on career enhancement can be detrimental to organization’s effectiveness, if employees will become more concerned about their image than performance, employee dissatisfaction, and turnover. Especially if expectations for advancement are unrealistic.
• How will the needs of a diverse workforce be met? Women as well as minorities are often held back from top executive positions, and lower-managerial positions and directorship. Dual-career couple is a couple whose members both have occupational responsibilities and career issues at stake. Organizational approaches, to prevent a crisis for companies and the couple, include flexible work schedules, telecommuting, and child-care services.

(Balkin, Cardy, & Gomez-Mejia 2016, 291-294.)

Challenges of Effective Development

Creating a development program, consists of three phases:

(1) the assessment,

(2) the direction phase, and

(3) the development phase.

(1)The assessment phase includes activities from self-assessment to organizationally provided assessment. The goal is to identify employees’ strengths and weaknesses. This assessment helps employees to choose a career that is realistically obtainable and do determine the weaknesses to overcome and achieve their goals (Balkin, Cardy, & Gomez-Mejia 2016, 294).

1. Self-assesment (career workbooks, career-planning workshops, career websites)
2. Organizational assessment

The assessment phase, self-assesment

Tools for self-assessment are for instance career workbooks, career-planning workshops, and career websites. Career workshops provide information about career options in the organization and usually give feedback on their career aspirations and strategies. Skills assessment exercises that are designed to identify an employee’s skills underlying the accomplishments. Another skills assessment exercise is rating skills on two dimensions: their level of proficiency at that skills and the degree to which they enjoy using it. An interest inventory is a measure of person’s occupational interests, by asking how strong or weak an interest they have in activities in different occupations. Values clarification involves prioritizing personal values, which can help employees to make satisfying career choices. (Balkin, Cardy, & Gomez-Mejia 2016, 294-296.)

The assessment phase, organizational assessment

Assessment centers are situational exercises, such as interviews, in-basket exercises, and business games, that are usually used for selecting managerial talent. Psychological testing is used to help employees understand their skills and interests. Performance appraisal, which include assessment of past-performance and should include learning and lead to future performance improvements and directions. Promotability forecasts involve managers making decisions regarding the advancement potential of subordinates. Succession planning focuses on preparing people to fill executive positions. It involves identifying organization’s future direction and challenges and derives the competencies new leaders need. Informal succession planning means that high-level managers identify and develop their own replacements. Succession planning is crucial for small companies specifically, because the sudden departure of key player can cause the business to flounder (Balkin, Cardy, & Gomez-Mejia 2016, 297-298.)

The Direction Phase

1. Individual career couseling
2. Information services (job-posting systems, skills inventories, career paths, career resource center)

The direction phase involves determining the type of career employees want, and steps they must take to realize their career goals (Balkin, Cardy, & Gomez-Mejia 2016, 298). It should be based on understanding the current position. A Healthcare Financial Management Association defined competencies for growth.

Component (1) understanding the business environment:

• strategic thinking, ability to integrate knowledge of the industry with an understanding of the vision of an organization
• system thinking, awareness of how one’s role fits within an organization and knowing when and how to take actions that support effectiveness

Component (2) making it happen:

• Result orientation, the drive to achieve and ability to diagnose inefficiencies and judge when to take entrepreneurial risks.
• Collaborative decision making, actions that involve key stakeholders in the decision-making processes.
• Action orientation, going beyond the minimum role requirements to boldly drive projects and lead the way to improved services, processes, and products.

Component (3) leading others:

• Championing business thinking, the ability to energize others to understand and achieve business-focused outcomes. Fostering an understanding of issues and challenges through clear articulation and agenda setting.
• Coaching and mentoring, the ability to release the potential of others by actively promoting responsibility, trust, and recognition.
• Influence, the ability to communicate a position in a persuasive manner, thus generating support, agreement, or commitment.

(Healthcare Financial Management 1999.)

The competency model is most useful for career development by focusing on the type of role the person desires. The direction phase should be based on thorough assessment of what is needed in the profession and should be integrated with other HRM efforts such as staffing, performance appraisal, and training. (Balkin, Cardy, & Gomez-Mejia 2016, 298-299.)

Individual career counselling involves one-to-one sessions with the goal of helping employees to examine their career aspirations. Topics discussed are for instance current job responsibilities, interests, and career objectives. Counseling can be conducted by manager, HR staff, professional counselors or other career planning resources that can be found for instance online. Information services provide career development information to employees. Employees have the responsibility to then determine what to do with this information. Job-posting systems provide information on opening jobs in the organization. When organization promotes from within, it might motivate employees to maintain and improve their performance and reduce turnover. Postings should include clear descriptions of job’s specifications and the criteria used in selection. (Balkin, Cardy, & Gomez-Mejia 2016, 299.)

Skills inventories are company-maintained record of employees’ abilities, skills, knowledge, and education. It can be used to evaluate workforce’s training or development needs, or to identify talent. Career path is a chart that shows the possible directions and career opportunities available in an organization. It presents the steps in a possible career. In addition, career paths should specify the qualifications necessary to proceed to the next step and minimum length of time employees must spend at each step. A career resource center is a collection of career development materials such as workbooks, tapes and texts. Career resource centers can help people identify their strengths and weaknesses, career options, and educational and training opportunities. (Balkin, Cardy, & Gomez-Mejia 2016, 300.)

The Development Phase

1. Mentoring
2. Coaching
3. Job rotation
4. Tuition assistance programs

The development phase involves taking actions to create and increase skills to prepare for future job opportunities. Mentoring is a developmentally oriented relationship between senior and junior colleagues or peers that involves advising, role modeling, sharing contacts, and giving general support. It can be involuntary and formal, and most effective when voluntary and formal. Membership in professional and trade associations is a form of ‘’group-mentoring’’. Coaching consists of ongoing, sometimes spontaneous, meeting between managers and their employees to discuss employee’s career goals and development. It enchases productivity and can encourage a manager’s own advancement. (Balkin, Cardy, & Gomez-Mejia 2016, 304.)

Job rotation assigns employees to various jobs so that they acquire a wider base of skills and broader job experience. Job rotation results in offering more career options, and in more broadly trained and skilled workforce. Tuition assistance programs support employees’ education and development. Costs of education programs may be fully covered, partially covered, or covered conditionally upon sufficient performance in the program. Investing in employees may increase job performance and reduce turnover. (Balkin, Cardy, & Gomez-Mejia 2016, 304.)

Self-Development

In order to find satisfaction with the work you do and navigate the ever-changing business environment, you need to manage and be responsible of your own. The first step is to determine what success means to you. Starting point is to recognize your own preferences regarding balance between work and personal life, and a successful career. (Balkin, Cardy, & Gomez-Mejia 2016, 305.)

The three domains:

1. Money: How much do you want to make?
2. Work: What kind of work do you want to do? What kind of work fits your strengths and values?
3. Life: What do you want outside of work?

(Balkin, Cardy, & Gomez-Mejia 2016, 306)

Development & Advancement Suggestions

Development is enhancing your skills and potential. Responsibility for development is increasingly being shifted to individual workers. (1) Identify your mission and indicate the business you would like to be in and a role you’d like to play. Set your core values. Personal mission statement should help you set your strategic direction, clarify your priorities,  and avoid investing time and energy in pursuits that are not instrumental to achieving your mission. (2) Keep learning continually to improve your skills and potential. (3) Develop competencies in areas that are likely to be required in your industry in the future. (4) Find a mentor who can give honest feedback and support. Mentor can help to identify your strengths and weaknesses. (Balkin, Cardy, & Gomez-Mejia 2016, 307.)

Advancement is positioning yourself to move ahead in the organization. (1) Make yourself know your organization and industry, for example attending seminars and conferences, which also provides networking opportunities. (2) Understand business trends especially in your area of business. You should also know your competitors. Demonstrate your knowledge of the business environment, which can help to differentiate you from competition for advancement. (3) Resolve problems and confront conflicts. If your intent is positive, dealing with the conflict can have positive impact on your advancement. (4) Improve your communication skills, written and verbal, can help you in career advancement. (Balkin, Cardy, & Gomez-Mejia 2016, 307.) 

