About Volume One

Why Is This Volume Important? Volume One focuses on the multiple defi nitional terms related to the comprehensive functioning of human resource management (HRM). From a more strategic sense, the introduction section of this volume attempts to anchor these defi nitions in a common purpose related to overall talent management—an important challenge facing organizations today. Therefore, this volume is important in that it brings a current defi nitional perspective of incremental HRM, yet seeks to apply them to a more progressive agenda of required business partnership for HR professionals. While not inclusive of all of the accepted defi nitional terms related to the practice of HRM, this volume provides a vast array of articles on updated and insightful topics for the benefi cial use of modern-day HR professionals.

What Can You Achieve with This Volume? The articles presented in Volume One were written to give readers a comprehensive perspective on the scope of today’s HR terminology and practices. Some of the terms that are deﬁ ned provide an in-depth focus of topics long-practiced in HRM, while others attempt to provide a current deﬁ nition for approaching a familiar practice. In all situations, they have been designed to stimulate new thinking and knowledge in the reader.

How Is the Volume Organized? Following a compelling introduction concerning effective talent management challenges faced by modern HR professionals, the terms described in this volume are presented in alpha- betical order. Each author begins with generally accepted defi nitions of the topic and brings forth recent research for updating the scope of the topic and summarizes with a new and progressive defi nition of the important term in the fi eld. About Pfeiffer Pfeiffer serves the professional development and hands-on resource needs of training and human resource practitioners and gives them products to do their jobs better. We deliver proven ideas and solutions from experts in HR development and HR management, and we offer effective and customizable tools to improve workplace performance. From novice to seasoned professional, Pfeiffer is the source you can trust to make yourself and your organization more successful.

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Essential resources for training and HR professionals www.pfeiffer.com Y

THE ENCYCLOPEDIA OF HUMAN RESOURCE MANAGEMENT Short Entries

VOLUME ONE

Executive Editor William J. Rothwell, Ph.D., SPHR

Volume One Editor Robert K. Prescott, Ph.D., SPHR Copyright © 2012 by John Wiley & Sons, Inc. All Rights Reserved. Published by Pfeiffer An Imprint of Wiley One Montgomery Street, Suite 1200, San Francisco, CA 94104-4594 www.pfeiffer.com No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at http://www.wiley.com/go/permissions. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifi cally disclaim any implied warranties of merchantability or fi tness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profi t or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. Readers should be aware that Internet websites offered as citations and/or sources for further information may have changed or disappeared between the time this was written and when it is read. For additional copies/bulk purchases of this book in the U.S. please contact 800-274-4434. Pfeiffer books and products are available through most bookstores. To contact Pfeiffer directly call our Customer Care Department within the U.S. at 800-274-4434, outside the U.S. at 317-572-3985, fax 317-572-4002, or visit www.pfeiffer.com. Pfeiffer publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on- demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com. Library of Congress Cataloging-in-Publication Data The encyclopedia of human resource management / executive editor, William J. Rothwell. p. cm. Includes bibliographical references and index. ISBN 978-0-470-25773-9 (v. 1)—ISBN 978-0-470-25772-2 (v. 2)—ISBN 978-0-470-25771-5 (v. 3) — ISBN 978-0-470-59134-5 (set) 1. Personnel management—Encyclopedias. I. Rothwell, William J., 1951– HF5549.A23E53 2012 658.3003—dc23 2011043163 Acquiring Editor: Matthew Davis Director of Development: Kathleen Dolan Davies Production Editor: Dawn Kilgore Editor: Rebecca Taff Editorial Assistant: Michael Zelenko Manufacturing Supervisor: Becky Morgan Printed in the United States of America HB Printing 10 9 8 7 6 5 4 3 2 1 PB Printing 10 9 8 7 6 5 4 3 2 1 CONTENTS

Introduction to Volume One xiii Robert K. Prescott

1. The Evolving Practice of Talent Management 1 Brian E. Wilkerson 2. Multi-Rater (360-Degree) Feedback Instruments 7 Curtis D. Curry 3. Action Learning 13 Yongho Park 4. Age Discrimination in Employment Act of 1967 (ADEA) 17 Katy Lynn Wilson 5. Adverse Impact 24 Kyle E. Brink 6. Afﬁ rmative Action 30 Wanda M. Costen

v vi Contents

7. Afﬁ rmative Action Plans 35 M. Edward Krow 8. Appreciative Inquiry 42 Michele L. Newhard 9. Assessment 50 Mimi Hull 10. Background Investigation 57 Toni Arnold 11. Behavior Modeling 62 Yeonsoo Kim 12. Employee Beneﬁ ts 68 Dawn Denniston Peterson 13. Burnout 75 Michele L. Newhard 14. Business Ethics 83 Thomas J. Horvath 15. Campus Recruiting 90 Erin G. Howarth 16. Career Development 98 Judy Y. Sun, Greg G. Wang 17. Change Management 103 Greg G. Wang, Judy Y. Sun 18. Child and Elder Care 107 Danielle Tavernier Spears 19. Civil Rights Acts 112 Emily R. Wilkins 20. Civil Rights Act of 1991 118 John M. Bagyi, Wendy S. Becker Contents vii

21. Consolidated Omnibus Budget Reconciliation Act (COBRA) 123 Dawn M. Fleming

22. Collective Bargaining 127 William B. Werner

23. Comparable Worth 131 Wanda M. Costen

24. Compensation 136 Danielle Marie Bologna

25. Corporate University 143 Yongho Park

26. Crisis Management 147 Nellie J. Brown, Nancy J. Lampen

27. Corporate Social Responsibility 153 Philip H. Mirvis

28. Culture 160 Ken Hultman

29. Disciplinary Procedures 165 Wanda M. Costen

30. Drug Tests 169 Brandon Bruce Vargo

31. Employee Wellness Programs 174 Steven N. Waller, Lebron P. Moten 32. Employment-at-Will 180 Judith Kish Ruud, Wendy S. Becker 33. Employee Relations 186 Andrea Burns viii Contents

34. Equal Pay Act of 1963 191 Emily R. Wilkins 35. Executive Compensation 197 Traci M. Pauley 36. Executive Education 203 Gerri Hura 37. Executive Order 11246 209 Deborah Kaplan-Wyckoff 38. Executive Search Firms 213 John D. Piccolo 39. Flexible Beneﬁ ts 217 Maurie Caitlin Kelly 40. Fair Labor Standards Act of 1938 222 Deborah Kaplan-Wyckoff 41. Glass Ceilings 227 Yongho Park 42. Global Supply Chain Management for HR 231 Martin K. Starr 43. Global Teams 239 Tracy H. Porter, Sharon E. Norris 44. Grievance 243 William B. Werner 45. Guilds 247 Maurie Caitlan Kelly

46. HR Metrics and Analytics 252 Donald P. Rogers

47. Human Resources Compliance 258 Peter M. Wald, Marcus Winterfeldt Contents ix

48. Human Resource Strategy 264 Laura A. Mindek

49. Mergers and Acquisitions 270 Jim Bowles

50. Human Resource Management 275 Donald P. Rogers

51. Internships 279 Jennifer Belinda DeSormoux

52. Job Analysis 284 Katy Lynn Wilson

53. Job Design 288 Sharon E. Norris, Tracy H. Porter

54. Job Satisfaction 292 Wanda M. Costen 55. Leadership Development 296 Robert K. Prescott, Keri Laine Williamson 56. Learning and Development 302 Karen L. Milheim 57. Leisure Counseling 305 Steven N. Waller 58. Loyalty 310 Andrea Burns 59. Merit Pay 314 Karen McMillen Dielmann 60. National Labor Relations Act 317 Cory Smith 61. National Labor Relations Board 321 William B. Werner x Contents

62. Negligent Hiring 324 David Washington 63. New Employee Orientation 327 Jim Bowles 64. Ombuds 331 John Dolan 65. Organizational Citizenship 336 Victoria Derderian 66. Outsourcing 341 Ashley Snyder 67. Pay Grades 346 Karen McMillen Dielmann 68. Performance Aids 348 Robert D. Jackson 69. Performance Management 353 D. Renee Tanner 70. Progressive Discipline 359 Wanda M. Costen 71. Project Management 363 Lynda Carter, Gerri Hura 72. Quality Circles 370 Eric Bergstrom 73. Recreation Programs 373 Steven N. Waller, Ni-Eric D. Perkins 74. Recruitment and Selection 379 Wanda M. Costen 75. Self-Directed Work Teams 388 Wendy S. Becker Contents xi

76. Social Responsibility 395 Peggy B. Fayﬁ ch 77. Strategic Human Resource Management 403 Donald P. Rogers 78. Succession Planning and Management 410 Lori A. Johnson-Vegas, Kathleen E. Wolfhope 79. Training Needs Analysis 417 William J. Rothwell 80. Virtual Teams 421 Wendy L. Bedwell, Eduardo Salas 81. Work Values 426 Agata Dulnik 82. Work/Family Balance 432 Michele L. Newhard 83. Workplace Chaplaincy 443 Steven N. Waller 84. Wrongful Discharge 448 David Washington

Contributors 453 Subject Index 473 Name Index 487 INTRODUCTION TO VOLUME ONE

his volume of The Encyclopedia of Human Resource Management consists of Tapproximately eighty-four defi nitional papers that discuss myriad topics in a specifi c, yet comprehensive, approach of the body of knowledge related to human resource management (HRM). Readers of this volume will fi nd in-depth research and discussions of specifi c topics related to HRM. However, we should not become myopic in the study of these defi nitions that we lose site of the bigger picture. All of what comes together (defi nitions included) to become a comprehensive body of knowledge of HRM should drive forward an agenda of progress for organizations that implement such practices. It is my opinion that “talent management” is the proverbial “stake in the ground” around which all modern HRM action creates the greatest impact for organizations. Thus, the fi rst article serves as a beacon of direction in moving HR practices from a designated point toward a better educated sense of destination—and as a worthy introduction for this volume of work. Dr. Robert K. Prescott, SPHR Editor, Volume One September 2011

ARTICLE 1

THE EVOLVING PRACTICE OF TALENT MANAGEMENT

Brian E. Wilkerson

ompanies that rely on traditional talent management approaches will fi nd Cthemselves at an increasing disadvantage in the years ahead. The winners will be those that replace traditional talent management tactics with an integrated strategy owned by line management and focused on the elements that will truly give them an advantage. Integrated talent management, which encompasses recruiting, succession planning, performance management, compensation, career development, learning, and strategic workforce planning, enhances an enterprise’s ability to attract and retain top talent. Bringing all these disciplines together into a cohesive strategy requires a signifi cant investment of resources. The payback, however, in terms of lower turnover, higher engagement, and greater fi nancial success, makes the investment worthwhile. Organizations are struggling with how to reframe their attraction and retention strategies to adapt to the shortage of skilled workers, a changing economy, and the new technologies required to keep pace. Today’s businesses are struggling to manage a complex workforce that encompasses three generations of workers with differing needs and motivations and an increasingly global employee and customer base. Fragmented and disjointed talent management programs are making this process diffi cult.

1 2 The Encyclopedia of Human Resource Management: Volume One

Recruiting, succession planning, performance management, compensation, career development, learning, and strategic workforce planning are often handled as separate functions—sometimes by separate groups that often don’t effectively collaborate or coordinate their efforts. Compounding their efforts are a highly uncertain economy where companies are often experiencing simultaneous surplus and scarcity when it comes to talent and increasingly limited funds to invest in the practice of talent management. Integrating talent management programs and other related initiatives allows a company to view workforce decisions in a strategic way and positions it for greater ﬁ nancial success.

Integrated Talent Management

Integrated talent management addresses managing human capital with the same clarity, discipline, and objectivity as managing other critical business assets. Research conducted while I was at Watson Wyatt Worldwide shows the elements that comprise a comprehensive, integrated strategy (Wilkerson, 2009). But just as important as connecting these elements together is connecting them to the business. In 2007, we examined more than 150 talent management projects to determine what made companies successful at deploying integrated strategies. The major fi nding was that, while successful talent management is facilitated by the HR staff, it is owned by line managers and executives. It is part of each manager’s responsibilities and receives continual attention. This can happen, however, only when talent management processes align with the culture and values that drive how people in the organization make decisions and take action. For example, no matter how thorough a succession planning process is, it will fail if managers pick up the phone and call an executive search fi rm as soon as a key player resigns. The point of succession planning is to have options already in place. Often succession plans are solely focused on compliance. Managers and HR staff respond to a CEO mandate by “fi lling in the boxes” to show a successor for all key positions. Little, if any, analysis or discussion occurs regarding the ripple effect of moving a particular person into a new position or the development needs of that individual, and often many people are identifi ed as successors for more than one position. Such plans do not address the organization’s strengths and gaps, nor do they refl ect a disciplined understanding of future needs. Integrated talent management aligns with the way the business works. Rather than forcing compliance from managers, it is embraced by managers because they see it as valuable to achieving their business results. This study showed that achieving this requires simple but powerful processes, where the effort put in is clearly aligned with the value received. The Evolving Practice of Talent Management 3

A truly integrated talent management process integrates talent decisions with business decisions. The distinction between connected processes and integrated processes is an important one here. In most organizations, talent management processes have varying degrees of connection to the business. That doesn’t mean they are integrated. Returning to the succession planning example, many organizations have talent review processes that call for discussing high-potential leaders and potential replacements and generally include a business context. Yet the talent planning discussion is disconnected from the business planning discussion. In companies in which talent management is truly integrated, the succession discussion is part of the business discussion and talent reviews are part of business reviews. Discussion of future talent requirements is a natural outgrowth of a discussion about business direction, products, markets, and other issues. Throughout this book, you will fi nd numerous defi nitions of key human resources concepts and information on practices employed by various companies. It is key to blend the elements that fi t your culture and organization strategy into an integrated set of processes and practices that matches your needs. Rather than simply adopting what someone else terms as best practices, you have to create a synthesis of these concepts that speaks to your organization and can become part of how your management team manages.

Preparing Managers for a New Role

The current workforce challenges demand new thinking about talent management. This new thinking requires managers to develop new skills, including spotting good talent, coaching and growing their people, and connecting business planning skills with talent planning. Successful companies help their managers develop these skills to handle the people component of their jobs more effectively. Managers play a critical role in integrated talent management, balancing the needs of the employer with those of the employee while representing the interests of both sides. To succeed, managers need a clear understanding of employee goals and expectations. Moreover, they need HR policies, processes, and tools to help them meet employees’ widely varying needs.

Establishing Talent Management Processes

Effective talent management processes integrate readily into the natural processes that drive the business. They take into account the managers’ work styles and busy work schedules. They ensure a high degree of communication from senior leaders down to individual employees. Clear communication establishes a clear line of sight and helps shape behavior. 4 The Encyclopedia of Human Resource Management: Volume One

For example, in most organizations, performance management really means performance appraisal. In contrast, integrated talent management closely links performance management with business management. One large service company has integrated its performance management process with its business reviews. Each business unit reviews its results and the contributions of its staff monthly, including the capabilities, skills, work processes, tools, and motivation that staff members need to improve their results. These reviews enable managers to provide real-time guidance to employees about improving performance, as well as real-time recognition for their contributions. Managers hold a brief conversation with each employee immediately following business reviews to give more speciﬁ c feedback on performance. Generally, managers use notes from these conversations to make a more formal performance appraisal at year end. Both employees and managers see the process as easier, more valuable, and more closely connected to driving business results. In the current business environment, integration also requires focus. Gone are the days of trying to establish “best in class” practices across all areas of talent management. Companies need to focus on the areas of talent management that will have the most impact on their business and where investments will bring the most return. In my own work, I have seen companies returning to a much more pragmatic approach to talent management and to integrating these processes with business strategy.

Achieving Integration

Companies that successfully integrate all their talent management processes and integrate talent management with the business strategy have a number of elements in common. First, they can clearly articulate how people contribute to the business strategy in terms that managers understand and can act on. Organizations with effective talent management also identify a clear set of objectives that are agreed to at the most senior levels and communicated throughout the organization. Increasingly, companies are using brand as the link between people and strategy. Efforts around aligning internal (employment) with external (customer) brand go well beyond simply making the links between employee experience and customer experience. With brand alignment, companies are explicitly linking their employment brand and resultant employee value proposition to their customer brand and recognizing that employees are critical to delivering the brand promise to customers. To ensure that employees deliver on the external brand promise, employers must deliver on their employment brand promise. Managers are once The Evolving Practice of Talent Management 5

again the critical link in this chain. Managers need to drive the right behaviors and have the right tools and processes to manage their people. As a next step in the integration process, successful organizations defi ne the decisions they are able to make to meet the talent management objectives, focusing on those that are most important and clearly tied to the business strategy. For example, in a consumer products company focused on new products, the key decisions focused on rewarding innovation, identifying the best innovators, and ensuring they were committed and engaged. These were then translated into data required to make the best decisions, and processes and tools were designed to effectively gather the data and translate it into actionable information. A final element to success was driving accountability for talent management throughout the organization. Accountability takes different forms depending on the company, but includes holding leaders accountable for executing agreed-on processes and using them to make talent decisions. It also includes holding leaders to standards such as leadership competency models and ensuring that leaders either demonstrate those competencies or have plans for developing them. While the integration process poses signifi cant challenges, all successful companies fi nd that integration is key to gaining manager and employee acceptance and to unlocking measurable results. Integration allows managers to see how to make talent management work in their day-to-day jobs instead of viewing it as some annual HR program. Once enough managers have adopted the processes, the programs, as measured by the key metrics the companies have chosen, begin to show improvement.

Conclusion

Research shows that companies with integrated talent management strategies do a better job of attracting and retaining top talent and, as a result, beneﬁ t from lower turnover and higher engagement levels than their peers. As talent management evolves in a changing economy, these companies are positioned to capture and maintain a leadership role in their respective industries. Most importantly, however, talent management strategies and processes must be aligned with the business strategy and owned by line managers and executives. In successful companies, HR is the facilitator and the business is the driver of successful talent management. These companies will continue to distinguish themselves by creating a strong employment brand that clearly deﬁ nes and communicates expectations, 6 The Encyclopedia of Human Resource Management: Volume One

outcomes, and rewards. They will create a partnership between HR and business managers, leveraging the skills and expertise of each to make integrated talent management a reality. Through this partnership, they will strengthen employee engagement and encourage behaviors that drive business success.

Reference

Wilkerson, B.E. (2009). Five rules for talent management in the new economy. www.towerswatson .com/research-and-ideas. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 2

MULTI-RATER (360-DEGREE) FEEDBACK INSTRUMENTS

Curtis D. Curry

ulti-rater feedback, more commonly known as 360-degree feedback, is Moften used by organizations to help their managers identify leadership strengths and development areas. Multi-rater feedback instruments are designed to solicit feedback on a number of characteristics, skills, and behaviors believed to represent effective management, teamwork, or leadership practices. Examples of competencies include decision making, initiative, communication, and delegation. There are many applications for multi-rater feedback. Common uses include assisting in career development, identifying gaps in perception of effective leadership performance between self, leader, peers, and direct reports, and enhancing manager and employee self-awareness. They are also used for improving communication and enhancing organizational efforts to involve employees. Using multi-rater feedback for these purposes can encourage behaviors and attitudes that reinforce the organization’s values and the strategic focus, while serving as a vehicle to promote the continuous growth and development of its leaders. The primary purpose of multi-rater feedback is to provide an individual with extensive feedback on his or her skills, knowledge, or performance from a group of individual raters who are familiar with his or her work. The raters generally include the individual’s employees, peers, and supervisor. This “360-degree” view helps people understand relative strengths and developmental areas both as they

7 8 The Encyclopedia of Human Resource Management: Volume One

perceives them and as others who have been selected to participate in the process perceive them. The process allows leaders to compare and contrast their view of their own effectiveness with the views of supervisors, peers, and employees. Such feedback helps the participant explore the concept “perception is reality” and determine how closely aligned the other individual perceptions are with his own. Chappelow (1998) summarizes the purpose of multi-rater feedback: “a structured method of collecting and processing data, and an opportunity to reﬂ ect on this valuable information. It may be the only time some leaders ever consciously stop to take stock of their performance effectiveness” (p. 35).

How Does It Work?

Multi-rater feedback surveys contain a number of questions, or items, that solicit feedback on the other person’s performance. The items are grouped under speciﬁ c scales, which usually represent competency areas such as those mentioned above. In implementing 360-degree programs, organizations choose individuals who will participate in the process. These participants complete the survey instrument and rate themselves on such topics as leadership effectiveness, typically responding to items on a scale. They evaluate their performance on each of the items that appear on the speciﬁ c survey. Additionally, the organization or the individual chooses raters from a pool of those who are familiar with the his or her work. The raters are asked to complete the instrument, responding to the same items, and providing valuable feedback on the individual’s performance. Most 360-degree assessments require a minimum of three raters from each peer and employee rater group. This is done in an effort to achieve anonymity. Research has shown that this is an important practice since raters will generally score an individual higher if anonymity is not guaranteed (Chappelow, 1998). One of the primary values of 360-degree feedback is the ability of the person being evaluated to consider many different perspectives on his or her performance. By guaranteeing anonymity, the person is more likely to receive constructive feedback. This is especially true for subordinates and peers, as most 360-degree feedback instruments do not guarantee anonymity for the supervisor of the individual being rated. The superiors’ and supervisor’s ratings are generally not anonymous, because people who are requesting the feedback are encouraged to discuss their feedback with their supervisors. Moreover, it is most common for people who complete a survey to have only one supervisor, although in matrix organizations feedback from several supervisors is not uncommon. Multi-Rater (360-Degree) Feedback Instruments 9

Conﬁ dentiality is an important consideration in implementing 360-degree feedback programs. When the focus of 360-degree assessment is placed on leadership development and conﬁ dentiality of results is assured, what Chappelow has called a “shield of objectivity” is created (1998). This “shield of objectivity” increases the validity of the responses. While participants in 360-degree survey programs are encouraged to share general trends in their feedback with their supervisors, when coupled with anonymity of respondents, the “shield of objectivity” helps participants receive more accurate, and therefore more useful feedback. Participating in a multi-rater feedback process gives an individual the opportunity to carefully consider perceptions of his or her strengths and potential developmental areas on a number of competencies, seen as critical for effective performance. Therefore, the person also has an opportunity to compare his or her self-perceptions with those of peers, direct reports, and managers on the very same competencies. This enables him or her to weigh the various perceptions, identify relative strengths and developmental areas, choose gaps in current behaviors and skills, and consider strategies to leverage existing strengths or develop new skills to bridge the gaps. This is accomplished through goal setting and action planning. Multi-rater feedback has extremely limited value if the participant does not put the information to work.

Pitfalls with 360-Degree Feedback

In addition to leadership development, other uses of multi-rater feedback include selection, promotion, and performance evaluation. Uses other than development are referred to as administrative uses. Practitioners and researchers alike (Chappelow 1998; Smither, London, & Reilly, 2005) advise against using multi-rater feedback for purposes other than leadership development. Smither, London, & Reilly (2005) note that such use may create a “prevention focus” that can lead participants to a reactive, avoiding-type goal orientation (p. 53). Using multi-rater feedback for administrative purposes also increases rater bias as individuals strive to avoid torpedoing the career of the person they are evaluating and rate people more leniently (Chappelow, 1998). In their excellent book on choosing multi-rater feedback instruments, Velsor, Leslie, and Fleenor (1997) also argue that 360-degree feedback instruments should be used only in the context of development: “An individual or organization planning to use an instrument of this sort for selection, promotion, pay, or performance purposes is in treacherous territory and will need to become aware of the relevant professional standards (SIOP, 1987) and government guidelines (Mohrman, Resnick-West, & Lawler, 1990), which are not covered in this report” (p. 18). 10 The Encyclopedia of Human Resource Management: Volume One

Another pitfall in using 360-degree feedback tools effectively includes not carefully selecting the right instrument for the organization’s needs. One instrument is unlikely to fi ll all an organization’s needs with different management groups and levels. Instruments should be chosen with the actual behaviors, knowledge, and skills of the specifi c target group in mind. Finally, the instrument’s validity and reliability should also be taken into account. Does the instrument measure accurately the behaviors it purports to provide feedback on? How reliably or consistently does it do so? Some surveys, such as the Center for Creative Leadership’s Benchmarks, are developed using rigorous validation procedures. Other 360-degree surveys are created by consultants or human resources professionals within the organization. Typically, these surveys are customized to address specifi c behaviors that the organization views as critical to its success in the marketplace. While they offer customization and specifi c targeting of leadership competencies, such instruments often suffer from inferior validity and reliability. If 360-degree feedback surveys are not carefully designed and validated to measure target competencies, the feedback may be marginally useful at best. Velsor, Leslie, and Fleenor (1997) offers a step-by-step guide to choosing the appropriate 360-degree feedback instrument to meet an organization’s specifi c needs.

Best Practices in Using 360-Degree Feedback

When utilized in the context of leadership development, 360-degree has been shown to improve performance, as well as serve as a catalyst to behavioral changes (Bradley, Allen, Hamilton, & Filgo, 2006; Chappelow 1998; Green, 2002; Smither, London, & Reilly, 2005). While multi-rater feedback can help leaders identify strengths and developmental areas and increase their self-awareness, there are a number of practices that can further increase its value to an organization. The following are the top eight best practices for implementing a 360-degree feedback effort:

1. Clearly communicate the purpose of using 360-degree assessment to participants and their leaders before, during, and after the program. The focus should be on development rather than evaluation. 2. Use trained facilitators who demonstrate a command of both the 360-degree process, and the speciﬁ c instrument and its target competencies, to present the results. 3. Consider combining the 360-degree feedback process with training to increase self-awareness of strengths and developmental areas. A management development workshop can be an ideal vehicle for presenting an overview of the Multi-Rater (360-Degree) Feedback Instruments 11

360-degree process, describing the instrument and how it is designed and scored, and delivering the feedback results. 4. Make sure participants create a development plan based on the feedback with SMART (speciﬁ c, measurable, attainable, relevant, and time-bound) goals. Many 360-degree instruments include developmental guides or workbooks that provide a step-by-step process for setting and achieving developmental goals. These generally feature developmental activities such as on-the-job assignments, other developmental assignments, and training. 5. Encourage participants to share the feedback with their leaders, peers, and employees. At a minimum, participants should be encouraged to thank their raters for taking time to complete the instruments and to indicate that they will be using the feedback to continue developing their skills and abilities. Leaders also may wish to meet with their employees, sharing general areas scored as strengths, as well as general areas the leader has chosen to continue to develop as a result of their feedback. The participant should also meet one-on-one with his or her leader to discuss the general areas of strengths and potential developmental areas. 6. Organizations should maintain peer and employee conﬁ dentiality to ensure the integrity of the process. 7. The organization should use multiple administrations to provide feedback on participants’ improvement in areas targeted for development. 8. Individual coaching can increase the value of 360-degree interventions. A skilled coach who is knowledgeable in the instrument can provide additional interpretive feedback that the participant may miss, as well as assistance in setting and achieving developmental goals.

Supervisor, employee, and especially peer, feedback has been shown to help individual participants improve their performance when combined with other development efforts such as those outlined above.

References

Bradley, T., Allen, J., Hamilton, S., & Filgo, S. (2006). Leadership perception: Analysis of 360-degree feedback. Performance Improvement Quarterly, 19(1), 7–33. Chappelow, C.D. (1998). 360-degree feedback. In C.D. McCauley, R. Moxley, & E. Van Velsor (Eds.), The handbook for leadership development. San Francisco: Jossey-Bass. Green, B. (2002). Listening to leaders: Feedback on 360-degree feedback one year later. Organizational Development Journal, 20(1), 8–16. Mohrman, A.M., Jr., Resnick-West, S.M., & Lawler, E., III (1990). Designing performance appraisal systems. San Francisco: Jossey-Bass. 12 The Encyclopedia of Human Resource Management: Volume One

Rogers, E., Rogers, C., & Metlay, W. (2002). Improving the payoff from 360-degree feedback. Human Resource Planning, 25(3), 44–54. Smither, J., London, M., & Reilly, R.R. (2005). Does performance improve following multisource feedback? A theoretical model, meta-analysis, and review of empirical ﬁ n d i n g s . Personnel Psychology, 58, 33–66. Tyson, S., & Ward, P. (2004). The use of 360-degree feedback technique in the evaluation of management development. Management Learning, 35(2), 205–223. Velsor, E.V., Leslie, J., & Fleenor, J. (1997). Choosing 360: A guide to evaluating multi-rater feedback instruments for management development. Greensboro, NC: Center for Creative Leadership. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 3

ACTION LEARNING

Yongho Park

n a modern competitive environment, organizations must be prepared to face Ivarious challenges, including fi nding new business opportunities, solving problems, establishing a shared vision of the future, and working toward achieving goals. Also, individuals have developmental needs to enhance their skills and knowledge. One method for coping with these two different needs can be action learning. Action learning is a real-time learning experience that is carried out with two equally important purposes—meeting an organizational need and developing group or individuals (Rothwell, 1999). Since its inception, action learning has infl uenced businesspeople, teachers, students, scientists, and a wide range of others with its approach to various level of learning including organizational, team, and individual (Waddill, Banks, & Marsh, 2010). The term “action learning” has been defi ned very differently by various people, and many different training and learning interventions have been labeled with this term during the last two decades. The founder of action learning, Reg Revans (1982), defi ned action learning as “a means of development, intellectual, emotional, or physical, that requires its subjects, through responsible involvement in some real, complex, and stressful problem, to achieve intended change to improve observable behavior henceforth in the problem fi eld.” Pedler (1991) regarded action learning as an approach to the individuals’ development in an organization and as the vehicle for learning, while McGill and Beaty (2001) defi ned it as a continuous process of learning and refl ection, which are supported by many of their

13 14 The Encyclopedia of Human Resource Management: Volume One

colleagues. Today, action learning is considered as both a process and a developmental program to improve favorable behaviors. Based on these trends, therefore, Marquardt (1999) described action learning as both a powerful program and a process that involves a small group of people solving real problems while focusing on what they are learning and the benefi ts from that learning at the same. From these defi nitions, it is apparent that certain principles are common to action learning. Also, some basic principles distinguish action learning from other forms of experience-based learning. Its foundation is working in small groups in order to take action on meaningful problems while seeking to learn from having taken this action (Yorks, O’Neil, & Marsick, 1999). The basic two concepts of action learning, action and learning, especially need to be fully understood to concrete the concept of action learning more specifi cally (Yeo & Nation, 2010). Action learning is basically learning through action, where “action” is related to the behavior that each member of a group takes on his or her own issue after refl ection with the group, and “learning” is the process of refl ection. That is, the opportunity to refl ect on an experience with the support of others followed by action means that set members engage in learning from experience in order to change rather than simply repeat previous patterns (McGill & Beaty, 2001).

Components of an Action Learning Program

The success and effectiveness of action learning rely on the cooperative interaction of elements. Weinstein (1999) discussed six main elements of action learning: (1) the set—the small group of ﬁ ve or six people who meet regularly to work together in a supportive yet challenging way; (2) the learning vehicle—the work- focused, real-time projects or tasks that each person focuses on; (3) the processes the set adopts when working—each person has his or her own “airspace,” in which to work on the project; (4) a set adviser—who helps the group as it works and learns; (5) the duration of a program—normally three to six months; and (6) the emphasis on learning—which emerges both from working on the projects and from working in the set. Weinstein discussed that the emphasis throughout the action learning is as much on achieving visible results as on learning from everything that takes place around the set. Marquardt (1999, 2004) also identiﬁ ed six action learning components. Some elements of those six are very similar to Weinstein. For example, “the set” of Weinstein’s analysis is “the group” in Marquardt’s elements. However, his analysis of action learning components is built around a problem, including project, challenge, issue, or task, and that is different from Weinstein’s framework. Action Learning 15

Marquardt’s framework for action learning elements is globally regarded as the most comprehensive approach., which includes the following elements: (1) a problem should be signifi cant, be within the responsibility of the team, and provide opportunity for learning; (2) the group is composed of four to eight individuals who examine an organizational problem that has no easily identifi able solution; (3) action learning tackles problems through a process involving asking questions to clarify the exact nature of the problem, and then refl ecting possible solutions prior to taking action; (4) members of the action learning group have to have the resolution to take action or be assured that their recommendations will be implemented because there is no real learning unless action is taken; (5) action learning places equal emphasis on accomplishing the task and on the learning of individuals and organizations (the commitment to learning); and (6) the facilitator is important in helping the group members refl ect both on what they are learning and on how they are solving problems. Marquardt suggested that interweaving these six components is valuable and necessary in creating the optimum capacity of action learning.

Key Steps in the Action Learning Model

Many action learning models have been suggested during the last few decades. These models share several common characteristics. Rothwell (1999) suggested one model depicting the following key steps:

• Step 1. Recognize a situation suitable for action learning. To be most effective, action learning should be used only when a genuine business or organizational need exists. • Step 2. Select and organize an action learning team. Appropriate members of an action learning team have to be chosen for the team to be successful. • Step 3. Brief the team and establish constraints. Team members have to be given information about the issue, situation, or problem. Also, team members must have some sense of the limits on their search. • Step 4. Facilitate team interaction. In the action learning team, to function cohesively is a key to success and to the development of individual members, who learn from each other. • Step 5. Empower a team to identify and experiment with solutions. To achieve this purpose, the team members must be empowered to take action. • Step 6. Evaluate results. Team members set the parameters for the solution, so it is often worthwhile to give them the responsibility to assess how well that solution has worked. 16 The Encyclopedia of Human Resource Management: Volume One

• Step 7. Set future directions. Action learning team members propose solutions, experiment with them, and are disbanded when an acceptable solution or a constraint is reached. An organization adopting action learning can obtain benefi ts in various ways. Action learning is undertaken to achieve the goals of an organizations and individuals, and the needs of organizations and individuals can be met by action learning. Dotlich and Noel (1998) identifi ed three types of action learning. Each type is related to the some benefi ts for organizations and individuals. That is, they discussed that action learning can be used as (1) a mechanism for cultural change, (2) a mechanism for developing people faster and better, and (3) a tool for raising revenue or cutting costs. These three types of action learning indicate that an organization can stand to benefi t from action learning on cultural change, individuals’ development, and business profi t. With regard to the benefi ts for the organization, Rothwell (1999) also more specifi cally listed the following fi ve: (1) increased creativity, (2) increased ownership, (3) increased willingness to take risks for improvement, (4) increased interaction among the organization’s parts, and (5) improved morale and work satisfaction.

References

Dotlich, D.L., & Noel, J. (1998). Action learning: How the world’s top companies are re-creating their leaders and themselves. San Francisco: Jossey-Bass. Marquardt, M.J. (1999). Action leaning in action: Transforming problems and people for world-class organizational learning. Palo Alto, CA: Davies-Black. Marquardt, M.J. (2004). Optimizing the power of action learning. Palo Alto, CA: Davis-Black. McGill, I., & Beaty, L. (2001). Action learning: A guide for professional, management & educational development. Sterling, VA: Stylus. Pedler, M. (1991). Question ourselves. In M. Pedler (Ed.), Action learning in practice (2nd ed., pp. 63–70). Brookfi eld, VT: Gower. Revans, R.W. (1982). The origin and growth of action learning. London: Chartwell Bratt. Rothwell, W.J. (1999). The action learning guidebook: A real-time strategy for problem solving, training design, and employee development. San Francisco: Jossey-Bass. Waddill, D., Banks, S., & Marsh, C. (2010). The future of action learning. Advances in Developing Human Resources, 12(2), 260–279. Weinstein, K. (1999). Action learning: A practical guide (2nd ed.). Brookfi eld, VT: Gower. Yeo, R.K., & Nation, U.E. (2010). Optimizing the action in action learning: Urgent problems, diversifi ed group membership, and commitment to action. Advances in Developing Human Resources, 12(2), 181–204. Yorks, L., O’Neil, J., & Marsick, V.J. (1999). Action learning: Theoretical bases and varieties of practice. Advances in Developing Human Resources, 2, 1–18.

Websites www.gwu.edu/~bygeorge/021804/actionlearning.html www.humtech.com/opm/grtl/ols/ols2.cfm The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 4

AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967 (ADEA)

Katy Lynn Wilson

Importance of ADEA

In 1964, Title VII of the Civil Rights Act was enacted into law by the U.S. Congress to prohibit discrimination in the workplace based on race, religion, gender, or national origin. However, the act did not address discrimination based on age, and older Americans still struggled against inequities in the workplace. Some of the disadvantages and difﬁ culties older Americans faced included obtaining and keeping employment, mandatory retirement, and employers imposing age limits for positions regardless of candidate abilities. To address this persisting discrimination, Congress passed the Age Discrimination in Employment Act (ADEA) in 1967 to prohibit discrimination against employees age forty and older in the workplace. Recent statistics indicate that over half of our current workforce is protected under ADEA, giving it a very broad reach. However, according to the EEOC’s litigation statistics, ADEA claims account for only 9 percent of all discrimination suits ﬁ led.

17 18 The Encyclopedia of Human Resource Management: Volume One

ADEA Coverage

The ADEA covers U.S. citizens and foreign nationals (who are authorized to work in the United States) who are forty years of age or older and employees or job applicants of the following types of employers:

• Private employers with more than twenty employees who work all business days in at least twenty weeks in the current or preceding calendar year; • Labor organizations; • Employment agencies; • State and local governments; • Multinational companies operating in the United States (unless otherwise covered by separate international agreement or treaty); and • Companies operating in other countries but based in, incorporated in, or controlled by a company in the United States (unless otherwise covered by laws in the other country).

It is important to note that the ADEA allows an employer to favor an older worker over a younger one, even if that younger worker is age forty or older. However, if an employer favors a younger worker protected by the ADEA over an older worker also protected, that employer is in violation of the ADEA.

ADEA Protections

The ADEA prohibits employers from discriminating against protected employees or job applicants in respect to all terms, conditions, and privileges of employment, including (but not limited to): hiring, transfers, promotions, terminations, layoffs, classiﬁ cations, compensation/beneﬁ ts, apprenticeships, and training programs. The act also prevents employers from harassing protected employees and creating hostile work environments as well as from retaliating against protected employees who claim age discrimination.

ADEA Exceptions

While the ADEA was enacted to protect older employees in the workplace, legis- lators did recognize that some exceptions to this protection were needed. These exceptions include:

• Bona Fide Seniority Systems—having a seniority system that rewards employees with longer tenure, even if they are not over the age of forty. Age Discrimination in Employment Act of 1967 19

• Bona Fide Occupational Qualifi cation (BFOQ)—a BFOQ exists if employees over a certain age would be unable to perform the essential job functions and there are no less discriminatory alternatives available. • Bona Fide Employee Benefi t Plans—plans that allow employers to provide benefi ts to both younger and older workers at equal costs, even if this results in lesser benefi ts for the older workers, as long as the plan is provided in writing to all employees. • Firefi ghters and Law Enforcement Offi cers—governments can impose mandatory retirement ages (fi fty-fi ve or older) on these workers. This is an exception to the 1986 amendment eliminating mandatory retirement ages. • Bona Fide Executives and High Policy Makers—Organizations can require executives to retire at age sixty-fi ve as long as they have worked in an executive/ policy making position for the previous two years and will be able to collect at least $44,000 a year in benefi ts. This age limit can vary according to state law.

ADEA Compliance and Penalties

The ADEA lists specifi c penalties for any employer found in violation of the outlined protections. These penalties can include payment of lost wages/benefi ts, liquidated damages, court costs, and attorney’s fees. Courts may also require that employers reinstate employees or pay them for any future earnings the employer may have cost that employee with the discriminatory action. The ADEA also outlines how a covered employer must maintain compliance with the provisions. Covered employers are required to post ADEA notices in prominent and accessible locations for both employees and potential applicants. They must also maintain employment records for a period of three years, which should include name, address, birth date, job title, and pay rate. Employers must keep records of benefi t and seniority plans for one year after the plans expire. Employers are also required to keep records of all employment actions for one year after the action occurs. ADEA outlines that an employer must have a valid reason completely unrelated to age for any employment decision.

ADEA Amendments

There have been amendments to the ADEA that further the initial protections described in the statute. ADEA’s original verbiage provided protections only to workers between the ages of forty-ﬁ ve and sixty-ﬁ ve. This age restriction was continuously extended until the maximum age limit was ultimately removed in 1987. 20 The Encyclopedia of Human Resource Management: Volume One

One important amendment is the Older Workers Benefit Protection Act passed in 1990, which protects employees (ages forty or over) from being denied benefi ts due to their age. Prior to this amendment, it was not uncommon for employers to make discriminatory hiring decisions based on the fact that it would cost more to provide benefi ts to an older worker than to a younger worker, moving them to focus on hiring only younger workers. With this amendment, employers are only permitted to utilize age-based distinctions in regard to benefi ts if those distinctions are cost justifi ed. This means that an employer is able to pay the same amount for benefi ts to both older and younger workers, even if this means the older worker receives fewer benefi ts (as the costs are the same). One important feature of the OWBPA is information regarding release agreements. During a reduction in force, employers will ask that the affected employees sign a waiver of liability prior to distributing severance. The OWBPA requires employers to ensure those waivers are written clearly and understandably and include the employee’s rights and potential claims under the statute. These releases must advise employees to seek legal advice and give employees twenty-one days to return them (forty- fi ve days if it’s a group of affected employees) as well as seven days to rescind the signed release after its return. These stipulations give employees more protection and provide all the necessary information regarding their rights.