Case 1

Milne (2016) writes that McDonald’s educates their employees to deliver better customer service by using gamification techniques. McDonald will be introducing a 3D virtual replica of its restaurants designed to train managers (Milne 2016). A new production process, where food is prepared for managers to order instead of stacking it up ready to go, is more complex and requires managers to think differently of the ratio of front to back-room staff (Milne 2016). Milne (2016) refers to author Dan Pink’s ideas of what motivates people: autonomy, mastery, and purpose. The approach should be engaging and fit for purpose (Milne 2016).

McDonald’s created an online game to train front-line staff how to use new tills (Milne 2016). Milne (2016) writes that the game went viral and saved huge financial costs in direct training. It worked because it was challenging and people where excited about game rather than using it for work. Balkin, Cardy, and Gomez-Mejia (2016, 265) argue that making training fun and active experience, where people can be involved add motivation to learn. Electronic learning methods can be cost effective and easily accessed for employees. E-learning, simulation, and virtual reality provide comfortable pace to learn, highly job-related training and easier transfer of training back to the job (Balkin, Cardy, & Gomez-Mejia 2016, 274).

Case 2

Nando’s Training Practices

Nando’s has won the National Training Award for management coaching, training new employees, improving internal communications and its ‘’buddy’’ system of training (Pollitt, 2006). Here are the training programs and their purpose explained briefly. Pollitt (2006) argues that many of the company’s managers are from different countries, backgrounds and cultures, which is why management coaching program was introduced to improve management teams’ communication skills and develop their understanding of how teams behave and how people cope with pressure. Program was intended to also help managers to embed the values of the organization to create a fun and supportive working environment to motivate employees (Pollitt, 2006). The purpose is to increase self-awareness and tolerance of the differences in others, and understand their role within a team (Pollitt, 2006) ‘’Since the training began Nando’s sales have grown from 20 million to 90 million pounds (Pollitt, 2006). Pollitt (2006) quotes regional director of Nando’s Rob Papps: ”Our main objective when launching the coaching program was to establish a culture where people would take more responsibility for their own development, the development of others and the growth of the business’’. The management program comprises of two workshops. (1) Based on pre-reading material attendants role-play different leadership styles and afterwards arrange coaching sessions back in their restaurant. (2) At the second workshop they reflect on the coaching sessions involving managers and employees (Pollitt, 2006).

Two other programs have been added: (1) skills development program, where attendants run a coaching session that is videoed and played back with feedback (Pollitt 2006). (2) For managing directors and central support staff a four-day advanced coaching residential course (Pollitt 2006). Managing director Grant Hawkins said of the course ‘’it offered insight into their natural strengths and weaknesses and how these affect team dynamics’’. Pollitt (2006) writes that new employees go through ten days of on-site training in Nando’s values, food hygiene, health and safety, Nando’s standards, use of equipment, and team building. The company has improved restaurant communication through weekly management meeting, monthly staff meeting and quarterly one-to-one reviews with all staff (Pollitt 2006). Pollitt (2006) distinguishes that the company has a turnover of managers well below average for the catering industry. Pollitt (2006) writes that Nando’s has a system whereby every restaurant has two ‘’buddies’’, who are responsible for training and they no longer rely on HR department for training staff. They are trained how to run interactive, dynamic and fun training sessions and they are recruited for their passion for training and developing others (Pollitt 2006).

Article 1

Several Fortune 500 companies, such as Boeing and Walmart are folding virtual reality into worker education and training programs (Morris 2019). Morris (2019) argues that the companies have seen retention rates and productivity increase due to using VR as a training tool. ‘’Virtual reality is the use of number of technologies to replicate the entire real-life working environment in real time’’ (Balkin, Cardy, & Gomez-Mejia 2016, 275). Walmart uses VR to train employees to learn new technologies, improve customer service and compliance, and to train employees disaster preparedness and other difficult situations (Morris 2019). Brock McKeel the senior director of digital operations at Walmart states that the program engages workers unlike any training program before: ‘’We has associates standing in line to get trained’’. Morris (2019) writes that the test’s academies have increased 10 to 15 percent when students use VR. Boeing uses augmented reality in training, which gives technicians access to hands-free, interactive 3-D diagrams as they install electrical wiring in its aircrafts (Morris 2019). According to the company using this method has improved productivity by 40 percent. Balkin, Cardy and Gomez (2016, 275) argue that tasks that virtual technology suits well are those that require rehearsal and practice and in which there is a high potential for damage to equipment. With the virtual system the technician can generate 3D view of the engine and focus on subsystem (Balkin, Cardy, & Gomez-Mejia 2016, 275).

Article 2

‘’Since a company is the sum total of what employees achieve individually, organizations should do everything in their power to ensure that employees perform at their peak’’ (Chopra 2015). Chopra (2015) argues that especially in changing and fast paced corporate world, training and development in an indispensable function. Balkin, Cardy, and Gomez-Mejia (2016, 265) define training as the process of providing employees with specific skills or helping them correct deficiencies in their performance, and development as an effort to provide employees with the abilities the organization will need in the future.

Training helps employees acquire new skills, sharpen existing ones, perform better, increase productivity and be better leaders (Chopra 2019). Chopra (2015) argues that training is particularly important for new employees to speed up with the processes of the company and address any skill gaps. Training and development addresses shortcomings that every employee has (Chopra 2015). When shortcomings and weaknesses are tackled it improves the performance and amplifies strengths (Chopra 2015). Chopra (2015) argues that investing in relevant training and development, it increases employee satisfaction. Training and development also helps employees to use new technology, which increases efficiency and productivity (Chopra 2015).

References

Balkin, D.B., Cardy, R.L. & Gomez-Mejia, L.R. 2016. Managing Human Resources.  Global Edition 8th ed. Pearson. London. pp. 289-308.

Chopra B. 2015. Importance of training and development in an organization. URL: https://economictimes.indiatimes.com/small-biz/hr-leadership/people/importance-of-training-and-development-in-an-organization/articleshow/48739569.cms. Accessed: 5 February 2020.

Morris C. 2018. Why Walmart and other F500 companies are using virtual reality to train the next generation of American workers. URL: https://www.cnbc.com/2018/10/29/why-f500-companies-use-virtual-reality-to-train-workers-of-the-future.html. Accessed: 5 February 2020.

Pollitt, D. (2006). Nando’s tastes success through training. Human Resource Management International Digest, 14(2), 19-21. URL: https://search-proquest-com.ezproxy.haaga-helia.fi/docview/214889678?accountid=27436. Accessed: 4 February 2020.

Chapter 7

Appraising and Managing Performance

1. Identification
2. Measurement
3. Management

Performance appraisal means the identification, measurement, and management of human performance in organizations. The identification includes determining what areas of work should be examined when measuring the performance. Rational identification usually involves job analysis. Measurement involves making managerial judgements of the employee performance. The performance measurement must be consistent and maintain comparable rating standards. Management is the goal of appraisal system. Appraisal must take a future-oriented view of what workers can do to achieve their potential, which involves feedback and coaching (Balkin, Cardy, & Gomez-Mejia 2016, 233.)

The Uses of Performance Appraisals

Appraisals are usually conducted for administrative or developmental purposes. Performance appraisals are used administratively when they are the basis for a decision regarding the employee’s work conditions, including promotions, termination, and rewards. Developmental uses for appraisals, which aim to improve performance and strengthening their job skills, include feedback, counselling on effective work behaviors, and offering them learning opportunities such as training (Balkin, Cardy, & Gomez-Mejia 2016, 234.)

Identifying performance dimensions

Dimension is an aspect of performance that determines effective job performance, for example quality of work done, quantity of work done and interpersonal effectiveness. Identifying those dimensions is much like job-analysis process. Organizations should identify dimensions based on their strategic objectives and what it is trying to achieve. One approach is to focus on competencies, which are the objective characteristics associated with successful performance. For adequate evaluations, competencies should be defined as observable characteristics. Competency model is the set of competencies associated with the job (Balkin, Cardy, & Gomez-Mejia 2016, 235.)