ADEA Enforcement

The EEOC maintains responsibility for enforcing ADEA. The EEOC has authority to initiate their own investigations into ADEA violations, negotiate with employers directly, and fi le lawsuits. Employees and job applicants can fi le charges against employers within 180 days from the discriminatory act (unless otherwise extended to three hundred days by state laws). Once a charge is received, the EEOC will immediately dismiss the claim or notify the employer and proceed to investigate the claim to determine whether discrimination occurred. The EEOC may require claimants to submit documentation (statement of position, requests for information) or conduct onsite visits/ interviews before they make a determination, which can, on average, take up to six months. If the EEOC fi nds no reason to believe discrimination has occurred, they will issue a “dismissal” along with a “notice of rights” to the employee who fi led the charge. They will send a “letter of determination” when they fi nd that discrimination most likely occurred, which will initiate the conciliation process. The conciliation process is voluntary and is a way to informally resolve an issue by allowing negotiations. If the conciliation process is unsuccessful, the EEOC will send the “right to sue” letter to the claimant. The claimant would then have ninety days from receipt of that letter to fi le a lawsuit. The ADEA allows for jury Age Discrimination in Employment Act of 1967 21

trials and for damages awarded by those juries to be doubled in cases involving intentional violations (known as disparate treatment). While the EEOC has the right to review and investigate claims, issue “reasonable cause” fi ndings, and “right to sue” letters, they have no authority to give a fi nal judgment on a claim or dictate fi nancial penalties. These judgments and fi nancial penalty determinations are reserved for the courts. Before a court can fi nd in favor of a claimant, the claimant must prove that he or she is within the protected age bracket and was, in fact, denied a benefi t or discharged while he or she was meeting the outlined expectations of the position at the time the discriminatory act took place. With the recent ruling in Gross vs. FPL Financial Services, it is stipulated that claimants are required to show a “preponderance of evidence” that age was the reason for the employer’s action in an ADEA claim. This ruling makes it signifi cantly more diffi cult to bring forth and win a charge against an employer under the ADEA than it would for a charge under Title VII. Unlike Title VII, the ADEA has no inclusion for “mixed-motive” cases (cases in which the employer used both legal and discriminatory reasons for an employment decision) to move the burden of proof to the employer when there may be mixed motives. This means the burden of proving age was the primary reason for the employment decision and providing evidence of such lies with the employee, and this is a higher standard than set in Title VII.

Related Employment Law Cases

In order to develop a true understanding of the ADEA, it’s important to understand how the law is interpreted by the U.S. judicial system. Below is a sample of recent court cases that have been ﬁ led under ADEA.

O’Connor vs. Consolidated Coin Caterers (1996) James O’Connor, fifty-six, filed suit under the ADEA against his previous employer, Consolidated Coin Caterers Corp., alleging prima facie discrimination after he was replaced by a forty-year-old employee. The Supreme Court stated that the ADEA provides protection to employees based on age and not their place within that age bracket. So it did not matter whether both employees were protected by the ADEA, only that the employment decision was based on age (www .oyez.org/cases/1990–1999/1995/1995_95_354).

Reeves vs. Sanders Plumbing Products (2000) Roger Reeves, ﬁ fty-seven, sued his former employer, Sanders Plumbing, under the ADEA claiming they terminated his employment due to his age, even though 22 The Encyclopedia of Human Resource Management: Volume One

the company stated it was because Reeves failed to maintain records accurately. Reeves showed evidence of his accurate records and the Supreme Court ruled in favor of Reeves. They indicated that if an employee provides adequate evidence to disprove an employer’s reason for a questionable employment decision, then that evidence would be adequate to ﬁ nd the employer liable for discrimination under the ADEA (www.oyez.org/cases/1990–1999/1999/1999_99_536).

General Dynamics Land vs. Cline (2004) Paul Cline, a forty-eight-year-old union member working for General Dynamics Land, fi led against his employer under the ADEA after they renegotiated a union contract to only provide full medical benefi ts to retirees over the age of fi fty by July 1, 1997. Cline indicated this was “reverse discrimination,” as it gave older workers preferential treatment over younger workers also covered by ADEA. The Supreme Court indicated the ADEA was enacted for the explicit purpose of protecting older workers over younger ones, even if those younger employees are also over the age of forty. Because this contract benefi ted older workers, the court found in favor of the company (www.oyez.org/cases/2000–2009/2003/2003_02_1080).

Smith vs. City of Jackson, Mississippi (2005) Azel Smith and his co-workers sued the Jackson, Mississippi, Police Department under the ADEA after a new salary plan was initiated. Smith contended that the salary plan offered larger raises to offi cers with fewer than fi ve years of tenure, which had a disparate impact (unintentionally discriminatory) on older workers, as the majority of that protected class had more than fi ve years of tenure. This case marked the fi rst time the Supreme Court recognized disparate impact claims under the ADEA. Despite this authorization, the court ruled in favor of the City, indicating the plan was based on valid material unrelated to age (www.oyez.org/ cases/2000–2009/2004/2004_03_1160).

Gross vs. FBL Financial Services (2008) Jack Gross sued FBL under the ADEA, contending that they demoted him based on his age and the Federal District Court in Iowa agreed and awarded him $46,945. However, upon appeal, the Supreme Court ruled that, for a “mixed motive” case under the ADEA, the burden of proof should not shift to the employer and held that the employee must provide a “preponderance of evidence” that age was the reason for the employer’s action (known as “but-for” cause) (http://oyez.org/cases/2000–2009/2008/2008_08_441). Age Discrimination in Employment Act of 1967 23

Related Topics Equal Employment Opportunity Commission Older Workers Beneﬁ t Protection Act (OWBPA) State Laws Prohibiting Age Discrimination in Employment Title VII of the Civil Rights Act

References

Baiocchi, L. (2009). “But for?” What for? SHRM Online. Retrieved July 20, 2009, from www .shrm.org/LegalIssues/FederalResources/Pages/StandardofProof.aspx. Deschenaux, J. (2009). EEOC focuses on age discrimination. SHRM Online. Retrieved July 20, 2009, from www.shrm.org/LegalIssues/FederalResources/Pages/ EEOCAgeDiscrimination.aspx Grossman, R.J. (2008). Older workers: Running to the courthouse? HR Magazine, 53(6). Guerin, L., & DelPo, A. (2006). The essential guide to federal employment laws. Berkeley, CA: Nolo. Oyez–U.S. Supreme Court Media. (2009). Retrieved July 20, 2009, from www.oyez.org/ search/apachesolr_search/adea. Repa, B.K. (2007). Your rights in the workplace (8th ed.). Berkeley, CA: Nolo. SHRM. (2007). Module 2: Workforce planning and employment. Alexandria, VA: Author. U.S. Equal Employment Opportunity Commission. (2009). The Age Discrimination in Employment Act of 1967. Retrieved July 20, 2009, from www.eeoc.gov/ Walsh, J. (1995). Mastering diversity—Managing for success under ADA and other anti-discrimination laws. Santa Monica, CA: Merritt. Wolkinson, B. (2008). Employment law: The workplace rights of employees and employers (2nd ed.). Malden, MA: Blackwell.

Websites www.bls.org (US Bureau of Labor Statistics) www.eeoc.gov/types/age.html (Equal Employment Opportunity Commission) www.oyez.org (The Oyez Project—access to case law summary information) www.shrm.org (Society for Human Resource Management) The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 5

ADVERSE IMPACT

Kyle E. Brink

itle VII of the Civil Rights Act of 1964 prohibits employment discrimina- Ttion on the basis of race, color, religion, sex, and national origin. The Equal Employment Opportunity Commission (EEOC) is the federal agency responsible for the enforcement of Title VII. The EEOC, jointly with other federal agencies, established the Uniform Guidelines on Employee Selection Procedures in 1978 and a questions and answers document to help interpret these guidelines in 1979. Together, these two documents are more conveniently referred to as the Uniform Guidelines or UGESP and they serve as a set of guidelines to follow for ensuring compliance with Title VII. The Uniform Guidelines deﬁ ne adverse impact as “a substantially different rate of selection in hiring, promotion, or other employment decision which works to the disadvantage of members of a race, sex, or ethnic group” (Uniform Guidelines Question 10). The Uniform Guidelines and adverse impact are most frequently discussed with respect to hiring or promoting employees, but they apply to virtually any employment decision that impacts one’s job standing (see Uniform Guidelines Section 2B and Question 6).

Implications of Adverse Impact

Adverse impact is generally the ﬁ rst step in establishing prima facie evidence of disparate impact, or unintentional discrimination, under Title VII. The burden is on the plaintiff to show that an employment decision adversely impacted a

24 Adverse Impact 25

protected group. The fi nding of adverse impact shifts the burden of proof to the defendant and would require the employing organization to defend the employment decision in question by providing evidence that the process used to make the decision was valid. According to the Uniform Guidelines (Section 3A), once a plaintiff provides evidence of adverse impact, the defendant’s practice is considered to be discriminatory unless suffi cient validity evidence is provided. The Uniform Guidelines apply to almost all organizations that employ fi fteen or more employees (see Question 3). Employers should ensure they are familiar with the concept of adverse impact because, due to a number of complex factors, adverse impact is common in employment selection decisions. In 2010, there were over seventy-three thousand discrimination charges fi led under Title VII. Not all discrimination charges are disparate impact claims based on adverse impact. Even though the number of disparate impact charges is likely far less than the total number of charges, adverse impact is a frequent occurrence. Monetary benefi ts paid out for Title VII charges in 2010 exceeded $229 million. The monetary benefi ts do not include costs incurred or benefi ts obtained through further litigation. Therefore, the monetary impact is likely far greater than the benefi ts paid. Discrimination charge statistics are made available by the EEOC on their website (www.eeoc.gov). Adverse impact is not a property of a test or selection procedure. Rather, it is an analysis of the results of employment decisions that may be infl uenced, in part, by test properties, test results, or other factors (for example, number of vacancies, seniority, performance ratings, or budgetary constraints). Adverse impact could result from the use of unfair, biased, discriminatory, or unlawful procedures. However, adverse impact could also result from true differences between groups on a relevant, job-related characteristic. Therefore, in absence of further information, adverse impact should be regarded as a neutral term. Nevertheless, the fi nding of adverse impact is enough to trigger an investigation that could ultimately be very costly and could tarnish an organization’s reputation.

Methods of Determining Adverse Impact

4/5ths Rule and Impact Ratio Adverse impact can be determined using several different methods. The most common and simplest method of calculating adverse impact is by using the 4/5ths rule (also known as the four-ﬁ fths rule or the 80 percent rule). The 4/5ths rule computes an impact ratio according to the four steps shown below (see Question 12 of the Uniform Guidelines): 26 The Encyclopedia of Human Resource Management: Volume One

1. Calculate the selection rate for each protected group (for example, female and male groups or black, Hispanic, and white race groups). The selection rate is equal to the total number of applicants within the group that are selected, divided by the total number of applicants within that group. For example, if eighty-nine applicants applied for a job, thirty-two of the applicants were female, and eight females were hired, the selection rate for the female group would be .25 (or 25 percent; 8/32 = .25). 2. Observe which group has the highest selection rate. 3. Calculate the impact ratio by dividing the selection rate for each group by the selection rate of the group with the highest selection rate. Selection rates should be compared for groups within a demographic variable (for example, male versus female or black versus white), but not across demographic variables (that is, do not compare male to black or white female to black male). 4. Determine whether the selection rates are substantially different; that is, is the impact ratio less than .80? In most circumstances, if the impact ratio is less than .80 then this indicates adverse impact.

The Uniform Guidelines indicate that the 4/5ths rule is the preferred method for determining adverse impact (see Questions 18, 23, and 24) unless samples are very small, small (see Questions 20 and 21, respectively), or large (see Questions 20 and 22). When samples are large, smaller differences in selection rates (that is, impact ratios greater than .80) may still constitute adverse impact if statistical tests of adverse impact are statistically and practically signiﬁ cant (see Questions 20 and 22).

N-of-1 Rule When samples are small, a change of only a few individuals could result in different adverse impact outcomes. The N-of-1 rule (or fl ip-fl op rule; see the Uniform Guidelines Question 21 and Roth, Bobko, & Switzer, 2006) is a practical test of adverse impact that can be used to determine the extent to which adverse impact is a result of fl uctuations due to small samples. The N-of-1 rule calculates an adjusted impact ratio assuming one more person from the minority group (where minority refers to the group with the lowest selection rate) and one less person from the majority group were selected (and consequently one less minority and one more majority were not selected). If the resulting selection rates are such that the minority selection rate is now larger than the majority selection rate, then selection rate differences (that is, an unadjusted impact ratio less than .80) may be attributed to the small sample size. Adverse Impact 27

Statistical Signifi cance Tests Tests of statistical signifi cance are also used to determine adverse impact. The pooled two-sample Z-score test (also known as the Z-test of the difference in selection rates [abbreviated ZD] or the two standard deviation test [abbreviated 2-SD]) is the statistical test recommended by the Offi ce of Federal Contract Compliance Programs (OFCCP, 1993). The Pearson chi-square test of association is also used for determining adverse impact. In fact, when analyzing a 2 x 2 contingency table, the chi-square test is mathematically equivalent to the pooled two-sample Z-score test (Moore & McCabe, 1993). Analyses of adverse impact typically analyze 2 x 2 contingency tables. A 2 x 2 contingency table is an analysis of two qualitative variables, each of which has two levels. For example, the two variables may be sex (with two levels: male vs. female) and decision outcome (with two levels: selected vs. not selected). Therefore, the ZD and chi-square tests should be regarded as identical tests for most adverse impact analyses. The OFCCP recommends using the Fisher’s exact test when sample sizes are small. However, Collins and Morris (2008) have shown that the chi-square test holds up well under conditions of small samples. They also show that Fisher’s exact test is overly conservative under these conditions. It essentially eliminates the possibility of Type I error (the probability of erroneously concluding that adverse impact exists when it does not) but does so at the expense of lower power (the probability of correctly concluding that adverse impact exists) and a higher probability of Type II error (the probability of erroneously concluding that adverse impact does not exist when it does). Collins and Morris concluded that the chi- square test may be more appropriate than Fisher’s exact test. A more recently developed statistical test for determining adverse impact is the Z-test of the ratio of selection rates (abbreviated ZIR). The ZIR has the following advantages over the chi-square or ZD tests: (1) the ZIR uses the same effect size comparison as the 4/5ths rule (that is, a selection rate ratio), whereas chi- square uses the difference in selection rates; (2) the ZIR is slightly more powerful than chi-square, especially as the proportion of minorities is smaller; and (3) confi dence intervals can be built around ZIR, allowing for estimates of its precision (Morris & Lobsenz, 2000). Research shows that the ZIR test is more powerful than the chi-square (or ZD) test (Morris & Lobsenz, 2000) and that the chi-square (or ZD) test is more powerful than Fisher’s exact test (Collins & Morris, 2008). Therefore, the ZIR appears to be the better statistical test for determining adverse impact because, given the same level of Type I error, the ZIR is more powerful and less prone to Type II error than the chi-square (or ZD) test or the Fisher’s exact test. 28 The Encyclopedia of Human Resource Management: Volume One

Comparison of Methods for Determining Adverse Impact The impact ratio has several advantages, including (1) it is easy to use and does not require statistical software or training in statistics, (2) it describes the magnitude of the selection rate difference between the groups that are being compared, and (3) it is more powerful than statistical signifi cance tests (Collins & Morris, 2008; Morris, 2001). A disadvantage of the impact ratio is that it is more prone to making a Type I error than statistical signifi cance tests generally are (Collins & Morris, 2008; Roth, Bobko, & Switzer, 2006; see also Ironson, Guion, & Ostrander, 1982; Lawshe, 1987; Morris, 2001; Morris, & Lobsenz, 2000). Type I error is problematic because, if the impact ratio is less than .8, it cannot be certain whether adverse impact truly exists or the result is due to chance. An advantage of statistical signifi cance tests in general, compared to the impact ratio, is that tests of statistical signifi cance can control Type I error via the chosen alpha level. When using a .05 alpha level, if the p-value resulting from the statistical test is less than .05 (indicating a statistically signifi cant difference), then there is less than a 5 percent probability that the difference is due to chance. An alpha level equal to .05 appears to be the level recommended by the Uniform Guidelines (see Question 24) and the OFCCP (1993). One disadvantage of statistical tests, compared to the impact ratio, is that statistical tests only indicate the likelihood that the results are due to chance; they do not describe the magnitude of the selection rate differences. Another disadvantage is that they are less powerful and more prone to Type II error than the impact ratio is, especially when samples sizes are relatively small and less balanced (a balanced sample would be one that has 50 percent minority and 50 percent majority, as well as 50 percent not selected and 50 percent selected). This is problematic because, if a statistical test is not signifi cant, it cannot be certain whether adverse impact truly does not exist or the result is due to chance. The impact ratio and statistical tests do not always indicate the same end result. When sample sizes are smaller (which is often the case in the context of adverse impact calculations), the impact ratio is usually more likely to indicate adverse impact exists than statistical tests are. This often results in defendants arguing that statistical tests are more appropriate and that the impact ratio should be ignored because it is prone to Type I error, whereas plaintiffs will argue that the impact ratio should be used and that statistical tests should be ignored because they have low power and are prone to Type II error. In situations such as this, it is important to consider the strengths and weakness of all methods as well as the probabilities of Type I and Type II errors. It is also important to recognize that, even though the Uniform Guidelines do not mention Type I or Type II errors, the authors were aware of and discussed the issues associated with these types Adverse Impact 29

of errors (for example, see Questions 18 through 24). Despite these issues, the Uniform Guidelines recommend the 4/5ths rule as the preferred method for determining adverse impact in most circumstances.

References

Civil Rights Act of 1964 § 7, 42 U.S.C. § 2000e et seq. Collins, M.W., & Morris, S.B. (2008). Testing for adverse impact when sample size is small. Journal of Applied Psychology, 93, 463–471. Equal Employment Opportunity Commission, Civil Service Commission, Department of Labor, & Department of Justice. (1978). Uniform guidelines on employee selection procedures. Federal Register, 43, 38290–38315. Equal Employment Opportunity Commission, Offi ce of Personnel Management, Department of Justice, Department of Labor, & Department of Treasury. (1979). Adoption of questions and answers to clarify and provide a common interpretation of the uniform guidelines on employee selection procedures. Federal Register, 44, 11996–12009. Ironson, G.H., Guion, R.M., & Ostrander, M. (1982). Adverse impact from a psychometric perspective. Journal of Applied Psychology, 67, 419–432. Lawshe, C.H. (1987). Adverse impact: Is it a viable concept? Professional Psychology Research and Practice, 18, 492–497. Moore, D.S., & McCabe, G.P. (1993). Introduction to the practice of statistics (2nd ed.). New York: W.H. Freeman and Company. Morris, S.B. (2001). Sample size required for adverse impact analysis. Applied HRM Research, 6, 13–32. Morris, S.B., & Lobsenz, R.E. (2000). Signifi cance tests and confi dence intervals for the adverse impact ratio. Personnel Psychology, 53, 89–111. Offi ce of Federal Contract Compliance Programs. (1993). Federal contract compliance manual. Washington, DC: Department of Labor, Employment Standards Administration, Offi ce of Federal Contract Compliance Programs (SUDOC# L 36.8: C 76/1993). Roth, P.L., Bobko, P., & Switzer, F.S., III (2006). Modeling the behavior of the 4/5ths rule for determining adverse impact: Reasons for caution. Journal of Applied Psychology, 91, 507–522. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 6

AFFIRMATIVE ACTION

Wanda M. Costen

oday affi rmative action is a very sensitive and very controversial topic, so it Tis important to fully understand what affi rmative action is, as well as why it was created and how it is implemented. Affi rmative action was created by Executive Order 11246 signed in September 1965. This order is similar to Title VII of the Civil Rights Act of 1964 in that it protects contractor and subcontractor employees from discrimination along the basis of race, color, religion, gender, and national origin. The order states that “affi rmative action, or positive measures, must be taken by covered employers to recruit and advance qualifi ed minorities and women for jobs in which they are underutilized relative to their availability” (Employment Law Information Network, n.d.).

Purpose of Afﬁ rmative Action

Afﬁ rmative action was created in an attempt to overcome past practices that discriminated against members of protected classes (race, color, gender, religion, and national origin). Women, people of color, non-Christians, and non-U.S. citizens have historically not been given the same employment opportunities as those in the majority. Thus, afﬁ rmative action is a practice designed to ensure that

30 Afﬁ rmative Action 31

members of these groups have opportunities for employment and advancement equal to those in the majority.

Components of Afﬁ rmative Action

First and foremost, it is important to remember that affirmative action was designed to right past wrongs. Therefore, affi rmative action must be remedial. This means that affirmative action must address underrepresentation or an imbalance in the workforce. Moreover, affi rmative action is temporary. It is only necessary as long as the imbalance or underrepresentation continues to exist. Finally, affi rmative action also can not infringe upon the rights of non-benefi ciaries (Mastroianni, 2006). Positive measures can include training programs, targeted recruitment, and outreach programs. Moreover, affi rmative action requires that employment decisions be based, at least partially, on race, gender, religion, color, and national origin. However, the employment decision can not be based solely on these characteristics (Gomez-Mejia, Balkin, & Cardy, 2009). Additionally, affi rmative action does not require or encourage organizations to hire unqualifi ed applicants.

Coverage

Executive Order 11246 covers employers with federal contracts in excess of $10,000 in any twelve-month period. Contracts for work outside the United States, which are not performed by employees recruited in the U.S. are exempt, as are contracts related to national interest or national security. Additionally, work performed on Native American reservations is not governed by the Executive Order (Employment Law Information Network, 2006).

Afﬁ rmative Action Plans

Executive Order 11246 also requires contractors and subcontractors with more than fi fty employees and a contract of $50,000 to conduct self-analyses to determiner any barriers to equal employment opportunities. Additionally, these contractors are required to write affi rmative action plans (U.S. Department of Labor, 2011). These plans must be written specifi c to each location and identify the steps the organization is taking to overcome past discriminatory 32 The Encyclopedia of Human Resource Management: Volume One

practices. According to the Ofﬁ ce of Federal Contract Compliance Programs (OFCCP) in the Department of Labor, these plans include (U.S. Department of Labor, 2011):

• Organizational proﬁ le and workforce analysis; • Job group analysis; • Placement of incumbents in job groups; • Determining availability; • Comparing incumbency to availability; • Placement goals; • Responsibility for implementation; • Identifying problem areas; • Action-oriented programs; and • Internal audits.

The organizational profi le and workforce analysis lists each position, its salary or wage, and the relevant demographic criteria (for example, the race and gender of each member of the organization by EEO category). The job group analysis breaks down the organization by job classifi cations (for example, Offi cials and Managers, Professionals, Clerical, Sales, Craft Workers, Laborers, and so forth), and incumbents in each group indicates the demographic composition of the organization in each of these categories. Most organizations use the most recent Census to determine the availability of candidates in these areas by demographic composition. The next section compares the organization’s demographic composition to the availability. Placement goals are established by the organization, and any problem areas are identifi ed and corrective action indicated. The affi rmative action plan also outlines who is responsible for implementing various goals and objectives. Finally, action-oriented programs are presented, as well as the organization’s plan for auditing its performance. Affirmative action plans are not something to be taken lightly. There is plenty of guidance and support available through the OFCCP and the Equal Employment Opportunity Commission.

Afﬁ rmative Action Versus Quotas

Contrary to popular belief, quotas are not really a component of afﬁ rmative action. Quotas are employment criteria imposed by the employer, which requires a “certain number of people from a protected class are hired” (Gomez-Mejia, Balkin, & Cardy, 2009). The Civil Rights Act of 1991 explicitly forbids quotas, Afﬁ rmative Action 33

and only under ﬁ ndings of blatant discrimination have the courts instituted quotas as part of an afﬁ rmative action plan (Gomez-Mejia, Balkin, & Cardy, 2009).

Enforcement Agencies

The OFCCP is responsible for monitoring affi rmative action. This offi ce ensures that organizations that have federal contracts “comply with the law and regulations requiring nondiscrimination and affi rmative action” (U.S. Department of Labor, 2006). The OFCCP receives and reviews affi rmative action plans to ensure organizations are in compliance. The EEOC enforces Title VII of the Civil Rights Act of 1964 and the Civil Rights Act of 1991. It “receives, investigates, and resolves” employment discrimination complaints (U.S. Equal Employment Opportunity Commission, 2011). The EEOC also assists employers with resolving discrimination charges through mediation, settlement, and conciliation (U.S. Equal Employment Opportunity Commission, 2011).

Final Thoughts

Affi rmative action is a very controversial topic today; however, employers are obligated to comply with employment law. It is important to understand what affi rmative action is and is not. Affi rmative action is in place to correct past discrimination against members of protected classes. Unfortunately, there are still incidents that indicate discrimination still exists in the United States. Affi rmative action is a temporary practice designed to give all U.S. citizens equal opportunities for employment and advancement.

References

Executive Order 11246. (n.d.). Retrieved 30 October 2006 from www.elinfonet.com/ 11246sum.php. Gomez-Mejia, L.R., Balkin, D.B., & Cardy, R.L. (2009). Managing human resources. Upper Saddle River, NJ: Pearson Prentice Hall. Mastroianni, P.R. (2006). EEOC staff advisory letter on Title VII: Afﬁ rmative Action. Retrieved 30 October 2006 from www.eeoc.gov/foia/letters/2006/vii_afﬁ rmative_action .html. U.S. Department of Labor. (2006). Retrieved 30 October 2006 from www.dol.gov/esa/ ofccp/index.htm. 34 The Encyclopedia of Human Resource Management: Volume One

U.S. Department of Labor. (2011). Facts on Executive Order 11246-Afﬁ rmative Action. Retrieved 18 April 2011 from www.dol.gov/ofccp/regs/compliance/aa.htm. U.S. Department of Labor. (2011). Sample afﬁ rmative action plan. Retrieved 18 April 2011 from www.dol.gov/ofccp/regs/compliance/pdf/sampleaap.pdf. U.S. Equal Employment Opportunity Commission. (2011). Enforcement and litigation. Retrieved 18 April 2011 from www.eeoc.gov/eeoc/enforcement_litigation.cfm. U.S. Equal Employment Opportunity Commission. (2011). Resolving a charge. Retrieved 18 April 2011 from www.eeoc.gov/employers/resolving.cfm. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 7

AFFIRMATIVE ACTION PLANS

M. Edward Krow

What Is an Afﬁ rmative Action Plan?

An Affi rmative Action Plan (AAP) is a written, results-oriented program in which a federal contractor details the steps it will take to ensure equal employment opportunity. A central premise underlying Affi rmative Action is that, absent discrimination, over time a contractor’s workforce, generally, will refl ect the gender, racial, and ethnic profi le of the labor pools from which the contractor recruits and hires. The contents of an AAP are governed by the Code of Federal Regulations, specifi cally, 41 CFR Parts 60–2, 60–250.5 and 60–741.5. These three documents govern AAPs for minorities and women, the disabled, and veterans.

Determining Federal Contractor Status

There are three conditions under which an organization can be considered a federal contractor for Afﬁ rmative Action purposes. They are

• Prime contractor or first-tier subcontractor with fifty or more employees and $50,000 or more in federal contract revenue during any twelve-month period, or

35 36 The Encyclopedia of Human Resource Management: Volume One

• A depository of government funds in any amount, or • An issuing and paying agent for U.S. savings bonds and savings notes.

An organization that meets any one of these conditions is required to write and implement an AAP for women and minorities. An additional requirement exists for construction contractors. The ﬁ rst bullet, often called the 50/50 rule, applies to all subcontracting construction companies, regardless of their position in the subcontracting hierarchy. An organization is required to develop an AAP for veterans and the disabled if the following criteria are met:

• Contracts, subcontracts, or purchase orders with the federal government worth $10,000 or more, or • Bills of lading of $10,000 or more in twelve months.

An organization may be exempt from written AAP requirements for minorities and women if the following criteria are met:

• Transactions of $10,000 or under, or • Contracts/subcontracts for indeﬁ nite quantities not exceeding $10,000, or • Work outside the United States, or • Contracts with state or local governments, or • Contracts with certain educational institutions, or • Work on or near Indian reservations.

First Steps

The fi rst step is to determine the number of AAPs that may need to be written. To determine this, a contractor must apply the above-mentioned rules to each of its facilities. For each facility that meets the qualifi cations, an AAP must be developed. When implementing this step, organizations may “cluster” several facilities if they are geographically similar and there is one senior executive responsible for the entire workforce at those facilities. Organizations may also seek special permission from the Offi ce of Federal Contract Compliance Programs (OFCCP), to develop their AAP by function. An example would be a nationwide organization that defi nes its AAP by departments instead of locations, such as “Sales and Marketing,” “Production,” “Finance and Accounting,” etc. It must be emphasized that permission is needed directly from the OFCCP prior to writing and implementing a functional AAP. Affi rmative Action Plans 37

AAP Contents

Organizational Profi le/Workforce Analysis The Organizational Profi le is a depiction of a staffi ng pattern in an organization. Also known as a Workforce Analysis, the profi le must include, for each organizational unit:

• The name of the unit; • The job title, gender, race, and ethnicity of the unit supervisor (if one exists); • The total number of male and female incumbents; and • The total number of male and female incumbents in the following groups: blacks, Hispanics, Asians/Paciﬁ c islanders, and American Indians/Alaskan natives.

The wage rate or salary range for each job title must also be given. All job titles must be listed.

Job Group Analysis (JGA) The JGA is a method of combining job titles within the establishment. The jobs must be combined to form jobs groups of similar job duties and wage rates. If contractors have fewer than 150 employees, they may prepare their JGAs using the standard EEO-1 categories. These categories are: Officials & Managers, Professionals, Technicians, Sales, Ofﬁ ce & Clerical, Skilled Workers, Operatives, Laborers, and Service Workers. As with the workforce analysis, the JGA must include the total number of male and female incumbents in the following groups: blacks, Hispanics, Asians/Paciﬁ c islanders, and American Indians/ Alaskan natives.

Availability Analysis The purpose of the Availability Analysis is to provide an estimate of the number of qualiﬁ ed females and minorities available for employment in a given job group. In determining availability, the contractor must consider at least the following factors:

• The percentage of women and minorities with requisite skills within a reasonable recruitment area; and • The percentage of women and minorities among those who are promotable, transferable, and trainable within the contractor’s organization. 38 The Encyclopedia of Human Resource Management: Volume One

Comparing Incumbency to Availability Next, the contractor compares the percentage of women and minorities in each job group, based on the JGA, to the availability of women and minorities in the recruitment area as determined in the Availability Analysis. When the percentage of women and minorities employed is less than what is available, the contractor must develop placement goals.

Placement Goals Placement goals serve as objectives or targets that can be reasonably attained through making good faith efforts to attract, retain, and promote a diverse workforce. Placement goals also measure progress toward achieving equal employment opportunity.

Transaction Report The transaction report tracks all internal efforts with regard to applicants, hires, promotions, and terminations. The transaction report must depict these efforts by males and females in the following groups: blacks, Hispanics, Asians/Paciﬁ c islanders, and American Indians/Alaskan natives.

Compensation Analysis The compensation analysis provides insight to compensation trends within the organization. Two compensation analyses must be performed: whites versus minorities and men versus women. Each must be broken into the same job groups identiﬁ ed in the JGA and must be analyzed by mean difference in pay and mean tenure. As with the placement goals report, the compensation analysis must include a good faith effort component that seeks to remedy any uncovered pay disparities.

Narrative The narrative portion of the AAP must contain specifi c information appropriate to how the organization operates and plans it has to correct any identifi ed defi - ciencies. At a minimum, the narrative must address three key issues:

• Where the organization is currently; • Where it should be; and • How it plans to get to where it should be. Afﬁ rmative Action Plans 39

Suggested areas to include in the narrative for women and minorities are • Written explanations of each of the above-mentioned reports; • Designation of responsibility for AAP activities; • Identifi cation of problem areas; • Action-oriented programs; and • Internal audit and reporting. Suggested areas to include in the narrative for the disabled and veterans are • Policy statement; • Review of personnel processes; • Physical and mental qualifi cations; • Reasonable accommodations; • Harassment; • Outreach and positive recruitment; • Internal policy dissemination; • Audit and reporting system; • Responsibility for implementation; • Training; and • Compensation. The key to writing a good narrative is to avoid boilerplate, generic language that does not adequately refl ect the organization’s goals and objectives with regard to its good faith efforts.

Updating the AAP

AAPs must be updated annually, for each year the contractor meets the requirements mentioned earlier. This means performing all the statistical analysis and rewriting the narrative, with emphasis on comparing ﬁ ndings year-to-year. It is recommended that contractors keep their current AAP, plus the previous three years; worth of AAPs and supporting data on ﬁ le.

A Note About Audits

AAP audits are performed by the Office of Federal Contract Compliance Programs (OFCCP). Audits can be triggered by a number of events, such as:

• Random selection from the OFCCP database; • Sudden surge in discrimination complaints; 40 The Encyclopedia of Human Resource Management: Volume One

• Community group’s focus on the organization; or • Selected by OFCCP’s district or region director.

Sequence of Events A scheduling letter is sent outlining dates, establishments, documents needed, and compliance officer (CO) assigned. The documents typically must be received by the OFCCP within thirty days. During the desk audit the CO organizes the data and reviews all documentation. If discrepancies are found, or by random selection, the CO can schedule an on-site visit, during which time the CO can interview employees and request additional documents and records. The conclusion of the audit will result in either a ruling of “complaint” or “noncompliant.” Twenty-ﬁ ve percent of all reviews receive a letter of compliance indicating that all good faith requirements are met. Another 25 percent of the audits result in a letter of commitment, in which minor violations are described, corrective actions to be taken are outlined and the date of action is given. Surprisingly, 50 percent of the cases result in a Conciliation Agreement. These are contracts for remedy of out-of-compliance conditions that are serious in nature. Reasons for Conciliation Agreements include:

• Discrimination is found; • AAP does not reﬂ ect a reasonable effort; • Contractor failed to demonstrate good faith; or • Failure to comply with a letter of commitment.

Should the contractor fail to come into compliance, the OFCCP can begin enforcement proceedings. In addition to ﬁ nes and penalties, a contractor can ultimately be barred from performing work for the federal government. While employers can certainly make the decision as to whether or not to do business with the federal government, once they decide to engage in government contracts there is no choice but to meet Afﬁ rmative Action requirements.

References

Business & Legal Reports. (2001). How to write an affi rmative action plan. Old Saybrook, CT: Author. U.S. Department of Labor, Offi ce of Federal Contract Compliance. (2006). Federal contract compliance manual. www.dol.gov/esa/regs/compliance/ofccp/fccm/fccmanul.htm. Affi rmative Action Plans 41

Websites www.afﬁ rmativeaction.org/ www.dol.gov/dol/topic/hiring/afﬁ rmativeact.htm www.dol.gov/esa/ofccp/TAguides/sbguide.htm The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 8

APPRECIATIVE INQUIRY

Michele L. Newhard

ppreciative inquiry (AI) is a moniker that describes at least three discrete Arenderings of a basic exploration for what gives life and energy to systems, organizations, and people (Cooperrider & Whitney, 2000; Reed, 2007). First, AI operates as an alternative form of organization development (OD), and has been called the next generation of the classic version (Bushe & Marshak, 2009; Watkins & Stavros, 2009). So, instead of launching a change event from a traditional problem- platform like OD, AI initiates a positive examination of the organization’s past, present, and future. Secondly, AI can be used simply as a tool or technique applied to situations (Reed, 2007), although many experts disagree that this assertion grossly underestimates the transformative potential (Head, Sorenson, Preston, & Yaeger, 2000). Finally, and most profound, AI is a life philosophy, a worldview (Reed, 2007; Stavros & Torres, 2005). A natural inclination to view the world through a positive lens permeates every action or thought the individual executes (Seligman, 2006). The thread connecting all three dimensions is the search for the best, optimal, or the strengths in a situation, individual, organization, or whatever the subject of inquiry.

AI as OD

Crucial to OD is its long-term, developmental nature, as well as the necessity for organization members to be at the helm of the change, supporting it from the top down while inspiring all involved to suggest new ideas and solutions for

42 Appreciative Inquiry 43

well-established problems (French & Bell, 1999; Rothwell & Sredl, 2000). The original intent of OD founders was that the change process would tap into the wisdom of the organizations’ people to provide the road map to solutions (Andreissen, 2007; Greiner & Cummings, 2004). It is safe to assume that should an organization apply any form of OD, the desired outcome is one of positive change.

Enter AI. In 1980 at Case Western Reserve University located in Cleveland, Ohio, USA, David L. Cooperrider and Suresh Srivastva conceptualized an alternative technique to problem-based OD method which became Appreciative Inquiry (Alban & Scherer, 2005; Cooperrider & Srivastva, 1987; Reed, 2007). Rooted in a number of both artistic and scientifi c ideas, AI seeks to examine an organization in order to build its optimal future using its successful past. Facilitated through a series of dialogues, the procedure reviews past successes, culls out common themes in those former accomplishments, envisions the organization’s ultimate future, and, fi nally, action-plans a strategy to reach that future using the themes that created past triumph (Cooperrider & Whitney, 1999; Watkins & Mohr, 2001). AI requires a generative sharing by the organization members under the guidance of an objective facilitator or facilitators and as a developmental technique, the project could be a rather lengthy one (Bushe, 2009; Cooperrider, Whitney, & Stavros, 2008; Ludema, Whitney, Mohr, & Griffi n, 2003). Most importantly, AI allows no time for negativity, the focus is on the strength in the system (Cooperrider, Whitney, & Stavros, 2008).

Appreciative Inquiry: The Genesis

In 1980, Cooperrider was perhaps unaware that the new concept he was presenting, called Appreciative Inquiry, would revolutionize the OD world. Cooperrider was working on an organizational behavior doctorate at Case Western Reserve University, in Cleveland, Ohio. Suresh Srivastva, faculty advisor, and his student, Cooperrider, were consulting on an OD project with the nearby Cleveland Clinic (Cooperrider & Srivastva, 1987). Here, they discovered a few catalytic observations. The traditional problem-based OD approach completely defl ated the group’s energy (Alban & Scherer, 2005; Ludema, Whitney, Mohr, & Griffi n, 2003). Further, this groundbreaking team chose to apply OD as an inquiry, instead of an intervention, ascertaining that the question approach gave energy to the process (Ludema, Whitney, Mohr, & Griffi n, 2003; McLean, Davis, Baker, & Anguita, 2005; Whitney & Cooperrider, 2000). The project was a success. The post-analysis focused on the vibrancy of the group’s stories of past optimal successes and the life-giving energy of sharing memories of these past successes, 44 The Encyclopedia of Human Resource Management: Volume One

not on problems (Watkins & Stavros, 2009). Instead of deconstructing a problem situation in order to rebuild a solution, an organization can use AI to construct an optimal, proactive future not based on the answer to a problem (Cooperrider, Whitney, & Stavros, 2008).

AI Root Philosophies

AI draws fi rst upon Schweitzer’s work, “reverence for life,” particularly through sharing past successes to provide that life-giving energy to the discussion (Ludema, Whitney, Mohr, & Griffi n, 2003; Philips, 2004). Schweitzer emphasized the value of delving into one’s surroundings in search of wisdom and knowledge, but more fundamental was his belief that one would fi nd life in the inquiry (1969). He believed that in this profound study of life, the knowledge-seeker found oneself and, ultimately, the energizing effect of this eureka moment (Schweitzer, 1969). His writings take on a mounting positivity, which he seemed to believe the ardent pursuant of knowledge would embody as he or she continued to investigate. Fully understanding AI requires a base knowledge of the scientifi c thought paradigms in Western society. The linear and provable science of Newtonian thought dictated the world for more than four centuries. Marked by materialism and reduc- tionism, Newtonian thought focuses wholly on the pieces of structure, but never the relationships surrounding the pieces (Wheatley, 2006). All things can be reduced to their most basic parts in the Newtonian worldview (Watkins & Mohr, 2001). Here, understanding comes from dissection. Cause and effect rule. Not only does this paradigm characterize the scientifi c world, but it has also permeated the world of social science studying human behavior within organizations (Wheatley, 2006).

The New Sciences. The New Sciences encompass quantum physics, chaos, complexity, and string theories (Marshak, 2004; Watkins & Mohr, 2001). These sup- positions embody concepts which are a complete departure from the traditional, positivist view that all hypotheses can be verifi ed in some quantifi able manner (Guba & Lincoln, 1994). In 1927, due to a debate between Bohr and Einstein over revolutionary discoveries relating to subatomic particles, the view began to change (Watkins & Mohr, 2001). Bohr argued that particles could be connected even over large expanses if they were engaged in instantaneous communication, while Einstein bristled at the postulation (Watkins & Mohr, 2001). Despite the rebuke, the so-called “new” sciences were born. Within the core of this groundbreaking approach was an idea of wholeness on a vast level, as opposed to the piece-structure of Newtonian thought (Naik, 2009; Wheatley, 2006). A quantum view such as this opens up a multitude of Appreciative Inquiry 45 possibilities and the holistic understanding of systems (Watkins & Stavros, 2009). When applied to OD, the new sciences approach embraces every aspect of an organization, never seeking out any one fl aw, since change or transformation could not be so simplifi ed.

Social Constructionism. Social constructionism posits that social discourse creates reality or one’s truth (Bushe, 2000; Leirvik, 2005). Further, this view challenges traditionalist ideas. Language has a powerful effect in social constructionism, since it can either compel or retard action (Berger & Luckmann, 1966). The vocabulary used to describe a situation is a function not of the nature of that situation, but human understanding of it (Cooperrider & Srivastva, 1987). With AI, it is an empowering dialogue born from questioning that directs an organization’s future (Watkins & Mohr, 2001).

Positive Images. Also important to understanding AI is the core belief that positive images can spur an organization on to its most desired and greatest future. A generative approach to imagining the future can assist the organization in reaching its goal through positively visualizing possibilities (Watkins & Cooperrider, 2000). Imagery has guided action throughout history (Srivastva & Cooperrider, 1990). Further, Cooperrider synthesized research from a diversity of ﬁ elds such as medicine reviewing the mind—body connection (Watkins & Mohr, 2001). One’s inner dialogue goes a long way in dictating an outcome (Cooperrider, Whitney, & Stavros, 2008). Langer’s (2009) research on mindsets and their effects on health have some fairly remarkable results that suggest that what people believe to be true about themselves can become true. Moreover, the power of the self-fulﬁ lling prophesy also comes into play. Today, counselors advise nervous students just as coaches direct unsure athletes: Imagine success, and then, become it.

The Light. Also compelling, research contends that organizations are heliotropic, defi ned as having an innate tendency to grow in a positive direction in the future (Srivastva & Cooperrider, 1990). The ideal state for organizations is said to be heliotropic (Cameron, 2008). Light draws life. Goldberg (2001) calls to mind sap- lings, able to stretch enough to fi nd small pockets of sunshine in a dense forest of full-grown trees. Johnson and Leavitt (2001) compare organizations to sunfl owers turning toward the light.

Positive Organizational Scholarship (POS). POS is a wide range of research encompassing topics that focus on a strengths aspect of human interaction in of which AI ﬁ ts (Cameron, Dutton, & Quinn, 2003). Positive psychology and its off- shoot research area, positive emotions (Fredrickson, 2001; Fredrickson & Losada, 46 The Encyclopedia of Human Resource Management: Volume One

2005), also ﬁ t under the aegis of POS and underpin AI. Seligman, the founder of the positive psychology movement, observed that the traditional psychology was deﬁ cit-based in that the focus was on dysfunction or defect (Cameron, Dutton, & Quinn, 2003).

Core Principles of AI. The “open book principle,” which Cooperrider refers to during an interview (Creelman, 2001), speaks to the concept of an open and ever-evolving organizational culture. Eventually, Cooperrider and Srivastva conceptualized the ﬁ ve core principles of AI based on all the concepts and philosophies already discussed (Cooperrider, Whitney, & Stavros, 2008; Watkins & Mohr, 2001):

• The Constructionist Principle: Understanding and destiny of an organization are entwined. • The Principle of Simultaneity: The act of questioning brings change. • The Anticipatory Principle: Social discourse constructs the future. • The Poetic Principle: An organization’s create its reality. • The Positive Principle: Positive questions beget a positive and transformational outcome.

These ﬁ ve principles lead to the actual practice of AI. These principles allow the practice to remain accepting without refraining from all ground rules (Tenkasi & Mohrman, 1999).

AI, a Model of Action

To suggest that AI can be a process may contradict its rather free ﬂ owing nature (Reed, 2007). Still, models are developed in order to simply, proliferate, and, hopefully, evolve process (Cady & Caster, 2000). AI is not the typical step-by- step process that OD practitioners might be expecting (Cooperrider, Whitney, & Stavros, 2008). The four cardinal phases, called the “4-D Cycle,” are “Design, Dream, Design, and Destiny/Delivery” (Cooperrider & Whitney, 1999, p. 11; see also Cooperrider, Whitney, & Stavros, 2008; Watkins & Stavros, 2010). During the ﬁ rst phase, facilitators set the stage for positive sharing that will take place in subgroup recollecting of past, optimal experiences of the organization. The group is encouraged to recall events when the organization was at its most vital and then reconvene so that all might hear the stories, after what is called the appreciative interview has transpired (Cooperrider & Whitney, 1999). In phase two, the group envisions what their optimal future looks like, based on Appreciative Inquiry 47

what was shared during the reminiscing (Cooperrider, Whitney, & Stavros, 2008). Herein lies the power of the positive image or self-fulﬁ lling prophesy—the dream (Watkins & Stavros, 2010). Next comes the design session, where the group creates a map to reach the optimal future while maintaining appreciative systems and processes within the organization. With this step, “provocative propositions” are created to describe the nearly perfect organization (Whitney & Trosten-Bloom, 2003, p. 9). The group co-constructs their ideal version of the future; they visu- alize their possibility statements, another name for the provocative propositions (Watkins & Stavros, 2010). Finally, phase four of the basic model is the actual application of the design, known as the destiny or delivery phase. This step is meant to carry the life-giving energy into future for the organization, as it creates the tangible organizational change (Cooperrider, Whitney, & Stavros, 2008). The “Mohr/Jacobsgaard Four I Model” has emerged to success in the use of AI, as well (Watkins & Mohr, 2001, p. 46). It, too, touts four phases of reﬂ ection and activity: Initiate, Inquire, Imagine, and Innovate.

References

Andreissen, D. (2007). Designing and testing an OD intervention: Reporting intellectual capital to develop organizations. Journal of Applied Behavioral Science, 43(1), 89–107. Alban, B.T., & Scherer, J.J. (2005). On the shoulders of giants: The origins of OD. In W.J. Rothwell & R. Sullivan (Eds.), Practicing organization development (2nd ed.) (pp. 81–105). San Francisco: Pfeiffer. Berger, P.L., & Luckmann, T. (1966). The social construction of reality. New York: Random House. Bushe, G.R. (2000). Advances in appreciative inquiry as an organization development intervention. In D.L. Cooperrider, P.F. Sorenson, Jr., D. Whitney, & T. Yaeger (Eds.), Appreciative inquiry: Rethinking human organization toward a positive theory of change (pp. 113–121). San Francisco: Pfeiffer. Bushe, G.R. (2009). Generativity and the transformational potential of appreciative inquiry. In D. Zandee, D.L. Cooperrider, & M. Avital (Eds.), Organizational generativity: Advances in appreciative inquiry, Volume 3. Amsterdam: Elsevier. Bushe, G., & Marshak, R. (2009). Revisioning organization development: Diagnostic and dialogic premises and patterns of practice. Journal of Applied Behavioral Science, 45(3), 348–368. Cady, S.H., & Caster, M.A. (2000). A diet for action research: An integrated problem and appreciative focused approach to organization development. Organization Development Journal, 18(4), 79–93. Cameron, K.S. (2008). Paradox in positive organizational change. The Journal of Applied Behavioral Science, 44(1), 7–24. Cameron, K.S., Dutton, J.E., & Quinn, R.E (2003). Foundations of organizational scholarship. In K.S. Cameron, J.E. Dutton, & R.E. Quinn (Eds.), Positive organizational scholarship: Foundations of a new discipline (pp. 3–13). San Francisco: Berrett-Koehler. Cooperrider, D.L., & Dutton, J.E., (Eds.) (1999). Organizational dimensions of global change, no limits to cooperation. Thousand Oaks, CA: Sage. 48 The Encyclopedia of Human Resource Management: Volume One

Cooperrider, D.L., Sorenson, P.F., Jr., Whitney, D., & Yaeger, T.F. (Eds.) (2000). Appreciative inquiry: Rethinking human organization toward a positive theory of change. Champaign, IL: Stipes. Cooperrider, D.L., & Srivastva, S. (1987). Appreciative inquiry in organizational life. In W. Pasmore & R. Woodman (Eds.), Research in organizational change and development (Vol. 1, pp. 129–169). Greenwich, CT: JAI Press. Cooperrider, D.L., & Srivastva, S. (1990). Appreciative management and leadership: The power of positive thought and action in organizations. San Francisco: Jossey-Bass. Cooperrider, D.L., & Whitney, D. (1999). Collaborating for change: Appreciative inquiry. In P. Holman & T. Devane (Eds.), Collaborating for change. San Francisco: Berrett-Koehler. Cooperrider, D.L., & Whitney, D. (2000). A positive revolution in change: Appreciative inquiry. In D.L. Cooperrider, P.F. Sorenson, D. Whitney, & T.F. Yaeger (Eds.), Appreciative inquiry: Rethinking human organization toward a positive theory of change (pp. 123–129). Champaign, IL: Stipes. Cooperrider, D.L., Whitney, D., & Stavros, J.M. (2008). Appreciative inquiry handbook: For leaders of change. San Francisco: Berrett-Koehler. Creelman, D. (2001, July 9). Interview: David Cooperrider and appreciative inquiry. Retrieved March 18, 2003, from http://www4.hr.com. Fredrickson, B.L. (2001). The role of positive emotions in positive psychology: The broaden- and-build theory of emotions. American Psychologist, 56(3), 218–226. Fredrickson, B.L., & Losada, M.C. (2005). Positive affect and the complex dynamics of human ﬂ ourishing. American Psychologist, 60(7), 678–686. French, W.L., & Bell, C.H., Jr. (1999). Organization development: Behavioral science interventions for organization improvement (6th ed.). Upper Saddle River, NJ: Prentice Hall. Goldberg, R.A. (2001). Implementing a professional development system through appreciative inquiry. Leadership & Organization Development Journal, 22(2), 56–61. Greiner, L.E., & Cummings, T.G. (2004). Wanted: OD more alive than dead! Journal of Applied Behavioral Science, 40(4), 374–391. Guba, E.G., & Lincoln, Y.S. (1994). Competing paradigms in qualitative research. In N.K. Denzin & Y.S. Lincoln (Eds.), Handbook of qualitative research (pp. 105–117). Thousand Oaks, CA: Sage. Head, T.C., Sorenson, P.F., Preston, J.C., & Yaeger, T.F. (2000). Is appreciative inquiry OD’s philosopher’s stone? In D.L. Cooperrider, P.F. Sorenson, D. Whitney, & T.F. Yaeger (Eds.), Appreciative inquiry: Rethinking human organization toward a positive theory of change (pp. 217–232). Champaign, IL: Stipes. Johnson, G., & Leavitt, W. (2001). Building on success: Transforming organizations through an appreciative inquiry. Public Personnel Management, 30, 129–136. Retrieved February 6, 2003, from www.proquest.com. Langer, E.J. (2009). Counter clockwise mindful health and the power of possibility. New York: Ballantine Books. Leirvik, B. (2005). Dialogue and power: The use of dialogue for participatory change. AI & Society, 19(4), 407–429. Ludema, J.D., Whitney, D., Mohr, B.J., & Grifﬁ n, T.J. (2003). The appreciative inquiry summit: A practitioner’s guide for leading large-group change. San Francisco: Berrett-Koehler. Mantel, M.J., & Ludema, J.D. (2000). From local conversations to global change: Experiencing the worldwide web effect of appreciative inquiry. Organization Development Journal, 18(2), 42–53. Appreciative Inquiry 49

Marshak, R.J. (2004). Morphing: The leading edge of organizational change in the twenty- ﬁ rst century. Organization Development Journal, 22(3), 8–21. Retrieved November 11, 2009, from ABI/INFORM Global. McLean, G.N., Davis, K.J., Baker, M.N., & Anguita, J. (2005). Global organization development. In W.J. Rothwell & R. Sullivan (Eds.), Practicing organization development (2nd ed.) (pp. 467–492). San Francisco: Pfeiffer. Naik, G. (2009, May 5). Science, spirituality, and some mismatched socks. The Wall Street Journal, p. A12. Philips, S. (2004, October). Appreciative inquiry: what it is and how it works. Training Journal, pp. 30–35. Reed, J. (2007). Appreciative inquiry: Research for change. Thousand Oaks, CA: Sage. Rothwell, W.J., & Sredl, H.J. (2000). Workplace learning and performance: Present and future roles and competencies, Volume 2 (3rd ed.). Amherst, MA: HRD Press. Schweitzer, A. (1969). Reverence for life. (R.H. Fuller, Trans.). New York: Harper & Row. (Original work published 1966) Seligman, M. (2006). Learned optimism: How to change your mind and life. New York: Random House. Sorenson, P.F., Jr., Yaeger, T.F., & Nicoll, D. (2000). Fad or important new focus for OD? OD Practitioner: Journal of the Organization Development Network, 32(1), 1–5. Srivastva, S., & Cooperrider, D.L. (Eds.) (1990). Appreciative management and leadership: The power of positive thought and action in organization. San Francisco: Jossey-Bass. Srivastva, S., Fry, R.E., & Associates (Eds.) (1992). Executive and organizational continuity: Managing the paradoxes of stability and change. San Francisco: Jossey-Bass. Stavros, J.M., & Torres, C.B. (2005). Dynamic relationships: Unleashing the power of appreciative inquiry in daily living. Chagrin Falls, OH: Taos Institute. Tenkasi, R.V., & Mohrman, S.A. (1999). Global change as contextual collaborative knowledge creation. In D.L. Cooperrider & J.E. Dutton (Eds.), Organizational dimensions of global change, no limits to cooperation (pp. 114–136). Thousand Oaks, CA: Sage. Watkins, J.M., & Cooperrider, D.L. (2000). Appreciative inquiry: A transformative paradigm. OD Practitioner: Journal of the Organization Development Network, 32(1), 6–10. Watkins, J.M., & Mohr, B.J. (2001). Appreciative inquiry: Change at the speed of imagination. San Francisco: Pfeiffer. Watkins, J.M., & Stavros, J.M. (2009). Our work for the times in which we live. In W.J. Rothwell, J.M. Stavros, R. Sullivan, & A. Sullivan (Eds.), Practicing organization development: A guide to leading change (3rd ed.) (pp. 158–181). San Francisco: Pfeiffer. Wheatley, M.J. (2006). Leadership and the new science: Discovering order in a chaotic world. San Francisco: Berrett-Koehler. Whitney, D. (1998). Let’s change the subject and change our organization: An appreciative inquiry approach to organization change. Career Development International, 3(7), 314. Whitney, D., & Cooperrider, D.L. (2000). The appreciative inquiry summit: An emerging methodology for whole system positive change. OD Practitioner: Journal of the Organization Development Network, 32(1), 13–26. Whitney, D., & Trosten-Bloom, A. (2003). The power of appreciative inquiry: A practical guide to positive change. San Francisco: Berrett-Koehler. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 9

ASSESSMENT

Mimi Hull

Deﬁ nition of Assessment

It has often been said, “That which is expected must be inspected.” Statistical treatment of data obtained from measurement serves a number of essential purposes that qualify as that inspection. The assessment method is an important and effective tool for personnel selection and promotion, building stronger teams, diagnosis of an organization’s or individual’s strengths and weaknesses, and the development of managerial competence (Lievens & Thornton, 2005). The purpose of this article is to describe and give a practical overview of assessment. Assessment will be described through a discussion of examples, components, and uses of assessment. Examples will include organizational level, that is, training needs assessment and assessment centers, and individual level, that is, IQ, personality, career interest, and 360-degree feedback. These examples were chosen because they are the most popular and widely accepted uses of assessment within HR. Throughout this article, beneﬁ ts of the assessment techniques will be covered, followed by an explanation of its integration with other HR functions.

50 Assessment 51

Assessment is the process of gathering and discussing information from multiple and diverse sources in order to develop a deep understanding of what an individual knows, understands, and can do with his or her knowledge as a result of educational, life, and work experiences. Assessment tries to fulfi ll the need to describe individuals and organizations in a more objective and predictive way so that there can be fairly reliable organizational forecasts of employee success and behavior. “Assessment is a means for focusing our collective attention, examining our assumptions, and creating a shared culture dedicated to continuously improving the quality of learning. Assessment requires setting of expectations and standards for quality that are both explicit and public. It involves systematically gathering evidence on how well performance matches those expectations and standards; analyzing and interpreting the evidence; and using the resulting information to document, explain, and improve performance” (Angelo, 1995, p. 11). It is essential that assessment not only be described by its formal defi nition but also by the components of which it is comprised and its uses. Types of assessments range from micro level, individual assessment to macro level, organizational assessment. Assessment helps to provide a diagnosis for the organization or individual so that they can improve or gauge their current standing on a variety of dimensions. Assessment can be used to recruit, select, place, train and develop, conduct performance appraisals, and develop the overall organization (Thornton & Rupp, 2006). All measurement involves some degree of error. There is the error resulting from the consistency with repeated measures, either in the instrument or in the characteristic being measured. This is the matter of the reliability of assessment. Validity, by comparison, refers to the extent to which the instrument measures what we intend it to measure. Failing to measure what was intended creates a threat to validity. Another form of error is a sampling error, which involves measuring only samples from the population, not all of the individuals composing the said population. It is important that samples from a population be chosen in an unbiased, random manner so that conclusions drawn from the sample can be applied to the population as a whole. Assessment helps organizations and individuals measure and affi rm those things that are going well and/or need to be improved. Assessment is not a one- time event but, rather, an ongoing and continuous effort to improve the quality of performance, learning, and overall effectiveness of an organization, department, unit, or individual. Through the use of assessments, it can sometimes be possible to aggregate the data and measure growth and development. 52 The Encyclopedia of Human Resource Management: Volume One

Types of Assessment

Organizational Organizational assessment is a “current state” assessment task designed to gather high-level information on the organization as a whole. This type of assessment gives a snapshot of key factors that impact organizational performance and the quality of work life in an organization. The focus is primarily on the “people,” “process,” and “technology” aspects of the operation. The most effective survey process allows feedback that is based on behaviors or critical factors that people can see and measures not only how well the organization performs these items but, also, how important these items are for the organization’s success. If something is not important and it is not a strength, that would not be a great concern. However, if there is a gap between the degree of importance and the agreement that something was done well, there should be a greater concern. In other words, the bigger the gap, the more critical the concern. Organizational assessment is often the ﬁ rst activity undertaken in the change process as it can reveal critical data needed for analysis and recommendations for further action. This task is usually the starting point for a number of initiatives, including: (a) high-level problem identiﬁ cation, (b) SWOT analysis (strengths, weaknesses, opportunities, and threats), (c) quality initiatives, (d) mergers and integration activities, and (e) growth planning, marketing, and competitive analyses. A variety of techniques are available for investigating organizational needs. To be most effective, it is important to use multiple methods. Using a combination of techniques, as appropriate, can bring out accurate information. Some the assessment techniques include:

• Direct observation • Questionnaires or surveys • Consultation with persons in key positions and/or with speciﬁ c knowledge • Review of relevant literature • Interviews • Focus groups • Tests • Records and report studies • Work samples

It is important to maintain conﬁ dentiality and to be clear that sharing of information will neither result in unearned reward or punishment. Assessment 53

Training Needs Assessment A training needs assessment tool is used to identify what educational/training courses or activities should be provided to employees to improve their work productivity and the organization’s bottom line. Identifying training needs requires careful scrutiny of mission objectives, personnel, production, resources, costs, and other factors. The training requirements that are identiﬁ ed factor into the total training budget forecast for the organization and have an impact on the amount of funds that are allocated. This allocation may also be impacted by the amount of organizational support. Needs assessments intervene into the lives of their employees and take time away from work to complete both the needs analysis and any training. Therefore, it is paramount that the organization be fully behind any initiative, and employees must recognize the importance of the initiative. A systematic and continuing review of current and foreseeable organizational training needs provides a realistic basis upon which to plan, budget, direct, and evaluate an effective training program. The training needs of individual employees should be assessed within the context of the organization’s strategic goals to ensure employees’ performance competency and development. Training assessments also help to identify employees’ speciﬁ c strengths and weaknesses and to identify areas in which training should or did enhance the employee’s job performance. The focus should be on individual and/or organizational needs, as opposed to desires.

Assessment Center An assessment center can be used to evaluate and develop employees (Thornton & Rupp, 2006). A variety of simulations and exercises are used to gauge employee competency across many dimensions. Simulations can more easily be used in an assessment center, where participants can be presented with a variety of stimuli and demonstrate overt behavior that can be analyzed (Thornton & Mueller- Hanson, 2004). Assessment centers are often seen as predicting a wide range of possibilities without showing adverse impact.

Individual Assessments

Intelligence (IQ) Typically, intelligence tests classify individuals into ability categories that reveal how people adapt to new circumstances, learn, and deal with complex and abstract material. Obviously, organizations need members who can move beyond 54 The Encyclopedia of Human Resource Management: Volume One

academic intelligence. “Smarts,” creativity, initiative, team leadership, cooperation, persuasiveness, resilience, and optimism are essential. Of course, IQ should not be disregarded. Indeed, IQ predicts approximately 20 percent of personal variation in occupational success. The abilities that predict the other 80 percent of success have yet to be established. Researchers are exploring other options to supplement existing IQ tests as predictors of real-world performance. Two have emerged: emotional intelligence (EI) and practical intelligence (PI). Both of these complement, not replace, the contributions of IQ (Human Synergistics, 2005).

Personality Personality assessments are used to yield a description of a person’s personality traits. When we discuss personality, we must remember that it is not a single independent mechanism but closely related to other human cognitive and emotional systems. Many factors contribute to personality, such as motivation, which is goal- directed behavior designed to satisfy needs, interests, and aspirations. Motivation represents the why of how we behave. Exactly how the underlying motives are conceptualized depends on the school of thought to which one ascribes. For example, a humanist might see the motivation behind behavior as coming from a desire to achieve one’s full potential, whereas a psychoanalyst might look for unconscious motivations to do with unfulﬁ lled sexual needs. Personality is also not the same thing as culture, which is the values, attitudes, and beliefs shared by a group. Nor is personality the same thing as ability (usually held to be synonymous with intelligence), the capability to identify, understand, and absorb the different components of a problem. There is a need to identify the way these factors are related to each other and the logical consequences of their interrelationships. Assessments are often used for this purpose.

Career and or Interest Career/interest assessment testing is useful for career selection as well as succession planning. These assessments are introspective and enable respondents to consider their interests, abilities, and values and how they relate to majors and careers. These assessments can also be useful in succession planning to determine whether there is a match between the organization’s needs and the individual’s interests.

360-Degree (Multi-Rater) Feedback Multi-rater or 360-degree feedback provides each employee the opportunity to receive performance feedback from his or her supervisor, peers, direct reports, Assessment 55

co-workers and/or customers. The purpose of 360-degree feedback is to help each individual to understand his or her strengths and to contribute insights into aspects of his or her work that require professional development. Such assessments allow respondents to understand their effectiveness as employees, co- workers, or staff members as viewed by others. The most effective 360-degree processes provide feedback that is based on behaviors that other employees can see and measures not only how well a person performs but also how important these items are for the individual’s success. A multi-rater assessment is meant to be a developmental tool rather than used to determine salary, bonuses, or other rewards. It is not meant to be a substitute for a performance review.

Summary and Conclusions

Assessments can be very helpful for HR professionals. Through the proper use of assessments, meaningful data can be garnered, aggregated, and distributed. Decisions that are data driven are often more accurate and more easily accepted and adopted by the organization. Assessment should not stand alone. It is just the fi rst step in a complex process that may have a variety of outcomes. Assessment can be used to select and promote employees, to determine payroll/benefi ts, and train and assess the performance of employees. No assessment should be completed without an ultimate goal in mind—to use the data gathered to make an informed decision. Assessments can be the cornerstone of many HR functions. It is always important to match the assessment to the need. For this, a deep and broad knowledge of the assessment process is essential. The better defi ned the need, the easier it is to choose an assessment. It has often been said that “Feedback is our friend.” And if that feedback is reliable, valid, and quantifi able, the entire process is more useful.

References

Angelo, T.A. (1995, April). AAHE Bulletin, p. 11 Barrett, G.V. (1992). Clarifying construct validity: Deﬁ nitions, processes, and models. Human Performance, 5, 13–58. Eurich, T., Krause, D., Cigularov, K., & Thornton, G. (2009). Assessment centers: Current practices in the United States. Journal of Business & Psychology, 24(4), 387–407. Freeman, B. (1996). The use and perceived effectiveness of career assessment tools: A survey of high school counselors. Journal of Career Development, 22(3), 185–196. Guidelines and ethical considerations for assessment center operations. (2009). International Journal of Selection & Assessment, 17(3), 243–253. 56 The Encyclopedia of Human Resource Management: Volume One

Kim, S. (2003). Linking employee assessments to succession planning. Public Personnel Management, 32(4), 533–547. Lievens, F., & Thornton, G.C., III (2005). Assessment centers: Recent developments in practice and research. In A. Evers, N. Anderson, & O. Voskuijl (Eds.), The Blackwell handbook of personnel selection (pp. 243–264). Malden, MA: Blackwell. Thornton, G.C., III, & Mueller-Hanson, R.A. (2004). Developing organizational simulations: A guide for practitioners and students. Mahwah, NJ: Lawrence Erlbaum Associates. Thornton, G.C., III, & Rupp, D.E. (2006). Assessment centers in human resource management. New York: Psychology Press. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 10

BACKGROUND INVESTIGATION

Toni Arnold

ackground investigation is a systematic inquiry of the relevant data collected Bon a person or situation. In the context of a normal pre-employment screening, this usually refers to the completion of one or more of the following: (1) an I.D. verification, which includes the verification of a person’s Social Security number, address, and employment history; (2) a criminal conviction history; (3) a civil litigation history, (4) a driver’s license record, (5) a personal credit history, and (6) veriﬁ cation of education, as well as, usually, a drug test to detect the use of illegal drugs and/or the illegal use of controlled substances. In addition, in human resources, the background investigation is used to authenticate the following information supplied to a potential employer by a job applicant in his or her résumé:

• Verifi cation of prior employment, including position, longevity, salary, and job performance, sometimes tracing back ten years or to the three prior positions; • Discussions with business, professional, and personal references and verifi cation of letters of recommendation; • Testing to confi rm skills and knowledge; and • An Internet search on the candidate’s name, especially at Google.com, to confi rm an individual’s claims about jobs, performance, awards, and more.

57 58 The Encyclopedia of Human Resource Management: Volume One

Human resources professionals usually conduct the background investigation, but occasionally, the supervisor of the position being ﬁ lled assists, especially with reference background checking.

Information Is Accessible

Employers have ready access to public information that previously had been difﬁ cult to collect without considerable effort, such as litigation history, criminal records, court judgments, bankruptcy, worker compensation claims, marriage records, and more. They may have access to private information such as certain telephone records, credit card, and bank account histories. It is even possible to retrieve medical records. Due to the employer’s need to know concern based on expense and ethics, the Privacy Protection Study Commission, created by the federal Privacy Act of 1974, addressed the tension between individual privacy and institutional needs for information in the context of employment. The Privacy Act of 1974, 5 U.S.C. § 552a, establishes a code of fair information practices that governs the collection, maintenance, use, and dissemination of personally identiﬁ able information about individuals that is maintained in systems of records by federal agencies. (A system of records is a group of records under the control of an agency from which information is retrieved by the name of the individual or by some identifier assigned to the individual.) The Privacy Act requires that agencies give the public notice of their systems of records by publication in the Federal Register. The Privacy Act prohibits the disclosure of information from a system of records absent the written consent of the subject individual, unless the disclosure is pursuant to one of twelve statutory exceptions. The Act also provides individuals with a means by which to seek access to and amendment of their records and sets forth various agency record-keeping requirements.

Consumer Rights

The Fair Reporting Credit Act (FCRA) was recently amended by the Fair and Accurate Credit Transactions Act of 2003 (FACTA) (PL 108–159, 12/04/03). Enforced by the Federal Trade Commission, it promotes accuracy in consumer reports and is meant to ensure the privacy of the information in them. In addition to credit reports on ﬁ le with credit bureaus, the FCRA may govern other ﬁ les of information collected and maintained on consumers, depending on their content and use. Medical information and information used to prevent and detect fraud are sometimes governed by the FCRA. Background Investigation 59

The Consumer Credit Reporting Reform Act of 1996 now applies to all reports on consumers. The U.S. Congress released the following information:

• Consumer reporting agencies (CRAs) have assumed a vital role in assembling and evaluating consumer credit and other information on consumers. • There is a need to ensure that Consumer Reporting Agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy. • The term “consumer reporting agency” means any person (or organization) that, for monetary fees, dues, or on a cooperative nonproﬁ t basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports. • The term “consumer report” means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living that is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for (1) credit or insurance to be used primarily for personal, family, or household purposes; (2) employment purposes; or (3) any other purpose authorized under Section 604. • The term “employment purposes,” when used in connection with a consumer report, means a report used for the purpose of evaluating a consumer for employment, promotion, reassignment, or retention as an employee. The term “consumer” means an individual.

Employment Investigation

The other reason for background investigations is to look for employee crimes in the person’s history before hiring. The following are a list of known employee crimes:

• Espionage: the unauthorized acquisition of restricted information. • Fraud: when someone intentionally provides false information to others to make money or business. • Embezzlement: the misappropriation of money or property by a person who has been entrusted with its care, custody, or control. 60 The Encyclopedia of Human Resource Management: Volume One

• Pilferage: theft by an employee. • Sabotage: consists of actions that are intended to hamper an organization’s operations. • Robbery: forcibly taking something of value from another person by threatening or actually harming the victim. • Burglary: entering a building or vehicle without authorization and either stealing something or committing another serious offense while inside. • Larceny: stealing something from a place where one has the right to be present.

Civil Litigation

There is also cause to check for civil litigation. For example, if the person has a short temper and has been involved in family or other violence, he or she may have a restraining order.

Summary

As a consumer, you do have rights; but to protect your rights of privacy, you must be aware of those rights. You must ask questions and be careful what information you release and to whom for what purpose. As an employee, you need to be aware of what information is placed in your personnel ﬁ le, who has access, and who has the right to know. Companies must have policies of what information they are able to release to the public and what must be approved by the present and past employee.

References

Laws and Regulations Fair Credit Reporting Act, as amended by FACTA, www.ftc.gov/os/ statutes/031224fcra.pdf FTC’s ﬁ nal regulations about free credit and specialty consumer reports, www.ftc.gov/os/2004/06/040624factafreeannualfrn.pdf Privacy Act of 1974, 5 U.S.C. § 552a, www.usdoj.gov-usdojploc: Privacy Act of 1974 Background Investigation 61

Federal Trade Commission Publications Obligations of Furnishers of Information under the FCRA, www.ftc.gov/ os/2004/11/041119factaappg.pdf Obligations of Users of Information under the FCRA, www.ftc.gov/ os/2004/11/041119factaapph.pdf Consumer Reports: What Insurers Should Know, www.ftc.gov/bcp/ conline/pubs/buspubs/insurers.htm Credit Reports: What Information Providers Need to Know, www.ftc.gov/ bcp/conline/pubs/buspubs/infopro.htm Using Consumer Reports: What Employers Need to Know, www.ftc.gov/ bcp/conline/pubs/buspubs/credempl.htm Using Consumer Reports: What Landlords Need to Know, www.ftc.gov/ bcp/conline/pubs/buspubs/landlord.htm

Privacy Rights Clearinghouse Publications Fact Sheet 6. How Private Is My Credit Report? www.privacyrights.org/fs/ fs6-crdt.htm Fact Sheet 6a. FACTA, the Fair and Accurate Credit Transactions Act: Consumers Win Some, Lose Some, www.privacyrights.org/fs/fs6a-facta.htm Fact Sheet 8. How Private Is My Medical Information? www.privacyrights .org/fs/fs8-med.htm Fact Sheet 16. Employment Background Checks: A Jobseeker’s Guide www.privacyrights.org/fs/fs16-bck.htm Fact Sheet 16a. Employment Background Checks in California: New Focus on Accuracy, www.privacyrights.org/fs/fs16a-califbck.htm Fact Sheet 26. CLUE and You: How Insurers Size You Up, www .privacyrights.org/fs/fs26-CLUE.htm The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 11

BEHAVIOR MODELING

Yeonsoo Kim

ehavior modeling, also often called Behavior Modeling Training (BMT), is Ba popular training technique that has been used primarily to train people to perform manual, interpersonal, and cognitive skills(Werner & DeSimone, 2009). It has become one of the most widely used and well researched psychologically based training interventions (Taylor, Russ-Eft, & Chan, 2005). The approach is based on Bandera’s (1977) social learning theory. Social learning theory explains human behavior in terms of continuous reciprocal interaction between cognitive, behavioral, an environmental inﬂ uences and emphasizes the importance of observing and modeling the behaviors, attitudes, and emotional reactions of others. Bandura (1977) states: “Learning would be exceedingly laborious, not to mention hazardous, if people had to rely solely on the effects of their own actions to inform them what to do. Fortunately, most human behavior is learned observationally through modeling: from observing others one forms an idea of how new behaviors are performed, and on later occasions this coded information serves as a guide for action” (p. 22). Social learning theory suggests that many of our behavioral patterns are learned from observing others. This theory forms the basis for behavior modeling (Werner & DeSimone, 2009).

62 Behavior Modeling 63

Use of Behavior Modeling Training

In organizations, employees learn all kind of behaviors from observing supervisor, managers, union leaders, and co-workers who serve as role models. In this technique, trainees observe a model performing a target behavior correctly (usually on a video or DVD), followed by a discussion of the key components of the behavior, practicing the target behavior they demonstrate. Behavior modeling is widely used for interpersonal skills training and is a common component of many management training programs. Research suggests that behavior modeling is one of the most effective techniques for teaching interpersonal and computer skills (Simon & Werner, 1996; Taylor, Russ-Eft, & Chan, 2005). Behavior modeling is more appropriate for teaching skills and behaviors than for teaching factual information. Behavior modeling has been widely advocated for building some competencies in classroom settings. Often, behavior modeling training is used for in-class training sessions, but it can also be a more subtle, long-term development method. For instance, by rotating employees to work with exemplary supervisors or performers, they learn through observation how to think and behave like the role models with whom they are paired (Rothwell, Kazanas, & Rothwell, 2003). One of the reasons for the effectiveness of behavior modeling is that it increases a trainee’s feeling of self-effi cacy, which is one’s belief in his or her capacity to perform a particular task. Individuals with high self-effi cacy tend to perform better than individual with low self-effi cacy (Werner & DeSimone, 2009). Pescuric and Byham (1996) note that behavior modeling training is also amenable to an interactive, computer-based self-study format. They suggest that classroom-based delivery, the traditional approach to behavior modeling training, is only one of four options that can be used. The other three include classroom training augmented by on-the-job training under the guidance of a coach; self- study of the principles, modeling, and application components, followed by practice in classroom setting; and self-study followed by on-the-job practice.

Four Components of Behavior Modeling

Social learning theory emphasizes four component processes: (1) attention, including modeled events (distinctiveness, affective valence, complexity, prevalence, functional value) and observer characteristics (sensory capacities, arousal level, perceptual set, past reinforcement), (2) retention, including symbolic coding, cognitive organization, symbolic rehearsal, motor rehearsal), (3) reproduction, including physical capabilities, self-observation of reproduction, accuracy of 64 The Encyclopedia of Human Resource Management: Volume One

feedback, and (4) motivation, including external, vicarious and self-reinforcement. Vicarious reinforcement occurs when a trainee sees a model being reinforced for using certain behaviors (Noe, 2006). Within the context of behavior modeling, attentional processes concern trainees observing modeling stimuli (for example, a videotape of someone depicting the skills or desired behavior). The extent to which a learner attends to the modeled behavior is thought to be inﬂ uenced by (1) characteristics of how the modeled behaviors are displayed, for example, sequencing of behaviors from least to most difﬁ cult; (2) characteristics of the key behaviors being modeled, for example, how distinctively they are presented; (3) characteristics of the model, for example, learners’ perceptions of the model’s expertise, and similarities between learners and the model such as in gender, race, and age; and (4) characteristics of the learner, for example, capabilities and arousal level (Decker & Nathan, 1985). Whereas attentional processes are believed to underlie the effective transfer of observed stimuli to short-term memory, retentional processes are considered necessary for learning to transfer to long-term memory. Retentional processes primarily concern symbolic coding, in which learners organize behaviors presented during modeling into symbols that facilitate storage and retrieval of those behaviors (Decker & Nathan, 1985). In behavior modeling, retentional processes can be facilitated by using learning points that aid symbolic coding and by encouraging trainees to engage in symbolic rehearsal of how they plan to use modeled behaviors in practice. Reproduction and motivational processes occur as trainees practice the skills previously presented through modeling and apply them to the post-training environment. Practice during behavior modeling training, referred to as behavioral rehearsal or skill practice, includes feedback from other trainees and/or the trainer, which serves not only a correctional function, when trainees fail to use key behaviors successfully, but also a motivational function, through an explicit emphasis on social reinforcement when trainees effectively use the newly learned skills (Goldstein & Sorcher, 1973). Motivational processes are facilitated further with its emphasis on transfer of training to the post-training environment, primarily through establishing reinforcements for the use of newly learned skills (Taylor, Russ-Eft, & Chan, 2005).

Designing Behavior Modeling Training

Behavior modeling’s emphasis is on describing to trainees a set of well- defi ned behaviors (skills) to be learned, providing a model to display the effective use of those behaviors, providing opportunities for trainees to practice Behavior Modeling 65 using those behaviors, providing feedback and social reinforcement to trainees following practice, and taking steps to maximize the transfer of those behaviors to the job (Decker & Nathan, 1985). Unlike other training approaches that often include one or more of these components, behavior model training emphasizes the importance of including them all (Taylor, Russ-Eft, & Chan, 2005) Behavior modeling typically involved fi ve steps: modeling, retention, rehearsal, feedback, and transfer of training. During the modeling phase, trainees are usually shown a video clip in which a model performs the behavior to be learned (Werner & DeSimone, 2009). The desired behavior is broken into a series of discrete learning points or key behaviors that make up the overall behavior (Werner & DeSimone, 2009). Learning points are written descriptions of the key behaviors that serve to cue the trainee as to what behaviors are most important. There are three types of learning points: behavioral (a detailed behavioral description of the modeled behavior), summary label (a short, global description of key behaviors), and rule code (a description and rationale for key behaviors). According to Decker (1984), the use of summary labels and rule codes can signifi cantly improve generalization over both behavioral learning points and a control condition. A key behavior is one of a set of behaviors that are necessary to complete a take (Bryant & Fox, 1995). In behavior modeling, key behaviors are typically performed in a specifi c order for the task to be completed. Key behaviors are identifi ed through a study of the skills and behaviors necessary to complete the tasks and the skills or behaviors used by employee who are effective in completing the task (Noe, 2006). In the retention phase, trainees perform activities to enhance their memory of what they have observed. These activities include reviewing the learning points, discussing the rationale underlying each point, and talking over the behavior the model performed to illustrate those points. In the rehearsal phase, each trainee plays the desired behavior with another trainee. For example, each trainee learning how to handle employee complaints has an opportunity to role play resolving a complaint from another trainee representing the complaining employee. During the feedback phase, each trainee receives feedback on his or her performance based on what was done well and what should be improved. Finally, in the transfer of training phase, trainees are encouraged to practice newly learned behavior on the job. In some behavior modeling programs, trainees regroup later to discuss problems and successes in using their newly learned skills. A sample program is shown on the next page. 66 The Encyclopedia of Human Resource Management: Volume One

A SAMPLE BEHAVIOR MODELING TRAINING PROGRAM

Module (Duration) Module Detail BMT Phase Introduction (45 min.) Watch video that present key behaviors Modeling Listen to rationale for skill module Discuss experience in using skill View model Skill Preparation and Participate in role plays and practice Retention/Rehearsal Development (2 hrs., 30 min.) Receive oral and video feedback on performance of key behaviors Feedback Application Set improvement goals Transfer of Learning Planning (1 hr) Identify situations in which to use key behaviors Identity on-the-job applications of the key behavior Source: Modiﬁ ed from Noe, 2006, p. 249.