Measurement tools

It is often difficult to quantify performance dimensions. Appraisal formats can be classified by the type of judgement that is required (relative or absolute), and the focus of the measure (trait, behaviour, outcome). Relative judgement is an appraisal format in which supervisors compare an employee’s performance to the other employees’ performance doing the same job, for example ranking them from best to worst. However relative rating systems do not provide any absolute information about the performance, and forces managers to identify differences among employees when they might not exist. Absolute judgement asks supervisors to make judgements about an employee’s performance based solely on performance standards. Typically dimensions of performance are listed on a rating form and employees rated on each dimension without comparisons. They allow more specific feedback. (Balkin, Cardy, & Gomez-Mejia 2016, 236-237.)

Trait appraisal instruments are an appraisal tool that asks supervisors to make judgements about worker characteristics that tend to be consistent and enduring, for instance decisiveness, reliability, energy, and loyalty. The method of assessing traits is criticized for focusing on the person rather than on the performance. Behavioral appraisal instruments are an appraisal tool that asks managers to asses employee’s behaviors. Behaviorally based rating scales are developed with the critical-incident technique. Advantage of behavioral approach is that the performance standards are unambiguous and based on observation. Best-known behavioral scale is the Behaviorally Anchored Rating Scale (BARS). Outcome appraisal instruments ask managers to assess the results achieved by workers, such as total sales or number of products produced. The most prevalent outcome approach is management by objectives (MBO), which is a goal-directed approach in which workers and their supervisors set goals together for the upcoming evaluation period. The rating is then done by assessing to what extent the goals have been met. (Balkin, Cardy, & Gomez-Mejia 2016, 238-240.)

The one that does the rating is commonly referred as the source of the appraisal, and commonly it’s the worker’s direct supervisor. Self-review is a performance appraisal system in which workers rate themselves. In peer review workers at the same level in the organization rate one another. In subordinate review, workers review their supervisor. Customers could also be a valuable source of appraisal. 360 feedback is the combination of peer, subordinate, self-review, and sometimes customer appraisal, which offers multiple perspectives (Balkin, Cardy, & Gomez-Mejia 2016, 243.)

Challenges to effective performance measurement

• Rate errors & bias
• The influence of liking
• Organizational politics
• Whether to focus on the individual or the group
• Legal issues

A rate error in an error in performance appraisals that reflects consistent biases on the part of the rater. Notable error is halo error, which is the tendency to rate similarly across dimensions. Another type of error is restriction of range error, which occurs when manager restricts all ratings consistent to a small portion of the rating scale. Different forms of range restriction are leniency error (using only the top of the scale), central tendency error (using only the middle points of the scale), and severity errors (using only the low portion of the rating scale). Personal bias consciously or unconsciously may also cause errors in evaluation. One difficulty in performance measurement is ensuring comparability. Comparability refers to the degree to which the performance ratings given by various supervisors in an organization are based on similar standards. An effective way to deal with errors and biases in to develop evaluation standards through frame-of-reference (FOR) training. It is a training that presents supervisors with fictious examples of worker performance and asks the supervisors to evaluate the workers in the examples, and then tells them what their ratings should have been. The purpose is to develop common evaluation standards for performance evaluation. The influence of liking can cause errors in performance appraisals, when raters allow like or dislike of an individual to influence their assessment of that person’s performance. Because of the potentially biasing impact of liking, supervisors should manage their emotional reactions to workers (Balkin, Cardy, & Gomez-Mejia 2016, 244-245.)

Organizational politics

Rational perspective assumes that the value of each worker’s performance can be estimated. The political perspective however assumes that the value of a worker’s performance depends on the agenda or goals of the supervisor. From political perspective the goal is utility, the maximization of benefits over costs given the context and agenda. The value of performance is relative to the political context and the supervisor’s goals. Both supervisors and employees are participating in the measurement process, and workers can influence their evaluations. Evaluations can be influenced directly by persuasion techniques or indirectly by behaviors. In political perspective the assessment criteria can be bent to the current agenda and decision process is based on overall assessment (Balkin, Cardy, & Gomez-Mejia 2016, 245-246.)

Legal Issues

There are laws that prohibit discrimination in all terms and conditions of employment, both individual and group levels. Often it is required also that performance appraisal systems should meet the same validity standards as selection tests. The courts look favorably on systems that include use of job analysis, providing written instructions, allowing employees to review appraisal results, agreement upon multiple raters, and the presence of rater training. To avoid legal issues for firing employees (employment-at-will) managers should provide subordinates with honest, accurate, and fair feedback, and make decisions consistent with that feedback (Balkin, Cardy, & Gomez-Mejia 2016, 248.)

Managing Performance

Effective management of human performance requires more than reporting, ratings, and measurement. Performance management requires involvement of managers, for example face-to-face meetings, and for managers to be proactive with dealing with performance problems and finding solutions. When completing the performance rating, the supervisor usually conducts an appraisal interview with the employee to provide feedback, which is one of the most important parts of the appraisal process. Appraisal interviews focus on the gaps in performance and provide suggestions for improvement, whereas feedback focuses only on shortcomings which can be demoralizing rather than motivating. Supervisors who manage performance effectively usually:

1. explore the causes of performance problems,
2. develop an action plan and empower workers to reach a solution, and
3. directly communicate at performance and provide effective feedback.

(Balkin, Cardy, & Gomez-Mejia 2016, 248-251.)

Identifying the causes of performance problems is sometimes challenging. Performance can be result of many factors, which all may not be in the worker’s control. The tendency for supervisors to blame the worker when they observe poor performance, and workers to blame external factors, is called actor/observer bias. Managers need to determine the causes of performance deficiencies accurately. Three primary factors that determine performance, ability, and situational factors. Ability includes characteristics such as intelligence, interpersonal skills, and job knowledge. Motivation can be affected by external factors but is ultimately an internal decision. Situational factors (or system factors) are a wide range of organizational characteristics that can positively or negatively influence performance.(Balkin, Cardy, & Gomez-Mejia 2016, 252.)

After the supervisor and worker have discussed and agreed on the causes of performance problems, the next step is developing an action plan and empowering workers to improve their performance. A supervisor-as-coach approach works to ensure that the necessary resources are available to worker and helps employees identify an action plan to solve performance problems. Supervisors should create a supportive and empowered work environment, clarify performance expectations, provide immediate feedback, strive to eliminate unnecessary rules, procedures, and other constrains (Balkin, Cardy, & Gomez-Mejia 2016, 253.)

Communication between the supervisor and employee is a critical part of performance management, and what and how something is communicated may determine whether the performance improves or declines. To make communication effective the focus should be on performance. Balkin, Cardy, & Gomez-Mejia (2016, 253) define steps to follow: define the performance problem, make it a discussion, be plain and direct when communicating the performance issue, and maintain your composure. Communication should be directed at the performance itself and not at the person (Balkin, Cardy, & Gomez-Mejia 2016, 254.)

Case

Bumgarner (2011) writes about his first performance appraisal experience. He describes it was horrible, and he considered to leave the company after that. Bumgarner had done everything he was assigned to, and more, and never got any feedback on his performance. Therefore, he expected good feedback in the appraisals, however he got negative. After the appraisal Bumgarner was reached by a human resource director, and the supervisor and Bumgarner together laid out a plan including goals and expectations. Regular meetings with the supervisor to review progress would be also arranged. Bumgarner writes that he felt encouraged by it. According to Bumgarner the supervisor turned out to be great mentor as he started to give truthful feedback, which also helped Bumgarner learn more and remain focused on the goals. Bumgarner emphasizes the importance of aligning employee performance with their organization’s missions and goals. Bumgarner writes that supporting the supervisor/employee relationship will result as employees being more focused and engaged, and organization can expect better results. (Bumgarner, 2011.)

The supervisor did poorly on the one essential aspect of managing performance, providing the feedback in the appraisal interview. First of all communication between supervisor and worker is critical to effective performance management (Balkin, Cardy, & Gomez-Mejia 2016, 253). In the caser article (Bumgarner, 2011) Bumgarner did not know about the performance problems, because the supervisor had not given any feedback. Balkin, Cardy, and Gomez-Mejia (2016, 253) argue that what is communicated and how it is communicated is crucial and can determine weather the performance improves or declines. Bumgarner (2011) writes that the appraisal discussion was a horrific experience for him, and he even considered to leave the company because of it. The story however had an happy ending, because Bumgarner was contacted by a professional, and the supervisor and Bumgarner agreed together on causes of performance problems, and developed an action plan.