Critiques of Behavior Modeling Technique

Behavior modeling is not without its critics. Parry and Reich (1984) argued that the technique can have several weaknesses and suggested several solutions for how to over overcome these concerns:

Concern Solution Modeling uses simplistic behavior Behavior modeling should be more than behavior models. Trainees can consider this mimicking. The model should be seen as a starting technique that fi ts all situations point, not the end-all. Instructors must become more because of its simplicity. process oriented and fl exible enough to accepting alternatives. Theory is lacking. Trainees may Instructors should understand the concepts, theories, not see underlying concepts and data that underlie each model and shared them and principles to understand the with trainees before asking them to imitate. behavior being taught. Class can be boring because of its Instructors can be more creative and fl exible, so simple format and repetition. they can apply this technique to a more deductive instructional style in which the concepts and skills are drawn from the learner instead of imposed on trainees. Behavior Modeling 67

Concern Solution Incorrect examples are not used. Design training that includes rework of the examples Often the behavior modeling or create home-grown scenarios that require the technique does not use incorrect trainees to discriminate between appropriate and or inappropriate behavior, which inappropriate behavior. would provide a chance for learners to analyze incorrect behaviors. Transfer of learning in weak. Provide training, tools, and equipment to both Although trainees may successfully trainees and their supervisors. For example, require imitate the desired behavior during an action plan from each trainee and have post- the training sessions, they fail to training meetings at which trainees and their apply it on the job supervisors review the application of new behavior on the job.

Source: Based on Parry and Reich, 1984.

References

Bandura, A. (1977). Social learning theory. Englewood Cliffs, NJ: Prentice Hall. Bryant, S.E., & Fox, S.K. (1995). Behavior modeling training and generalization: Interaction of learning point type and number. Psychological Record, 45(3), 495. Decker, P.J., & Nathan, B.R. (1985). Behavior modeling training: Principles and applications. New York: Praeger. Goldstein, A.P., & Sorcher, M. (1973). Changing supervisor behavior. New York: Pergamon Press. Noe, R.A. (2006). Employee training and development (4th ed.). New York: McGraw-Hill/Irwin. Parry, S.B., & Reich, L.R. (1984). An uneasy look at behavior modeling. Training & Development Journal, 38(3), 57. Pescuric, A., & Byham, W.C. (1996). The new look of behavior modeling. Training & Development, 50(7), 24. Rothwell, W.J., Kazanas, H.C., & Rothwell, W.J. (2003). The strategic development of talent (2nd ed.). Amherst, MA: HRD Press. Simon, S.J., & Werner, J.M. (1996). Computer training through behavior modeling. Journal of Applied Psychology, 81, 948–659. Taylor, P.J., Russ-Eft, D.F., & Chan, D.W.L. (2005). A meta-analytic review of behavior modeling training. Journal of Applied Psychology, 90(4), 692–709. Werner, J.M., & DeSimone, R.L. (2009). Human resource development (5th ed.). Mason OH: South-Western Cengage Learning.

Websites http://teachnet.edb.utexas.edu/~lynda_abbott/Social.html Social Learning Theory website, www.learning-theories.com/ social-learning-theory-bandura.html The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 12

EMPLOYEE BENEFITS

Dawn Denniston Peterson

enefi ts are items offered to an employee by an employer to provide some Blevel of fi nancial security and to enhance the quality of life of the employee. Benefi ts represent a commitment by the employer to the health and welfare of employees and their families. Benefi ts can also provide the employer with a competitive total compensation package to aid in the attraction and retention of employees. Companies choose a variety of menu items in creating a benefi ts package. The types of benefi ts offered at a particular organization are usually chosen based on cost, industry trends, and the culture of the organization.

Employee Beneﬁ ts Package Structure

Organizations structure benefi ts packages by using eligibility criteria based on groupings of employees. For example, an organization may offer one menu of benefi ts to employees classifi ed as full-time based on number of hours worked and another menu of benefi ts to part-time employees. Most benefi ts within an organization are offered for the benefi t of the employee. However, many plans, especially insurance plans, allow family members to enroll as well. A current trend some companies are adopting is the extension of benefi ts to the domestic partner of the employee and in some cases the children of the domestic partner as well.

68 Employee Beneﬁ ts 69

Many companies adopt a “cafeteria” or Section 125 plan in order to reduce the employee and employer tax liability and offer employees a choice of benefi ts with a cash credit. Under Section 125 of the Internal Revenue Code (Internal Revenue Service [IRS], 2011, Publication 15-B), employers can offer certain insurance type benefi ts before federal taxes and the Federal Insurance Contributions Act (FICA) tax. This provides a tremendous tax advantage by reducing the taxable wages of the employee by the amount of the insurance premium. Also, some organizations structure a cafeteria plan whereby there is a menu of benefi ts for an employee to choose from. Some of these benefi ts have a premium cost associated with them and some have a premium credit. This allows employees to opt out of a particular benefi t plan and receive a cash credit back to offset other benefi ts plans that are chosen.

Types of Beneﬁ ts

The types of beneﬁ ts offered usually fall into one of several categories: legally required, insurance, paid leave, retirement, and savings or miscellaneous.

Legally Required Benefi ts The basic legally required benefi ts include Social Security Old-Age, Survivors, and Disability Insurance (OASDI), Medicare Hospital Insurance (HI), Unemployment Compensation, and Workers’ Compensation Insurance. All of these benefi ts are based upon legislation passed from 1930 through the 1960s to provide employees with income protection in old age, lack of employment situations, and for job- related injuries. OASDI Social Security was designed to encourage workers to retire at age sixty-fi ve by providing payments. It is funded by a tax on income paid by both employee and employer. As of 2011 the tax is 4.2 percent of income for employees and 6.2 percent of income for employers, with a wage limit of $106,800 (IRS, 2011, Publication 15, Chapter 9). Medicare taxes fund a national healthcare system for retirees over age sixty- fi ve by taxing current workers and the employer 1.45 percent of income, with no current income limits. Unemployment Compensation is entirely employer paid and is designed to provide income to individuals who become unemployed by no fault of their own. It is administered at both the state and federal levels. Workers’ Compensation provides income and medical benefi ts to employees injured while working. It is state mandated and entirely employer paid. 70 The Encyclopedia of Human Resource Management: Volume One

Insurance Benefi ts Most insurance benefi ts can be categorized as welfare benefi ts because they are designed to provide fi nancial protection against losses from illness, disability, or death. The cost of these plans is called a “premium” and can be shared by employee and employer. The most common insurance benefi t is health insurance. Most employers pay a portion of health insurance premiums. Health insurance is one of the fastest growing costs for employee benefi ts, growing at a rate more than twice as fast as employee wages and overall infl ation. According to the Annual Employer Health Benefi ts Survey by the Kaiser Family Foundation (2010) the average annual cost for family health coverage in 2010 was $13,770, with workers paying an average of $3,997 of these premiums. To combat rising costs, employers institute greater cost-sharing benefi t plan designs, change premium cost-sharing formulas, promote employee consumerism, and implement savings accounts such as health savings accounts (HSA), medical savings accounts (MSA), or health reimbursement accounts (HRA). These accounts provide the employee with the ability to save money over a period of time in order to provide protection against large out-of-pocket health expenses that are often part of plans with greater employee cost sharing. Employers may also offer additional health-related insurance plans such as dental, vision, long-term care, cancer and heart care plans, and various other supplemental insurance plans. These supplemental plans are often offered as an employee-paid benefi t. Insurance benefi ts that provide protection against losses associated with debil- itating illness or accidents is called long-term disability insurance. Short-term disability insurance is generally provided at no cost to employees by the employer. Long-term disability may be available with a small employee cost. Disability protection plans have waiting periods before benefi ts become payable and often benefi ts are payable at less than 100 percent of pre-disability income. Life insurance benefi ts are provided by most employers to allow employees income protection for their families in the event of their death. Usually the life insurance offered to employees is group term life insurance for the term of employment. Both employee and employer may share cost. The option to continue this policy beyond employment is sometimes available.

Paid Leave Benefi ts Paid leave benefi ts can include all types of vacation, holiday, sick leave, paid time off (PTO), and other leave options available to employees. Paid leave policies are almost always entirely employer paid. Employers recognize the need for employees to have time off work to care for personal and family needs. Paid leave Employee Benefi ts 71

beneﬁ ts provide employees an opportunity to take time off work without loss of income. Speciﬁ c practices and length of time off vary by employer and sometimes by type of position with the same employer.

Retirement Savings Benefi ts Retirement savings benefi ts are vehicles designed to allow employees to save for retirement years while working. In most plans the taxability of contributions is deferred until withdrawal, providing the employee with a signifi cant tax advantage while working and contributing to a retirement savings plan. There are numerous rules and regulations affecting these savings vehicles. The Employee Retirement Income Security Act of 1974 (ERISA) establishes the standards and rules for retirement plans. Traditional retirement savings vehicles include defi ned benefi t plans (also called pension plans), defi ned contribution plans (401(k) plans, 403(b) plans, employee stock ownership plans, and profi t-sharing plans), and other individual retirement plans (IRAs) available through an employer.

Miscellaneous Family-Friendly Benefi ts There are many additional miscellaneous benefi ts offered by employers. These benefi ts can range from employee dry cleaning services and pet insurance to company-specific additions such as onsite gym, childcare, or dining facilities. Many of these benefi ts fall under the heading of family-friendly benefi ts. Although no monetary value may be associated with these items, they are considered an integral part of any organization’s benefi ts package.

Cost of Employee Beneﬁ ts

The cost of employee benefi ts can be a signifi cant portion of the total compensation budget of an organization. According to the Bureau of Labor Statistics (BLS), in December 2010 benefi ts averaged around 29.2 percent of salary and wages or $8.11 for every hour worked (BLS, 2011). Costs will vary by the choice of benefi t options, size, and location of the organization and industry.

Regulation of Employee Beneﬁ ts

The primary employee beneﬁ ts legislation is the Employee Retirement Income Security Act of 1974 (ERISA). Despite the fact that the name implies “retirement” plan oversight, ERISA actually governs both retirement and welfare beneﬁ ts plans. 72 The Encyclopedia of Human Resource Management: Volume One

The Employee Security Beneﬁ ts Agency (EBSA) of the Department of Labor is the primary organization responsible for enforcing the provisions of ERISA. However, some parts of ERISA are administered by the Pension Beneﬁ t Guaranty Corporation (PBGC) and the Internal Revenue Service (IRS) Department of the Treasury.

History of Employee Beneﬁ ts

According to the Employee Benefi t Research Institute (EBRI), employee benefi t programs in the United States have existed since the early 1600s (EBRI, 2009). Various corporations provided retirement, pension, and even group health and life insurance in the 1700s into the 1900s. The federal government expanded coverage in 1935 with the Social Security program and in 1965 with the Medicare program. In more recent years, voluntary employer benefi t programs have become more prevalent as tax preferences are given by the government and employers seek to become more competitive.

Trends in Employee Beneﬁ ts

As the family structure changes, many companies are providing more family- friendly benefi ts, including life management referral and resource benefi ts to help employees better balance work and family needs. Many of these benefits are provided through a comprehensive employee assistance program or generous leave policies. Additionally, as the workforce ages, benefi ts such as long-term care, fl exible work arrangements, and retiree health insurance become more important. Another benefi ts concern is the promotion of wellness. However, in the midst of economic recession, a large federal defi cit and a competitive job market, employers have to shift benefi t objectives. Controlling costs is among the top priorities in diffi cult economic times. In the MetLife Eighth Annual Study of Employee Benefi ts Trends (2010), a link was identifi ed between benefi ts programs and improving employee productivity. Programs that foster health and wellness, fi nancial advice and guidance, and work/life balance may improve productivity. This is helpful information for employers seeking to meet the objective of cost containment while at the same time continuing to meet employee needs through benefi t options. Employment and economic trends will continue to infl uence and change the design of employee benefi t programs. Employee Benefi ts 73

The Value of a Beneﬁ ts Package

In an environment in which companies spend more on human resources than most other non-consumable expenses and where benefi ts costs are almost one- third of salary, the cost and structure of the benefi ts package is a top priority. Organizations fi nd that they must justify the resources that benefi ts consume in an effort to contain rising budgets. Also, benefi ts have tremendous value for employees. Many employees view employee benefi ts as a privilege and a signifi cant part of their total compensation package. When benefi ts are adequately provided they can aid in attracting and retaining employees. Organizations that have properly aligned the benefi ts package with the needs of the employees and the culture of the organization while managing the costs have successfully created an employee benefi ts package.

References

Employee Benefi t Research Institute. (2009, August). EBRI datebook on employee benefi ts (Chapter 1: Employee benefi ts in the United States: An introduction). Retrieved from www.ebri.org/publications/books/index.cfm?fa=databook. Internal Revenue Service. (2011). Publication 15 (Circular E). Employer’s tax guide. Retrieved from www.irs.gov/publications/p15/ Internal Revenue Service. (2011). Publication 15-B. Employer’s tax guide to fringe benefi ts. Retrieved from /www.irs.gov/publications/p15b/ Kaiser Family Foundation & Health Research & Educational Trust (HRET). (2010). Employer health benefi ts 2010 annual survey. Retrieved from http://ehbs.kff.org/ pdf/2010/8085.pdf. MetLife. (2010). 8th annual study of employee benefi ts trends. Retrieved from www.metlife. com/assets/institutional/services/insights-and-tools/ebts/Employee-Benefi ts-Trends- Study.pdf. U.S. Department of Labor. (March 2011). December 2010 employer costs for employee compensation. Bureau of Labor Statistics news release. Retrieved from www.bls.gov/ news.release/ecec.nr0.htm.

Further Reading

Aon Consulting. (2010). Health care trend survey. Retrieved from www.aon.com/ attachments/2010_health_care_trend_survey_summer.pdf. Employee Benefi ts Research Institute (EBRI). (2007, January). Facts from EBRI: Basics of the Pension Benefi t Guaranty Corporation (PBGC). Retrieved from www.ebri.org/pdf/ publications/facts/0107fact.pdf Social Security Online, Offi ce of the Chief Actuary. (2011). Cost of living adjustments. Retrieved from www.ssa.gov/OACT/COLA/cbb.html. 74 The Encyclopedia of Human Resource Management: Volume One

U.S. Department of Labor, U.S. Bureau of Labor Statistics. National Compensation Survey. www.bls.gov/ncs/ U.S. Department of Labor, Employee Benefi ts Security Administration. History of EBSA and ERISA. Retrieved from www.dol.gov/ebsa/aboutebsa/history.html. U.S. Small Business Administration. Providing Employee Benefi ts. Retrieved from www.sba .gov/content/providing-employee-benefi ts. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 13

BURNOUT

Michele L. Newhard

What Is Burnout?

An excess of workplace stressors can lead to burnout, particularly, in service-centered industries according to many researchers (Ahola, Honkonen, Kivimäki, Virtanen, Isometsä, Aromaa, et al., 2006; Ballenger-Browning, Schmitz, Rothacker, Hammer, Webb-Murphy, & Johnson, 2011; Barnett, Brennan, & Gareis, 1999; Hellriegel & Slocum, 2007; Leiter & Maslach, 1999; Maslach, Schaufeli, & Leiter, 2001). Such stressors including very lean scheduling, too few rewards or recognition programs, variable shifts, or emotionally draining clients or climates are common in the average workplace. Once considered only a social difficulty or a pseudoscientific issue, job burnout quickly emerged as a legitimate, researchable syndrome in need of a solution or prevention strategy (Schaufeli & Enzmann, 1998). Langer (1989) suggests that burnout often results when mindlessness overtakes dynamic creativity in the workplace due to repetition or familiarity, so that the days seem to run together without much distinction between them. Burnout, as a term, has been a rather modern occupational construct. Only within the last three decades has burnout begun to be researched in American organizational contexts (Salami, 2011). The prevailing opinion indicates that burnout is the result of long-term, on-the-job stress typically manifested in three main outcomes—physical and

75 76 The Encyclopedia of Human Resource Management: Volume One

emotional exhaustion, overt cynicism (sometimes referred to as depersonalization), and feelings of ineffectiveness or inefﬁ cacy (Barnett, Brennan, & Gareis, 1999; Hellriegel & Slocum, 2007; Leiter & Maslach, 1999; Maslach, Schaufeili, & Leiter, 2001). The syndrome can result in poor health, increased absenteeism, or a general decline in performance (Ballenger-Browning et al., 2011). When organizations can avoid staff burnout, one possible outcome is a decrease in turnover (Langer, 1989). If the workday challenges seem more like tired, unsolvable problems that continue to resurface and no one has any energy or gumption to creatively problem-solve, burnout has or will likely take hold (Langer, 1989). Burnout can describe the state of an employee who has depleted his or her energy stores and is left with no more drive (Hellriegel & Slocum, 2007; Schaufeli & Enzmann, 1998), in other words, a state of emotional exhaustion (Salami, 2011). So burnout may be the mind’s defensive mechanism to guard against further damage by prolonged stressors (Kumar, Hatcher, & Huggard, 2005). It is an individual’s relationship with his or her workplace taken to the negative extreme. Often accompanied by increased absenteeism or “presenteeism,” mounting instances of sick leave, and disability claims, burnout causes issues on the job (Lack, 2011; Schaufeli & Enzmann, 1998). The consequences of burnout can include employee turnover and decreasing morale, as well as a possible negative impact on any clientele services and negative effects on the employee’s family and home life (Barnett, Brennan, & Gareis, 1999; Lack, 2011). The depersonalization component of burnout renders an individual numb to, disconnected from, or even pessimistic toward others (Salami, 2011). The consequences of burnout make it a workforce syndrome in serious need of continued study.

History

With the advent of the Industrial Revolution, the average employee’s work pace began to quicken, forcing Americans to become quite time-conscious as well as time-dependent (Fishkin, 1994). As the modernization of transportation made the world smaller, our population’s growing stress was further exacerbated by the rise of technology, intended to make life easier with the unintended consequence of making more demands on our time (Wheatley, 2005). Burnout makes its appearance on the scene. The early exploration of burnout as a deﬁ nable and measurable phenomenon began in the healthcare ﬁ eld during the 1970s, with work conducted by Freudenberger, a psychiatrist, as well as Maslach, a social psychologist (Maslach, Burnout 77

Schaufeli, & Leiter, 2001). Borrowed from drug addiction terminology, the word “burnout” acquired a new deﬁ nition when applied to the condition of exhaustion, cynicism, and inefﬁ cacy (Maslach, Schaufeli, & Leiter, 2001, p. 399). In a quest to demystify burnout during the 1980s, studies were large and assessment- oriented, utilizing the quantitative approaches of surveys and questionnaires which led to the development of the Maslach Burnout Inventory. An important change in the variables meant that turnover, job satisfaction, and commitment were now being explored. In the late 1990s, some scholars deemed the condition a worldwide epidemic that had invaded virtually every industry and, therefore, necessitated academic attention and subsequent strategies to combat it (Golembiewski, Boudreau, Munzenrider, & Luo, 1996). Within the military, which has also begun to investigate the syndrome, this problem is referred to as “battle fatigue,” marked by extreme weariness and feeling pointless (Levinson, 2006, p. 21).

Worklife Model

One way to examine burnout is through the lens of worklife areas. These six areas—workload, control, reward, community, fairness, and values—provide an organizational framework for burnout (Leiter & Maslach, 1999). According to this worklife model, it is the mismatch of the employee with any one of these areas that precipitates burnout. Viewing burnout within the context of these six factors could lead to effective interventions. Workload and control are the most studied of the factors to date, while an excessive workload and the feeling of having no control over one’s work situation have been shown often to lead to burnout (Leiter & Maslach, 1999). Research suggests that organizations that promote work environments in which staff can deal with and eliminate stress to develop more even-keeled, low-stress climates are showing high productivity and low absenteeism and presenteeism rates (Lack, 2011). In addition, a meta-analysis of nearly fi ve hundred studies, including one of the health outcome of burnout and incorporating nearly twenty thousand participants, found that the employees reporting the lowest levels of job satisfaction were most likely to experience burnout (Faragher, Cass, & Cooper, 2005). Another study, this one exploring the well-being of fi nancial advisors, conversely discovered that high levels of job satisfaction were more likely to indicate low negativity or cynicism about the job (Fichter, 2011). Further, this same study reported that as “job satisfaction increased, feelings of professional effi cacy and personal accomplishment on the job increased” (p. 57). 78 The Encyclopedia of Human Resource Management: Volume One

The Wrong Personality and Other Factors

Salami (2011) defi nes personality as one’s “values, preferences, needs, stable dis- positions, or emotional characteristics” (p. 111). Some research suggests that certain personalities are likely candidates for developing burnout (Kumar, Hatcher, & Huggard, 2005; Maslach, Schaufeli, & Leiter, 2001). This predisposition is compounded when the actual individual’s occupation is one at high risk for burnout (Kumar, Hatcher, & Huggard, 2005), such as law enforcement, social work, teaching, or profi t-driven, customer-focused positions (Ballenger-Browning et al., 2011; Hellriegel & Slocum, 2007). Research has suggested that the Type A personality may be prone to burnout (Salami, 2011). There is evidence to suggest that personalities of a more neu- rotic proclivity can develop burnout more easily than others (Reinhold, 1996). Moreover, burnout is not simply caused by external factors such as excessive workload. Self-sacrifi cing people who strive to be liked no matter what the cost, or try to be everything to everybody, play a role in bringing about their own burnout (Maslach, Schaufeli, & Leiter, 2001; Reinhold, 1996). One study has indicated that the fi ve basic personality factors—extraversion, agreeableness, conscientiousness, emotional stability, and intellect/autonomy— can be predictors of burnout (Bakker, Van Der Zee, Lewig, & Dollard, 2006; Maslach, Schaufeli, & Leiter, 2001). The result of this research, which utilizes opinions of volunteer counselors, suggests that emotional stability could possibly predict exhaustion, while emotional stability, extraversion, and intellect/ autonomy might foretell depersonalization or cynicism. And fi nally, emotional stability along with extraversion was found to predict effi cacy (Bakker et al., 2006). Knowledge of these predictors may help employees look for warning signs and take appropriate action, should the signs appear.

Who and What?

Another opinion suggests that burnout can strike anyone, from all races and industries, both genders, and at any age, due to, as one author puts it, the fast- paced world (Fishkin, 1994). Others contend that burnout risk targets vary, even in high-stress professions such as medicine (Bakker et al., 2006; Barnett, Brennan, & Gareis, 1999). Still other studies assert that burnout is more likely to affect employees who are new to their jobs and therefore possess less experience using coping strategies, in addition to the probability of being more idealistic early in the career (Kumar, Hatcher, & Huggard, 2005). Burnout 79

A list of potential symptoms across five distinct classifications can signal burnout—affective, cognitive, physical, behavioral, and motivational (Schaufeli & Enzmann, 1998). The condition can manifest differently within each individual (Boyatzis & McKee, 2005) beyond the consistently common dimensions of exhaustion, cynicism, and inefﬁ cacy. For example, a previously motivated over- achiever may simply stop trying at work because he or she can no longer cope (Hellriegel & Slocum, 2007).

Measuring Burnout

After much conjecture about measuring burnout as an actual manifestation within an organization, the most widely accepted empirical measurement to be developed is the Maslach Burnout Inventory (MBI), ﬁ rst used in 1981 for healthcare and human services staff, identiﬁ ed as the MBI-HSS (Maslach, Schaufeli, & Leiter, 2001; see also Barnett, Brennan, & Gareis, 1999). The educational industry was the next to receive a version of the MBI, referred to as the MBI-ES. Finally, in 1996, a general version of the test, the MBI-GS, was created for other industries that did not necessarily have the human contact that the human services and education fields experienced, but still reported instances of burnout (Maslach, Schaufeli, & Leiter, 2001; Schaufeli & Enzmann, 1998). Other gauges are the Burnout Measure (BM), which assesses the individual’s exhaustion levels in general terms (Schaufeli & Enzmann, 1998), and the Phase Model that measures burnout as a sequential condition, where it begins with one of the stressing dimensions from low intensity to high, then transfers into the next dimension, and so on (Golembiewski, Boudreau, Munzenrider, & Luo, 1996; Maslach, Schaufeli, & Leiter, 2001).

An Appreciative Reframing of the Measure

Given the inherent negativity present in surveying for burnout, it is no surprise that an alternative approach to assessing one’s organization for the condition has emerged. Instead of measuring for negative dimensions to predict burnout, the opposites of each were determined and then used as the predictor. In this process, exhaustion defers to energy, involvement trumps depersonalization, and effectiveness eclipses inefﬁ cacy (Leiter & Maslach, 1999). This new approach allows for a more holistic view of burnout as either present or absent on a 80 The Encyclopedia of Human Resource Management: Volume One

continuum. Measuring for the opposite position, the positive, may be the ﬁ rst step in combating burnout.

Job Strain Model

A Finnish study found that one factor called job strain is the single most important contributor to burnout (Ahola et al., 2006). The job strain model posits that numerous factors coalesce and can develop into burnout. Due to the mental strain caused by this resulting interplay of factors such as the job’s demand on the psyche, one’s job control, other demands, and work resources, burnout can often result. The highest job demands with the lowest individual control, led not only to burnout, but also to impaired health in the study ﬁ ndings (Ahola et al., 2006).

Possible Preventions

Change is a constant in the business world and certainly can be a stressor for the workforce (Rothwell, Stavros, & Sullivan, 2009). Organizations are beginning to see the value in taking more responsibility for their involvement in the mental health of their employees (Faragher, Cass, & Cooper, 2005). Designing programs that directly and positively affect staff satisfaction levels emerge as a good place to begin, while it is equally important to ensure that the employees are accepting of any such programs. And certainly, there are myriad possible interventions targeting burnout in progress or programs aimed at stopping burnout before it starts (Bloniasz, 2011; Eisenwine & Hadley, 2011; Langer, 1989). Harry Levinson states that “Prevention is the best cure” (2006, p. 27). An organization’s proactive approach could include the development of stress management policies, as well as a corporate culture committed to a balance between work and life (Hellriegel & Slocum, 2007; Schaufeli & Enzmann, 1998). Any organizational activity that can change the approach or alter the context can infuse energy into the work climate and thus, stave off burnout (Anonymous, 2011; Langer, 1989). Other developmental strategies to prevent burnout include mentoring, continuing education programs, job refreshing or reorganization, instituting an acceptance of off-limits free time without constant connection to technology, and a strong, support network (Anonymous, 2011; Bakker et al., 2006; Golembiewski et al., 1996; Kumar, Hatcher, & Huggard, 2005; Schlichte, Yssel, & Merbler, 2005). Supportive dialogue and change management along with adequate time away from the environment can be successful in deﬂ ecting burnout. Burnout 81

Seligman (2006) suggests parlaying employee strengths to prevent boredom from turning into burnout. Theoretically, by applying one’s highest level strength to the unpleasant task, the individual reframes it to ﬁ nd new energy and appreciation for the previously mundane duty (Seligman, 2006). Along similar lines, Abrahamson (2004) promotes creative recombination, a form of change that seeks to recast aspects of an organization instead of deconstructing the system and starting over, which helps employees avoid burnout and remain energized.

References

Abrahamson, E. (2004). Change without pain: How managers can overcome initiative, overload, organizational chaos, and employee burnout. Cambridge, MA: Harvard Business School Press. Ahola, K., Honkonen, T., Kivimäki, M., Virtanen, M., Isometsä, E., Aromaa, A., et al. (2006). Contribution of burnout to the association between job strain and depression: The health 2000 study. Journal of Occupational and Environmental Medicine, 48(10), 1023–1030. Anonymous. (2011). A new work-life paradigm? Industrial Engineer, 43(1), 12. Bakker, A.B., Van Der Zee, K.I., Lewig, K.A., & Dollard, M.F. (2006). The relationship between the big fi ve personality factors and burnout: A study among volunteer counselors. The Journal of Social Psychology, 146(1), 31–51. Ballenger-Browning, K.K., Schmitz, K.J., Rothacker, J.A., Hammer, P.S., Webb-Murphy, J.A., & Johnson, D.C. (2011). Predictors of burnout among military mental health providers. Military Medicine, 176(3), 253–260. Barnett, R.C., Brennan, R.T., & Gareis, K.C. (1999). A closer look at the measurement of burnout. Journal of Applied Biobehavioral Research, 4(2), 65–78. Bloniasz, E.R. (2011). Caring for the caretaker: A nursing process approach. Creative Nursing, 17(1), 12. Boyatzis, R., & McKee, A. (2005). Resonant leadership: Renewing yourself and connecting with others through mindfulness, hope, and compassion. Cambridge, MA: Harvard Business School Press. Carmona, C., Buunk, A.P., Peiró, J.M., Rodriguez, I., & Bravo, M.J. (2006). Do social comparison and coping styles play a role in the development of burnout? Cross-sectional and longitudinal fi ndings. Journal of Occupational and Organizational Psychology, 79(1), 85–100. Cresswell, S.L., & Eklund, R.C. (2005). Motivation and burnout in professional rugby players. Research Quarterly for Exercise and Sport, 76(3), 370–377. Eisenwine, M.J., & Hadley, N.J. (2011). Multitasking teachers: Mistake or missing link? The Educational Forum, 75(1), 4. Faragher, E.B., Cass, M., & Cooper, C.L. (2005). The relationship between job satisfaction and health: A meta-analysis. Occupational and Environmental Medicine, 62, 105–112. Fichter, C. (2011). Results: Role confl ict, role ambiguity, job satisfaction, and burnout among fi nancial advisors. Journal of American Academy of Business, 16(2), 54. Fishkin, G.L. (1994). American dream, American burnout: How to cope when it all gets to be too much. Detroit: Harcourt Brace Jovanovich. Golembiewski, R.T., Boudreau, R.A., Munzenrider, R F., & Luo, H. (1996). Global burnout: A worldwide pandemic explored by the phase model. Greenwich, CT: JAI Press. 82 The Encyclopedia of Human Resource Management: Volume One

Hellriegel, D., & Slocum, J.W. (2007). Organizational behavior (11th ed.). Stamford, CT: Cengage Learning. Kennedy, B.R. (2005). Stress and burnout of nursing staff working with geriatric clients in long-term care. Journal of Nursing Scholarship, 37(4), 381–2. Kumar, S., Hatcher, S., & Huggard, P. (2005). Burnout in psychiatrists: An etiological model. International Journal of Psychiatry in Medicine, 35(4), 405. Lack, D.M. (2011). Presenteeism revisited: A comprehensive review. AAOHN Journal, 59(2), 77. Langer, E.J. (1989). Mindfulness. Cambridge, MA: Da Capo Press. Leiter, M.P., & Maslach, C. (1999). Six areas of worklife: A model of the organizational context of burnout. Journal of Health and Human Services Administration, 21, 472–89. Levinson, H. (2006). Harry Levinson on the psychology of leadership. Cambridge, MA: Harvard Business School Press. Maslach, C., Schaufeli, W.B., & Leiter, M.P. (2001). Job burnout. Annual Review of Psychology, 52, 397–422. Reinhold, B.B. (1996). Toxic work: How to overcome stress, overload, and burnout and revitalize your career. New York: Penguin Books. Rothwell, W.J., Stavros, J.M., & Sullivan, R. (2009). Organization development and change. In W.J. Rothwell, J.M., Stavros, R, Sullivan, & A. Sullivan (Eds.), Practicing organization development: A guide to leading change (3rd ed.) (pp. 11–42). San Francisco: Pfeiffer. Salami, S.O. (2011). Job stress and burnout among lecturers: Personality and social support as moderators. Asian Social Science, 7(5), 110–121. Schaufeli, W., & Enzmann, D. (1998). The burnout companion to study and practice: A critical practice. London: Taylor & Francis Ltd. Schlichte, J., Yssel, N., & Merbler, J. (2005). Pathways to burnout: Case studies in teacher isolation and alienation. Preventing School Failure, 50(1), 35–41. Seligman, M. (2006). Afterword: Breaking the 65 percent barrier. In M. Csikszentmihalyi & I.S. Csikszentmihalyi (Eds.), A life worth living: Contributions to positive psychology (pp. 230–236). New York: Oxford University Press. Wheatley, M. (2005). Our work for the times in which we live. In W.J. Rothwell & R. Sullivan (Eds.), Practicing organization development (2nd ed.) (pp. 646–655). San Francisco: Pfeiffer. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 14

BUSINESS ETHICS

Thomas J. Horvath

he definition of the word “business” is straightforward and without T question—the dictionary provides the following phrases: line of work, commercial organization, and commercial activity. The word “ethics” also provides defi nitive phrases from the dictionary: study of morality’s effect on conduct, code of morality. However, when combining the two words together, “business ethics” does not provide a singular accepted defi nition in the dictionary, academia, the press, or the halls of corporate America. Perhaps “business ethics” is just an oxy- moron! It is no wonder that everyone is confused. Newspapers and courtrooms are fi lled with corporate crimes and indiscretions, and many people are asking, “Why didn’t somebody catch this earlier?” But who is “somebody”? and What is the exact defi nition of “this”? The complexity of business ethics spans much broader and deeper than any one department reaches, but there is a strategic opportunity for leaders in the organization, most certainly including the HR department, to position themselves as part of their organization’s ethics solution.

The Scope of Business Ethics

Ethics in business come from many directions and perspectives and sometimes the “right” thing to do is clear as a bell, while at other times the ethics issue is barely identiﬁ able, lost in the drone of the marketplace. What organizations and

83 84 The Encyclopedia of Human Resource Management: Volume One

employees are doing—or not doing—are topics of debate, discussion, analysis, and legislation. A partial list of business ethics issues could include:

The Environment. From the dumping of toxic waste to the treatment of animals to the location of a manufacturing plant to oil spills in the Gulf, organizations and their interaction with the environment are given to speculation, ridicule, and advocacy.

The Community. The geographic and human community where an organization does its business is besieged with phrases such as “giving back,” “partnering,” and “corporate responsibility.” But the questions of how much, when, where, who, and how are all left to scrutiny, second-guessing, and examination.

Financial. Accurate and honest accounting procedures are more complex than just adding and subtracting numbers and balancing a checkbook. Executive compensation, extravagant spending, workforce downsizing, and outsourcing are all decisions that are driven by the ongoing ﬁ nancial sustainability of the organization.

Assets. Corporate theft has evolved quite a bit from the concerns of the ofﬁ ce stapler being commandeered for use at home. Today, intellectual property, trade secrets, and conﬁ dential personal data have entered the debate of appropriate conduct for the employee as well as the employer.

Climbing the Ladder of Organizational Ethics

Organizations are not standing still in the whirlwind of business ethics. Instead, most organizations are becoming proactive in the ways they are addressing the inevitable situation of ethics in the workplace. Each step that an organization takes leads to acceptable behavior that is hoped to insulate the organization from harm. While every organization and industry has different approaches to the ethics of their business, each approach can be categorized into one of three categories—progressive steps up a ladder.

The Law The foundational step for any ethical organization is the law itself. Certain behavior has already been identiﬁ ed as undesirable to the marketplace, which has been speciﬁ cally addressed in the penal code. When certain behavior would Business Ethics 85

break a law, it is safe to assume that behavior is not condoned by the organization. The law, however, is only a starting point because there are still many behaviors that would be legal in the eyes of the law but would not be tolerated within an organization. In addition, it is naïve to think that a law that prohibits a certain behavior will in and of itself eradicate unlawful actions or attitudes. For example, anti-discrimination laws have not eradicated racism, and tax code laws have not eliminated people cheating on their taxes. The law by itself is a deterrent against an established standard, not a foolproof solution. Recognizing these limitations, most organizations have added the second rung on the business ethics ladder, organizational policy.

Organizational Policy Using the law to establish a minimum standard, organizations craft their own behavioral policies or codes of conduct. The policy takes the law one step further by applying the law to speciﬁ c “do’s and don’ts” related to the performance of one’s job responsibilities and providing guidelines for behavior that would keep one above the suspicion of impropriety. The goals of the policy and surrounding programs are to prevent, detect, and punish violations. Many organizational policies revolve around money, authority, people, and reputation—the organizational assets that are often damaged by unethical behavior. To substantiate the policies that often extend beyond the letter of the law, organizations create values that the policies can use as a foot hold. In addition to putting the policy in writing, companies invest great amounts of resources to provide training and methods to encourage compliance and the critical thinking skills for employees “to do the right things.” While organizational policy provides excellent awareness, it too has its limitations on applicability and effectiveness. Rarely does an employee face a decision in a training room using a prepared “black and white” case study. Instead, employees live and work most of their lives in “the gray,” where organizational directives become blurred and decisions are required in a split second. Organizational policy can provide adequate awareness, but at the end of the day the root cause of business ethics lies with the third rung of the ethics ladder, personal decisions.

Personal Decisions Lapses in organizational ethics are the result of personal choices. Ethics begins— and ends—with the people in the organization. None of the published ethics 86 The Encyclopedia of Human Resource Management: Volume One

indiscretions have ended with a tape recorder, software system, or paper shredder being ushered out of the courtroom in handcuffs—it’s about people in the organization and the decisions they make. People in organizations essentially make two types of decisions:

1. Priority Decisions. Priority decisions are management decisions that do not hinge on the “right or wrong” application of the organization’s ethics. Deciding whether to increase or decrease production of widgets or deciding to launch a new product or build a new offi ce building are decisions about the prioritization of organizational strategy and resources. These decisions are essential to doing the work of the organization, not explicitly making a decision in regard to the organization’s ethics. 2. Ethical Decisions. Ethical decisions are personal leadership decisions whose outcome could be a violation of a clearly established law or organizational ethics standard. Deciding to produce more widgets by asking non-exempt workers to perform overtime without providing compensation would be a violation of a law, and thereby unethical. Launching a new product from specifi cations obtained from a recently hired employee from the competition could be a violation of organizational policy, and thereby unethical. Building a new offi ce building through the use of bribes to city commissioners and kickbacks to contractors would violate established laws and organizational policy, and thereby be unethical.

Personal decisions, made by an individual in isolation or in a group, have the power to endorse or deny laws, organizational policy, and personal conscience. Using this “Ladder of Organizational Ethics” to categorize their environment and efforts, organizations would do well to see the issue of ethics in terms much broader than policy manuals and mandatory training classes. Traditionally, these periodic times of focus are usually reactionary to an already committed indiscretion within the organization or industry and result in nothing more than an ethical “ﬂ ea dip” where participants are “cleaned up” only to return to the very environment that could produce the same infestation of ethical indiscretion. A survey released by the International Association of Business Communicators (2006) revealed that just 60 percent of respondents reported that they felt their organizations encouraged “openness about ethical/unethical conduct” and only 47 percent agreed that “discussion of moral dilemmas and criticism of censurable conduct is encouraged.” Organizations need to be proactive in exposing ethics for what it is—personal decisions—and equip their people to understand the “why” of decisions as much as “what” their decisions should be. Business Ethics 87

Why Great Employees Make Not So Great Decisions

If the crux of the matter is that ethics are personal decisions played out on the organizational stage, then one would ask how people who would typically be characterized as constructive, ethical employees could make disastrous, unethical decisions. When bad decisions are analyzed after the fact, some common circumstances appear in the spotlight:

Rushed Decisions. We live in a real-time world that has accelerated the pace of doing business, and decisions making. Many people feel pressured to make a decision without adequate time for reﬂ ection about the decision or time to research more information needed to make the decision. Not only do people have less time to make decisions as the result of the pace of business, but they also have more decisions to make with the increased volume of work throughput.

Justifi cation. Some employees defend their unethical decisions by saying that they were trying to correct or seek revenge for a previous wrong they witnessed or experienced. This self-righteous behavior can also be evidenced when employees feel that the “ends justify the means” because their actions in the long term really benefi t the organization. The employees justify in their minds that when the organization fi nally realizes that the decision was made in the organization’s best interest, the organization will actually condone the behavior and protect the employees because they served the greater good.

Rationalization. Many times the unethical decision has been rationalized by the offender by saying that the decision “really” wasn’t violating a law or policy, or that the “intent” of the law or policy “really” didn’t apply to the situation surrounding the decision. Sometimes the unethical action, in the mind of the wrongdoer, had to be done to avert an even greater egregious act.

Peer Pressure. Unethical decisions, while still being rooted in individual decisions, at times are made in the context of a group. In fact, many psychological studies have shown that groups of people are inﬂ uenced by “group think” whereby each individual gives in to the perceived predominant thinking of the group and discounts their individual decisions and convictions. The defense of “everybody is doing it” is presented as validation of the individual’s unethical decision. Similar pressure is created when a superior in the organization is making unethical decisions and the employees are afraid to confront the individual for fear of retribution. 88 The Encyclopedia of Human Resource Management: Volume One

What Can an Organization Do?

While there is no one way to effectively infuse ethical behavior throughout all organizations, there are actionable steps that can be customized and initiated to complement existing ethics policy and programs. Once the general law and speciﬁ c organizational policies are identiﬁ ed and communicated in writing to everyone in the organization, leadership should consider the incorporation of the following components.

Address the Cause as Well as the Symptoms. In addition to the attention on the law and organizational policies, focus attention on the individual and the environment that surrounds his or her decision making. Enhance the organization’s culture to encourage open discussion before, during, and after making difﬁ cult ethical decisions.

Little Things. It could be said that unethical behavior is seldom a “blow out” but instead a “slow leak”—progressive indiscretions that culminate in an ethical failure. Rarely does unethical behavior appear out of nowhere; it usually can be identiﬁ ed by a series of unethical choices that lead to a much larger, more public unethical decision. Leaders of the organization should be cognizant of how an employee handles the ethical “little things” since that may well indicate how they will handle the larger ethical situations. For example, if someone falsiﬁ es an expense report how will he draw the line on falsifying other documents?

Stress Testing. Similar to monitoring the smaller tests of ethical behavior, organizations should take advantage of difﬁ cult, pressure-packed situations to test what decisions an employee will make. Similar to an athlete or student’s behavior, an employee’s behavior can be inﬂ uenced through repetition. While every decision is unique, ethical decision-making skills can be learned by making decisions over and over in similar pressure-packed situations.

Hire Ethical People. Verifying a candidate’s educational accomplishments is much easier than verifying her integrity, but having highly ethical employees only comes as the result of hiring highly ethical people in the right roles. If a candidate stretches the truth on a resume or during an interview, is it overlooked—or worse yet, given the positive characteristic of simply being “ambitious”—or is it cause for disqualifying the candidate?

What Does the Organization Reward? Does your organizational culture reward thoughtful, ethical decision making as much as it rewards top performance? If Business Ethics 89

given the choice to “get the deal now” or “get the deal the right way,” which one would employees think management wants the most? How many stories about your organization are told regarding the tough ethical choices that have been made in the past? The August 2010 press release of Hewlett-Packard’s CEO Mark Hurd will surely be a story referred to again and again in the midst of ethical decision making within the organization.

Conclusion

In conclusion, the issue of business ethics and how an organization addresses the topic is multifaceted, far-reaching, and involves everyone in the organization because the organizational “ethics chain” is only as strong as the weakest link. The speciﬁ c approach used to tackle the organization’s stance on ethics must extend beyond a list of rules and behaviors to include personal application for every employee. The organization’s culture and practices must also play a supporting role for ultimate success. The goal of every organizational leader should be that, when the words “business ethics” are spoken, each person in the organization interprets and internalizes the information and relates it to every decision and action he or she takes.

References

Badaracco, J. (2003). Harvard Business Review on corporate ethics. Cambridge, MA: Harvard Business School Press. International Association of Business Communicators. (2006). The business of truth: A guide to ethical communication. San Francisco: Author. Maxwell, J. (2003). There’s no such thing as business ethics. New York: Warner Books. Weinstein, B. (2011, January 18). How truthful must CEO Steve Jobs be? BusinessWeek. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 15

CAMPUS RECRUITING

Erin G. Howarth

ampus recruiting is a symbiotic relationship between an academic institution Cand a corporation. The academic institution is responsible for the placement of students, while corporations are looking for talented young workers. This marriage of convenience has great beneﬁ ts for all involved if executed properly.

The History of College Recruiting

The history of college recruiting takes us back to the end of World War I. At this time, college recruiting mirrored a placement agency. World War I had caused a low percentage of college graduates; therefore all college graduates were in high demand. In the late 1960s more students began attending college and the number of graduates fi nally outnumbered the amount of opportunities available, hence college recruiting, as we know it today was born. In the 1970s and 1980s, as the Baby Boomers graduated college, campus career centers began to guide their students through the competitive job market. College recruiting must fl ex in changing economic times, in the 1990s the tide changed again, with more opportunities than students (Cunningham, 2004). At this point, corporations had to become creative in order to fi ll their open positions. As the economic outlooks change, corporations must be prepared.

90 Campus Recruiting 91

Future Trends in College Recruiting

The future once again looks bright for campus recruiting. Even with the downturn in the economy, employers are steadily hiring more students in 2011 than 2010 (National Association of Colleges and Employers, 2010b). Most likely, in the next ten years competition for qualiﬁ ed candidates will increase and it will be more difﬁ cult for corporations to land their star talent. Corporations will need to market these positions to the talent available.

Generations “Y” and “Z”

The star talent entering the workforce in the next ten years will most likely be from the Generation Y and Z segments. These individuals born between 1979 and 2000 are unlike the generations before them. Gen Y individuals are described as “high tech, high touch” (Giordani, 2005). This label explains their understanding and comfort with technology, paired with their need for strong relationships. Technology does not impress this group because of their connectivity for much of their youth to cell phones and computers. Their high confi dence and relationship building skills can be attributed to “the parent factor.” Most individuals in the Gen Y segment have had parents guiding them through their school experiences and see the importance of ethical values and personal missions (Giordani, 2005). Many have seen their parents struggle through careers that they did not enjoy. According to NACE’s 2005 Graduating Student and Alumni Survey, the top reasons recent grads choose one employer over another are “enjoying what I do,” “integrity of an organization,” “stability,” “ethical business practices,” and “a good benefi ts package.” Corporations need to focus on the “high tech, high touch” label, being cautious not to replace personal contact with technology. “Employers should be wary of using technology to replace personal contact, and should only use it to complement the personal relationship-building that is so important to good hiring” (Giordani, 2005). According to a survey completed by the Scott Resource Group looking at what Gen Y students expect in the recruitment process, these candidates look for: “good recruiters, follow-up and follow through, realistic preview of organization’s culture, specifi c job opening information, and frequent contact with real people.” This survey also determined what students do not want. Be wary of “the replacement of personal contact with technology, too much web, black hole job boards, telephone screening interviews, chat rooms, and video interviews” (NACE, 2005b). Members of Generation Z, born in the early 1990s, have completely 92 The Encyclopedia of Human Resource Management: Volume One

grown up in the shadow of the World Wide Web. These individuals have connected to each other through technology as their main form of communication and have created their own online identities through social networking sites. These “self-branders” are also “multi-taskers,” in which all forms of communication are competing for their attention. The world is a very small place for these individuals, with texts, chats, tweets, and Facebook status updates in “real time” versus “real physical place” (Cross-Bystrom, 2010).

Campus Recruiting Strategies

When it comes to campus recruiting, corporations must a plan appropriately, taking into account their culture, the positions available, and the budget allotted for recruiting efforts. Once these items are determined, the organization must then identify the targeted group of colleges and universities. “This can be done by researching the school’s curriculum and ranking, location, demographics, competitive environment, student groups, graduation date, career center, alumni in organization, and the organization’s internal opinion of the school” (Gray, 2003). Once these action items are determined and the needs have been accessed, the campus relations team can choose from the following campus recruiting strategies.

School Job Fair The students’ perception of an organization is critical in the recruitment process, and a school job fair is an opportunity to meet students face to face. According to Julie Cunningham, president of the Cunningham Group (a university relations and consulting ﬁ rm), “Being visible on campus enables you to build your company’s image on campus and market the organization to students and differentiate your organization from others. In order to make the most of a career fair: know your campus, send recruiters who know your organization, be approach- able, send a diversity of recruiters (including young alumni if possible), prepare a recruitment pitch, prepare interview questions, and follow up with the students” (NACE, 2005c).

Corporate Information Session HR representatives evaluate candidates; however, these candidates also evaluate the HR representatives and the corporations they represent. A corporate information session is an opportunity to share valuable information on corporation culture, opportunities available, and what the company looks for in a candidate. Campus Recruiting 93

These sessions also allow students to ask questions about the corporation. “Three tips for a successful information session include: choosing your speakers wisely, encouraging networking, and not forgetting the logistics” (Pollack, 2005). The speakers chosen should adequately represent the organization and be entertain- ing and engaging. Networking needs to be encouraged, as the students are seeing whether they might ﬁ t in the organization. Starting and ending on time and providing the students giveaways are ways to ensure a successful session.

Guest Lecturer Many professors, alumni relations ofﬁ ces, or career centers use guest lecturers in the classroom or for a special event to share their “corporate stories.” This is a perfect opportunity to use storytelling tactics to promote your organization and establish a relationship with the students.

Internship Program A corporate internship program is a very effective business and recruiting tool. Once implemented, these programs are a smart business tactic as well as an extensive interview process. After the students are trained and accepted into the culture of the organization, the next logical step would be to hire the student full- time. “Tips on creating a premier internship program are having buy-in from all areas of the organization, effective program design, good candidate selection, consistent positive messages, and an effective intern-to-fulltime conversion process” (NACE, 2005a).

Corporate Receptions Fostering relationships with students is a vital aspect of successful campus recruiting. Participating in or sponsoring corporate receptions is another opportunity to informally network with potential candidates. Utilizing alumni who are now employees of the organization is a way to build bonds with potential candidates.

Speed Networking Events Speed networking is a derivative of speed dating, which has become popular over the past few years. The concept is very similar in that you meet and network with many contacts in a short amount of time. Sponsoring or suggesting a speed networking activity with potential contacts will allow recruiters to network with many potential candidates in an informal, fun atmosphere. 94 The Encyclopedia of Human Resource Management: Volume One

Virtual Career Fair Campus career centers are partnering with their online job posting software systems and other “consortiums” or “groups” of schools to put on virtual career fairs. These fairs include job postings available to students from these schools for a several week period. The total resumes received are then sent to the corporation via email or web link.

Strong Website and Blog All potential candidates in the technology savvy Generations Y and Z segments will visit the websites of their top employer lists. It is crucial for the college recruitment section to be easy to use and updated regularly. If a potential candidate cannot ﬁ nd the appropriate information, frustration follows. In the UK, Cadbury Schweppes has tried a new “blog” strategy in promoting students to visit their website. “Under the scheme, current employees from across the company are encouraged to write freely about their experiences on the graduate training scheme. Their weekly blogs are posted on the company’s graduate Internet page for potential recruits” (“Graduate ‘blogs’ give candidates taste of life at Cadbury’s,” 2005).

Corporate Competition Many corporations are recruiting key talent by offering competitions targeted to upcoming graduates. These games offer corporations a unique view into characteristics of applicants like how they deal with competition, stress, and problem solving (Maher, 2004). Corporations can contact their targeted colleges and universities to promote their competition events or to push visits to their corporate website. “In 2001, L’Oreal started a separate online contest, E-Strat, which attracted 7,800 student competitors. This year 31,000 students from 113 countries have managed a portfolio of beauty brands through the company’s online business game” (Maher, 2004).

Online Resume Database/Resume Books and CDs Career center technology has improved signiﬁ cantly over the past few years. In most schools, student résumés are now housed in an online database. Career center professionals have access to search qualiﬁ ed students, email résumés or produce résumé books or CD’s in the click of a mouse. Campus Recruiting 95

Online Job Posting These databases also allow for the ease in posting positions for students using their on-campus system. The career center will promote the postings and the corporation will be able to view applicants on their own or with the assistance of a career service professional.

On-Campus Interviewing Making a company’s presence known on-campus can show great rewards. Campus career centers will assist in scheduling interviews. On-campus interviewing is a great preliminary screening tool, and students appreciate the chance to talk to a recruiter. It also draws positive attention to the organization. Being out of the ofﬁ ce for interviewing allows for fewer distractions during the interview process.

Reverse Job Fairs All corporations target leaders of student organizations. One way to focus on these groups is the reverse job fair concept whereby student groups or organizations set up “job fair” type displays. Recruiters then approach the organizations or groups that mirror the types of students the corporation is looking to recruit. These fairs can also be set up with the students segmented into speciﬁ c majors or concentrations (NACE, 2004).

Corporate Visits Sponsoring a corporate visit is another occasion for students to learn about a corporation and have the opportunity to network with representatives in their work environment. These visits can be arranged through the college or university career center or can be targeted through a course to attract students with a speciﬁ c major.

Giveaways In college recruiting, a corporation must differentiate themselves from other companies in order to land star talent. One way to gain the attention of a student is to provide useful, fun giveaways at campus events. For example, in 2008, to appeal to Generation Y, Towers Perrin focused on eco-friendly products as giveaways at their campus recruiting events and donated one hundred trees for every career 96 The Encyclopedia of Human Resource Management: Volume One

fair attended to the American Forests’ Global ReLeaf Program (Towers Perrin, 2009). Dean Foods now give samples of their product line to students at recruiting fairs, including ice cream and beverages (NACE, 2010c).

Social Media Searches While students are not likely to yet be “friended” by a corporation looking to hire them, it may be a future trend. In early 2010 only 6 percent of students had ever been contacted by an employer through Facebook. However, two out of three students expect companies to view their online proﬁ les (NACE, 2010a). The U.S. State Department has been actively utilizing social networking in their recruiting events since 2005. By updating statuses and Twitter tweets, the recruiters can notify students where they will be recruiting prior to events. These posts are also a way to point students to a particular part of a website to answer questions or announce deadlines (NACE, 2010d). The LinkedIn social networking site is another way to highlight potential candidates in an online referral form by being “linked” to each other. The strategies above will assist in the creation of a successful campus-recruiting plan. Maintaining relationships with local colleges will ensure success through changes in the economy as well as times of company downsizing. Campus recruiting is not an exact science, and trends will continue to change. However, having a well- executed campus relations plan will put a corporation ahead of the competition.

References

Cross-Bystrom, A. (2010, August 20). What you need to know about generation Z. Imedia Connection. Retrieved March 29, 2011, from www.imediaconnection.com. Cunningham, J. (2004, Summer). Trends and truths in college recruiting. NACE Journal, 64(4) 14–17. Retrieved November 13, 2005, from www.naceweb.org. Giordani, P. (2005, Summer). “Y” recruiting: New generation inspires new methods. NACE Journal, 65(4) 23–25. Retrieved November 13, 2005, from www.naceweb.org. Graduate “blogs” give candidates taste of life at Cadbury’s. (2005, October 4). Personnel Today, 4. Retrieved November 13, 2005, from ProQuest Direct database. Gray, K. (2003, Fall). Bull’s-eye!: Selecting target schools can boost an organization’s bottom line. NACE Journal, 64(1). Retrieved November 13, 2005, from www.naceweb.org. Maher, K. (2004, June 1). Win in a corporate competition, land on square that offers a job. Wall Street Journal, p. B10. Retrieved November 13, 2005, from ProQuest Direct database. Pollock, S. (2005, Winter). Effective brand-building. NACE Journal, 65(7) 23–27. National Association of Colleges and Employers (NACE). (2004, September 30). Who’s in the booth? Reverse job fairs change traditional dynamics. Spotlight Online. Retrieved November 9, 2005, from www.naceweb.org/pubs/spotlightonline/2004/e093004.html Campus Recruiting 97

National Association of Colleges and Employers (NACE). (2005a, February 4). Building a premier internship program: A practical guide for employers. Spotlight Online. Retrieved November 13, 2005, from www.naceweb.org/pubs/spotlightonline/2005/e020405.htm. National Association of Colleges and Employers (NACE). (2005b, September 1). New recruiter series: Building and maintaining a stellar campus presence. Spotlight Online. Retrieved November 13, 2005, from www.naceweb.org/pubs/spotlightonline/2005/ e090105.htm. National Association of Colleges and Employers (NACE). (2005c, September 15). New recruiter series: Making the most of your time on campus. Spotlight Online. Retrieved November 13, 2005, from www.naceweb.org/pubs/spotlightonline/2005/e091505.htm. National Association of Colleges and Employers (NACE). (2009). Towers Perrin—Go green campus recruiting initiative. Spotlight Online. Retrieved March 29, 2011, from www.naceweb.org. National Association of Colleges and Employers (NACE). (2010a, June 9). Social networking accounts from little job-search activity. Spotlight Online. Retrieved March 29, 2011, from www.naceweb.org. National Association of Colleges and Employers (NACE). (2010b, September 16). Job outlook 2011: College hiring outlook positive in all regions. Press release. Retrieved March 29, 2011, from www.naceweb.org. National Association of Colleges and Employers (NACE). (2010c, September 29). Company turns to college recruiting to boost diversity, capability. Spotlight Online. Retrieved March 29, 2011, from www.naceweb.org. National Association of Colleges and Employers (NACE). (2010d, October 27). Social media ampliﬁ es, extends reach for U.S. State Department. Spotlight Online. Retrieved March 29, 2011, from www.naceweb.org. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 16

CAREER DEVELOPMENT

Judy Y. Sun, Greg G. Wang

nderstanding career development logically starts with the concept of career. UCareer can be examined from both subjective and objective perspectives (Ng, Eby, Sorensen, & Feldman, 2005). From the objective perspective, career is a lifelong sequence of job- or role-related experiences as represented by tangible outcomes such as positions, salaries, and social status. Objective careers represent the way individual experiences in the sequence of jobs and activities that constitute one’s work history. Subjective careers, on the other hand, refer to the changing aspirations, career satisfactions, self-conceptions, and other related attributes the person has toward work and life. Combining the two perspectives, career is deﬁ ned as individually perceived sequence of attitudes and behaviors associated with work-related experiences and activities over the span of an individual’s life (Coupland, 2004; Hall, 2002). Career development can be seen from both individual and organizational perspectives. From an individual perspective, career development is a lifelong process involving psychological, sociological, educational, economic, and physical factors, as well as chance factors that inﬂ uence the career of the individual. From an organizational perspective, it is a process of assuring an alignment of individual career planning and organization career management processes to achieve an optimal match between individual and organizational needs.

98 Career Development 99

The Importance of Career Development

Career development is important to organizations for retaining and developing human resources to achieve organizational goals. It is also important to individuals because careers represent their entire lives in the work settings. For most people, work is a primary factor in determining the overall quality of life. Work provides a setting for satisfying practically the entire array of human needs—physiological, safety, socializing, ego, self-actualization, achievement, and afﬁ liation, to name a few. Therefore, developing career is one of the main tasks through which a person may improve the total quality of his or her life.

The Process of Career Development

Career development is supported and sponsored by individuals and organizations. From an individual’s point of view, career development is an ongoing process of planning and action toward personal work and life goals (Pietrofesa & Splete, 1975; Super, 1957). Through a constant and conscious career development process, an individual may understand, explore, and make a commitment to various aspects of his or her career (Hansen, 1977). The process often involves a number of behavioral actions, including giving and receiving of information, experiencing feelings, working through various decisions, and making choices among alternatives (Drier, 1977). On the other hand, organizations create and implement career development interventions to assist their employees in improving their skills, knowledge, and expertise for meeting their present and future human resource needs. This process requires developing career ladders or paths over which employees move within the organization (Bolyard, 1981). It is an organized and planned effort comprised of structures, activities, or processes which result in a “mutual plotting” effort between employees and organization (Leibowitz & Schlossberg, 1981).

How Career Development Is Implemented

Career development programs can be conducted throughout an individual’s life stages by career counselors, counseling psychologist, teachers, placement specialists, and mentors or managers. In organizational settings, career development often includes skill training, performance feedback, coaching or mentoring, and continuing education (Cummings & Worley, 2005). The diverse activities range 100 The Encyclopedia of Human Resource Management: Volume One

from helping elementary school children explore career interests, to assisting adolescents in making initial career choices, to performance-related competency development and career planning to address individuals’ career concerns, to person-job matching issues, as well as organizational needs in talent shortage or succession planning.

Career Development Interventions

A career development intervention is a deliberate action aimed at enhancing some aspects of a person’s career, including inﬂ uencing the career decision-making process, clarifying career goals, and skill building activities (Sampson, Lenz, Reardon, & Peterson, 1999). Major interventions may include the following:

• Career Guidance or Career? Planning one’s career is a broad activity encompassing many strategies. It has been used traditionally as a rubric under which all career development interventions were initiated. • Career Education. This is a systematic attempt to inﬂ uence career development of participants through various types of educational strategies, including providing occupational information, infusing career-related concepts into the academic curriculum, and offering training devoted to the study of career interests or choices. • Career Counseling. This is a service provided to a single client or group of clients who come seeking assistance with career choices or career adjustment issues. • Career Coaching. This is a term used in business and industry to signify managers’ efforts in facilitating career development of employees. Career coaching efforts are directed at helping employees identify opportunities that exist within their work settings and to prepare them for these careers.

Contemporary Career Development

Instead of hierarchical careers in the same organization, a new concept has emerged during the past two decades. Protean careers is an orientation that shifts away from organizational careers. It is named after the ﬂ exible Greek sea god Proteus (Hall, 2002). Under the new career orientation, individuals are responsible for their own career development, rather than the organization being responsible. Protean career is often associated with boundaryless careers. It reﬂ ects the fact that career movements across organizational boundaries have become a norm and acceptable to many in current changing global economies (Arthur, Career Development 101

Khapova, & Wilderom, 2005). Therefore, career development becomes self- directed, autonomous, and driven by individuals’ needs instead of organizations’ needs. The protean career is managed by individuals, not organizations. Thus, career development is characterized by continuous learning, self-directedness, relationship-building, and work challenges (Hall, 2002).

Criticism on Career Development

Career development has been criticized on several points. One is that the term “career development” has no universally accepted deﬁ nition to date. There are many different deﬁ nitions based on different assumptions. This brings confusion, particularly to career development practitioners. A second issue is that, in the turbulent and rapidly changing socioeconomic environment of career mobility and contingent employment, career development interventions seem to be losing their power, especially in organizational settings. It is unclear how an organization and its employees can adapt in a satisfying and productive way to the new career contract. A third issue is whether the new concepts of protean and boundaryless careers can be the future of careers, as organizations are still the dominate unit of business operations at this time (Arnold & Cohen, 2008).

References

Arnold, J., & Cohen, L. (2008). The psychology of careers in industrial and organizational settings: A critical but appreciative analysis. International Review of Industrial and Organizational Psychology, 23, 1–44. Arthur, M.B., Khapova, S.N., & Wilderom, C.P. (2005). Career success in a boundaryless career world. Journal of Organization Behavior, 26, 177–202. Bolyard, C.W. (1981). Career development: Who is responsible in the organization? In D.H. Montross & C.J. Shinkman (Eds.), Career development in the 1980s: Theory and practice. Springﬁ eld, IL: Charles C Thomas. Cummings, T.G., & Worley, C.G. (2005). Organization development and change (8th ed.). Cincinnati, OH: South-Western College. Coupland, C. (2004). Career deﬁ nition and denial: A discourse analysis of graduate trainees’ accounts of career. Journal of Vocational Behavior, 64(3), 515–532. Drier, H.N. (1977). Programs of career guidance, counseling, placement, follow-up, and follow-through: A future perspective. Columbus, OH: National Center for Research in Vocational Education, Ohio State University. Hall, D.T. (2002). Careers in and out of organizations. Thousand Oaks, CA: Sage, Hansen, L.S. (1977). Integrative life planning: Critical tasks for career development and changing life patterns. San Francisco: Jossey-Bass. 102 The Encyclopedia of Human Resource Management: Volume One

Leibowitz, Z., & Sclossberg, N. (1981). Training managers for their role in a career development system. Training and Development Journal, 35(7), 72–79. Ng, T.H., Eby, L., Sorensen, K., & Feldman, D. (2005). Predictors of objective and subjective career success: A meta-analysis. Personnel Psychology, 58(2), 367–408. Pietrofesa, J.J., & Splete, H. (1975). Career development: Theory and research. New York: Grune & Stratton. Sampson, J.P., Jr., Lenz, J.G., Reardon, R.C., & Peterson, G.W. (1999). Cognitive information processing approach to employment problem solving and decision making. Career Development Quarterly, 48(1), 3–18. Super, D.E. (1957). The psychology of careers. New York: Harper & Row.

Websites http://associationdatabase.com/aws/NCDA/pt/sp/resources#list_ resources_all-R102-NCDA http://kivunim.huji.ac.il/cddq www.careerkey.org www.ncda.org The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 17

CHANGE MANAGEMENT

Greg G. Wang, Judy Y. Sun

hange management is a systematic and structured process of developing and Cimplementing strategies and interventions for organizations transitioning from current state to a desired state (Rothwell, Stavros, & Sullivan, 2010). Change management typically deals with incremental change, or ﬁ rst-order change, and transformational change, or second-order change (Bartunek & Moch, 1987). Usually, ﬁ rst-order change does not challenge the established overall system and context of an organization. It is often associated with changes in policies and procedures, individual needs, and task and skill requirements; thus the change is incremental. It is also called transactional change. On the other hand, second- order change involves changes in fundamental assumptions about reality, coupled with a shift and realigning of vision, values, culture, beliefs and attitudes, and core processes, thus called transformational change (Cameron & Green, 2009). Change management is a process for managing the people side of change.

The Goal of Change Management

The primary goal of change management is to enhance organizational performance ability and capability through proactive or reactive actions to cope with either internally induced or externally imposed changes (Beitler, 2003). The purpose is

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to respond to or anticipate the changing internal and external environments for achieving strategic organizational goals.

The Importance of Change Management

Change management has always been an integral part of organizational management. It is often a part of HRM process. Change management plays a critical role in today’s organization, not only in maintaining variation of existing operations, but also in shaping the future direction of an organization. Successful change management is able to lead and enable employees to accept new visions, new behaviors, and a new culture (Beer & Nohria, 2000). Regardless of dealing with proactive or forced changes, successful change management can determine an organization’s future survival, development, and strategic directions.

The Process of Change Management

A number of change management models or processes are available (Cameron & Green, 2009). While differing in specifi cs, most models contain the following three phases: 1. Preparing for the change, including analyzing, planning, and strategy development. The purpose of this phase is to analyze the scope of the change by addressing the following questions: • How big is this change? • How many people are affected? • Is it an incremental or radical change? • What is the value system and background of the impacted groups? • How much change is already going on? • What is the anticipated resistance? • What is the expected outcome of the change? 2. Managing change implementation: • Communicating the right message at the right time is critical in change management. It involves building an awareness of the coming change and the risk of maintaining the status quo. • Communication plans need to be specifi cally developed for employees at all levels based on their roles in implementing the change. • Obtaining front-line managers’ buy-in is critical because direct supervisors have infl uence on employees’ motivation to change. Individual or group coaching is often necessary for facilitating the buy-in of employees. Change Management 105

• Training and development can be part of the change implementation to build knowledge, skills, behaviors, and attitudes required for the change. • Resistance from employees and managers is expected in any change effort. Persistent resistance, however, can threaten the change effort. It is vital to identify, understand, and manage resistance throughout the organization. 3. Consolidating and institutionalizing the change, including change review, feedback analysis, corrective action, and stabilizing the implemented change. This phase involves in the following activities: • Review and evaluate the successes and failures and identify needed modi- ﬁ cations for improving and implementing desired outcomes. • Establish processes for ongoing and continuous improvement. • Establish necessary policies and procedures to institutionalize the change. • Involve employees is an integral part of change management efforts. • Gather feedback from employees. Corrective action based on this feedback provides a robust cycle for implementing and improving outcomes.

Typical Criticisms of Change Management

Criticism on change management is often around the following issues. First, change management is often seen as unnecessary and irrelevant to the core business. Second, some believe that change management does not require a process, as people will change when they are forced to. A third issue is that change has become a constant in people’s daily lives; therefore, many believe that no special effort is needed to implement change. A fourth line of thought is that change only involves management teams and that employees will follow if management decides to change.

References

Bartunek, J.M., & Moch, M.K. (1987). First-order, second-order, and third-order change and organization development interventions: A cognitive approach. Journal of Applied Behavioral Science, 23, 483–500. Beer, M., & Nohria, N. (2000) (Eds.). Breaking the code of change. Cambridge, MA: Harvard Business School Press. Beitler, M. (2003). Strategic organizational change: A practitioner’s guide for managers and consultants (2nd ed.). Greensboro, NC: Practitioner Press International. Cameron, E., & Green, M. (2009). Making sense of change management: A complete guide to the models, tools and techniques of organizational change. Philadelphia: Kogan Page. 106 The Encyclopedia of Human Resource Management: Volume One

Rothwell, W.J., Stavros, J. M., & Sullivan, J. M. (2010). Organization development and change. In W.J. Rothwell, J.M. Stavros, R.L. Sullivan, & A. Sullivan (Eds.), Practicing organization development: A guide for leading change (3rd ed.) (pp. 11–42). San Francisco: Pfeiffer.

Websites www.businessballs.com/changemanagement.htm www.change-management.com/ www.odnetwork.org/ The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 18

CHILD AND ELDER CARE

Danielle Tavernier Spears

any companies struggle to fi nd talented employees who are engaged and Mproductive. Once found, retaining and growing those employees is sometimes hindered by external factors in an employee’s home life over which the company has little or no control. Recognizing the correlation between level of engagement and stress at home, companies are increasingly offering nontraditional benefi ts that help foster a positive work/life balance for their employees. Avoiding the high cost of employee turnover and lost productivity due to lack of engagement are motivators for some companies to offer unique perks, specifi cally child and elder care benefi ts, that help an evolving U.S. workforce cope with daily life struggles while maintaining optimal work outputs.

What Are Child and Elder Care?

Child and elder care benefi ts are two types of extended workplace benefi ts, or employee services, offered to full- or part-time employees based solely on the fact that they are employed with a fi rm; in other words, they are not contingent upon merit (Cascio, 2010). As defi ned by the U.S. Department of Labor, child care benefi ts are employers’ full or partial payments for the cost of caring for an employee’s children in a nursery, day care center, by a baby-sitter, on or off

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the employer’s premises, while the employee is at work. Similarly, elder care is defi ned as a program that provides paid or unpaid time off for the purpose of caring for sick or elderly parents or an employer sponsored or subsidized adult day care. More exhaustively, child and elder care benefi ts manifest in forms beyond those defi ned by the U.S. Department of Labor to include discounts, subsidies, on- or off-site care, referral services, and job sharing. While not considered a traditional or federally mandated benefi t, like healthcare or paid leave, nontraditional benefi ts have been growing in popularity since the mid-1980s. Their sheer existence is the result of an evolving U.S. demographic. Larger fi rms and government entities offer child and elder care as a benefi t to stay competitive and attract qualifi ed and loyal employees. But at their core, child and elder care benefi ts are offered as a means to decrease the amount of time away from work and improve employee engagement, job attitudes, and organizational outcomes.

Evolution out of Need

In its early stages, employer sponsored child and elder care was integrated with maternity leave, sick time, paid time off or the Family Medical Leave Act (FMLA). As of the mid-1980s, the concept of child and elder care as an employee benefi t was still largely unexplored. But as demographics evolve and more workers take on caregiver roles, companies fi nd value in offering nontraditional benefi ts like child and elder care, whose objective is to offer support and prevent employee disengagement and decreased job satisfaction and improve organizational outcomes. Some large employee assistance programs (EAP) have recently expanded to offer support in these areas. Child care benefi ts, when offered as part of a benefi ts program, typically take one of four forms: funding for child care, on-site child care, off-site child care, and child care support services. While these represent the more traditional approaches, companies may offer child care benefi ts through less formal approaches like EAP, job sharing, or fl exible scheduling. Elder care benefi ts vary from child care benefi ts in that support is usually indirect. Traditionally, they also take place through company EAPs, fl exible scheduling, or elder daycare. Most large EAPs have referral services for child and elder care services (Rosenberg, 2001). The key to implementation, though, is advertising the EAP to employees as well as lowering any access. Most importantly, fi rms need to look at elder care as a support mechanism that improves retention and engagement of aging and long-term employees (Anonymous, 2010). Child and Elder Care 109

Changing Workforce Demographic

It’s assumed that the growing number of companies deciding to offer child and elder care benefi ts may be in response to an evolving demographic that sees an increase in the number of women participating in the workforce. For example, in 1975 approximately 49 percent of all women were looking for outside work, which was up to almost 75 percent in 1999 (Baker & King, 2001). Tangent to this evolution is the increase in the number of working adults who offer support to not only children but also their elderly parents. Research shows that one-third of women aged forty-fi ve to fi fty-six offer some kind of assistance to both parents and children, either fi nancially, through completion of household chores, running errands, or via co-residence, and spend about 1,350 hours each year care giving for either children, parents, or both (Pierret, 2006). As this demographic continues to expand, so may company interest concerning the integration of child and elder care benefi ts in their overall benefi ts packages. Compared to child care benefi ts, elder care benefi ts are still a novel concept. At this point limited quantitative research is available on elder care benefi ts, and what is available is somewhat divided. One concern reiterated in many forums is that the Baby Boomer generation has the most immediate need for elder care benefi ts, but that the future needs of younger generations should not be overlooked, as they will eventually step into caregiver roles.

Work/Life Balance

Improved organizational outcomes are the ultimate goal of most optional benefi ts programs and changing demographics necessitate that companies modify their tactics in order to attract and retain employees who will most benefi t their companies. For example, data shows that only 11 percent of employees are satisfi ed with their current elder care arrangements; those who had insuffi cient elder care arrangements were disengaged from work and “more likely to be interrupted at work, leave work early . . . and were more likely to be thinking about leaving their jobs” (Phelps, Shoptaugh, & Visio, 2004). While this reinforces the positive attributes of elder care as a workplace benefi t, there is still some argument as to whether the increased demographics are adequate to negatively impact organizational outcomes, thus warranting concentrated support. When employees become disaffected and ultimately decide to leave a company due to confl icting child or elder care responsibilities, it’s estimated that replacing that experienced worker can cost at least 50 percent of his or her annual salary in turnover expenses. This 110 The Encyclopedia of Human Resource Management: Volume One

speaks to the beneﬁ t of identifying employee needs and developing methods that improve and maintain job attitudes, employee engagement, and overall employee retention. Recognizing the impact of economic cycles when in a downward swing will see companies reducing the number of frills and beneﬁ ts. But as companies come out of downturns, pressure will again be placed on talent management and fostering work/life balances in order to attract and retain the right employees.

Trends and Best Practices

Most research shows a positive trend in the number of companies that choose to offer child and elder care benefi ts to employees. For example, the U.S. Bureau of Labor Statistics (BLS) notes that in 1985 only 1 percent of full-time employees had access to employer provided child care benefi ts. In 2000, the percentage had only increased to 4 percent, but by 2006 (the most recent year data was available) 15 percent of full-time employees had access. Research across various age groups tends to show employee support for the establishment of child and elder care benefi ts. Whether a company sees a need to institute child or elder care benefi ts to improve employee attitudes and attendance is subjective. In some instances there may not be a signifi cant enough gap between employees with low job satisfaction due to caregiver issues and those employees who were satisfi ed. One study regarding elder care benefi ts creates the hypothesis that employees with signifi cant child or elder care responsibilities may fi nd solace at work, away from caregiver duties (Phelps, Shoptaugh, & Visio, 2004). Companies that incorporate child or elder care benefi ts into their benefi t package do so most successfully when their use is reinforced by company culture. In February 2010 Fortune magazine ranked the 100 Best Companies to Work For and of the companies on the Top 100 list; almost one-third offered on-site child care centers (Fortune, 2010). Ten of those companies, including Afl ac, USAA, Publix Supermarkets, and SAS, offer child care benefi ts at a monthly rate lower than the national average (NACCRRA, 2009). Topping the list in 2010 was SAS, a privately held software company that offers many non-traditional employee benefi ts, including child and elder care, to gain and maintain a competitive edge. A feature in Fortune’s online publication substantiates the company’s best practices in that their practices cultivate a stronger, more engaged workforce (Kaplan, 2010).

The New Deﬁ nition

Currently, child and elder care beneﬁ ts have expanded beyond intangible stipends or care facilities to include support services for caregivers. At its core, the purpose of beneﬁ ts includes improved organizational outcomes; a by-product of which are Child and Elder Care 111

improved attendance, productivity, and employee attitudes, all supported through the creation of work/life balance. With origins in personal leave, child and elder care benefi ts are now offered in some places as a core benefi t, as part of a benefi ts package selection, or made indirectly available through EAP services. There are no clear lines drawn to outline what child and elder care benefi ts should entail. In other words, there is no cookie-cutter solution to applying these unique benefi ts. What is evident, though, is that, as employee and company needs evolve, so will the role of child and elder care benefi ts.

References

Anonymous. (2010). Employers’ rising stake in elder care. HRMagazine, 11. Baker, C., & King, J. (2001). Childcare benefi ts continue to evolve. Compensation and Working Conditions, 10. Cascio, W. (2010). Managing human resources (8th ed.). New York: McGraw-Hill. Durekas, F. (2009). Companies and their employees realize value through employer- sponsored child care benefi ts. Employee Benefi t Plan Review, 3, 5. Fortune. (2010, February 8). 100 best companies to work for. Retrieved March 10, 2010, from http://money.cnn.com/magazines/fortune/bestcompanies/2010/beneftis/child_care. html. Kaplan, D.A. (2010, January 22). Fortune. Retrieved March 26, 2010, from http://money.cnn .com/2010/01/21/technology/sas_best_companies.fortune/ Labor, U.D. (1998). Glossary of compensation terms. Washington, DC: U.S. Department of Labor, Bureau of Labor Statistics. NACCRRA. (2009). Parents and the high price of child care: 2009 update. Retrieved March 26, 2010, from www.naccrra.org/publications/naccrra-publications/parents-and-the-high- price-of-child-care-2009. Phelps, J., Shoptaugh, C., & Visio, M. (2004). Employee eldercare responsibilities: Should organizations care? Journal of Business and Psychology, pp. 179–196. Pierret, C. (2006). The “sandwich generation”: Women caring for parents and children. Monthly Labor Review, pp. 3–9. Rosenberg, L.F. (2001). More employers embracing EAPs. Business Insurance, 10, 16. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 19

CIVIL RIGHTS ACTS

Emily R. Wilkins

Deﬁ nition of Legislation

The Civil Rights Act of 1964 was enacted July 2, 1964, and was signed by President Lyndon B. Johnson. It was a revolutionary piece of legislation in the United States. The Civil Rights Act banned major forms of discrimination against blacks, including racial segregation, and women (The Dirksen Congressional Center, 2006). The Civil Rights Act was initially established by President John F. Kennedy, and its intention was to end the racial gaps between blacks and whites in the United States. The political and social climate attributed to the creation and development of the Civil Rights Act.

Overview of Civil Rights Act

The key components of the Civil Rights Act of 1964 were

1. Barred unequal application of voter registration requirements, but did not abolish literacy tests sometimes used to disqualify African Americans and poor white voters. (The Dirksen Congressional Center, 2006) 2. Outlawed discrimination in hotels, motels, restaurants, theaters, and all other public accommodations engaged in interstate commerce; exempted private

112 Civil Rights Acts 113

clubs without defi ning “private,” thereby allowing a loophole. (The Dirksen Congressional Center, 2006) 3. Encouraged the desegregation of public schools and authorized the U.S. Attorney General to fi le suits to force desegregation, but did not authorize busing as a means to overcome segregation based on residence. (The Dirksen Congressional Center, 2006) 4. Authorized but did not require withdrawal of federal funds from programs which practiced discrimination. (The Dirksen Congressional Center, 2006) 5. Outlawed discrimination in employment in any business exceeding twenty fi ve people and creates an Equal Employment Opportunity Commission to review complaints, although it lacked meaningful enforcement powers. (The Dirksen Congressional Center, 2006)

History Behind the Civil Rights Act

“The 13th, 14th, and 15th amendments outlawed slavery, provided for equal protection under the law, guaranteed citizenship, and protected the right to vote for African American Americans. The amendments also allowed Congress to enforce these provisions by enacting appropriate, speciﬁ c legislation. The federal government took very little action to enforce civil rights after 1900” (The Dirksen Congressional Center, 2006). The American people had created amendments that would ﬁ t with the “white” society but neglected to mention or pay attention to civil rights until the late 1940s, shortly after World War II. Around this time there was a migration in the United States; the African Americans were moving from the south and into northern cities. Also at this time federal courts began to address the needs of civil rights for minorities and also protecting these civil rights. In 1954 there was change for the better for minorities, in the Brown v. Board of Education of Topeka, Kansas Supreme Court case. This case struck down the legal support for maintaining “separate but equal” education facilities:

“To separate black children from others of similar age and qualiﬁ cations solely because of their race generates a feeling of inferiority as to their status in the community that may affect their hearts and minds in a way never to be undone. . . . We conclude that in the ﬁ eld of public education the doctrine of separate but equal has no place. Separate educational facilities are inherently unequal.” (Brown v. Board of Education, Topeka)

It would not be until 1962 when John F. Kennedy began taking steps to ensure minority rights in voting, employment, housing, transportation, and education by executive action. 114 The Encyclopedia of Human Resource Management: Volume One

Social and Political Pressure Behind the Civil Rights Act

The Dirksen Congressional Center presented the following view on the social and political pressure behind the Civil Rights Act of 1964. The center stated that, the Civil Rights Act of 1964 not only represented a period of intensity in legislative activity but it also reﬂ ected the changing nature of social conditions in the United States. Minority groups grew more vocal and persuasive in their demands, and many white Americans began to see the need for civil rights laws. These social conditions contributed mightily to the climate of opinion demanding congressional action (The Dirksen Congressional Center, 2006). The Dirksen Center went on to say that major legislation rarely occurs unless there are social pressures encouraging action. The Civil Rights Act of 1964 certainly was no exception. As African Americans organized and demonstrated, other groups formed in reaction. On many occasions the result was peaceful accommodation between the two groups and working out difﬁ culties. In several cases, however, violence resulted, forcing the nation as a whole to review its treatment of African Americans and other minorities (The Dirksen Congressional Center, 2006). Finally, the Dirksen Center stated, the climate of opinion had changed dramatically between World War II and 1964. It appeared that a vocal majority of churches, representatives and senators, and the nation favored civil rights legislation. The National Opinion Research Center discovered this change of attitude in a sample survey of northern whites in 1963. The Center determined that the number who approved neighborhood integration had risen 30 percent in twenty years, to 72 percent in 1963. The proportion favoring school integration had risen even more impressively to 75 percent (The Dirksen Congressional Center, 2006).