Article 1

Half (2019) writes that bad performance review can be an emotional and extremely demotivating experience, particularly if the person feels unfairly treated. The aim of performance management is to praise achievement and address poor performance, with the intention to motivate the employee to improve. Half (2019) defines tips to conducting reviews in an efficient way. Firstly, avoid any subjectivity or personal criticism in the review. Personal opinions should be left completely out and should be objective and based on facts as much as possible. Performance appraisal should be constructive, and present solutions not problems. It should involve helping the employee to willingly address performance issues and support improvement, for instance allocating a mentor, further training or a course. When providing support, the employee may feel valued and that can lead to greater motivation. If the performance is genuinely poor, it is important that the performance is well documented and based on clear, undisputed numbers or evidence. Wrong dismissal claims and complaints of personal vendettas can damage business productivity. However even when a bad performance review is done properly, it can be rewarding for employer and become a positive asset to the business. (Half, 2019.)

Receiving criticism might be very sensitive topic for some people. It is crucial how poor performance is communicated. Balkin, Cardy, and Gomez-Mejia (2016, 254) argue that it is important that communication regarding performance should be directed at the performance itself and not at the person, or else the conclusions can be seen as personal attacks. Performance appraisal should be always based on thorough job analysis, identifying the dimensions of performance that determine effective job performance (Balkin, Cardy, & Gomez-Mejia 2016, 254). I consider important to also hear employees feedback on the performance appraisal system to identify for example if the manager is conducting the appraisals in an inappropriate or uncomfortable way.

References

Balkin, D.B., Cardy, R.L. & Gomez-Mejia, L.R. 2016. Managing Human Resources.  Global Edition 8th ed. Pearson. London. pp. 231-254.

Bumgarner J. 2011. A Performance Appraisal Horror Story (With A Happy Ending). URL: http://www.cascadeemployersblog.com/salarytrends/a-performance-appraisal-horror-story-with-a-happy-ending. Accessed: 7 February 2020.

Half R. 2019. What is the impact of bad performance review? URL: https://www.roberthalf.com.au/blog/employers/what-impact-bad-performance-review. Accessed: 10 February 2020.

Chapter 6

Managing Employee Separations, Downsizing & Outplacement (Chapter 6)

Challenges

-Understanding employee separations

-Identifying types of employee separations

-Managing early retirements

-Practices for managing layoffs

-The role of outplacement

What Are Employee Separations?

Employee separation means the termination of an employee’s membership in an organization. The turnover rate is a measure of the rate at which employees leave the firm. Effective organizations try to monitor their turnover rate and identify and manage causes for turnover. The goals is to minimize the turnover and cost of replacing employees. An excessively high turnover rate compared to the industry standard is often a sign of problems in the organization. (Balkin et al, 2016, 210.)

(Balkin et al, 2016, 211.)

The cost of Employee Separations

The cost of turnover can be different across organization and hard to measure. Replacement costs can be particularly high for highly skilled positions. The effect of lost talent on sales, on productivity, or research and development may be hard to estimate. According to studies employee turnover is an important factor in bottom-line performance. It is a common estimate that the cost of turnover is from a conservative 25 percent to 300 percent of the lost employee’s annual compensation. The costs associated with replacing an employee can be categorized to recruitment costs, selection costs, training costs, and separation costs. (Balkin et al, 2016, 211-212.)

Separation costs: the largest separation cost is compensation in term of pay and benefits. Most companies provide severance pay (also called separation pay) for laid-off employees. Length of service is the main factor in determining the amount of severance pay, but also for example salary, grade level, and title. Employees may continue to receive health benefits until they find a new job. Administration of separation may include an exit interview to find out why the employee is leaving voluntarily, or to provide counselling and/or assistance in finding a new job. It is common for firms to provide outplacement assistance, which is a program that helps departing employees find jobs more rapidly by providing them with training in job-search skills. (Balkin et al, 2016, 213.)

Benefits of Employee Separations

When turnover rates are low, few new employees will be hired and opportunities for promotion are sharply curtailed. An organization can reduce its total labor costs by reducing the size of its workforce (salary savings from the elimination). Replacing poor performance with new and presumably more skilled employee. Advancement opportunities for high-performing employees and hiring new people with new perspectives can be an important source of innovation. Separations can be an opportunity for greater diversity, to hire employees from diverse backgrounds and to redistribute the cultural and gender composition. (Balkin et al, 2016, 214.)

Types of Employee Separations

Voluntary separation

Voluntary separation is a separation that occurs when an employee decides, for personal or professional reasons, to end the relationship with the employer. The decision may be having attractive alternatives of being unhappy with aspects of the current job, or commonly both. Voluntary separations can be avoidable or unavoidable. Unavoidable separations result from an employee’s life decisions beyond employer’s control. However, according to resent studies 80 percent of voluntary separations are avoidable, and many of those are staffing mistakes. (Balkin et al, 2016, 214.)

Two types of voluntary separations are quits and retirements. (1) The decision to quit depends on the level of employee’s dissatisfaction with the job, and the number of attractive alternatives the employee has outside the organization. Some employers have used pay early retirement incentives to encourage employees to quit voluntarily (voluntary severance plans, or buyouts), to reduce the size of workforce by avoiding the negative factors associated with a layoff. (2) Retirement differs from quit for example, retirement usually occurs at the end of employee’s career, the individual usually receives retirement benefits from the organization, and the organization usually plans retirements in advance. Most employees postpone retirement until they are close to the age of 65, because then they are titled to Medicare benefits from the government. (Balkin et al, 2016, 214-215.)

Involuntary Separations

Involuntary separation occurs when management decides to terminate an employee due to (1) economic necessity or (2) poor fit with the employee and the organization. The decision of dismiss should be implemented with ‘’due process’’ for the employee and performed within company’s employment policy. A discharge occurs when management decides that there is a poor fit between the employee and the organization, for example poor performance or serious misconduct such as theft. Most union companies and all unionized firms have a progressive discipline procedure that allows employees the opportunity to correct their behavior before receiving a serious punishment. Managers must document the occurrences of violation and provide the employee evidence and warning. (Balkin et al, 2016, 215.)

Layoffs are a means for an organization to cut costs. Change in company’s environment or strategy forces it to reduce its workforce, for example global competition, reductions in product demand, changing technologies, mergers and acquisitions. Downsizing is a company strategy to reduce the scale (size) and scope of its business in order to improve the company’s financial performance. Layoffs are one way of reducing costs or improving profitability. Rightsizing is the process of reorganizing a company’s employees to improve their efficiency. An organization needs to rightsize when it becomes bloated with too many management layers or bureaucratic work processes that add no value to its product or service. The result may be layoffs, or alternatives to layoffs, for example early retirements. (Balkin et al, 2016, 215-2017.)

Managing Early Retirements

Early retirement is an alternative to layoffs. Early retirement policies consist of two features (1) a package of financial incentives that makes it attractive for senior employees to retire earlier than they planned, and (2) an open window that restricts eligibility to a fairly short period of time. After the window is closed the incentives are no longer available. The financial incentives accelerates senior employee’s retirement eligibility and increase the retirement income. Company’s can provide a lump-sum payment or offer continuation of health benefits until they are eligible for medical care from the government. (Balkin et al, 2016, 218.)

Early retirement programs must be managed so that eligible employees do not perceive that they are being forced to retire and consequently file age discrimination charges. Ways to manage early retirements effectively: to restrict eligibility to divisions that have redundant employees with high levels of seniority (instead of making the policy available to all employees) and asking senior employees how they would respond to specific early retirement plan. (Balkin et al, 2016, 218-219.)

Managing Layoffs

Alternatives to Layoffs

Common strategies to const-reduction without layoffs include: attribution, freezing employment, not renewing contract workers, and encouraging employees to take time off voluntarily or shorter workweek, changes in job design, employment policies, pay and benefit policies, and training. (1) Adjustments to employment policies. Attrition is an employment policy designed to reduce the company’s workforce by not refilling job vacancies that are created by turnover. Hiring freeze is an employment policy designed to reduce the company’s workforce by not hiring new employees into the company. Other employment policies aim to decrease the number of hours worked. The strategic application of employment policies to provide job security for a firm’s full-time, core employees is called a rings of defense approach to job security. (Balkin et al, 2016, 219-220.)