Equal Employment Opportunity Commission (EECO)

The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex (including pregnancy), national origin, age (forty or older), disability, or genetic information. It is also illegal to discriminate against a person because the person complained about discrimination, ﬁ led a charge of discrimination, or participated in an employment discrimination investigation or lawsuit (Overview of EEOC). Most employers with at least ﬁ fteen employees are covered by EEOC laws (twenty employees in age Civil Rights Acts 115

discrimination cases) (Overview of EEOC). Most labor unions and employment agencies are also covered. The laws apply to all types of work situations, including hiring, fi ring, promotions, harassment, training, wages, and benefi ts (Overview of EEOC). Since its creation in 1964, Congress has gradually extended EEOC powers to include investigatory authority, creating conciliation programs, fi ling lawsuits, and conducting voluntary assistance programs. While the Civil Rights Act of 1964 did not mention the words “affi rmative action,” it did authorize the bureaucracy to makes rules to help end discrimination. According to the legislation of the Civil Rights Act of 1964, the EEOC enforces laws that prohibit discrimination based on race, color, religion, sex, national origin, disability, or age in hiring, promoting, fi ring, setting wages, testing, training, apprenticeship, and all other terms and conditions of employment. Race, color, sex, creed, and age are now protected classes (National Archives and Records Administration).

Civil Rights Act of 1968

On April 11, 1968, President Lyndon B. Johnson signed the Civil Rights Act of 1968. This act was also known as the Indian Civil Rights Act of 1968, meant to follow on the original 1964 Civil Rights Act. The 1968 act expanded by including the discrimination that can be found in housing, which is why this act is also known as the Fair Housing Act. The 1968 act expanded on previous acts and prohibited discrimination concerning the sale, rental, and ﬁ nancing of housing based on race, religion, national origin, and as of 1974, gender; as of 1988, the act protects the disabled and families with children. It also provided protection for civil rights workers (Pratt, 2003). The Civil Rights Act of 1968 prohibited the following forms of discrimination:

1. Refusal to sell or rent a dwelling to any person because of his or her race, color, religion or national origin. People with disabilities and families with children were added to the list of protected classes by the Fair Housing Amendments Act of 1988 (Pratt, 2003). 2. Discrimination against a person in the terms, conditions, or privilege of the sale or rental of a dwelling (Pratt, 2003). 3. Advertising the sale or rental of a dwelling indicating preference of discrimination based on race, color, religion, or national origin (amended by Congress as part of the Housing and Community Development Act of 1974 to include sex and, as of 1988, people with disabilities and families with children) (Pratt, 2003). 116 The Encyclopedia of Human Resource Management: Volume One

4. Coercing, threatening, intimidating, or interfering with a person’s enjoyment or exercise of housing rights based on discriminatory reasons or retaliating against a person or organization that aids or encourages the exercise or enjoyment of fair housing rights (Pratt, 2003).

Civil Rights Act of 1991

According to the U.S. Equal Employment Opportunity Commission, the Civil Rights Act of 1991 is a U.S. statute passed in response to a series of U.S. Supreme Court decisions that limited the rights of employees who had sued their employers for discrimination. The Act represented the ﬁ rst effort since the passage of the Civil Rights Act of 1964 to modify some of the basic procedural and substantive rights provided by federal law in employment discrimination cases. It provided for the right to trial by jury on discrimination claims and introduced the possibility of emotional distress damages, while limiting the amount that a jury could award (U.S. Equal Employment Opportunity Commission). The Civil Rights Act 1991 expanded the options available to victims of discrimination by amending Title VII of Civil Rights Act of 1964.

Current Deﬁ nition

Based on past and present information about the Civil Rights Act, it is clear that there have been some changes and adaptations over time. There has been expansion of the deﬁ nition to include not only basic discrimination but also to include how to approach and deal with discrimination. The deﬁ nition has not changed and remains consistent to this day, with minor amendments to the limitations and regulations of the original act.

References

Brown v. Board of Education, Topeka. (n.d.). Retrieved from www.law.cornell.edu/supct/ html/historics/USSC_CR_0347_0483_ZS.html. National Archives and Records Administration. (n.d.). The Civil Rights Act of 1964. Retrieved from www.archives.gov/education/lessons/civil-rights-act/ Overview of EEOC. (n.d.). Retrieved from www.eeoc.gov/eeoc/index.cfm. Pratt, T.M. (2003). The Fair Housing Act: 35 years of evolution. Retrieved from www.fairhousing.com/include/media/pdf/35years.pdf. Civil Rights Acts 117

The Dirksen Congressional Center. (2006). Congress link: Major features of the Civil Rights Act of 1964. Retrieved from www.congresslink.org/print_basics_histmats_ civilrights64text.htm. U.S. Congress. (2011). Civil Rights Act of 1964. Retrieved from www.dotcr.ost.dot.gov/ Documents/YCR/CIVILR64.HTM. U.S. Equal Employment Opportunity Commission. (n.d.). Civil Rights Act of 1991. Retrieved from www.eeoc.gov/laws/statutes/cra-1991.cfm. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 20

CIVIL RIGHTS ACT OF 1991

John M. Bagyi, Wendy S. Becker

he Civil Rights Act of 1991 (CRA of 1991) amends the laws enforced by the TEqual Employment Opportunity Commission (EEOC) to provide additional deterrents to and protections from unlawful harassment and discrimination in the workplace. The changes made by the CRA of 1991 provide additional rights to employees who have been victims of discrimination and additional recourse to seek damages from an employer. The CRA of 1991 amends the Civil Rights Act of 1964, the only major civil rights legislation since the CRA of 1866. Two cases, Price Waterhouse v. Hopkins (1989) and Wards Cove Packing Co. v. Atonio (1989) were inﬂ uential in the CRA of 1991. Important issues addressed by the CRA of 1991 that will be discussed here include disparate impact analysis, mixed motive analysis, damages, jury trials, Americans abroad, and procedural changes.

Disparate Impact Analysis

The CRA of 1991 makes an important shift in the burden of persuasion in disparate impact cases. Disparate impact cases involve employment practices that, while neutral on their face, have a statistically signiﬁ cant adverse impact on a protected group. Wards Cove Packing Co. v. Atonio (1989) examined the issue of “business necessity” of hiring practices in two salmon cannery companies in Alaska.

118 Civil Rights Act of 1991 119

In Wards Cove, the Supreme Court held that an employer can avoid adverse impact liability by showing a business justifi cation for the practice that caused the disparate impact, thus shifting the burden to the plaintiff employee to show that the practice lacked a business justifi cation (Wards Cove Packing Co. v. Atonio, 1989). The CRA of 1991 altered this analysis by requiring employers to show that the challenged employment practice was required by a business necessity and that practices with less impact on the protected group were insuffi cient.

Mixed Motive Analysis

The CRA of 1991 also made a major change in “mixed motive” cases. The mixed-motive theory applies when there are both legitimate and discriminatory reasons for the challenged employment decision. In 1989, in Price Waterhouse v. Hopkins, the Court held that, even when a plaintiff demonstrates that an employer was motivated by discrimination, the employer could escape liability by proving that it would have taken the same action in the absence of the unlawful discrimination (Price Waterhouse v. Hopkins, 1989). The CRA of 1991 altered this analysis by establishing that the defendant employer will be liable if the plaintiff employee proves that an impermissible factor (race, for example) played a motivating part in an employment decision. This factor does not have to be the sole or motivating factor, but the employee must show that it was a factor the employer considered. Once the employee makes this showing, the employer is liable. The employer’s liability in such mixed motive cases is limited, however. When an employer establishes that it would have made the same decision without consideration of the impermissible factor, the plaintiff employee will not recover compensatory or punitive damages, but the court may order the employer to cease using the practice, impose injunctive relief, and award attorneys’ fees.

Damages

The CRA of 1991 substantially increased the damages available to successful plaintiff employees, while at the same time imposing a cap on the maximum damages that could be awarded. Prior to 1991, successful plaintiff employees were entitled to back wages as well as equitable relief, in the form of an order to hire or reinstate an employee. The CRA of 1991 expanded the remedies available to disparate treatment plaintiffs by providing for compensatory and punitive damages. 120 The Encyclopedia of Human Resource Management: Volume One

Compensatory damages are those awarded to compensate a plaintiff for “out of pocket” monetary losses, future monetary losses, emotional distress, pain and suffering, inconvenience, humiliation, and mental anguish. Punitive damages are awarded not to compensate a plaintiff for a harm suffered, but to punish the defendant for its willful misconduct and to deter the defendant and others similarly situated from engaging in illegal conduct. Punitive damages are available if the plaintiff demonstrates that the employer engaged in a discriminatory practice with “malice or reckless indifference” to the rights of the employee (CRA of 1991). “[M]alice or reckless indifference” refers to the employer’s knowledge that it is possibly acting in violation of federal law, rather than its awareness that it is engaging in discriminating conduct (Kolstad v. American Dental Association, 1999). A defendant may avoid punitive damages if it implements policies prohibiting violations of federal anti-discrimination laws and educates its employees about these policies (Kolstad v. American Dental Association, 1999). At the same time that it expanded the relief available to plaintiffs, the CRA of 1991 also imposed caps on compensatory and punitive damages. For private sector employers with ﬁ fteen to one hundred employees, the cap is $50,000, for 101 to 200 employees, the cap is $100,000, for 201 to 500 employees, the cap is $200,000 and for over ﬁ ve hundred employees the cap is $300,000. The cap is per plaintiff rather than per defendant, so the potential exposure to liability is substantial, despite the cap. Damages awarded for violations of state law, back pay, and front pay are not subject to the cap (CRA of 1991). In addition, juries are not informed of the damage caps, in an attempt to eliminate the potential for the caps to exert pressure, upward or downward, on damages (CRA of 1991; 137 Cong. Rec. §15484, daily ed. Oct. 30 1991; statement of Sen. Danforth).

Jury Trials

One of the most important changes made by the CRA of 1991 is in the trial phase of a plaintiff employee’s claim. Under the Civil Rights Act of 1964, plaintiffs were not entitled to a jury trial; following a bench trial, a judge awarded equitable relief damages, if appropriate. The CRA of 1991 dramatically altered this by providing plaintiffs with the right to a jury trial for claims seeking compensatory and punitive damages (CRA of 1991). Claims for equitable relief remain issues for the court (CRA of 1991). This change was signiﬁ cant as juries are made up of a plaintiff employee’s peers—employees. Civil Rights Act of 1991 121

Americans Abroad

Another signifi cant change made by the CRA of 1991 is that its remedies are available to U.S. citizens employed by American-owned or controlled companies in foreign countries (CRA of 1991). A corporation is “American owned” if the employer is incorporated in the United States or has suffi cient contacts with the United States. A corporation is “American controlled” if the totality of the contacts with the United States are sufficient, including the interrelation of operations, common management, centralized control of labor relations and common ownership or fi nancial control of the employer and the foreign corporation (Bland, 2002).

Procedural Changes

The CRA of 1991 also makes two important procedural changes. First, it alters the statute of limitations period for plaintiffs asserting claims under the Age Discrimination in Employment Act (ADEA). Under the ADEA, a plaintiff employee had to commence an action within two years of the alleged discriminatory act or three years if the violation was willful. The CRA of 1991 eliminated these limitation periods and made ADEA suit fi ling requirements the same as those under Title VII. The second procedural change relates to consent decrees. In 1989, in Martin v. Wilks, the Supreme Court ruled that white fi refi ghters who were not parties to a consent decree between African American fi refi ghters and their city employer could challenge employment decisions made in accordance with the consent decree (Martin v. Wilks, 1989). The CRA of 1991 provides that non-parties to consent decrees cannot challenge them under Title VII if they had notice and a chance to intervene or were adequately represented by others.

Conclusion

The CRA of 1991 ushered in major changes in employment discrimination law and requires employers to focus their attention on curtailing illegal discrimination in the workplace. The availability of increased damages and the risks associated with having a case decided by a jury rather than a judge pose signiﬁ cant risks for employers. As a result, employers must be ever conscious of their compliance with federal civil rights law to prevent workplace discrimination. 122 The Encyclopedia of Human Resource Management: Volume One

References

137 Cong. Rec. §15484 (daily ed. Oct. 30 1991) (statement of Sen. Danforth). Bland, T. (2002). Basics of Title VII and the CRA of 1991. Retrieved January 13, 2009, from www.shrm.org/hrresources/whitepapers_published/CMS_000382.asp. Civil Rights Act of 1991 42 U.S.C. §1981a et seq (1991). Kolstad v. American Dental Association, 527 U.S. 526 (1999). Lindeman, B.T., & Grossman, P. (2007). Employment discrimination law (4th ed.). Washington, DC: BNA Books. Martin v. Wilks, 490 U.S. 755 (1989). Price Waterhouse v. Hopkins, 490 U.S. 228 (1989). Wards Cove Packing Co. v. Atonio, 490 U.S. 642 (1989).

Further Reading

Gyebi, D. (1993). The Civil Rights Act of 1991: Favoring women and minorities in disparate impact discrimination cases involving high-level jobs. Howard Law Journal, 36, 97. Kuklis, E. (1996). Comment: The future of front pay under the Civil Rights Act of 1991: Will it be subject to the damage caps? Albany Law Review, 60, 465. Landy, F.J. (2005). Employment discrimination litigation: Behavioral, quantitative, and legal perspectives. San Francisco: Jossey-Bass. Maines, L. (2000). Recent decisions: Plaintiffs need not show egregious conduct to seek punitive damages under Title VII of the Civil Rights Act of 1991: Kolstad v. American Dental Association. Duquesne Law Review, 38, 1103. Ross, J.C. (1992). New civil rights act: Law reverses several recent high court decisions. American Bar Association Journal, 78, 85. Rotunda, R.D. (1993). Symposium: The Civil Rights Act of 1991: A brief introductory analysis of the Congressional response to judicial interpretation. Notre Dame Law Review, 68, 923.

Websites The Civil Rights Act of 1991 (description), www.eeoc.gov/ abouteeoc/35th1990s/civilrights.html The Civil Rights Act of 1991 (document), www.eeoc.gov/policy/cra91.html U.S. Commission on Civil Rights, www.usccr.gov/ Leadership Conference on Civil Rights, www.civilrights.org/ http://www.thehrspecialist.com/hrs_list/hr_law_101/hrl101_civil_rights_act/ Employment Law Resource for Recent Developments, www.hrhero.com/ The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 21

CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT (COBRA)

Dawn M. Fleming

uida Peterson, vice president of education at CONEXIS, a Texas-based Obenefit consultancy firm, stated that administering COBRA “is simple if you know everything you need to know and when you need to know it” (Bridgeford, 2007). In 1986, President Ronald Reagan signed the Consolidated Omnibus Budget Reconciliation Act, better known as COBRA. This act requires companies with a workforce of twenty or more people to offer healthcare beneﬁ ts at the organization’s group rate to employees who leave the company either voluntarily or involun- tarily (Beaver, 2008). The U.S. Department of Labor’s Employee Beneﬁ ts Security Administration outlines three key elements used to determine COBRA eligibility:

1. Plan Coverage—Group health plans for employers with twenty or more employees on more than 50 percent of its typical business days in the previous calendar year are subject to COBRA. Both full- and part-time employees are counted to determine whether a plan is subject to COBRA. Each part-time employee counts as a fraction of an employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full-time.

123 124 The Encyclopedia of Human Resource Management: Volume One

2. Qualifi ed Benefi ciaries—A qualifi ed benefi ciary generally is an individual covered by a group health plan on the day before a qualifying event who is an employee, the employee’s spouse, or an employee’s dependent child. In certain cases, a retired employee, the retired employee’s spouse, and the retired employee’s dependent children may be qualifi ed benefi ciaries. In addition, any child born to or placed for adoption with a covered employee during the period of COBRA coverage is considered a qualifi ed benefi ciary. Agents, independent contractors, and directors who participate in the group health plan may also be qualifi ed benefi ciaries. 3. Qualifying Events—Qualifying events are certain events that would cause an individual to lose health coverage. The type of qualifying event will determine who the qualifi ed benefi ciaries are and the amount of time that a plan must offer the health coverage to them under COBRA. A plan, at its discretion, may provide longer periods of continuation coverage (www.dol.gov/ebsa/ faqs/faq_consumer_cobra.html).

Typical qualifying events (Beaver, 2008) include:

• Quitting or being ﬁ red, other than for gross misconduct • Reduction in work hours, leaving the employee ineligible for the group health insurance • Not returning to work after taking family or medical leave • Reporting to military duty

The Act requires companies to offer beneﬁ ts to eligible individuals for up to eighteen months. According to an article by Anne Moran (2009):

“Such coverage could also end earlier if: (1) the employer ceases to provide any group health plan to any employee; (2) the covered benefi ciary fails to pay premiums; or (3) the qualifi ed benefi ciary becomes (after the date of election of continuation coverage) covered under any other group health plan or Medicare. The minimum election period under which a qualifi ed benefi ciary is entitled to elect continuation coverage begins not later than the date on which coverage under the plan terminates on account of the qualifying event, and ends no earlier than the later of 60 days or 60 days after notice is given to the qualifi ed benefi ciary of his or her COBRA rights.”

The coverage offered must be identical to that which the employee retained prior to a “qualifying event” as outlined by the Act (Moran, 2009). The same law COBRA 125 allows an employee’s family to elect up to three years of coverage at the group rate due to the employee’s death or a divorce (Cascio, 2006, p. 471). There are deadlines for notifying an employee about COBRA coverage eligibility and companies that do not comply with these rules may be ﬁ ned $110 per day (Beaver, 2008). In order to protect your company from a lawsuit, the HR department should retain records regarding when and where COBRA notices were sent to employees. Beaver suggests the use of a computer tracking system to document the exact letters sent to beneﬁ ciaries. Common COBRA mistakes, according to Bridgeford (2007), include:

• Not sending the Initial Right Notice • Not sending the Qualifying Event notice • Not maintaining accurate archives • Making a decision simply because it “feels right” • Making exceptions • Not maintaining an accurate, up-to-date policy and procedure manual • Not gathering all of the facts before addressing an inquiry • Overlooking the COBRA continuants at annual enrollment

Bridgeford (2007) also states, “The costs for employers continue to rise, aver- aging $9,914 per participant per year in 2006, up from $5,721 in 2004, according to Spencer’s Benefi ts Reports.” Costs are increasing for employees as well, and statistics suggest that only one out of every four employees who are laid off will be able to continue their healthcare benefi ts under COBRA due to the rising cost of premiums (Cascio, 2006, p. 471). Moran (2009) states that the average premium for single coverage can exceed $4,000, while family coverage may exceed $10,000 on average. Coverage can be discontinued if the benefi ciary fails to make premium payments on time; however, there is a grace period. Once benefi ts are terminated due to late payment, they cannot be reinstated. For this reason, many employees are unable to keep their healthcare benefi ts and end up without any health insurance. In 2009, the U.S. Congress passed the American Recovery and Reinvestment Act (ARAA). According to Moran (2009), part of the funds allocated through this act are used to subsidize up to 65 percent of the cost of premiums for employees who have been laid off (other than for cause). Moran also states that “the subsidy is paid to the employer or other entity that provides the coverage, and will be paid as a credit against payroll taxes after the employer incurs the initial cost.” This new law only pertains to “assistance eligible individuals,” as outlined in the American Recovery and Reinvestment Act, for up to nine months. Additionally, 126 The Encyclopedia of Human Resource Management: Volume One

the subsidy is only valid for workers who lost their jobs between September 1, 2008. and May 31, 2010 (U.S. Dept. of Labor website). Packets provided to employees eligible to receive COBRA should include information about rights to reduced rates for qualifi ed benefi ciaries because of this 2009 Act. Packets are available at www.dol.gov/ebsa/cobra.html. While the details of administering COBRA benefi ts may seem vast, there are numerous resources to help HR professionals maintain compliance. The U.S. Department of Labor offers fl yers, posters, sample notice letters, and additional collateral for employers as well as employees. Visit www.dol.gov/ebsa/COBRA .html to access the free material.

References

Beaver, S. (2008, July 1). Layoffs and slow economy bring COBRA issues to light. Employee Benefi t News. Bridgeford, L.C. (2007, November). Halfway knowing COBRA can get employers in trouble. Employee Benefi t News. Cascio, W.F. (2006). Managing human resources: Productivity, quality of work life, profi ts (7th ed.). New York: McGraw-Hill/Irwin. Moran, A.E. (2009, Summer). Recent legislative changes require immediate employer action and point to future trends. Employee Relations Law Journal, 35(1) 100–107. U.S. Department of Labor. Employee Benefi ts Security Administration. www.dol.gov/ebsa/ cobra.html and www.dol.gov/ebsa/faqs/faq_consumer_cobra.html. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 22

COLLECTIVE BARGAINING

William B. Werner

ollective bargaining is the process by which employees negotiate the terms, Ccompensation, and conditions of their work with their employer through a union representative selected by them according to the provisions of the National Labor Relations Act (NLRA). The purpose of collective bargaining is to produce a collective bargaining agreement covering all the employees represented by the union. Employers whose employees are represented by one or more labor unions are required by the NLRA to negotiate in good faith with union representatives over the wages, hours, terms, and other conditions of employment, but they are not required by any law to agree to the union’s demands. If the parties fulfi ll their obligations to bargain in good faith but fail to reach agreement, the result is impasse. Collective bargaining is prohibited when the employees’ representative has not been certifi ed by the National Labor Relations Board according to specifi c procedures established in 1947 by the NLRA. A labor agreement between an employer and an uncertifi ed employee representative is not legally enforceable.

Duty to Bargain

The NLRA imposes on both the employer and the union the duty to bargain with each other over matters affecting the employees represented by the union. Section 8(d) of the NLRA deﬁ nes this duty to bargain collectively as the obligation “to

127 128 The Encyclopedia of Human Resource Management: Volume One

meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment.” The scope of subjects over which an employer and union must bargain is not speciﬁ ed or limited any more clearly in the statute, but subsequent decisions of the federal courts and the NLRB have established reliable precedent for determining which subjects are subject to the duty to bargain. While bargaining over many subjects is mandatory, employers and unions are free to mutually agree to other provisions, but legally prohibited from insisting upon or including certain matters in any collective bargaining agreement.

Mandatory Subjects of Bargaining The phrase “wages, hours, and other terms and conditions of employment” is construed broadly to encompass any subject or issue relating to the employment. The mandatory subjects include issues that directly affect the workers (for example, employment beneﬁ ts, work schedules, employee uniforms, seniority, job duties, layoff and recall rights, and work rules), issues that affect the employer-union relationship (for example, grievance and arbitration provisions, no strike/no lock-out commitments, union agent access), and issues that may potentially impact both (such as operational consolidations and shut-downs, subcontracting employee work). Either party may insist on its proposal on any mandatory subject to the point of complete impasse. If the parties reach impasse in good faith, then the duty to bargain requires no more. The NLRA speciﬁ cally “does not compel either party to agree to a proposal or require the making of a concession.” Thus, the employer or the union can legally condition further agreement on all other issues on its position on any single mandatory subject of bargaining.

Permissive Subjects of Bargaining Unions and employers often agree to negotiate over subjects that are not mandatory but nonetheless directly or indirectly affect the employees. Examples include interest arbitration clauses, internal union affairs, and the use of union labels on products. Because the subjects are not mandatory, however, neither party can insist on one to impasse or condition further agreement on mandatory subjects on bargaining over a permissive subject (Baer, 1989).

Illegal Subjects of Bargaining The NLRA and subsequent amendments have identiﬁ ed certain agreements that are illegal, even if the employer and union mutually agree to them. It is likewise a violation of the NLRA to insist on any illegal contract provision, such as a closed shop or hot cargo clause. Collective Bargaining 129

Collective Bargaining Procedures

Successful collective bargaining requires the reasonable participation of union and employer representatives to propose contract provisions and respond to the other’s proposals. The NLRA, however, imposes no particular procedure for this exchange, except to require that the representatives “meet and confer” at reasonable times. Employers are typically represented by human resources managers, executives, and attorneys, while employees are represented by union offi cials, attorneys, and sometimes a committee of the represented employees. The negotiations may take hours or years, and neither party is obligated to make a single concession in its demands. The test whether an employer or union has fulfi lled its legal duty to bargain collectively is determined not by the outcome of the negotiations, but rather by their conduct in the process. Failure to reach an agreement is not evidence that either party has violated the NLRA, but both parties remain obligated to negotiate “in good faith” throughout the process (Katz, Kochan, & Kochan, 2003). “Good faith” is generally defi ned as honesty of intention, meaning the manifest desire to reach agreement if mutually acceptable terms can be negotiated. While concessions are never required, the parties are expected to reasonably consider each other’s proposals and arguments and to meet to discuss their differences. An employer cannot, for instance, refuse to meet for prolonged times or present the employees with one “take it or leave it” contract from the outset. So long as the parties negotiate in good faith, a deadlock in negotiations is not a violation of the duty to bargain in good faith. Either side may break off further negotiations once there is no further progress on any disputed mandatory subject of bargaining. Impasse has several important legal consequences for the employer and the employees, including rights to strike, to lock out the employees, and to unilaterally implement changes to the employees’ pay and other terms and conditions of employment without further negotiations. If either party declares impasse and refuses to bargain further without having bargained in good faith, then it will be ordered to return to negotiations and rescind any changes made since the unlawful refusal to bargain (Herman, 1997). The National Labor Relations Board has exclusive jurisdiction over cases in which an employer or union is accused of failing to bargain in good faith, but its decisions may be appealed to the U.S. Circuit Court of Appeals. Federal courts also have jurisdiction over cases alleging violation of a collective bargaining agreement, but only if the claim is outside the scope of any grievance or arbitration provision in the agreement. Claims falling within the contractual grievance procedure must be pursued through that process and may be compelled by a federal court to participate in fi nal and binding arbitration. 130 The Encyclopedia of Human Resource Management: Volume One

Expiration and Termination

Most collective bargaining agreements are in effect for several years. If the employer or the union desires to bargain over the renewal or renegotiation of an expiring collective bargaining agreement, it must give written notice to the other party at least sixty days prior to the expiration date. If the notice is given later, then the party giving the notice must continue to follow the existing contract for sixty days while negotiations take place. Regardless of whether any renewal negotiations take place, the expiration of a collective bargaining agreement does not change the union’s status as certi- ﬁ ed representative of the employees. If the expiring agreement is not renewed or extended, the parties remain obligated to bargain in good faith toward a new contract.

References

Baer, W.E. (1989). Collective bargaining: Custom and practice. Jefferson, NC: McFarland. Herman, E.E. (1997). Collective bargaining and labor relations (4th ed.). Englewood Cliffs, NJ: Prentice Hall. Katz, H., Kochan, T.A., & Kochan, T. (2003). An introduction to collective bargaining and industrial relations (3rd ed.). New York: McGraw-Hill/Irwin.

Websites http://ucbcollectivebargaining.berkeley.edu/ www.ilr.cornell.edu/depts/ICB www.bna.com/products/labor/cbnc.htm www.bls.gov/cba/home.htm The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 23

COMPARABLE WORTH

Wanda M. Costen

omparable worth is the notion of workers being paid equally for doing work Cthat has similar worth or value (Ames, 1995). Pay equity is the more frequently used term to deﬁ ne this concept. Pay equity means that compensation is based on the relative value of the work performed, regardless of the sex of the people performing the work (Ames, 1995). In general, comparable worth relates to the pay differential between women and men.

The Pay Gap

Many people are unaware of the pay gap that exists between women in men in the United States. Table 23.1 on the next page depicts the history of the gender wage differential. Despite the increase in women’s participation in the workforce, as well as attendance in college, women still earn less than men on average. To illustrate the signiﬁ cance of this difference, the National Committee on Pay Equity also calculates Equal Pay Day. This is the day when the average woman makes the same amount as the average man in the United States. In 2011, Equal Pay Day was on April 12 (National Committee on Pay Equity, 2011a). That means women must work almost four additional months to earn the same amount men earn in one year!

131 132 The Encyclopedia of Human Resource Management: Volume One

TABLE 23.1. GENDER WAGE GAP Year Women’s Earnings Men’s Earnings Dollar Difference Percentage 1980 $22,279 $37,033 $14, 754 60.2% 1985 $23,978 $37,131 $13,153 64.6% 1990 $25, 451 $35, 538 $10,087 71.6% 1995 $25,260 $35,365 $10,105 71.4% 2000 $27,355 $37,339 $9,984 73.3% 2005 $31,858 $41,386 $9,528 77.0% 2009 $36,278 $47,127 $10,849 77.0%

Source: National Committee on Pay Equity, 2011a

Explanations for Gender Pay Inequity

There are several explanations for the differences between women’s and men’s pay. One explanation is the economic or human capital view. Human capital is a combination of the following characteristics a worker possesses: skills, knowledge, abilities, tenure on the job and in the organization, education, and age (Becker, n.d.). This economic view of pay inequity argues that the differences between men’s and women’s pay is related to the amount of education, skills, training, and tenure that men have versus women. Early research showed that human capital only explains a small portion of this wage difference (Ames, 1995; England, Farkas, Kilbourne, & Dou, 1988). More recent research suggests that single women earn approximately 90 percent of what single men earn. Married women, however, still earn 60 to 70 percent of what married men earn (Polachek, 2004).

Occupational Sex Segregation Many of the jobs in an organization are occupied predominantly by one sex or the other. Having mostly men in one occupation and mostly women in another occupation is called occupational sex segregation (Anker, Melkas, & Korten, 2003). Occupational sex segregation sometimes leads to discrimination in an attempt to exclude one sex from an occupation. Moreover, it offers one explanation for the gender wage gap. Over the past decade, women and men have mostly stayed in occupations historically earmarked for women and men (Dolado, Felgueroso, & Jimeno, 2003). Comparable Worth 133

White men primarily occupy the position of salaried manager, while secretary is the dominant occupation for white women (Reskin & Padavic, 1999). African American women dominate the nurse’s aide occupation, while African American men dominate truck driver occupations (Reskin & Padavic, 1999). Hispanic men also tend to be truck drivers, but Hispanic women are typically secretaries and cashiers (Reskin & Padavic, 1999). It seems clear that these occupations have vastly different salaries and wages. Therefore, segregating women and men into different occupations offers a plausible explanation for the gender wage difference. Having women and men in different jobs in itself does not pose a problem. What is disconcerting is the fact that women’s jobs hold less value to organizations. When an occupation becomes dominated by women, the pay typically decreases (Reskin, 1990). This decrease in pay also means that men are less likely to apply for these jobs, which means the demographics of the occupation remain the same.

Sex Typing Sex typing is related to occupational sex segregation. Sex typing is the notion of assigning duties and responsibilities based upon the domestic division of labor. This process results in women being placed in positions associated with traditional female tasks and attributes (Cohn, 1985). These engrained cultural stereotypes do not have to be based upon actual differences between the sexes to be implemented. Sex typing occurs because those responsible for hiring believe these differences exist and use these belief systems to make decisions about who is qualiﬁ ed for which jobs.

Recommendations for Ensuring Pay Equity Although comparable worth is an issue across the world, it does not have to result in disparities within an organization. Organizations must methodically develop compensation systems whereby jobs are fairly evaluated based on the value they contribute to the organization, not the composition of the workers in the jobs. Once organizations create a diagram that depicts the structure of the organization and how jobs ﬁ t together, the HR department must work with the other members of the leadership team to group the jobs that are similarly valued or have similar worth within the organization. Next, HR should assign a compensation wage band to each group of jobs. This process ensures that jobs that have equal value to the organization receive equal compensation. By focusing on the contributions of the jobs to the organization, the process reduces pay inequity. 134 The Encyclopedia of Human Resource Management: Volume One

Throughout this process, it will be important for both HR and line managers to focus on the essential knowledge, skills, and abilities needed for each position. Focusing on the speciﬁ c tasks and duties of each job should also reduce or eliminate the gender pay differential. If positions are valued according to their contributions, then the sex composition of the position should not inﬂ uence the compensation each job receives. Ideally, each position in a salary or wage band should require similar types of expertise.

Final Thoughts

Although in 2004 women comprised 59 percent of the labor force in the United States, on average women’s median weekly income was still only 80 percent of what men earned (Bureau of Labor Statistics, 2005). Stated another way, women earn 80¢ for every $1 a man earns. This gender pay gap primarily results from women’s jobs being paid less than men’s jobs. It follows then that in the United States women’s job are valued less than men’s jobs. Because organizations value women’s work less, they compensate these jobs less. This inequity is because of the jobs not having comparable worth. Organizations can reduce or eliminate the gender pay inequity by focusing on the essential knowledge, skills, and abilities needed for each position and paying positions with similar skill sets similar wages. The good news is that recent research suggests that the overall pay gap between men and women has lessened (Blau & Kahn, 2004).

References

Ames, L.J. (1995). Fixing women’s wages: The effectiveness of comparable worth policies. Industrial and Labor Relations Review, 48(4), 709–725. Anker, R., Melkas, H., & Korten, A. (2003, September). Gender-based occupational segregation in the 1990s. International Labour Ofﬁ ce. Retrieved 11 November 2006 from www.ilo.org/public/english/bureau/integration/download/publicat/4_3_173_ 16-gender-based_occupational_segregation_in_the_1990s.pdf. Becker, G.S. (n.d.). Human capital. Retrieved 11 November 2006 from The Concise Encyclopedia of Economics on the Library of Economics and Liberty website: www.econlib.org/library/Enc/ HumanCapital.html. Blau, F.D., & Kahn, L.M. (2004). The gender pay gap: Have women gone as far as they can? Academy of Management Perspectives, 21(1), 7–23. Bureau of Labor Statistics. (2005). Women in the labor force: A databook. Retrieved 18 May 2011 from www.bls.gov/cps/wlf-intro-2005.pdf. Cohn, S. (1985). The process of occupational sex-typing: The feminization of clerical labor in Great Britain. Philadelphia: Temple University Press. Comparable Worth 135

Dolado, J.J., Felgueroso, F., & Jimeno, J.F. (2003). Where do women work?: Analysing patterns in occupational segregation by gender. Annals of Economics and Statistics,71/72, 293–315. England, P., Farkas, G., Kilbourne, B.S., & Dou, T. (1988). Explaining occupational sex segregation and wages: Findings from a model with ﬁ xed effects. American Sociological Review, 53(4), 544–558. National Committee on Pay Equity. (2011a). Equal pay day. Retrieved 18 April 2011 from www.pay-equity.org/day.html. National Committee on Pay Equity. (2011b). The wage gap over time: In real dollars, women see continuing gap. Retrieved 18 April 2011 from www.pay-equity.org/info-time.html. Polachek, S.W. (2004). How the human capital model explains why the gender pay gap narrowed. IZA Discussion Paper Series, No. 1102. Bonn, Germany: Institute for the Study of Labor. Reskin, B.F. (1990). Culture, commerce, and gender: The feminization of book editing. In B.R. Reskin & P. Ross (Eds.), Job queues, gender queues: Explaining women’s inroads into male occupations. Philadelphia: Temple University Press. Reskin, B.F. & Padavic, I. (1999). Sex, race, and ethnic inequality in United States workplaces. In J.S. Chafetz (Ed.), Handbook of the sociology of gender. New York: Kluwer Academic/Plenum Publishers. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 24

COMPENSATION

Danielle Marie Bologna

wenty years ago human resources was often mainly focused on executing Tpolicies and procedures. Today there is a better understanding that HR leaders need to be strategic, especially when it comes to creating a work environment with competitive advantages in an increasingly competitive business environment. One appealing tactic to recruit and maintain top talent is to offer employees incentive pay (Meisinger, 2008).

Incentive Pay

Incentive pay is given to employees for speciﬁ c performance results, such as reducing costs, acknowledging a job well done, and to entice employees to have a shareholder mentality towards the company (Ueda, 2010). Incentives can either be structured so workers know the exact connection between job performance and the reward or they can be causal, meaning that workers can’t predict when rewards will be distributed. Casual rewards tend to be simple gestures to recognize outstanding work, along with a verbal acknowledgment for going above and beyond the expectations of the job. Some examples of casual rewards include a check for a modest amount, a ﬂ exible work schedule, the option to work from home occasionally, gym

136 Compensation 137 memberships, and movie tickets. If not distributed properly, there can be negative drawbacks to causal incentives, such as jealousy among employees, speculation of favoritism, and the use of rewards to preserve social distance (SHRM, 2010). While structured incentives maintain a high level of employee performance, there are a few risks associated with them. There is the risk of employees neglect- ing those tasks that aren’t directly linked to incentives, not ensuring incentives are meeting current needs, or improperly establishing incentives. There are seven major points to keep in mind when developing structured incentives:

1. Examine the situation to determine whether incentives are pertinent. 2. Show a direct correlation between pay and accomplishments. 3. Expect technicalities. 4. Create guidelines. 5. Shield employees from negative ramiﬁ cations. 6. Improved communications. 7. Continually update the program. (Billikopf, 2010)

Regardless of the reward, top talent generally responds to any opportunity that rewards exceptional performance. The following rewards work well for those employees who see themselves with the company for the long haul:

• Deferral plans allow employees to lower their existing income tax liability as their earnings mature tax-deferred. Employers have the option of matching those contributions not permitted under a 401(k) plan; this provides motivation to stay loyal to a company. • Phantom stock can be offered to employees every three or fi ve years, or over a longer duration if desired. Phantom stock isn’t tax-qualifi ed, so it isn’t bound to the tax regulations of 401(k) plans. • Performance unit bonuses can be offered based on the achievement of predetermined fi nancial goals set by the company; therefore, they are generally rewarded to executive-level employees.

The following plans are examples of incentives that can also be distributed on a company-wide basis to reward overall performance:

• Merit increase programs are established depending on the funds at hand and the funds appropriated for the purpose of bonuses by the company’s administration. Although merit pay is subjective, there are many advantages, such as the ability for employers to contrast pay given to those who exceed expectations with pay given to those who did not, contrast individual versus company 138 The Encyclopedia of Human Resource Management: Volume One

accomplishments, and the ability for employers to reward an employee for something that may only occur once, such as establishing a new system. • Gainsharing is a tool used by management to raise motivation and performance levels throughout the company. Generally, all employees are included in the ﬁ nancial gain as the company’s performance improves through a predetermined system. Gain is determined by comparing the company’s current performance to a baseline or historical performance. Gainsharing bonuses are distributed either monthly or quarterly and, of course, depend on whether or not the company has seen a gain. Gains are typically determined by operational measures such as customer service and quality, which are easier for employees to control than company-wide proﬁ ts.

Gainsharing

Typically, gainsharing plans have the following features:

1. Payouts are self-funded and determined by the savings accrued due to increased levels of performance. 2. The program is applied to a single site. 3. They include provisions for the end of the year to make up for insufﬁ cient periods. 4. Employees have the ability to collaborate in the formatting of the process. 5. They involve employees in improvement initiative programs.

Some of the key advantages to gainsharing include assisting companies to obtain lasting change in core performance metrics, generating a culture of continual improvement, enhancing employee focus and attention, heightening employees’ sense of responsibility and commitment to teamwork, and fostering positive change as well as employee morale. On the fl ip side, gainsharing can have negative aspects, such as metrics that are not as broad as company-wide profi ts and bonuses that are distributed even though profi ts are down. Management may not be willing to participate and refuse to openly discuss pertinent information that corresponds to performance metrics; stress levels may increase company-wide due to everyone having fi nancial rewards that hinge on the company’s success; and, if the work environment isn’t collaborative, implementation will be diffi cult. A company is best served using gainsharing when performance levels are easily quantifi able in an atmosphere of trust. Management must be involved and committed to the process, which includes training and open communication. Ideally, employees should be involved with the implementation of the plan, Compensation 139

establishing rules, receiving approval from management, and then communicating the details. Once the plan is in place, supervisors and managers should be trained in their respective roles. An expert on gainsharing should be appointed to avoid payouts from false gains.

Proﬁ t Sharing

Profi t sharing is a plan that awards a percentage of the company’s pre-tax profi ts to eligible employees. The percentage may be infl uenced by the employee’s base salary so those who receive a greater base salary receive a greater percentage of the profi ts that are typically distributed on an annual basis. Advantages to profi t sharing include the ability for employees to collaborate toward a common goal, improved employee focus on profi tability, implementation costs rise and decline with the company’s profi ts, and there is an improved desire to fulfi ll company-wide goals. Disadvantages to profi t sharing include the inability to individualize performance or credit for work, limited focus on profi tability, employees may receive drastic differences in earnings, making it diffi cult to manage personal fi nances, and compensation may be limited to exempt employees due to the Fair Labor Standards Act requiring employers to recalculate each employee’s “regular rate” of pay. Profi t sharing is best applied to companies that have steady or steadily rising profi ts. Rules should be established when implementing profi t sharing so there is a clear understanding between management and employees. Several formulas and models should be created to determine future profi ts and the associated costs with sharing those profi ts.