Changes in job design: an organization can use its human resources more cost-effectively by changing job designs and transferring people to different units of the company. Alternatively, employees may be relocated to a different location. Practice of unionized companies, called bumping, allows a senior employee whose job is eliminated to take a job in a different unit of the company from an employee with less seniority. Companies can also use job sharing when it is possible to reconfigure one job into two part-time jobs. (Balkin et al, 2016, 219-220.)

Pay and benefit policies: one way of reducing costs is to enforce a pay freeze during which no wages or salaries are increased. Pay freeze should be done on across-the-board basis to avoid accusations of discrimination. These policies can be augmented by reductions in overtime pay and policies that ask employees to use up their vacation and leave days. More radical policy to reduce labor costs is a pay cut. This approach should only be used if employees except it voluntarily as an alternative to layoffs. A long term pay policy is a structure of compensation so that profit sharing (the sharing of company profits with employees) or variable pay (pay contingent on meeting performance goals) makes up a significant portion of employees’ total compensation. By retraining employees whose skills have become obsolete, a company may be able to match newly skilled workers with available job vacancies. (Balkin et al, 2016, 220.)

Implementing a Layoff

The key issues managers must settle when implementing layoffs are notifying employees, developing layoff criteria, communicating to laid-off employees, coordinating media relations, maintaining security, and reassuring survivors of the layoff. Managers should give a notice at least several weeks before a layoff. There are also arguments in favor of no notification, because it may result in potential theft or sabotage, and the productivity of the employee may decline during the notice period. (Balkin et al, 2016, 220-221.)

The criteria for dismissal must be clearly laid out, and fair. Most important criteria used are seniority (last in, first out method) and employee performance. Seniority, the amount of time an employee has been with the firm is easily applied, and employees view it fair as long as all employees have equal opportunity to obtain seniority. When workforce is unionized layoff decisions are usually based on seniority. However, when workforce is nonunion, and especially with professional and managerial employees, companies usually base layoff decisions on performance criteria or a combination of performance and seniority. However, there is a risk of the company being exposed to wrongful discharge litigation, if decisions are based on discrimination or company acted arbitrarily in judging performance. There should be a valid performance appraisal system. (Balkin et al, 2016, 221.)

It is crucial to communicate with the employees who will be laid off as humanely and sensitively as possible. Laid-off employees should first learn their fate from their supervisors in a face-to-face private discussion. The information session should be brief and to the point, and the manager should express appreciation what the employee has contributes and explain how severance pay and what benefits will be provided. (Balkin et al, 2016, 221)

Rumors of an impending layoff can be very dangerous to the workforce’s morale as well as to the organization’s relationship with customers, suppliers, and the surrounding community. The organization should develop a plan to provide accurate information about the layoffs to external clients and the workforce. Layoff may have positive effect of reducing labor costs and restoring financial balance to an organization. However, layoffs can have a negative impact on the organization. Managers should reassure the survivors of the layoff by communicating clearly about the layoff. (Balkin et al, 2016, 222-223.)

Outplacement

Outplacement is a program created to help separated employees deal with the emotional stress of job loss, and to provide assistance in finding a new job. Outplacement activities often handled by consulting firms retained by the organization. Companies are often willing to pay for outplacement to avoid risks associated with layoffs, such as negative publicity or unions’ attempts to organize the workforce. Outplacement programs aim to control the disruption caused by layoffs and other employee separations. Most important goals are (1) reducing the morale problems of employees who are about to be laid off so that they remain productive until they leave the firm, (2) minimizing the amount of litigation initiated by separated employees, and (3) assisting separated employees in finding comparable jobs as quickly as possible. It can also help keep the remaining employees focused on their work. Most common outplacement services are emotional support and job-search assistance. The programs usually provide counselling to help employees deal with the emotions associated with job loss: shock, anger, denial, and lowered self-esteem. Job-search assistance includes teaching separated employees the skills they need to find a new job, for example resume writing, interviewing, and job-search techniques. (Balkin et al, 2016, 223-224.)

Case a

Nokia Announces Abolition of 4000 Jobs

Nokia is planning to close a plant in Germany and relocate it to lower cost are Romania. According to ETUC, European Trade Union Confederation, Nokia announced the abolition of 4,000 jobs arguing that the plant was not competitive enough. Nokia has received state assistance from Germany, and the government would be prepared to make concessions if German jobs could be saved. Juergen Ruettgers, conservative state premier of NRW, western German state, told that Nokia had received over 80 million euros in German public funding for the Bochum plant. Romania receives aid from the bloc party partly supplied by Germany, which would not be used for the relocation. However, commission spokeswoman Eva Kaluzynska says that the industrial park where Nokia was based in Romania probably was financed partly by the EU’s pre-accession fund before joining the bloc in 2007. Nokia announced the abolition of 4,000 jobs without the slightest information or consultation. This, according to Reiner Hoffmann, Deputy General Secretary of the European Trade Union Confederation (ETUC), demonstrates the urgent need to revise the EU directive on European Works Councils (EWCs). It must be guaranteed that companies cannot ride over European and national workers’ rights without sanctions, and without prior thorough information and serious consultations with the workers’ representatives and their trade unions. (Communicating Labor Rights, 2008.)

In this case, the company terminated employees involuntarily due to economic necessity, and it has a profound effect on the organization and especially on the employee who loses their job (Balkin et al, 2016, 215). It might have an effect on the morale of the remaining employees, who fear losing their jobs in the future, if the company again moves the production to a lower cost area. 4000 jobs is a huge number of jobs, and eliminating those will also have a huge effect on the area’s economy and community. Before conducting layoffs, there should be proper measures taken to examine and possibly implement alternatives to layoffs and cost reduction, in order to protect jobs. The government had given support to the company in order to sustain those jobs. According to the article (Communicating Labor Rights, 2008) Nokia implemented layoffs of 4000 jobs without any information or consultation. Sometimes harsh measures to cut costs are necessary to secure the operation, however I consider Nokia’s actions and the way to announce the relocation of the plant, described in the article (Communicating Labor Rights, 2008) very questionable given the countries financial support and willingness to make concessions. 

Case b

Nokia Cuts 3500 Jobs, to ‘’Ensure Profitability’’

Nokia has informed employees of drastic job cuts, terminating total of 3,500 employees. The plant in Cluj Romania, just four years old, will be closed. The company’s Executive Vice President of Markets, Niklas Savander told YLE the job cuts were intended to ensure the company’s profitability. ”It is impractical to manufacture products in Europe when the components are first flown to Europe and then the readymade phones back to Asia,” he stated. The company is planning to end the assembly of phones in Finland at the Salo plant and transfer operations to Asia. Nokia is reconsidering the role of the Salo plant. It is to become a specialised unit for product customising, designing smartphone software and marketing. The roles of facilities in Komárom, Hungary and Reynosa, Mexico are also being re-evaluated. These changes are expected to result in job losses next year. Nokia plans to reduce staff in units including Location & Commerce, which was set up in June. Nokia estimates that some 1,300 people will be let go from the unit internationally. Operations in Bonn, Germany and Malvern, USA will be shut down. The mobile phone giant will also continue redundancy talks that it began last April in its sales, marketing and support services. (Yle, 2011.)

Due to fierce competition and automation, organizations have to make disruptive and painful changes. Typically, companies resort to restructuring and routine layoffs, but in the long term they damage employee engagement and company profitability. In 2011, as the Nokia’s mobile phone business was struggling, the companies decided to lay off 18 000 employees across 13 different countries over the next two years. However, Sucher and Gupta (2018) argue, that this time Nokia implemented a program to ensure employees felt the process was equitable and laid off employees would have a soft landing, unlike in the layoffs done in 2008. Layoffs are a short-term solution for lowering costs, but they create many difficulties. Charlie Trevor of University of Wisconsin, and Madison and Anthony Nyberg of University of South Carolina researched on the effects of layoffs in the organization and employees. As a result of eliminating employees companies lose the time invested in training, networks of relationships, and knowledge. It effects also the remaining employees, and may lead to voluntary turnover, low morale that weakens engagement, fear of no guaranteed jobs despite hard work and performance, decline in job satisfaction, and in organizational commitment. (Sucher & Gupta, 2018.)

Case c

Voluntary Severance Packages

Former Nokia employees at the consultancy firm Accenture are leaving the company and claiming severance packages. Accenture has offered the packages to workers who were only outsourced by Nokia, and 400 former Nokia workers have accepted the packages. Nokia transferred 1,200 Symbian developers to Accenture and continued to work on the Symbian operating system while contracted to their new employer. Around 40 percent of those sought the payoffs and majority have signed leaving agreements according to shop steward Sami Sallmén. Sallmén says that there is now so little work left, that the severance packages have been an agreeable offer for many outsourced developers. The severance packages are worth up to 15 months’ pay, according to Sallmén. The smallest payouts are a few months’ salary. Unions criticized the outsourcing arrangement from the start as they feared that Symbian operating system was to be replaced by Windows Phone as the main smartphone platform for Nokia. Accenture management are keeping a low profile and communication department explained by email that the lay-off program is voluntary. It says that the packages have been offered to those former Nokia employees that have not yet found new responsibilities within Accenture. (Yle, 2012.)

I think Nokia was fair to offer employees to accept a monetary compensation if they were to leave the company. Voluntary layoff program was an efficient way to avoid selecting employees to layoff and cutting costs of salaries. They give employees also the option to decline the offer and employees most dedicated and willing to work for the organization will remain. Employees also that were not satisfied with the job could choose to leave. The risk for the company is that the employer might lose its most valuable employees, unlike when the decisions to select employees to be laid off is done by supervisors. On the other hand according to the article (Yle, 2012) many of the relocated employees had no responsibilities in their new job. The 40 percent of the employees that accepted the severance package might have felt under coercion to choose that alternative, and fear to be laid off later on possibly without compensation. With Nokia’s fluctuating success, employees likely don’t feel very secure in their job position.

Article 1

Creative alternatives to layoffs.

Sivasubramaniam (Berrett-Koehler) introduced creative alternatives to layoffs to reduce costs. Across-the-board wage cuts keep employees employed while reducing payroll expenses. One option is voluntary separation incentive packages, either a retirement allowance (if close to retirement age) or a separation allowance. The company could also reduce the hours worked in a week, with the proportional decrease in salary. Unpaid leave of absence (usually between 3 to 12 months), but not terminating the employment relationship. Companies want to be seen as ‘’employers of choice’’ so they can attract and retain great staff, even under difficult economic conditions. (Clear HR Consulting 2019.) There are various alternatives to reduce costs and avoid layoffs, and decision to layoff might not always produce the anticipated results. Sivasubramaniam (Berrett-Koehler) distinguished reasons why layoffs are a bad idea. Downsizing does not automatically make a company more profitable nor perform better. Layoffs are a quick solution ‘’band-aid approach’’ to a long-term problem, and the benefits are temporary. According to research employees would make individual sacrifices (such as reducing working hours, job-sharing, or pay cuts) to avoid their co-workers being laid off, because of the relationship between co-workers. (Sivasubraniam, Berrett-Koehler.)

There are various alternatives to terminating employees, and usually employees are willing to make temporary sacrifices in order to sustain the long-term employment relationship, their as well as their co-workers’. As Sivasubramaniam (Berrett-Koehler) stated layoffs are a quick short-term solution to reduce costs. I have investigated in the previous cases and articles the various negative effects of layoffs on the organization. Taking those, such as lower performance and reduced organizational commitment, employers should work together with employees to discuss and implement alternatives to reduce costs. Both parties would benefit from that. If the layoffs are essential, the effort of the company to discuss alternatives in order to sustain employees, will give a positive impression of the organization to the remaining employees. Also a humane and appropriate approach to conducting the layoffs is crucial to how the remaining employees will feel towards the organization. The company could for example give assistance to the terminated employees in job search, which shows that the company cares for the people who have contributed to its success.

Article 2

Pros & Cons of Voluntary Redundancy

Jones (2017) distinguishes pros and cons of offering voluntary redundancy. Biggest advantage associated with voluntary redundancies is cost savings in staff salaries, which is often a large proportion of a company’s costs. Voluntary redundancies are also a way to avoid making compulsory redundancies. It allows those who are unhappy or already considering leaving, to leave. It also eliminates the need to select those that will be chosen for compulsory redundancy. Offering voluntary redundancy is viewed as more positive for morale. It is more consultative, and less damaging on company’s reputation. There are disadvantages to your business of offering voluntary redundancy. The risk of losing the bestemployees. The most valuable employees are likely confident of finding new employment elsewhere. Higher costs of redundancy pay than compulsory redundancy strategy, as the staff with most to gain financially are the ones that choose to go. Risk of discrimination claims. It can be avoided by keeping clear records and selecting fairly and objectively. Those who are not selected for voluntary redundancy may feel demotivated. Careful consideration of these pros and cons will help to decide the right option between voluntary and compulsory redundancy. (Jones, 2017.)

Voluntary separations occur, when an employee decides, for personal or professional reasons to end the relationship with the employer. There are several benefits to layoffs to employer as well as employee. Employee might be able to escape unpleasant work situation. Employee can reduce its labor costs, replace poor performance, create advancement opportunities for high-performing employees, new employees bring new perspectives and innovation, and employer will have the opportunity to increase diversity by hiring people from different backgrounds. (Balkin et al, 2016, 214.) For employee accepting a voluntary separation offer may be a good decision for example if the company is not doing well and downsizing is likely to be followed, if the employee is close to retirement age, and if the payment is fair.

References

Balkin, D.B., Cardy, R.L. & Gomez-Mejia, L.R. 2016. Managing Human Resources.  Global Edition 8th ed. Pearson. London. pp. 209-225.

Clear HR Consulting. 2019. Creative Alternatives to Layoffs. URL: https://clearhrconsulting.com/blog/retention/creative-alternatives-to-layoffs/. Accessed: 18 March 2020.

Communicating Labor Rights, 2008. Nokia closes plant in Germany and relocates in Romania. URL: https://communicatinglabourrights.wordpress.com/2008/01/17/nokia-closes-plant-in-germany-and-relocates-in-romania/. Accessed: 13 March 2020.

Jones, M. 2017. Voluntary redundancy: pros and cons. URL: https://www.breathehr.com/blog/voluntary-redundancy-pros-and-cons. Accessed: 18 March 2020.

Sivasubramaniam, J. Berrett-Koehler. Five Reasons Why Layoffs Are A Bad Idea. URL: https://www.bkconnection.com/bkblog/jeevan-sivasubramaniam/five-reasons-why-layoffs-are-a-bad-idea. Accessed: 19 March 2020.

Sucher S.J., & Gupta, S. 2018. Layoffs That Don’t Break Your Company. URL: https://hbr.org/2018/05/layoffs-that-dont-break-your-company. Accessed: 19 March 2020.

Yle, 2011. Nokia cuts 3500 jobs ‘’to ensure profitability’’. URL: https://yle.fi/uutiset/osasto/news/nokia_cuts_3500_jobs_to_ensure_profitability/5431070. Accessed: 13 March 2020.

Yle. 2012. Hundreds of Nokia’s outsourced Symbian developers leaving Accenture. URL: https://yle.fi/uutiset/osasto/news/hundreds_of_nokias_outsourced_symbian_developers_leaving_accenture/5252177. Accessed: 17 March 2020.

Recruiting & Selecting Employees

Human Resource Supply & Demand

Human resource planning (HRP) is the process of ensuring that the organization has the right amount and right kind of people for the future. Labor supply is the availability of workers with the required skills and labor demand is the number of workers the organization needs. In large organizations human resource planning is done by HR staff. If HRP is not conducted properly, the firm may have labor shortage or labor surplus, which can both cause significant financial costs. For example, company will have to pay higher taxes to unemployment insurance system or wage premium for working overtime. HRP process includes (1) forecasting labor demand and (2) estimating labor supply. (Balkin et al, 2016, 178-179.)

Human Resources Planning

Labor demand exceeds labor supply:

-training or retraining,

-succession planning,

-promotion from within,

-recruitment from outside,

-subcontracting,

-use of part-timers or temporary workers,

-use of overtime

Labor supply exceeds labor demand:

-pay cuts,

-reduced hours,

-work sharing,

-voluntary early retirements,

-inducements to quit (for example, severance pay),

-layoffs

Labor demand equals labor supply:

-replacement of quits from inside or outside,

-internal transfers and redeployment

(Balkin et al, 2016, 179.)