Stock Options

Stock options allow employees to purchase stock by a set future date, usually up to ten years in the future, at a set price. The price is generally determined by the market price of the stock when the option is sold. The option increases in value when the underlying stock value increases and has no value when the underlying stock price drops below or remains the same as the value of the “grant” price. Employees have the option, but are not obligated, to buy shares of their employer’s stock. Options tend to have a ﬁ ve-year vesting time frame to encourage employee longevity; however, it is up to the discretion of the company. Stock options provide the opportunity for employers to share ownership of the company with its 140 The Encyclopedia of Human Resource Management: Volume One

employees and to align employee and company interests. Draw-backs to stock options include diminished ownership, exaggeration of operating income, and potential for stocks to become worthless in a down economy. There are two types of stock options: incentive and nonqualifi ed. Incentive stock options allow employees to postpone taxation until the shares purchased with the option are sold; however, the company doesn’t receive a tax deduction. Nonqualifi ed stock options require employees to pay income tax on the “spread” between what the stock is worth and the price paid for the option. The benefi t to this option is that earnings won’t be charged and the company may benefi t from a tax deduction on the “spread.” The disadvantages include the need for executive investment, diluted earnings per share, and potential short-term manipulations of stock price. Restricted stock is granted to executives with conditions regarding the sale, transfer, or pledging of shares. Shares are taxed as normal income and are forfeited in the case of employee termination. Executive investment is not a requirement and, if the stock happens to rise after the grant, the company’s tax deduction will surpass the fi xed charge to earnings. Unfortunately, the earnings per share will instantly become diluted for the sum of shares granted and the earnings over the restriction period will be charged the fair-market value. Performance shares are conditional shares of stock granted at the beginning of a performance period. When performance goals are met, executives receive a portion of the grant. When the stocks are used, the visions of the executives and shareholders become aligned. Executive investment is not a requirement, and the company may receive a tax deduction at the time of payout. There is a fair amount of diffi culty in establishing performance goals, and earnings will be charged. Stock options have the best results when companies are small, expect future growth, and when they want to offer a sense of ownership to the employees. When implementing stock options, it’s important to consider the amount of stock to sell, potential recipients, number of options to be sold, and whether this is a permanent benefi t or simply an incentive.

ESOP Plans

The last compensation to be discussed is the Employee Stock Ownership Plan (ESOP). An ESOP allows employees to become owners of stock in the company they work for as part of a defi ned contribution employee benefi t plan. An ESOP is unique due to the fact that it’s required by law to invest, for the most part, in the employer’s securities. Additionally, an ESOP has the ability to borrow money; therefore, “leveraged ESOPs” can be used as a corporate fi nance technique. Compensation 141

An ESOP functions via a trust, created by the company, to purchase company stock by accepting tax-deductible contributions from the company, allotted to individual employee accounts within the trust. The allotment amount per employee tends to vary according to a predetermined formula that usually incorporates salary, service, or position. Employees have the option to “cash out” after they are vested in the program or when they terminate from the company. Vesting requirements generally dictate the amount that can be cashed out. An ESOP employee who reaches the age of fi fty-fi ve and has a minimum of ten years vested in the ESOP must be given the choice to diver- sify his or her account up to 25 percent of the value. All ESOP shares distributed to employee accounts after December 31, 1986, meet this requirement. The vested share is given to either employees or benefi ciaries at termination, disability, death, or retirement in a lump sum or installments over a certain number of years. The vested share is distributed immediately in the case of disability or death. There are a number of benefi ts to ESOPs. The owner can sell the entire company, borrow money tax-free, and still possess control of the company by con- verting personal and corporate taxes into tax-free capital appreciation. Incentive- based retirement is a cost-effi cient plan that motivates employees. There are tax advantages that allow company owners to sell their shares to the ESOP, without taxable gains on the sale, and sell a portion or the entire company to employees free of cost. If 30 percent or more of the company is sold to an ESOP, the owner has the ability to “roll over” the proceeds into other securities while deferring tax on the gain. Companies can reduce their tax liability by issuing treasury or newly issued stock to its ESOP. On the downside, when fi nancing a company’s growth with an ESOP, the rate of dilution must be compared to the cash fl ow benefi ts. In the event the value of the stock vastly appreciates, the ESOP and/or the company may not have the capital to buy back stock when employees retire. The ESOP may be viewed as a less attractive offer than profi t sharing if the company’s value doesn’t increase. ESOPs are not diversifi ed in other investments; in this event, employees lose their benefi ts if the company fails. To successfully implement an ESOP, companies must determine whether they want to use them as an employee benefi t plans or incentive programs. The value of the stock needs to be determined, and the effects of the contributions that need to be made to the trust should be considered. The plan should be developed by an ESOP authority due to the different accounting methods and allocation of stocks and other investments among employees (SHRM, 2010). 142 The Encyclopedia of Human Resource Management: Volume One

Summary

Companies should incorporate a variety of incentive plans that fi t the culture of the workplace. By doing so, companies can reap the benefi ts while diminishing the disadvantages. Different plans allow the company to motivate a variety of personality types; some people respond to long-term goals, while others prefer the instant gratifi cation of short-term goals. Companies can take care of a variety of needs with multiple incentive plans; some employees prefer vacation time and fl exible schedules, while others prefer monetary compensation. The overall incentive plan is strengthened by accommodating more employees when a combination of techniques is applied (Sunshine, 2010).

References

Billikopf, G. (2010, April 11). Labor management in agriculture: Cultivating personnel productivity. Incentive pay. Berkeley, CA: Regents of the University of California. www.cnr .berkeley.edu/ucce50/ag-labor/7labor/08.pdf. Incentive plans. (2010, April). Human resources internet guide. www.hr-guide.com. Meisinger, S. (2008, April 1). Employers demanding more from HR. HR Magazine. http:// ﬁ ndarticles.com/p/articles/mi_m3495/is_4_53/ai_n25341220/?tag=content;col1. SHRM. (2010, April 11). Incentive pay plans. SHRM Online. www.shrm.org/hrdisciplines/ compensation/pages/incentivepay.aspx. Sunshine, J. (2010, April 11). What are the different types of incentive plans? WiseGEEK: Clear answers for common questions. www.wisegeek.com/what-are-the-different-types-of- incentive-plans.htm. Ueda, D. (2010, April). Bonuses: Talent management, compensation, competencies, payroll, salaries. www.salary.com. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 25

CORPORATE UNIVERSITY

Yongho Park

corporate university is an institution serving key roles for developing orga- Anizations’ and employees’ abilities for business success with various instructional approaches. It can be a powerful tool for helping organizations get where they need to be. Also, this has becomes a global phenomenon in organizations (Wang, Li, Qiao, & Sun, 2010). New customers, new products and services, new alliances, and new opportunities are brought by the 21st century’s competitive business atmosphere. In this situation, a corporate university’s primary goal is to prepare an organization’s employees to take full advantage of the emerging opportunities and to institutionalize a culture of continuous learning aligned to core business strategies. In several ways, a corporate university differs from a traditional training department regarding the function and characteristics (Wang, Li, Qiao, & Sun, 2010). A training department tends to be primarily targeted to instruct employees about job skills and to be decentralized and reactive. In contrast, a corporate university is the centralized strategic umbrella for the education and development of employees and other stakeholders, such as customers, suppliers, and dealers (Meister, 1998a). An article in 1983 provided the ﬁ rst detailed research on corporate universities. Hawthorne, Libby, and Nash (1983) then used the term “corporate college” instead of corporate university. The authors deﬁ ned a corporate college as an institution offering post-secondary degrees that was initially established by an organization whose primary mission was something other than granting

143 144 The Encyclopedia of Human Resource Management: Volume One

collegiate degrees (Hawthorne, Libby, & Nash, 1983). Because this defi nition limits corporate colleges to institutions offering degrees, it is a little bit too restrictive. Moore (2002) defi ned a corporate university as a central organization serving multiple organizations to develop the employee’s capabilities required for success. This defi nition focuses on the responsibility for developing employee’s capacities, so it can be regarded as an instructive approach. Moore claimed that the corporate university is the tool helping the organization meet its goals through its people. Phillips (1999) defi ned the corporate university concept as a process, not a physical place. He suggested that all levels of employees, and sometimes customers and suppliers, participate in a variety of learning experiences necessary to improve job performance and enhance business impact in the corporate university. Allen (2002) identifi ed the key descriptors of a corporate university: It is an educational organization, it provides a variety of functions, and these functions are strategically linked to the organization’s goals and mission. Based on these three descriptors, he offered a defi nition of a corporate university as an educational entity that is a strategic tool designed to assist its parent organization in achieving its mission by conducting activities that cultivate individual and organizational learning, knowledge, and wisdom. In that defi nition, three words—learning, knowledge, and wisdom—need to be more specifi cally understood. Learning refers to change in individuals and organizations. Knowledge refers to specifi c facts, procedures, and skills that are able to be possessed by an individual or an organization, and wisdom refers to the ability to apply knowledge effectively to organizational goals. In order for corporate universities to be effective, employees and organizations should have the wisdom to apply their learning and knowledge effectively to meet organizational goals. Allen’s defi nition, which includes three key developmental aspects (learning, knowledge, and wisdom), may be accepted as one of most comprehensive approaches. In some organizations, the traditional training and development (T&D) function has been converted to, and sometimes just labeled, a corporate university. In some cases, organizations have created a corporate university to meet specifi c challenges and foster change (Bingham & Galagan, 2011). Therefore, another method of defi ning a corporate university would be to examine the scope of activities undertaken by a corporate university in an organization. Allen (2002) identified four levels of activity in which corporate universities may engage: (1) training only; (2) training plus managerial and/or executive development; (3) courses offered for academic credit; and (4) courses offered that lead to an academic degree. The corporate university is highly visible in many organizations. Phillips (1999) identifi ed that the corporate university concept as one of sixteen global Corporate University 145 trends of the human resource development fi eld through a practitioner survey. Even though this trend began in North America, it has spread to the rest of the world. In the proliferation of corporate universities, there are several driving factors (Meister, 1998a). First, knowledge changes quickly, and people should keep up. Second, organizations want to use their investment in employee education as evidence of their competitive advantage for recruiting and retaining the best employees. Last, organizations’ reengineering or an entire industry’s restructuring, the most popular approach to cultural change, has a basic goal of increasing workforce productivity and creating a competitive advantage in the marketplace (Meister, 1998b). Many corporate universities are well known to the training and development professionals. For instance, Disney University from Walt Disney Company and Motorola University from Motorola Corporation are good examples of high- profi le corporate universities. These universities have become symbols of training and development excellence, and it is diffi cult, at times, to separate the images of the universities from the images of their parent companies (Phillips, 1999). Fulmer (2002) found that organizations with corporate universities reported spending 2.5 percent of their payroll on learning; this fi gure is almost twice the national average. Ten principles lie at the heart of the corporate university’s power to stimulate employees into becoming the best workforce needed for success in the globally competitive market-place. Meister (1998a) called them the ten building blocks necessary to construct a corporate university successfully. These ten blocks are (1) form a governing body; (2) craft a vision; (3) recommend the funding strategy; (4) organize the scope; (5) identity stakeholders and their needs; (6) develop products and services; (7) select learning partners; (8) draft a technology strategy; (9) devise a measurement system; and (10) communicate the vision, products, and program throughout the organization and beyond. Meister (1998b) also identifi ed ten principles in designing a corporate university. These ten principles are also used as steps in building a corporate university. Meister’s steps are (1) provide learning opportunities that support the organization’s critical business issues; (2) consider the corporate university model a process rather than a place of learning; (3) design a curriculum to incorporate the three Cs—corporate citizenship, contextual framework, and core competencies; (4) train the value chain, including customers, distributors, product suppliers, and the universities that provide tomorrow’s workers; (5) move from instructor-led training to multiple formats of delivering learning; (6) encourage leaders to be involved with and facilitate learning; (7) move from a corporate allocation funding model to one “self-funded” by the business units; (8) assume a global focus in developing learning solutions; (9) create a measurement system to evaluate 146 The Encyclopedia of Human Resource Management: Volume One

outputs as well as inputs; and (10) utilize the corporate university for competitive advantage and entry into new markets. Meister asserted that launching a corporate university is an iterative process that requires several stages. This means that skipping some steps will not produce results in helping the individuals to learn in the corporate university environment. In short, a corporate university, which can be deﬁ ned as an institution to develop organizations’ and employees’ competencies for success, is one of the key trends of human resource development ﬁ eld in our modern rapidly changing world. For establishing an effective corporate university, an organization should pay attention to the principles of designing them.

References

Allen, M. (2002). What is a corporate university, and why should an organization have one? In M. Allen (Ed.), The corporate university handbook: Designing, managing, and growing a successful program (pp. 1–14). New York: AMACOM. Bingham, T., & Galagan, P. (2011). M’m m’m good. T+D, 65(3), 36–43. Fulmer, R.M. (2002). Best practices in corporate universities. In M. Allen (Ed.), The corporate university handbook: Designing, managing, and growing a successful program (pp. 107–120). New York: AMACOM. Hawthorne, E.M., Libby, P.A., & Nash, N.S. (1983). The emergence of corporate colleges. Journal of Continuing Higher Education, 31(2), 2–9. Meister, J.C. (1998a). Ten steps to creating a corporate university. Training & Development, 52(11), 38–43. Meister, J.C. (1998b). Corporate universities: Lesson in building a world-class workforce. New York: McGraw-Hill. Moore, J. (2002). Running a corporate university like a business: A ﬁ nancial model. In M. Allen (Ed.), The corporate university handbook: Designing, managing, and growing a successful program (pp. 33–42). New York: AMACOM. Phillips, J.J. (1999). HRD trends worldwide: Shared solutions to compete in a global economy. Houston, TX: Gulf. Wang, G.G., Li, J., Qiao, X., & Sun, J.Y. (2010). Understanding the corporate university phenomenon: A human capital theory perspective. International Journal of Human Resources Development and Management, 10(2), 182–204.

Websites www.corpu.com www.motorola.com/motorolauniversity.jsp www.qualitydigest.com/jan97/disney.html The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 26

CRISIS MANAGEMENT

Nellie J. Brown, Nancy J. Lampen

risis management is an ongoing, systematic, and disciplined process that Cattempts to identify an organization’s vulnerabilities to a wide range of problems in order to prevent crises from occurring. While not all crises can be avoided, they can be managed—through planning and effective communication (Mitroff & Anagnos, 2005). What makes a “crisis”? A crisis is either (1) not having sufﬁ cient or accurate information to make decisions or (2) lacking the resources to control the situation; and along with these, an escalating ﬂ ow of events that needs to be managed. During a crisis, the organization has to manage the problem while under intense scrutiny from outsiders, the media, and its own workforce. This can lead to a siege mentality whereby the management team may feel they are under attack from all sides. How well the crisis is managed may determine the long-term survival of the organization.

Business Case for Crisis Management

A study of Fortune 500 organizations found that the companies that were best- prepared for crises planned for a larger number and wider variety of crises than they had faced in the past (Mitroff & Alpaslan, 2003). Crisis-prone organizations prepared to handle only the types of crises they had already suffered, and not

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even all of these. Research indicates that most companies are not prepared to manage an unfamiliar crisis. Planning for crises reduces their incidence and promotes ﬁ nancial stability: crisis-prepared organizations stay in business longer and are more proﬁ table.

Crisis Management Team

Goal/Membership/Tasks The goal of a crisis management team is to develop a crisis plan by analyzing and evaluating the organization’s vulnerability to crises and then developing crisis response strategies and interventions. To better identify possible threats, it is important that members of the team view the organization from different perspectives. Team membership may include: upper levels of management and the union, human resources, the employee assistance program, security, health and safety, ﬁ nancial and legal departments, operations (including various work- sites), maintenance, public relations, and (highly recommended) at least one front-line employee.

Tasks The tasks of the team include: • Conducting a crisis audit to determine vulnerabilities as seen by all functions within the organization (see guidelines below); • Reviewing the current policies and procedures for managing crises; • Developing a comprehensive plan that addresses how to respond to a variety of crises and their management; and • Writing a crisis response manual that lets employees know their responsibilities during a crisis. The manual addresses who will manage the crisis, the ﬂ ow of information during a crisis, and who will be in charge of communicating about the crisis.

Conducting a Vulnerability Assessment

A vulnerability assessment is a tool to assist people to think in a structured way about the unthinkable. The crisis management team conducts the vulnerability assessment by asking key employees for their views on possible vulnerabilities and any natural- or human-caused crises the organization could face (Mitroff & Crisis Management 149

Pearson, 1993). The team also reviews crises that have happened to organizations similar to their own. The team evaluates the extent of damage these crises could cause and the effects they would have on employees, the organization, and its customers. Next, the team examines the preparedness of the organization to manage these crises, considering what would happen if more than one of these crises occurred at the same time. The team should also consider how the organization would cope if one or more of these crises occurred concurrently with a natural disaster. The assessment should identify the most-likely or most-damaging crises that could occur in the workplace and especially look for those that the organization is not prepared to manage. Organizations need to anticipate problems of all sorts; some examples could be major equipment failures, serious legal trouble, lost intellectual property, a damaged reputation, or an outbreak of illness in the workplace. How does your organization become aware of a crisis or impending crisis? What signals or information would suggest that a crisis may be unfolding? It is important for your organization to design crisis detection mechanisms and foster a culture that supports signal detection. You want bad news to travel upward in the organization so that you can deal with the crisis at its earliest stages. You may want to consider recognizing/rewarding people for alerting the organization to possible hazards.

Developing a Crisis Management Plan

A crisis management plan provides guidelines for identifying events and monitoring or evaluating incidents or situations, as well as providing procedures for notifying and communicating effectively with employees, stakeholders (any persons or entities who have an interest in the outcome of the situation), the media, and the public. It lists speciﬁ c staff and their crisis responsibilities and lists the organization’s key stakeholders, including how communication will be handled with each of them. In a crisis, all personnel need to know what their individual responsibilities are and to whom or where to report.

Crisis Recovery Plan

To ensure a speedy recovery after a crisis has occurred, it is essential for the organization to have determined in advance what is needed for business continuity and recovery. Developing well-thought-out crisis scenarios provides an effective 150 The Encyclopedia of Human Resource Management: Volume One

tool for crisis planning: it makes clear what competencies are needed for an organization to perform well in the face of adversity, reveals what’s required for an organization to recover, and enables an enterprise to develop early warning systems—systems that can avert trouble before a crisis emerges. A scenario is a story of how you envision a particular type of problem or crisis would happen in your organization. For example, a scenario involving a health crisis might unfold as a serious outbreak of inﬂ uenza that reduces your workforce’s attendance by 60 percent, so that there are personnel missing who cannot conduct your business’s principal functions. Scenarios help employees to envision the crisis in speciﬁ c terms, imagining the reality of the incident, as well as in general terms, crafting a pattern to follow in the event of similar crises. A successful recovery includes identifying minimum needs to resume operations, building in redundancies for critical functions or services, as well as identifying the stakeholders most important to recovery (Blythe, 2002).

Communicating During and After a Crisis

Managing a crisis means performing two tasks simultaneously: managing the crisis itself and managing the communications (Mitroff & Pearson, 1993). The effectiveness of the communication shapes people’s perceptions of the crisis. Just as managing a crisis is extremely diffi cult without a plan, it is important to have a communication management plan. To stay on top of a crisis, it is important to determine how information will be collected, evaluated, and disseminated to employees, the media, and other stakeholders during a crisis—including methods and channels, how information will be gathered, and where and how it will be analyzed and stored. With such a plan, as information fl ows into the organization, it is collected and addressed so that potential problems can be detected and dealt with before they, in turn, become crises. Poor communications may turn a minor problem into news headlines that need to be addressed and managed. When information is not communicated in a timely manner, a vacuum is created and the grapevine takes over, perhaps spreading misinformation and rumors. Next, the media calls or arrives on the scene and asks questions like: “When did you fi rst learn of this problem?” or “Why didn’t you know about this problem before now?” A crisis affects employees, too, and may cause them to not be thinking as clearly as they might under non-crisis circumstances. Preparing templates and core messages in advance allows employees to concentrate on the actual crisis instead of having to impro- vise in times of stress. Spokespeople should be identifi ed and trained in advance, which increases the likelihood that communication about the crisis will be handled effectively (Cohn, 2000). Crisis Management 151

Troubleshooting the Crisis Management Plan

The following are some sample questions to prompt thinking about the unthinkable: • Does your organization have a crisis management plan that covers more than natural disasters? • Are evacuation plans provided to new employees when they attend your organization’s new employee orientation? • Does each employee know his or her role in a crisis and where to go if there is a problem in the facility? • Who in your organization has medical training? What type? • Have you ever practiced an evacuation drill under less-than-ideal conditions? • Who is the point person for communications? Who is the back-up? • Does your organization have a back-up communication system in place? • Does crisis information need to be disseminated in more than one language? • What are the needs of your disabled employees in an emergency? • Could you quickly access a building site map that shows things like utility lines and shutoff valves? • Is your computer information backed up and stored offsite? • Do crisis management team members have contact information for other members 24/7? • Where do you store your crisis management plan and contact information? How often do you update it? • What is your communication plan for contacting all stakeholders? Do employees know which stakeholders they need to contact? • Do you have a succession plan? • Do you have a recovery plan with lists of what is needed to become operational after various types of crises?

Aftermath of a Crisis: Critical Incident Stress

Organizations must use emotional intelligence when working with employees after a crisis (Mitchell & Everly, 2001). Employees’ thoughts and feelings need to be addressed; if not, critical incident stress may progress to post-traumatic stress disorder. Some people over-control emotions at the time of a crisis so as to handle the immediate tasks at hand, and then continue to over-control later to block out feelings and images associated with the event. When employees are given an opportunity to understand the effects of critical incident stress and the value of acknowledging their emotions, they recover faster, 152 The Encyclopedia of Human Resource Management: Volume One

stay healthier, remain more productive on the job, and experience less disruption in their home lives. Some people fi nd it helpful to attend a critical incident stress debriefi ng in which they may discuss their experiences and feelings, gain a sense of perspective, and de-stress. For those who consider this insuffi cient or uncomfortable, follow-up counseling and individual sessions should be made available. Organizations have to keep employees informed of the resources available in the wake of a crisis and encourage the use of these resources to promote health and recovery. Some workers may express concerns about the privacy of their employer’s employee assistance program, and the issue has to be addressed by management. In a unionized setting, employees may seek their union’s member assistance program instead. Employees should be provided with information on how to take advantage of these services.

Conclusion

It’s no longer a matter of whether a crisis will happen or not, it’s a matter of what type it is and when it occurs. It’s an imperative to create a crisis management plan and communication management plan, then follow up by testing your response procedures and capabilities through exercises and preparedness drills (U.S. Federal Emergency Management Agency; U.S. Dept. of Labor). These enable employees to experience their responsibilities in a crisis, and the organization can change procedures as necessary. Attaching crisis management to other initiatives within the organization assures that it is part of the normal operations and is updated regularly.

References

Blythe, B.T. (2002). Blindsided: A manager’s guide to catastrophic incidents in the workplace. New York: Penguin Group. Cohn, R. (2000). The PR crisis bible. New York: St. Martin’s Press. Mitchell, J.T., & Everly, G.S., Jr. (2001). Critical incident stress debrieﬁ ng: An operations manual for CISD, defusing and other group crisis intervention services. Ellicott City, MD: Chevron Publishing Corp. Mitroff, I.I., & Alpaslan, M.C. (2003, April). Preparing for evil. Harvard Business Review, pp. 109–115. Mitroff, I.I., & Anagnos, G. (2001). Managing crises before they happen. New York: AMACOM. Mitroff, I.I., & Pearson, C.M. (1993). Crisis management: A diagnostic guide for improving your organization’s crisis preparedness. San Francisco: Jossey-Bass. U.S. Federal Emergency Management Agency. Emergency management guide for business and industry. www.fema.gov. U.S. Department of Labor. Occupational Safety and Health Administration. www.osha.gov/ SLTC/emergencypreparedness. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 27

CORPORATE SOCIAL RESPONSIBILITY

Phillp H. Mirvis

orporate social responsibility (CSR) is in a “pre-paradigmatic phase where Cthere is scant agreement on defi nitions and terms and no consensus has been reached about what it includes and does not include in its boundaries” (Googins, Mirvis, & Rochlin, 2007, p. 29). This entry takes an expansive perspective on CSR that includes its namesakes: corporate citizenship (addressing the roles and duties of a company in society), corporate responsibility (encompassing the full range of responsibilities of a company), and sustainability (concerned with the longer term impact of a company on society and the planet). To begin, the fi eld of CSR has its roots in ethics, which stresses the importance of moral corporate conduct. Ethics has been very much in the spotlight this past decade (a period book-ended by the misdeeds and collapse of Enron and Lehman Brothers) because of fi nancial fi nagling, corporate human rights abuses in supply chains, and environmental pollution. At a minimum, this fundamental aspect of CSR translates into compliance: corporate behavior that conforms to current laws, accepted business principles, and codes of conduct. But companies can choose to exceed the law in, say, product safety, environmental protection, or employee relations. On a global scale, this asks fi rms to decide whether or not to apply the high standards for ethics and transparency that are found in the United States and Europe to their operations in nations where there is no legal requirement or strong public expectation that they do so. Beyond compliance, philanthropy is an important part of the business-society equation. Increasingly fi rms in the United States and globally are expected to

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give back a portion of their profi ts to help the disadvantaged, support community life, and, when necessary, provide disaster relief. This translates into a voluntary contribution to society in exchange for business benefi ts such as market infrastructure and a general license to operate. Of course, corporate giving and employee volunteerism can also yield fi rm-specifi c benefi ts such as an improved reputation and stronger community relationships. However, business has its biggest impact on society through (1) its own operations and (2) its interactions with suppliers, distributors, and others through the entire value chain to end users (including B2B customers and/or consumers). In this context, the social and economic impact of philanthropy is comparatively modest. Most agree that CSR encompass the harms and benefi ts of a company’s commercial activities on society. Toyota has been in the news this past year for putting its customers in harm’s way with a faulty accelerator. In years past, the spotlight has swept over Nike (for labor issues in its supply chain), Chiquita (for work conditions on its plantations), Nestlé (for pushing its infant formula in lands where breast-feeding is healthier for children), Coca-Cola (for water usage), McDonald’s (for contributing to obesity), Home Depot (for selling lumber cut from old growth forests), and Wal-Mart (for exploiting its workers and destroying small businesses). Interestingly, these companies have since made concerted efforts to address these matters in order to improve their overall CSR performance. Today, front and center on the CSR agenda are concerns over climate change and environmental sustainability. One survey found that over 50 percent of consumers and business leaders sampled in ten countries rate “environmental issues, including climate change” as the most important issue facing business (Bonini, Hintz, & Mendonca, 2008). Hence the “greening” of business is under way around the world. Finally, it is also well documented that how employees are treated is the “lit- mus test” for how the public evaluates its corporations. In annual GolinHarris (2006–2010) surveys run in the United States, for instance, the public’s perception of whether or not a company “values and treats employees fairly and well” has been the number one criteria in ratings of its corporate citizenship, more so than charity, community involvement, environmental performance, and other factors.

Changing Conceptions of CSR

What are the responsibilities of a corporation? In an early period, Archie Carroll (1979) argued that there are four classes of responsibility for business in society: economic, legal, ethical, and what he termed “discretionary” responsibilities. Corporate Social Responsibility 155

He arranged these hierarchically, in a pyramid, as economic responsibilities are “fi rst and foremost,” while the other responsibilities (legal, ethical, and discretionary) come as additional, successive considerations. Since that time, at least three developments have expanded conceptions of CSR. One generally accepted idea, for example, is that corporations not only have responsibilities to their fi nancial shareholders but also to multiple stakeholders, including customers, suppliers, employees, communities, government, and so on. Most business leaders today acknowledge these responsibilities and their fi rms increasingly undertake some form of stakeholder consultation. This includes meeting with a growing voice in society, non-governmental organizations (NGOs), which act as representatives of many interests, the disenfranchised and the natural environment among them. The case is made that if a fi rm does not answer properly to these multiple constituents, it will lose its institutional legitimacy. Beyond responsibilities to specifi c stakeholders, many contend that companies have obligations to society overall (Hemphill, 2004). Wood (1991) expresses this is in the notion of “public responsibility.” This means that “businesses are responsible for outcomes related to their primary and secondary areas of involvement with society.” An auto maker, for example, “is rightly held responsible for helping to solve problems of vehicle safety and air pollution, and such a company might reasonably become involved with drivers’ education programs and public transportation policy” (p. 698). A second idea gaining traction is that a company is responsible for and needs to take an accounting of the full range of its social, economic, and environmental outputs––what John Elkington (1997) termed the triple bottom line (TBL). This has fi rms take an accounting of their social and environmental impact in the form of metrics and criteria such as those advanced by the Global Reporting Initiative (GRI) or the International Organizations of Standardization (ISO 14000), and publish a report on the fi ndings. In this light, William C. Frederick (1995) argues that business has both econo- mizing and ecologizing responsibilities. The former encompasses the production of marketable output, while the latter speaks to the surrounding ecosystem of energy, resources, technology, the workforce, and so on. A third idea, just beginning to unfold in select corporations, connects CSR to the very purpose and operating strategies of a business. Firms like Dow Chemical, IBM, General Electric, Unilever, Interface Carpets, and Wal-Mart, to name only a few, are making a strong link between social/environmental issues and their business models. This translates into greener chemicals, tools for a smarter planet, wind turbines, healthier foods, recyclable carpets, and lower drug costs. The strategic intent in these fi rms is not simply to go about their business responsibly and sustainably, but to make a responsible and sustainable business out 156 The Encyclopedia of Human Resource Management: Volume One

of addressing the world’s social and environmental needs (Mirvis, Googins, & Kinnicutt, 2010). Tracking this progress, Mirvis and Googins (2006) have depicted companies moving through “stages” of CSR. The stages of development posited—from an elementary to an engaged, innovative, integrated, and, in some instances, transformative approach to corporate responsibility—emphasize continuous interaction between a ﬁ rm and its environment that stimulates organizational learning. At each stage of development, the company’s engagement with societal issues is progressively more open and dealings with stakeholders are more interactive and mutual. In the same way, how companies think about their responsibilities becomes more expansive, and the organizational structures, processes, and systems used to manage citizenship are more sophisticated and aligned with the business.

CSR and Human Resource Management

How does CSR connect with HR in organizations today? To begin, there are many good reasons why companies should treat employees fairly and well, ranging from simple decency to competitive advantages in recruiting and retention to effective human resource management. Connecting HR to CSR, however, puts a public spotlight on employee relations and focuses companies on what Pfeffer (2010) terms “human sustainability.” As for ethics, most corporations publish codes of conduct and have “whistle blowing” policies that enable employees to report conﬁ dentially any violations that they observe. General Electric has gone further by establishing a “Spirit and Letter” compliance policy that reminds employees that they must not only adhere to the letter of the law, but also its spirit or intent. The policy has been published in thirty-one languages and distributed in over one hundred countries to over three hundred thousand employees who must sign it. On the philanthropic front, many companies match employee contributions to charity and provide “dollars for doers” funds to support their personal giving. Today, however, there is also an emphasis on strategic philanthropy—supporting business-relevant causes—and on employees contributing both their time and talents to society. IBM, as one example, has established an on-demand volunteer website that matches employee interests and skills with potential service opportunities in what is broadly termed “skill-based” volunteerism. When the company matches an employee with a skill-based assignment, it also offers them technology, software, and organizational support to contribute their business knowledge to community groups. Timberland, with its “serve a palooza” program, engages Corporate Social Responsibility 157

thousands of its employees, along with business customers and consumers, in annual community service and environmental clean-up efforts. When it comes to operations, employees are a key stakeholder in companies committed to CSR and are consulted on all matters regarding how they are treated and how their companies interact with society. As for engaging employees responsibly, leading companies today are attending to workforce diversity, work/ family balance, and employee development in the spirit of being good employers and good corporate citizens. On the broader agenda, Levi Strauss & Company solicited the views of hundreds of its employees when it crafted its corporate citizenship value proposition (CVP). The CVP stressed ﬁ ve themes:

• Business Practices That Reflect the Diversity of the World We Serve—The company seeks to build on its record of diversity among employees, consumers, suppliers ,and other stakeholders, as well as in its advertising and marketing efforts. • Supply Chain Practices That Respect the Workers Who Make Our Products—The company seeks to build on its pioneering sourcing code, continuing to work at the factory, community, and public policy levels to improve working conditions for garment workers worldwide. • Environmental Initiatives That Support Sustainability—The company aspires to build on its leadership supply-chain water-quality program and expand sustainability initiatives to other parts of its operations. • Societal Engagement That Contributes to Positive Social Change—The company aims to build on its achievements in employee community involvement and social- change-focused grant-making through deeper engagement with employees, consumers, and diverse stakeholders. • HIV/AIDS Initiatives That Protect Employees, Workers, and Consumers—The company intends to build on its longstanding leadership in this area by activating employees, consumers, and workers to oppose HIV/AIDS stigma and discrimination and work with contractors to promote worker access to prevention information, treatment, and care.

CSR Minus HR = PR

The Reputation Institute (2006) fi nds that, on average, 75 to 80 percent of those polled in some twenty-fi ve countries would “prefer to work for a company that is known for its social responsibility.” In the United States this seems especially true for the Generation Y or Millennials born from 1978 to 1998, who are entering and moving up in companies today. Cone Communications (2006) fi nds that nearly 158 The Encyclopedia of Human Resource Management: Volume One

seven in ten say that they are aware of their employer’s commitment to social/ environmental causes and 65 percent say that their employer’s social/environmental activities make them feel loyal to their company. One report phrased its meaning succinctly: CSR minus HR = PR. In addition, there is movement afoot to have employees serve as social intra- preneurs within the company and social entrepreneurs in CSR efforts. Unilever, for example, has its young leaders do ﬁ eld studies in impoverished communities to develop affordable products and services aimed at the “bottom of the pyramid.” IBM also has a global service program modeled on the Peace Corps that deploys over three hundred people annually and engages volunteers in three months of pre-work, one month overseas where they help small businesses and community organizations in emerging markets to address their commercial and technological challenges, and then two months in post-service where they harvest insights for themselves and their business. On the broader CSR front, Sandra Waddock (2002) is examining how ﬁ rms respond to global social, political-economic, and environmental threats and opportunities by establishing “extra-organizational” forms, including multi- business ventures and partnerships with governments and civil society. This, too, is an avenue for employee contribution and for developing a socially responsible workforce (Mirvis, Thompson, & Marquis, 2010).

References

Bonini, S., Hintz, G., & Mendonca, L.T. (2008, March). Addressing consumer concerns about climate change. The McKinsey Quarterly. Carroll, A.B. (1979). A three-dimensional conceptual model of corporate performance. Academy of Management Review, 4(4), 500. Cone Communications. (2006, October 24). The 2006 Cone millennial cause study. www.coneinc.com. Elkington, J. (1997). Cannibals with forks: The triple-bottom line of 21st century business. London: Capstone/John Wiley & Sons. Frederick, W.C. (1995). Values, nature and culture in the American corporation. New York: Oxford University Press. GolinHarris. (n.d.). Doing well by doing good: The trajectory of corporate citizenship in American business. www.golinharris.com. Googins, B.P., Mirvis, P.H., & Rochlin, S. (2007). Beyond “good company”: Next generation corporate citizenship. New York: Palgrave-McMillan. Hemphill, T. (2004). Corporate citizenship: The case for a new corporate governance model. Business and Society Review, 109(3), 339–361. Mirvis, P.H., & Googins, B. (2006). Stages of corporate citizenship: A developmental framework. California Management Review, 48(2), 104–126. Corporate Social Responsibility 159

Mirvis, P.H., Thompson, K., & Marquis, C. (2010). Preparing next generation business leaders (pp. 464–486). In R. Burke & M. Rothstein (Eds.), Self-management and leadership development. Cheltenham, England: Edgar Elgar. Mirvis, P.H., Googins, B., & Kinnicutt, S. (2010). Vision, mission, values: Guideposts to sustainability. Organization Dynamics, 39, 316–324. Pfeffer, J. (2010, February). Building sustainable organizations: The human factor. Academy of Management Perspectives, pp. 34–45. The Reputation Institute. (2006). RepTrak pulse 2006: Social responsibility report. www. reputationinstitute.com. Waddock, S. (2002). Leading corporate citizens: Visions, values, value added. New York: McGraw-Hill/Irwin. Wood, D.J. (1991). Corporate social performance revisited. Academy of Management Review, 16(4), 697. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 28

CULTURE

Ken Hultman

ulture, sometimes called organizational culture or corporate culture, has Cbeen described as “the way we do things around here.” Every human group has a culture, including nations, subgroups within nations, and business organizations. Culture consists of:

• Beliefs, which are underlying assumptions, conclusions, and predictions; • Values, which are standards of importance based on beliefs; and • Norms, which are standards for behavior based on beliefs and values.

Values and beliefs are psychological constructs, internal to a person. Organizations as such don’t have values and beliefs, but their cultures are shaped by them to the extent that they are shared or aligned.

Purposes of Culture

The primary functions of corporate culture are to help an organization defend itself against perceived threat, maintain the status quo, and foster growth. All three are necessary, but they need to be in the right balance. Cultures placing too

160 Culture 161

much emphasis on protecting against threat or maintaining the status quo may fail to adapt to changing conditions or take advantage of emerging opportunities. Also, cultural factors linked to past success tend to resist change, even when these become outmoded.

Levels of Culture

Three levels of culture can be distinguished:

• The espoused culture, deﬁ ned by verbal and published statements; • The actual culture, consisting of both formal and informal patterns of communications; and • The desired culture, reﬂ ected by the organization’s vision for the future.

Argyris and Schön (1974) distinguished between espoused theories, which is how people say they will behave, and theories-in-use, which is how they actually behave. Discrepancies between the espoused and actual cultures almost always exist, since progress toward vision is a process of continuous improvement. This isn’t necessarily a problem if employees perceive the organization as moving toward the espoused culture, as refl ected in the behavior of leaders and managers. If employees fail to perceive this, however, the espoused culture will likely be viewed as hypocritical and manipulative. Discrepancies between the actual formal and informal or “shadow” cultures undermine organizational trust. While the informal culture isn’t articulated in offi cial statements and policies, its subtle pressures and demands often exert a powerful infl uence on behavior. Reducing a formal/informal culture gap is important for increasing trust and building alignment to vision.

Assessing and Changing Culture

A number of books discuss the process of culture assessment and change (see, for example, Buckingham & Coffman, 1999; Collins & Porras, 1994; Hultman, 2001; and Schein, 1992). The following blueprint for planning and implementing culture change is sub-divided into Data Collection and Plan Development and Implementation phases. Any initiative to assess and change culture should come from the very top; otherwise, it is unlikely to work and may even backﬁ re. Also, if changes are made before current values are assessed, they may serve to reinforce 162 The Encyclopedia of Human Resource Management: Volume One

the existing culture, aspects of which could be outmoded. Changing corporate culture is one of the most strategic actions leadership can take—the underlying beliefs, values, and norms that deﬁ ne a culture shape strategy for better or for worse. To be effective, culture change must apply to all organizational levels, from leaders to unskilled workers; a culture won’t support growth unless everyone is aligned and is expected to abide by the same standards.

Data Collection Phase Data collection action steps are as follows:

1. First, assess current culture: • Involve all stakeholder groups in the process, that is, leaders, managers, employees, customers, suppliers, and stockholders; • Use a combination of instruments and interviews, and gather other relevant information about the company; • Identify current purpose, vision, and goals; • Identify underlying beliefs that support current values and norms; and • Decide which current purpose, vision, goals, beliefs, values, and norms you want to keep and which ones need to be changed by addressing these questions: • What’s working now and why? • What isn’t working now and why? • How can you strengthen what’s working, eliminate what isn’t working, and change what needs to be fi xed? 2. Second, defi ne the desired culture: • As in the fi rst step, involve all stakeholder groups in the process; • Clarify new realities that make culture change necessary; and • Select values, beliefs, and norms that: • Fit the organization’s context, that is, the needs of customers, the situation in labor markets, and the conditions in fi nancial markets. • Consider all key constituencies (customers, employees, and stockholders) and encourage leadership across all organizational levels. • Allow the organization to adapt to a changing environment. • Support short-term performance and effi ciency without compromising broader, long-range goals. • Respond to employee needs. • Foster movement toward vision and goals, and eliminate or de-emphasize outmoded cultural factors. Culture 163

Plan Development and Implementation Phase Steps for developing and implementing a comprehensive plan are as follows:

1. A fi rst step is developing a set of norms based on the desired values and beliefs. The norms should specify both acceptable and unacceptable behaviors. 2. A second step is developing a plan for closing the gap between current and desired vision, goals, values, beliefs, and norms and deciding how it will be implemented. 3. A third step is working toward alignment (compatibility) between employee and organizational vision, goals, values, so that the latter can become truly shared by addressing these questions: • What does the organization want (organizational interests)? • What do employees want (employee interests)? • In what ways are the wants compatible (aligned)? • How can areas of compatibility (alignment) be enhanced? • In what ways are the wants in confl ict (misaligned)? • How can areas of confl ict (misalignment) be reduced? 4. A fourth step is embedding desired values in management systems: • Initiate incremental changes in strategies and practices to keep the organization’s culture in tune with environmental realities (Kotter & Heskett, 1992). • Align the culture with vision, goals, strategies, tactics, and organizational design. • Use the culture to guide strategic planning, set priorities, make decisions, solve problems, and resolve confl ict. • Provide training in the new culture. • Orient new employees to the culture. • Use the culture to select employees, guide day-to-day supervision, and evaluate performance. • Use the culture to defi ne criteria for advancement and to set training and development objectives. • Build the reward system around the culture. • Coach, counsel, and mentor for consistency between culture and behavior. • Hold everyone from the top down accountable for acting in accordance with the culture. 5. A fi fth step is dealing with resistance to change: • What resistance do you expect to these changes? • How can you prevent or minimize this resistance? 164 The Encyclopedia of Human Resource Management: Volume One

6. A sixth step is working toward continuous improvement in aligning values, beliefs, norms, practices, and external realities. 7. A last step is reassessing the culture regularly.