Labor supply can be increased by for instance training or retraining, promoting from within, recruiting outside, subcontracting, part-timers or temporary workers, or paying overtime to existing employees. If the company has more employees than it needs, in case of saving jobs, firms resort to pay cuts, reducing working hours and work sharing. Positions are eliminated through early retirement incentives, severance pay, and layoffs. If the labor surplus is modest terminating employees is avoided, because of payments into unemployment compensation insurance program. Also avoiding recruiting and training costs when demand for labor increases. (Balkin et al, 2016, 179-180.)

Global Markets: Surpluses or Shortages

Most jobs require various types of skills and experience. There may be also labor shortages, even though there is surplus in terms of unemployment rate. For example, there is short supply of workers in the skilled trades such as electricians and plumbers. There are imbalances in supply of labor globally. For example, China has shortage of college-educated workers and on the other hand India may have surplus of labor but shortage of workers in skilled trades. Reasons for shortages in the skilled trades: less attractive jobs, not viewed as positively as careers. Variations in the supply of labor can occur due to changes in policies and economic conditions (from farming to industrial to technology), people moving or investing in additional education. Issues in supply of labor are the talent that is available and is there enough workers available in an area of industry at a reasonable wage rate. (Balkin et al, 2016, 179-180.)

Quantitative & Qualitative Techniques in Forecasting Labor Demand & Supply

Mathematical quantitative techniques rely heavily on past data or previous relationships between staffing levels and other variables such as revenue or output. These techniques are less appropriate today, when firms struggle with for instance technological change and intense global competition. Qualitative techniques rely on experts’ judgements or estimates. These techniques are flexible and different conditions and factors can be considered. However subjective judgements can be less accurate. (Balkin et al, 2016, 182-183.)

Challenges in the Hiring Process

The hiring process consists of three steps:  recruitment is the process of announcing job’s availability inside and outside and attracting qualified candidates, selection is determining what characteristics the job requires and assessing the candidates, and socialization is the process of orienting new employees to the organization and specific unit. Challenges in hiring process include:

-determining which personal characteristics are most important to performance,

-measuring those characteristics,

-evaluating motivation levels,

-and deciding who should make the selections decisions.

(Balkin et al, 2016, 183-184.)

The important characteristics needed to perform a job efficiently are challenging to determine. The knowledge, skills, and abilities can change over time. The organization’s culture may need to be considered, and different people in the organization often want different characteristics in a new employee. Most of the measures used in hiring decisions focus on ability over motivation. However, motivation is critical to performance. Motivation is difficult to measure, and employers try to asses it during the interview. There are two notable reasons why the HR department should run the staffing process: legal issues and convenience. The organization must ensure that its employment practices comply with legal requirements. If the company decides to involve line employees in hiring decisions the first ones to consult would be managers who will be supervising the new hire. (Balkin et al, 2016, 184-185.)

Practices of Meeting the Challenge of Effective Staffing

Recruitment can be most effective when it’s viewed from the applicant’s perspective, applicant-centered approach to recruitment. Going to where the customers (applicants) are, for instance social media. Considering what applicants what for instance working atmosphere, career opportunities and pay. Also having customer-oriented approach in the recruiting process and giving a positive impression of the organization. (Balkin et al, 2016, 185-186.)

Sources for recruiting

Most prominent recruitment sources are: current employees (internal job openings), referrals from current employees, former employees (familiar with the company), former military, customers (familiar with the products and services), print and radio advertisement, internet advertising, career sites and social media, employment agencies (external contractors to recruit), temporary workers (provide flexibility to quickly meet fluctuating demands), and college recruiting. (Balkin et al, 2016, 186-187.)

Ways to evaluate et effectiveness of different recruitment sources: how long employees recruited from different sources stay in the company, the expectations and knowledge the employees have about the organization, by the cost of the recruiting sources and evaluating various outcomes from different sources such as number of employment offers, number of acceptances, turnover at one year and employee performance ratings at one year. Different yield ratios relate recruiting input to recruiting output. For example, (1) offer-to-acceptance ratio, (2) the interview-to-offer ratio, (3) number of invitations-to-interview ratio, (4) number of advertisements or contacts-to-applicant ratio. (Balkin et al, 2016, 190-191.)

Advantages of hiring externally include new perspectives and different approaches and bearing expenses of training costs of training current workers in a new process or technology. On the downside, current employees may discount their ideas and limit their impact. It also might take time for the new employee to learn the job. Advantages of recruiting internally (promotions and transfers): less costly, signals the current workers that the organization offers opportunities for advancement. Internal recruits are familiar with the organizations’ policies, procedures, and customs. On the downside internal recruiting reduces the probability of innovation and new perspectives. Also promoting current workers may undercut their authority in former colleagues’ eyes. (Balkin et al, 2016, 190.)

Selection: Reliability & Validity

Selection determines the overall quality of organization’s human resources. Value of good selection is high and continually hiring people who perform above average can make a tremendous difference to an organization. Two concepts are important for selection tools reliability and validity. Reliability refers to consistency of measurement, usually across time but also across judges. If measure procedures produce consistent results, that measure is perfectly reliable. Reliability is an index of how much error has influenced the measures. Deficiency error occurs when a component of the domain being measured is not included in the measure. Contamination error occurs when measure includes unwanted influences. For example, an interviewer might rate an average job candidate lower because of the contrast with other candidates. (Balkin et al, 2016, 191.)

Validity is the extent to which the technique measures the knowledge, skill, or ability. In the selection context it is how scores on a test or interview correspond to actual job performance. When discrimination in hiring practices in charged, the critical evidence will be the job relatedness (validity) of the selection technique. There are two basic strategies to determine the validity of selection method. (1) A content validity strategy assesses how representative the selection method is of job content. (2) An empirical validity strategy demonstrates the relationship between selection method and job performance. There are two types of empirical validity. Concurrent validity refers to correlation between selection and performance scores when measured at the same time. Predictive validity refers to correlation between selection scores and performance scores, when performance is measured later in time. (Balkin et al, 2016, 191-192.)

Selection Tools

-Letters of recommendation

-Application forms

-Ability tests

-Personality tests

-Honesty tests

-Interviews

-Assessment centers

-Drug tests

-Reference checks

-Background checks

-Handwriting analysis

Letters of recommendation are mostly positive. The focus should be on the content, the traits that the writes attributes to the candidate, rather than extent of positivity. Application forms are used to determine if candidate satisfies the minimum job specifications, especially for entry-level jobs. A detailed version of application form is the biodata form. It includes series of questions relevant to the job about their background, experiences, and preferences. Biodata have moderate validity in predicting job performance.  It’s important that the application forms are nondiscriminatory and must not ask information such as gender, age or race. (Balkin et al, 2016, 192-193.)

Ability tests measure abilities. Cognitive ability tests measure abilities in areas such as math. Cognitive ability tests are a valid predictor of job performance, when the test is based on a job analysis. General cognitive ability (g) is measured by adding the scores on verbal and quantitative ability, and it measures general intelligence. Person with high level of g is likely to learn more and faster and able to adapt quickly. The physical ability tests are used by police and fire departments to measure physical abilities such as strength and endurance. A more direct measure of performance ability is to observe how the applicants perform on actual job tasks, and they are called work sample tests.  Work sample tests have high reliability and validity and it is an effective selection tool. Emotional intelligence, ability to perceive and manage emotions in the self and in others, can also be measured. (Balkin et al, 2016, 193-194.)

Personality tests assess traits that tend to be consistent and enduring. It has been argued that traits are subjective and unreliable and unrelated to job performance and not legally acceptable. Many traits can be measured inconsistently in many ways, which causes problems with reliability and validity. Recent research however suggests that personality can be reliably measured as being composed of five dimensions: extroversion, agreeableness, consciousness, emotional stability, openness to experience. Of the five factors, conscientiousness appears to be most related to job performance and found to be related to safety at work. The validity of other factors is more job specific. For that reason, a job analysis should be done first to identify the personality factors that enhance job performance. Personality factors may play a critical role in jobs that are less regimented and demand teamwork and flexibility. (Balkin et al, 2016, 194.)

Honesty and integrity tests are used to identify candidates who are likely to engage in theft and other undesirable behavior. Typical test measures attitude towards honesty and dishonest behavior, for example measuring the applicants’ tolerance for theft by others. Study by various researchers have proven the validity of honesty testing. How ever there is controversy with the issue of honest people scoring poorly on the tests. (Balkin et al, 2016, 195.)

Interviews are the most common selection tool. Issues related to interviews are the different assessment of different interviewers, human judgement limitations, and interviewer biases. There is also criticism that the interview experience in different for each applicant depending on the interviewer. Alternative approach to traditional unstructured interview is the structured interview. It is based on thorough job analysis and involves series of job-related questions with predetermined answers: situational, job knowledge, and worker requirements questions.  Structured interviews are valid indicator of job performance. The content is limited to job-related factors, the questions are consistent across all interviewers, and responses are scored the same way. The impact of individual interviewers’ characteristics and biases are limited. Questions in application forms or interview regarding for example race, creed, sex, national origin, marital status, or number of children are illegal and the company can be sued. (Balkin et al, 2016, 195-196.)

An assessment center is a set of work-related tasks or exercises that candidates are asked to perform (usually for managerial positions). The method is used usually for external hiring or promoting. They are expensive but appear to be a valid predictor of managerial job performance and judging leadership competencies. Assessment centers are usually conducted off-premises, last from one to three days, and may include up to six candidates at the same time. Usually, the candidates’ abilities are evaluated in four areas: organizing, planning, decision making, and leadership. The in-basket exercise is commonly used. The candidates are asked to deal with for example the kind of problems that might be found in manager’s in-basket. The performance the exercise can be highly revealing. (Balkin et al, 2016, 197-198.)

Other selection tools include drug tests, reference checks, background checks, and handwriting analysis. A drug test might be part of the selection procedure. To look at applicants’ past employment records, reference checks, is one of the best methods to predict future success. The rules are that the inquirer has a job-related need to know, employer must release only truthful information. Depending on the job, background checks can be distinguished for example, from reference checks, criminal background checks, and verifications of academic achievements. Background checks are conducted to avoid lawsuit charging negligent hiring, and for example safety reasons. (Balkin et al, 2016, 198-199.)

Selection Decision Making

There are strategies to making a selections decision based on the information collected with different methods. (1) Multiple-hurdle strategy involves making a preliminary selection decision after completion of each, usually with large number of applicants. The other two strategies require collecting all the information before making decisions: (2) in clinical strategy all the information is evaluated and then an overall judgment is made. (3) In statistical strategy the pieces of information according to mathematical formula and candidates receive scores. For some organizations the traditional approach to selection may not be efficient. There may be values and responsibilities that are considered core of the business and part of the culture and employment brand of the organization. Hiring people who share the organizations priorities and characteristics, are most likely to be committed and loyal employees. (Balkin et al, 2016, 199.)

Legal Issues in Staffing

Organizations should ensure that selection techniques used in selection process are job related. That is the best defense and it should include job analysis information and evidence that test scores are valid predictors of performance. Discrimination in all terms and conditions of employment is illegal. The Civil Rights Act of 1964 prohibits discrimination based on race, color, sex, religion, age, national origin, and physical or mental disability is prohibited. Legal issue in staffing is negligent hiring, which has been increasing over the years. It refers to situation where employer fails to use reasonable care in hiring and employee who is hired commits a crime.  Employers are responsible for conducting a thorough investigation into applicant’s background. There should be clear policies on hiring, disciplining, and dismissing employees. (Balkin et al, 2016, 201-202.)

Case 1

Discrimination in Hiring

Cook (2015) describes the recruiting process of the Abercrombie company from her experience as a former employee. The company used to hire people purely based on appearance and without any interview process (Cook, 2015). Cook (2015) says that when she was assigned to do recruitments, she was given a checklist of who is acceptable and looks attractive, and minorities needed to be recruited simultaneously to avoid lawsuits. Cook (2015) explains, that during her working time the company got multiple claims over discriminatory hiring, however the company has now announced that it would stop hiring staff based on ‘’body type or physical attractiveness’’ and give up its ‘’look policy’’ and heavily sexualized marketing.

Discrimination against race, sex, religion, age, national origin, and physical or mental disability is prohibited (Balkin et al, 2016, 201). By poor selection processes the company may also face for example negligence hiring charges. In addition, the legal issues, the operation of Abercrombie is unethical. The selection process was only focusing on what they considered ‘’attractive’’ appearance, and not on the applicants’ qualifications for the job. Hiring base on looks might result in employees that are unmotivated and lack the ability to perform the job, and consequently higher turnover.

Looking at the matter from another perspective, Abercrombie has a clear marketing strategy and the company wants to create a specific image of the brand, by deploying prevailing social ideals. Many fashion brands and companies are doing the same thing, but Abercrombie’s practices where questionable. Hiring based on appearance might be difficult to see and prove, for example from my own observation most clothing retailers hire employees to their stores based on the targeted customer segment and their assumed ideals, which may include factors such as looks and age. Cook (2015) mentioned in her article that being different is celebrated far more now than it was previously. The values of consumers are changing.

Article 1

Factors to Consider in Selection

The article (Aspire Recruitment Solutions, 2017) suggests various factors to consider, when making hiring or selection process decisions. One factor is the skills the candidate possesses, to evaluate if they can do the job efficiently. Skills can be measured based on resume, cover letter, and interview. However, lack of experience can sometimes be covered with a desire to learn. Desire is an important factor, and lack of desire can have negative impact on even the most skilled individual. Personality plays an important role in determining fit to the organization, a team player or perhaps leadership qualities. Attitude should be considered and evaluated based on the characteristics that are required for the job. The company should provide clear job description and communicate it during the interview process, and it will also allow the candidate to decide weather it is a match or not. (Aspire Recruitment Solutions, 2017.)

Desire, attitude and motivation are especially important features to consider when making selection decisions but may not be the easiest to determine. Motivation and ability, competence in performing a job, are equally important to performance (Balkin et al, 2016, 184). Motivation is a person’s desire to do the best possible job, and it directs human behavior (Balkin et al, 2016, 47). Motivated employees put their maximum effort for performing their tasks, which has a positive impact on the overall performance. High motivation is also likely to increase job satisfaction, which will result in dedicated, long-term employees, that care about the organization’s success.

Article 2

The Role Recruiting in Evolving

Lewis (2019) refers to the Linkedin report, that predicts how the recruitment will change in the future. Recruiting teams will be called on to develop new skills, master new metrics, and adopt new tools. Recruiters will possibly take a more visible, and strategic role in the company. Recruiting will be more important, and the practices will change considerably. They will search for more creative candidates, as automation takes over repetitive tasks. Business environment and hiring goals will be constantly changing. Methods for selection process will also be revolutionized, as new technologies are developed, such as video interviewing. ‘’Businesses will need recruiters more: to engage passive candidates inundated by offers; to analyze talent data and advice leaders; to tease out long-term business results and forecast future hiring needs; to master new technologies; and build new types of teams.’’ (Lewis, 2019.) Human resource planning in the process of ensuring that organizations’ have the right amount and the right kind of people to deliver a particular output, and it requires forecasting labor supply and demand in the future (Balkin et al, 2016, 202).  Good selection decisions are crucial to the company’s succeed and is one of the most important things companies do, especially because the business environment is changing and more competitive.

References

Aspire Recruitment Solutions, 2017. 5 Factors to Consider in Candidate Selection. URL: https://www.aspirehiring.ca/5-factors-to-consider-in-candidate-selection/. Accessed: 29 January 2020.

Balkin, D.B., Cardy, R.L. & Gomez-Mejia, L.R. 2016. Managing Human Resources.  Global Edition 8th ed. Pearson. London. pp. 289-308.

Cook A. 2015. What It Was REALLY Like Working as an Abercrombie ‘Model’. URL: https://www.huffpost.com/entry/what-it-was-really-like-working-as-an-abercrombie-model_b_7154042. Accessed: 29 January 2020.

Lewis, G. (2019). New Report: 7 Prediction on How Recruiting Will Be Different in 2025. URL: https://business.linkedin.com/talent-solutions/blog/future-of-recruiting/2019/7-predictions-on-how-recruiting-will-be-different-in-2025. Accessed: 4 April 2020.