References

Argyris, C., & Schön, D. (1974). Theory in practice: Increasing professional effectiveness. San Francisco: Jossey-Bass. Buckingham, M., & Coffman, C. (1999). First break all the rules: What the world’s greatest managers do differently. New York: Simon & Schuster. Collins, J.C., & Porras, J.I. (1994). Built to last: Successful habits of visionary companies. New York: HarperBusiness. Hultman, K.E. (2001). Balancing individual and organizational values: Walking the tightrope to success. San Francisco: Pfeiffer. Kotter, J., & Heskett, J. (1992). Corporate culture and performance. New York: The Free Press. Schein, E.H. (1992). Organizational culture and leadership (2nd ed.). San Francisco: Jossey-Bass.

Websites http://humanresources.about.com/od/organizationalculture/ Organizational_Culture_Corporate_Culture_in_Organizations.htm www.odnetwork.org www.odinstitute.org The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 29

DISCIPLINARY PROCEDURES

Wanda M. Costen

ne of the most challenging aspects of being a manager or supervisor is Odeciding how to discipline employees. Not only should the disciplinary action match the severity of the offense, but discipline must be implemented equally for all employees. Failing to implement disciplinary procedures equally for all employees throughout the entire organization can lead to employees feeling mistreated. These feelings often lead to charges of discrimination. The goal of discipline is to change the behavior of the employee. Discipline is any treatment that punishes an individual for a particular act. Discipline is also designed to create orderly behavior in the workplace. Finally, discipline can also be thought of as training that molds and strengthens desirable conduct (or corrects undesirable conduct), while simultaneously developing self-control (Christian, Edwards, Hinner, & Penny, 2006).

Common Disciplinary Problems

The most common disciplinary problem in the workplace is attendance. Attendance issues include tardiness, unexcused absences, and leaving prior to the end of one’s shift. While most certainly it is an individual’s responsibility to get to work on time, attendance problems can also signal that there are issues within the organization itself. If an organization has a severe attendance problem, it might

165 166 The Encyclopedia of Human Resource Management: Volume One

be necessary for the management team to meet and discuss the overall environment and what might be causing people to not want to come to work. Another common disciplinary problem is overall work performance. If an employee is not performing the job tasks appropriately or to the necessary standard, then the supervisor must have a performance feedback session with that employee. During this session, the supervisor discusses the performance problem and specifi cally works with the employee to come up with solutions to solve the problem. The supervisor should not criticize the employee, but focus on helping him or her understand the job specifi cations and standards. The supervisor should also consider retraining the employee to ensure he or she understands the requirements of the job. Managers often make the mistake of assuming an employee knows what is expected, but seldom take the time to fully outline the specifi c job duties and responsibilities with the employee. A performance feedback session is an opportunity to do just that. Behavioral problems also surface at work. These problems include personality confl icts among the staff, as well as the use of foul language and aggressive behavior. These problems should be handled immediately! If there are personality confl icts, the supervisor should have a discussion with both parties to fi nd out the source of the issues and develop an action plan that allows both parties to work together. When an employee uses foul language or engages in aggressive behavior, the supervisor should pull that employee aside immediately. The supervisor should discuss why the language or behavior is inappropriate and mention consequences for the continued behavior. Occasionally, employees are also dishonest at work. Dishonesty takes the form of not being truthful, misappropriating items, or withholding information. These incidents should be handled in the same manner as those discussed above.

Disciplinary Investigations

Serious disciplinary infractions require an investigation. Examples of serious alle- gations include sexual harassment, misappropriation of funds, altercations with customers or co-workers, and drug and alcohol usage or abuse. The goal of the investigation is to uncover the facts of the situation upon which the disciplinary action will be based. When conducting the investigation, it is important to maintain conﬁ dentiality and ensure that information is not disseminated to anyone who does not have a “need to know.” It is important to protect all involved parties. Also remember that, as in a court of law, an employee is considered innocent until the facts indicate otherwise. Disciplinary Procedures 167

The following questions should be considered when conducting a disciplinary investigation:

• What was the offense? • Did the employee know he or she was doing something wrong? • Is the employee “guilty”? • Are there extenuating circumstances? • Has the rule been uniformly enforced? • Is the offense related to the workplace? • What is the employee’s past work record?

The answers to these questions provide insight into what the disciplinary action should be. If this was the employee’s ﬁ rst offense, perhaps some latitude is in order. If the employee was unaware that he or she was engaged in inappropriate behavior, this becomes an opportunity for training. The key is to focus on gathering the facts and then ensuring that disciplinary action is applied equally across the entire organization.

Documentation

By far the most important thing to remember when it comes to discipline is to document, document, and document! Each and every disciplinary discussion with an employee should be formally documented in writing. The format of the written document should be consistent across the organization. The document should contain the following information:

• Employee’s name • Date of the offense • Date of the performance discussion • Full description of the offense, speciﬁ cally focusing on the behavior • Action plan for correcting the behavior • Consequences or disciplinary action taken • Consequences or disciplinary action taken if behavior continues • Supervisor and employee signatures

It is important to inform the employee that his or her signature is not a statement of agreement with the document, but acknowledging that the discussion took place. If the employee refuses to sign the document, merely indicate that on the document. Additionally, it might be wise to encourage the employee to 168 The Encyclopedia of Human Resource Management: Volume One

bring in a witness. The witness has no say in the discussion, but merely confi rms the content of the discussion and that it took place. Finally, the employee should receive a copy of the document with all signatures. The original should be placed in the employee’s offi cial fi le, and another can be placed in the supervisor’s personal fi les.

Files

There are typically two fi les for all employees. One fi le is the offi cial employee fi le. This fi le contains all employment documents to include the application, I-9, performance appraisals, and formal write-ups. The other fi le is the supervisor’s fi le, which contains information about the employee’s overall performance. The supervisor’s fi le is separate and contains notes on the employee’s performance that have been collected over the course of the year. These include positive comments from customers, co-workers, and other managers, as well as informal discussions. This fi le helps the supervisor write an accurate and comprehensive performance evaluation at the end of the year.

Final Thoughts

Unfortunately, supervisors spend an inordinate amount of time disciplining employees. It is important to ensure that disciplinary action is appropriate and equally implemented across the entire organization. Finally, the primary goal of discipline is to change behavior, not to change the person.

Reference

Christian, N., Edwards, S., Hinner, A., & Penny, M. (2006). Employee rights & discipline. Retrieved 28 October 2006 from www3.uta.edu/faculty/tmoore/Becky3320/Employee%20 Rights%20_%20Discipline%202.ppt#256,1, Employee Rights & Discipline. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 30

DRUG TESTS

Brandon Bruce Vargo

Deﬁ nition of Drug Tests

A drug test is commonly defi ned as an examination of biologic material to detect the presence of specifi c drugs and determine prior drug use (MedicineNet.com, 2008). Drug testing in the workplace is often performed pre-employment in a drug screening to detect illegal drug use or the use of substances not permitted in specifi c occupations or athletic competitions. Commonly used biologic materials include urine, hair, saliva, or sweat. Drug testing is particularly important to maintaining the safety of the workplace environment and lessens the impact of drug abuse in the workplace that results in tardiness, absenteeism, turnover, attitude problems, theft, decreased productivity, crime, and violence (Rosen, 2010). Most drug testing is done by sending an employee to a collection site, where a urine sample is obtained and sent to a certifi ed laboratory for analysis. In the United States, federal agencies are required to have drug-free workplace programs for their employees; however, there are no federal laws that universally affect the private-sector employers (USDOL, 2011). Two federal laws that have taken aim at combating the issue of drug use in the workplace include the Drug-Free Workplace Act of 1988 and the Omnibus Transportation Employee Testing Act of 1991. The Drug-Free Workplace Act of 1988 requires some federal contractors and all federal grantees to establish a

169 170 The Encyclopedia of Human Resource Management: Volume One

drug-free workplace before receiving a contract or grant from a federal agency (USDOL, 2011). The act does not require drug testing; however, some federal agencies do have regulations in regard to a fi tness-for-duty requirement, and in some cases this can include drug tests. The Omnibus Transportation Employee Testing Act of 1991 requires transportation industry employers who have employees in “safety-sensitive” positions to have drug-free workplace programs that include both drug and alcohol testing. The U.S. Department of Transportation (DOT) is required to implement and enforce these regulations (USDOL, 2011). Drug testing in the workplace started to gain momentum in the United States during the late 1980s with the War on Drugs movement instituted by the Reagan Administration, which resulted in the fi rst attempt to standardize drug testing in the workplace. Even though it was met by a large amount of resistance from civil rights activists, many companies that were involved in industries where workers under the infl uence could harm others began testing for drugs, in particular, companies whose employees worked with heavy machinery. Today, many of the legal considerations involved with drug testing are state-dependent in the United States and are stricter than the federal regulations enacted (Testcountry.org, 2011). The majority of Fortune 500 companies participate in drug testing and, while many require pre-employment drug screening, if the company wants to enact random drug-testing policies, the law does require this to be disclosed pre-employment (Rosen, 2010).

Limitations of Drug Tests

There are multiple limitations of drug tests, and most of the limitations are test dependent. The primary types of drugs tests are blood testing, hair testing, urine testing, saliva testing, and sweat testing. While most of the tests can provide a negative result within a twenty-four-hour period, the length of time to provide a positive result is typically longer and less accurate (Passthetest.com, 2011). Furthermore, the results of the drug tests require you to put extensive faith in science, as the chemistry is complex and difﬁ cult to understand. With all drugs tests, there remains a possibility that certain over-the-counter medications, foods, vitamin supplements, or prescription medicines could result in a false positive reading (Wisegeek, 2010). Furthermore, the detection periods are often limited in time and do not necessarily reﬂ ect the worker’s state in the work environment, but rather the state he or she is in when the test is taken. A sober worker could have a positive reading for up to ninety days past the time he or she used a drug (Wisegeek, 2010). Drug Tests 171

There is also growing concern over the physical and mental invasiveness of drug testing. The most reliable test is a blood test; however, it is also considered by many as the most invasive. Therefore, the most common form of a drug test for employers has become the urine screening. Even urine drug testing is met with some resistance as employees are reluctant to have to urinate in the presence of staff at a collection site (Passthetest.com, 2011). Tests often involve procedures that are personal in nature, and in many states the results are not legally required to be kept conﬁ dential (USDOL, 2011). Other than objections about accuracy, the majority of the opposition to drug testing comes in the form of civil rights issues. The majority of drug tests result in a negative reading, and it is therefore the argument of civil rights activists that not all employees should be subject to the search. The invasive nature of the tests make for awkward situations that many law-abiding citizens are required to go through. Drug tests are often said to violate an individual’s personal privacy rights (Comer, 1994). Other arguments and claims against drug testing say that there is no con- clusive evidence that drug testing enhances organizational effectiveness (Comer, 1994). The argument is made that, despite widespread support for biological testing, research suggests that not all drug use diminishes performance. The only item that is being measured in a drug test is an individual’s exposure to a given drug. Drug testing is limited in the sense that it cannot asses the individual’s ability to perform or the suitability of any employee or applicant. While the idea behind drug testing is safety, the testing process can have an adverse effect on an individual’s behavior as he or she may become reluctant to perform his or her duties. An alternative to biological drug testing is skills testing, which is far less intrusive and doesn’t invade the privacy of individuals.

HR Implications of Drug Tests

In order for drug testing to be effective, human resources should continually review the company’s policies and procedures for dealing with drug-related issues. In particular, it is the job of the HR manager to monitor the laws in any given state to ensure company compliance. Drug-testing laws are vastly different across the United States, and there are few standards that are universally accepted or adapted. If a company plans on implementing a drug-free program, HR must communicate the speciﬁ c requirements of this program to managers and employees. Furthermore, even if a company chooses to promote a drug-free program, drug testing is only one aspect of such a program. While the process may become routine, it is the law to notify employees that a random drug-testing policy exists prior to employment, and this becomes one of the responsibilities of the HR 172 The Encyclopedia of Human Resource Management: Volume One

department (Testcountry.org, 2011). Ultimately, HR should communicate the rights of the employees to each applicant before being hired, so everyone knows what the company’s expectations and rules are. Another implication of drug testing for the HR department is in deciding the cost benefi t. Currently, pre-employment drug-testing programs can be implemented with minimal effort from the company. Firms can utilize local medical clinics or, if the fi rm has multiple locations, programs can be set up through drug-testing agencies to allow testing at locations convenient to the job applicant throughout the United States. In fact, most companies outsource this activity to medical clinics at the cost of approximately $50 to $70 per employee (Rosen, 2010). This includes the cost for collection of the sample, laboratory analysis, services of a medical review offi cer, and communication of results. It would be impossible to determine how many positively tested employees would result in a substance abuse problem at work; however, it has been found that many companies would rather incur the preventative up-front cost than deal with the costs that are attributed to drug abuse in the workplace (Rosen, 2010). Companies that implement drug-testing policies have typically experienced lower turnover, less absenteeism, less theft, higher productivity, and reductions in the number of worker medical claims (Rosen, 2010).

Proposed Legislation Changes

In regards to drug-testing legislation, it is important to note that most of the legislation that exists or has been proposed is state-dependent. Drug- testing legislation is taking two particular paths. The ﬁ rst path is expanding its use and making it a universal requirement for multiple federal help programs. For example, current legislation exists in Florida that would make it a requirement to pass a drug test before receiving welfare payments (Associated Press, 2011). Many of the problems that Florida is currently having with the legislation, however, is in deciding who would pay for the tests and whether it would be the responsibility of the taxpayers or the applicants for temporary welfare assistance. According to USA Today, twenty-seven states are currently considering legislation that would require recipients of various kinds of public assistance to pass drug tests (Barnett, 2011). The second direction that drug-testing legislation is taking is in reducing its use and protecting the rights of the individuals who are required to take the tests. California has some of the most liberal legislation in regard to drug testing, and other states are following its lead. Currently, California has laws in place that make it illegal to require a potential employee to pay for a pre-employment or Drug Tests 173

continuing employment exam. The state also requires that all testing needs to be performed in a certiﬁ ed laboratory by a licensed physician (USDOL, 2011). While we have seen a strong movement to expand drug testing, we are also seeing a movement to contain it in order to protect the rights and privacy of the applicants. Currently, there is no major legislation being pushed through on the federal level in regard to drug testing. Beginning in the late 1980s the legislation that has been passed and proposed was a constant struggle to balance employee rights with worker safety. More recently there has been a trend to move toward public service. The issues at hand continue to be largely state-dependent, and varying laws continue to challenge employers across state boarders. The majority of legislation that we will see in the coming years regarding drug testing will continue to affect companies and their drug policies. As drug-testing technology continues to advance, the laws will also have to progress in order to fairly implement drug- testing procedures in society.

References

Associated Press. (2011, April). Florida welfare drug testing. Miami Herald. Retrieved from www.miamiherald.com/2011/04/16/2170099/ﬂ a-welfare-drug-testing-may-get.html. Barnett, R. (2011, April). State seeks to link public assistance, drug testing. USA Today. Retrieved from www.usatoday.com/news/nation/2011–04–17-drug-tests-state- legislatures-South-Carolina-.htm. Comer, D. (1994, May). A case against workplace drug testing. Retrieved from www.jstor.org/ pss/2635019. MedicineNet.com. (2008, May 20). De ﬁ nition of drug test. Retrieved from www.medterms .com/script/main/art.asp?articlekey=89631 Passthetest.com. (2011). The problems with drug screening. Retrieved from www.passthetest .com/drug-detox/The%20Problems%20With%20Drug%20Screening.html. Rosen, L. (2010). ESRcheck.com. Retrieved from www.employmentdrugtesting.com/ screening.html. Testcountry.org. (2011). History of drug testing in the U.S. Retrieved from www.testcountry .org/history-of-drug-testing-in-the-us.htm. USDOL. (2011). Federal laws. Retrieved from www.dol.gov/asp/programs/drugs/ workingpartners/regs/other_fedlaws.htm. Wisegeek. (2010, March). What could cause a false positive on a drug test? Retrieved from www.wisegeek.com/what-could-cause-a-false-positive-on-a-drug-test.htm. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 31

EMPLOYEE WELLNESS PROGRAMS

Steven N. Waller, Lebron P. Moten

Advent of Employee Wellness Programs

Rudimentary forms of wellness programs can be traced back to the early 1900s when employers sponsored recreation, physical fi tness programs, and health assessments for their employees. In the early 1980s people across the United States began to see the significance of healthy living, otherwise termed “wellness.” Realizing the wide range of personal benefi ts to employees and fi nancial benefits to the company, corporations such as Dow Chemical, AIG, Siemens, Daimler-Chrysler, and Caterpillar began to implement wellness initiatives. Today, multifaceted wellness programs are commonplace among public, private, and nonprofi t companies.

The General Cycle

As medical models of health began to decline, interest in developing company- based wellness programs began to escalate. The holistic well-being (physical, emotional, spiritual, intellectual and social health) of the employee became the focal point of companies focused on protecting the ﬁ nancial “bottom line”

174 Employee Wellness Programs 175

(Godbey, 2006, p.148). To develop a company wellness program, the Wellness Councils of America (WELCOA, 2006) recommends the following program development cycle:

1. Obtain management support and a good wellness team. 2. Collect potential participant data. 3. Establish measurable goals and operating plans. 4. Implement appropriate programs. 5. Develop and implement an evaluation plan.

Pre-Implementation An employee wellness program in any company would be beneﬁ cial for the modern employee and employer. Some wellness programs consist of using exercise facilities, ﬁ rst aid classes, stop smoking programs, and personal health awareness speakers and consultants. Before implementing any wellness program, a survey or questionnaire should be presented to all employees because of the voluntary nature of this type of endeavor (Natural Healthcare, 2003–2005).

The Committee and Program Goals If a sufﬁ cient number of participants are interested, then the employee who shows the most interest should be delegated to coordinate the program with a small committee of co-workers. This committee will be in control of all organizing and scheduling of events pertaining to the wellness program. Committee members should also collaborate often to determine, implement, and update goals for the program (Natural Healthcare, 2003–2005). Responses from the initial survey or questionnaire will aid in the decision making regarding goals and programs offered. A few goals may include:

1. Increase productivity; 2. Reduce employee turnover rate; 3. Decrease employee absenteeism; 4. Avoid unnecessary injuries; 5. Increase attitude and ofﬁ ce morale; 6. Increase ofﬁ ce unity; 7. Promote general health; and 8. Reduce stress. 176 The Encyclopedia of Human Resource Management: Volume One

Promotion. In order for the wellness program to be successful, it should be made clear that the program is voluntary and employees who do not join should not be hassled. If others beneﬁ t from the programs, the resistant persons may be motivated to participate eventually. When promoting and designing effective wellness programs, age, culture, body type, and schedule demands of the potential participants should be taken into consideration (Natural Healthcare, 2003–2005). Before employees pursue a wellness program, physical exams should be provided by a qualiﬁ ed healthcare professional to reduce negligence.

Exercise Program. According to age and body types of potential employee participants, fi tness programs should be made available through the purchase of exercise equipment, formation of recreation sports teams, and subsidized memberships to local fi tness clubs. If your company chooses to acquire exercise equipment and utilize unused space, personal trainers should be contracted to make sure that employees are emphasizing aerobic, strength, and agility workouts. It is also helpful to incorporate small tips and reminder posters within the work environment to help positively infl uence the values of the company. Some tips to achieve overall improved health and happiness include using stairs instead of elevators, providing complimentary pamphlets discussing different health aspects, bringing in yoga instructors, joining a company sports team, parking farther away from the offi ce, rearranging work hours to allow convenient exercise time during the daylight hours, and installing grooming stations so employees may not have to leave the offi ce to refresh after an intense workout. Stress reduction, job satisfaction and production, better nutrition, family planning, and aging gracefully are all benefi ts of an employee exercise program (Natural Healthcare, 2003–2005).

Smoking Cessation Programs. One of the oldest issues of the workplace is smoking. Many companies provide smoking areas for employees to use throughout the workday. A wellness program warrants a responsibility to these individuals, even if they show no interest in participating—and most will not. Since this group could be a signiﬁ cant size, brochures, pamphlets, posters, and seminars should be used for anyone interested in learning of potential diseases, health risks, popular supplements for nicotine, withdrawal, and quit smoking guides. A couple of successful, commonly used quit smoking models for consideration are the Health Belief Model and the Stages of Change Model (American Cancer Society, 2006).

First Aid Courses. A staff that can identify dangerous situations before accidents occur can reduce insurance and claims costs. Safety of employees should be one of the main goals of any company because employees are the main asset. First aid Employee Wellness Programs 177

and CPR training will be of great value if an emergency of any sort does occur (Natural Healthcare, 2003–2005). Some common situations include burns, cuts, sprains or bruises, and personal health emergencies (heart attack, stroke, choking, etc.). All employees should be knowledgeable of the contents in a fi rst aid kit and know how to use them. Some common fi rst aid items for the workplace include Band-Aids, cold packs, alcohol and peroxide, and sterile gauze pads. Training in fi rst aid will increase health awareness and offi ce teamwork.

Evaluation. Any wellness program should be evaluated continuously to retain high levels of interest and infl uence the corporate culture (WELCOA, 2006). Employees should display learned and developed skills and knowledge of the programs attended that can be sustained outside of the workplace. A questionnaire should be administered on a scheduled basis to evaluate participation rates, participation satisfaction, and reduced risk factors. If employees have enjoyed their experiences in the program, then the program can promote itself via word-of-mouth. Many participating employees should also experience a reduction in healthcare claims and absenteeism. Safety should always be a primary component of the wellness program and its success should be shown in reduced injuries and disability claims. An option that may be considered for improving absenteeism is the implementation of an emergency child and elder care program for employees with family responsibilities. You can fi nd out who has a need through a questionnaire. “Presenteeism” is a phenomenon whereby employees are present in body but not productive (WELCOA, 2006). If this is an issue in the company, then the wellness program should also address depression and stress, which cause lack of productivity. An increase in employee productivity can be noticed by routine monitoring and analysis of fi nancial statements. Finally, a break-even analysis should be done on the program. Employee demand must be suffi cient for any wellness program to be cost-effi cient (American Journal of Healthcare Promotion, 2001). Break-even on these types of programs may be diffi cult to analyze, but the benefi ts to the company should be shown or funds won’t be allocated for future programs. Successful wellness programs attract potential employees, reduce employee turnover, and infl uence the future perceptions and policies of the workplace, all diffi cult to quantify (American Journal of Healthcare Promotion, 2001).

Advantages and Beneﬁ ts Access to an employee wellness program will allow all members of a the opportunity to improve their health. It also allows for socialization and collaboration 178 The Encyclopedia of Human Resource Management: Volume One

outside of work. Stress affects all levels of an organization (Noelcke, 2004). The physical and mental life changes associated with wellness programs give employees more energy and enthusiasm to dedicate to family and personal interests outside of work also. This is an invaluable beneﬁ t. From an employer’s standpoint, investment in a program that will have a high return is vital (Noelcke, 2004). Lower employee absenteeism and healthcare costs and increased retention are just a few of the beneﬁ ts to employers. After all, employees are the main asset of any company, and assets must be protected to retain their value. Below is a study conducted by Johnson & Johnson of its employee wellness program.

The Value of Employee Wellness Programs

Johnson & Johnson Intent of the Study. Johnson & Johnson wanted to determine the effectiveness of its corporate health and wellness program. The program covered disability management, occupational health, employee assistance, work-life issues, wellness, and ﬁ tness.

Method. Johnson & Johnson contracted with Medstat to conduct a fi nancial analysis of medical insurance claims for more than eighteen thousand domestic employees who participated in the health and wellness program during a four-year period. The two-part evaluation compared the employees’ medical costs for the four years they had been in the program to their medical costs from the prior fi ve years. The fi rst study focused on changes in inpatient utilization, outpatient care, mental health visits, emergency room use, and associated ancillary expenditures. The second study reported the effectiveness of the program in reducing the health risks of more than four thousand employees who participated in two serial health screening programs, with a minimum of one year between screenings.

Results. The study showed Johnson & Johnson’s savings averaged $8.5 million annually for the four-year period after the program began, primarily due to lower administrative and healthcare costs. The annual medical costs of employees participating in the program were, on average, $225 lower than they were before they joined the program due to reductions in hospital admissions, mental health visits, and outpatient service use. The study also showed that employees participating in the program had lower health risks. Over two years, participants showed Employee Wellness Programs 179

improvements in eight health risk areas, including cigarette smoking, sedentary lifestyle, high cholesterol, high blood pressure, low dietary ﬁ ber intake, and poor motor vehicle safety practices. The improvements to the overall health of employees contributed to long-term health cost avoidance and increased productivity (MedStat, 2006).

References

American Cancer Society, Inc. (2006). Guide to quitting smoking. www.cancer.org/docroot/ PED/content/PED_10_13X_Guide_for _Quitting_Smoking.asp?sitearea=PED. American Journal of Healthcare Promotion. (2001, May/June) www.healthpromotionjournal.com/ publications/journal/ib2001–05.htm. Godbey, G. (2006). Leisure and leisure services in the 21st century: Toward mid-century. State College, PA: Venture Publishing. MedStat. (2006). MedStat research quantifi es value of Johnson & Johnson wellness program. www.medstat.com/insights_and_resources/success_stories_detail.aspx?id=261. Natural Healthcare Canada. (2003–2005). The Canadian reference for complementary and alternative health care. Pixcode Inc. http://naturalhealthcare.ca/benefi ts_of_a_wellness_ program.phtml. Noelcke, L. (2004). A healthy fi t for employers and employees: Advantages of workplace wellness programs. http://sparkpeople.com/resource/Motivation_articles. asp?id=246&page=1 The Wellness Councils of America (WELCOA). (2006). Seven benchmarks of success. www .welcoa.org/wellworkplace/index.php?category=2

Websites Employee Assistance Professionals Association: www.eapassn.org/public/ pages/index.cfm?pageid=1 Employee Wellness Programs: www.employee-wellness-programs.com/ National Association for Health and Fitness: www.physicalﬁ tness.org/ nehf.html Wellness Councils of America: www.welcoa.org/wellworkplace/ The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 32

EMPLOYMENT-AT-WILL

Judith Kish Ruud, Wendy S. Becker

he employment-at-will doctrine governs when and how an employer and Temployee may terminate an employment relationship having no deﬁ nite term (Rand, 2007). Each state interprets this doctrine under its own laws, which creates inconsistencies in its interpretation and application across the states (Moss, 2005). We provide a very general overview of this important and complex doctrine. Readers must seek additional information to understand how the doctrine applies in each state. In every state except Montana, employment-at-will is the default rule governing private sector employment relationships. Therefore, those states presume employees are “at-will employees” unless an employment contract provides otherwise (Rand, 2007). The vast number of at-will employees, the trend of legislatures and courts to balance the employer and employee’s rights under this doctrine, and the potential for costly litigation and damage awards require that employers understand the doctrine and its exceptions. Generally, parties to an employment relationship for a stated term may only terminate that relationship when the term expires, unless they have a valid reason to terminate it earlier. However, where the relationship has no deﬁ nite term, either party may terminate it at any time, with or without a reason, and without liability; provided that employer terminations are for legal reasons (Marks & Levine, 2007).

180 Employment-at-Will 181

Common deﬁ nitions of the employment-at-will doctrine, including one from the seminal case, include:

“If the service is terminable at the option of either party, it is plain no action would lie even to the employe[e]; for either party may terminate the service, for any cause, good or bad, or without case, and the other cannot complain in law.” (Payne v. Western & Atl. RR. 1884) “In the United States, employees without a written employment contract generally can be ﬁ red for good cause, bad cause, or no cause at all; judicial exceptions to the rule seek to prevent wrongful terminations.” (Muhl, 2001)

Rationale for the Employment-at-Will Doctrine

There are several reasons to allow either party to terminate an employment relationship of indefi nite duration with or without cause. They include fostering a free market system, allowing parties to freely contract regarding their relationship, and protecting the employer’s right to make objective decisions about employment without fear that disgruntled employees will sue for wrongful termination or courts will second-guess the employer’s decision (Rand, 2007). Traditionally, the doctrine assumed that when both parties freely enter employment relationships, market forces would encourage them to fulfi ll their employment obligations (Epstein & Rosen, 1984, as cited in Bowman & West, 2007). Initially, some considered this doctrine fair to both parties because each could end the employment relationship at any time without notice (Muhl, 2001). However, concerns about an employer’s economic advantage over employees and power to terminate employees for illegal reasons, such as discrimination, prompted exceptions that limit an employer’s right to terminate an employee (Muhl, 2001). There exists a steady fl ow of cases where at-will employees challenge terminations under exceptions to the doctrine. Additionally, law review articles continue to analyze the doctrine’s usefulness to protect employees, erosion by various exceptions, extension to new situations, and state court applications. These articles are available through databases such as LexisNexis. The current economic climate and management strategies for employment relationships create a climate ripe for challenges to job terminations under the doctrine’s exceptions (Coley, 2010a; Crain, 2010). Therefore, today’s employers must understand the doctrine and the exceptions. 182 The Encyclopedia of Human Resource Management: Volume One

Exceptions

Courts, state statutes, and federal law have carved out exceptions to the doctrine. If these apply, employers may only terminate employees for cause even absent a formal written contract for a stated term (Coley, 2010a; Rand, 2007). The exceptions generally protect activities society deems desirable, protect underrepresented populations potentially subject to an employer’s unfair behavior, or imply a contract for term based on an employer’s representations or actions. Some believe the exceptions are slowly eroding the doctrine; limiting an employer’s right to terminate employees for valid business reasons (Rand, 2007). Regardless, since forty-nine states employ the doctrine, employers must understand it so they can structure businesses to minimize, if not avoid, lawsuits under it. Accordingly, the following summarizes some major exceptions at-will employees use to challenge job terminations under the doctrine and related policies. The Department of Labor website (www.dol.gov) further describes these.

1. Public Policy Exception. States following this exception prohibit employers from terminating at-will employees for violating policies the public deems benefi - cial. Although each state may defi ne public policy differently (Muhl, 2001), this exception generally prohibits terminating employees for (a) whistle- blowing, (b) refusing to act illegally, (c) exercising legal rights or privileges, or (d) fulfi lling statutory duties (Gutman, 2003, as cited in Lichtenstein & Darrow, 2008). There are numerous federal statutes that create public policy exceptions, including The National Labor Relations Act and Title VII of the Civil Rights Act of 1964 (Coley 2010a; Patel, 2007). Among other things, this exception prevents terminating employees who refuse to work in unsafe environments or miss work for jury duty (Institute of Management & Administration, 2007). This exception is thought to prevent employers from leveraging employment against an at-will employee’s rights (Gutman, 2003, as cited in Patel, 2007). Recent articles discuss if the freedom of speech warrants extending this exception to protect an at-will employee’s right to blog about employment during non-working hours (Patel, 2007; Pham, 2006). Successful employee litigants under this exception could receive punitive damages (Institute of Management and Administration, 2007). 2. Implied Contract Exception. In states following this exception, an employer’s promises (oral or written) or actions that cause at-will employees to believe they can only be fi red for cause, limit the employer to terminating employees for Employment-at-Will 183

cause (Coley, 2010b; Muhl, 2001). Written statements are often in employer documents like employee handbooks, offer letters, company manuals, personnel policies, or employee reviews (Coley, 2010b; Rand, 2007). Subject to state law nuances, an employer’s assurances that evidence of a promise of continued employment changes the relationship from at-will to a stated term and limits the employer’s rights to terminate employees for just cause (Institute of Management & Administration, 2007). 3. Implied Covenant of Good Faith and Fair Dealing. States that recognize this exception require that employers act fairly and in good faith with at-will employees (Schwartz, 1996). This exception may limit terminations to “just cause” or prohibit those based on bad faith or malice (Shane & Rosenthal, 1999, as cited in Muhl, 2001). Courts may ﬁ nd this covenant where an employer’s representations cause employees to believe the employer will provide fair treatment and job security (Institute of Management and Administration, 2007). Some suggest internal branding programs “could and should serve as a basis for implied-in-fact contract claims” under this exception (Crain, 2010).

Trends

Other challenges include intentional inﬂ iction of emotional distress and promis- sory estoppel (Buckley & Green, 2006, as cited in Sonne, 2007). Some discuss exceptions to protect an at-will employee’s conscious objections to activities, such as objections to a particular healthcare procedure (Sonne, 2007). Additionally, in some jurisdictions employees may try to use other state laws, such as closely held corporation laws, to trump the doctrine and provide them with a cause of action (Kortum v. Independent Family Doctors, 2010). Recently, someone asked whether states could so broadly deﬁ ne a class of persons entitled to protection under the doctrine’s exceptions to virtually protect every disgruntled employee (Rand, 2007). Recognizing the continuing litigation under this doctrine, employers should ensure that employee terminations are properly motivated and do not violate the doctrine (Institute of Management & Administration, 2007; Muhl, 2001).

Conclusion: Practical Advice to Employers

The doctrine’s application continues to evolve and its scope varies among jurisdictions (Coley, 2010a). This complicates general discussions about how the doctrine and its exceptions apply in various employment situations and requires employers to work with local counsel on those issues. To minimize 184 The Encyclopedia of Human Resource Management: Volume One

problems, some suggest that employers use employment contracts (Coley, 2010a). Others suggest employers work with local counsel to see if the following will preserve at-will status in a particular jurisdiction (Institute of Management & Administration, 2007):

1. Conﬁ rm that at-will employment relationships are not altered by statements in employer documents such as handbooks, policies, procedures, and hiring applications; 2. Give employees handbooks and have them sign receipts; 3. Have employees sign statements acknowledging their at-will employment status; 4. Regularly train personnel responsible for employment issues about at-will employment issues; and 5. Create documented paper trails for hiring and performance reviews that con- ﬁ rm the at-will relationship has not been terminated.

References

Bowman, J.S., & West, J.P. (2007). Lord Acton and employment doctrines: Absolute power and the spread of at-will employment. Journal of Business Ethics, 74(2), 119–130. Coley, T.J. (2010a). Contract, custom, and the common law: Towards a renewed prominence for contract law in American wrongful discharge jurisprudence. Brigham Young University Journal of Public Law, 24(2), 193–224. Coley, T.J. (2010b). Getting noticed: Direct and indirect power-allocation in the contemporary American labor market. Catholic University Law Review, 59(4), 965–1000. Crain, M. (2010). Managing identity: Buying into the brand at work. Iowa Law Review, 95, 1179–1258. Institute of Management & Administration. (2007, October). How at-will employment is changing. Retrieved February 12, 2009, from HRfocus: www.IOMA.Com/HR. Kortum v. Independent Family Doctors, LTD. et al., 2010 ND 153; 786 N.W.2d 702; 2010 N.D. LEXIS 151. Lichtenstein, S.D., & Darrow, J.J. (2008). At-will employment: A right to blog or a right to terminate? Journal of Internet Law, 11, 9, 11–20. Marks, D., & Levine, A. (2007). Employment contracts: Revisiting common law claims. Nevada Lawyer, 15, 20. Moss, S.A. (2005). Where there’s at-will, there are many ways: Redressing the increasing incoherence of employment at will. University of Pittsburgh Law Review, 67, 295–364. Muhl, C.J. (2001). The employment-at-will doctrine: Three major exceptions. Monthly Labor Review, 124(1), 3–11. Patel, B.J. (2007). MySpace or yours: The abridgement of the blogosphere at the hands of at-will employment. Houston Law Review, 44(3), 777–813. Payne v. Western & Atl. R.R., 81 Tenn. 507, 518–519 (1884), overruled on other grounds, Hutton v. Watters, 179 S. W. 138 (Tenn. 1915). Employment-at-Will 185

Pham, H.H. (2006). Bloggers and the workplace: The search for a legal solution to the conﬂ ict between employee blogging and employers. Loyola of Los Angeles Entertainment Law Journal, 26, 207–235. Rand, K. (2007). Employment at will in Maine: R.I.P.? Maine Law Review, 22. 12. Schwartz, D.J. (1996). State common law wrongful discharge doctrines: Up-date, reﬁ nement, and rationales. American Business Law Journal, 33, 645. Sonne, J.A. (2007). Firing Thoreau: Conscience and at-will employment. University of Pennsylvania Journal of Labor and Employment Law, 9(2), 235–291. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 33

EMPLOYEE RELATIONS

Andrea Burns

ayne Cascio (2006) offers a simple explanation to employee relations: all Wpractices that implement the philosophy and policy of an organization with respect to employment. NASA’s Goddard Space Flight Center Ofﬁ ce of Human Relations offers a similar explanation: employee relations involves the body of work concerned with maintaining employer-employee relationships that contribute to satisfactory productivity, motivation, and morale. Essentially, employee relations is concerned with preventing and resolving problems involving individuals, which arise out of or affect work situations.

Managing Employee Relations

The workplace is changing to include more diversity; different generation, various international presence, and nationality. To improve productivity and remain competitive managers must attract and retain the best talent by improving their listening, adaptability, and decision-making skills. According to an article by Greg Roper (2005), there are two most important skills on which to focus: interpersonal communication and conﬂ ict management.

186 Employee Relations 187

Interpersonal Communication Most organization refer to interpersonal communication skills as life coaching skills. Such communication provides an opportunity to get to know one’s employees on a personal level, since this builds trust and respect and will help the organization accomplish its goals.

• Infl uence—Organizations utilize personal knowledge to infl uence a particular behavior or align the employees’ values with those of the organization. One can infl uence an employee to meet or exceed organization goals if one knows the employee well. • Interpersonal Facilitation—This allows for a better understanding of employees, since it teaches managers to read body language and be intuitive about employees, based on the interpersonal information shared. • Relational Creativity—One should understand employees enough to know what contest, incentive, or discussion can be used as a motivational tool. This dimension is focused on nurturing and developing relationships with diverse groups. • Team Leadership—The dimension covers the day-to-day interactions of employees with their supervisors, such as writing reports or completing individual tasks. People are led through person-to-person interactions. Organizations must be careful, however, if technology shapes the way leaders communicate with employees, both at the workplace and during off hours. Bill Leonard (2011) states that employers may wrestle with wage and hour disputes simply because voice mail and email access is provided during non-work hours. If managers are sending emails or leaving text messages after hours with the expectations that employees will read and respond, then there is a potential for wage and hour dispute under the Fair Labor Standard Act (FLSA). Employers must fi nd ways to track and compensate off-hours work to not be in violation of the law.

Confl ict Management Confl ict management skills help to resolve employee issues quickly and create greater satisfaction from the work group. There are seven components to effective confl ict management:

• Speak your mind and heart—Address the issue not the person and do not divert blame. Instead of avoiding the problem, address it and speak up. • Listen well—Listening skills are fundamental to conﬂ ict management. Focus on what the person is saying and not on how you are going to respond. 188 The Encyclopedia of Human Resource Management: Volume One

• Express strong feelings appropriately—Understand the emotions involved in a confl ict and work to resolve it by choosing words carefully. It is often not what is said, but how it is said. • Remain rational for as long as you can—Focus on resolving the confl ict and remain connected to the employee throughout the conversation. • Review what has been said—All agreements must be clarifi ed to avoid confusion or misunderstanding. Ask as many questions as necessary to clarify any issues. • Learn to give and take—Conversation must be two-sided; a manager should not do all the talking. • Avoid harmful statements—Verbal attacks will put people on the defensive and will delay a quick resolution to any problem. Remember the Hippocratic Oath: “Do no harm.”

Getting to the root of issues is of utmost importance in resolving employee concerns. It will also improve management’s credibility with the workforce and establish a positive workplace. The book Whale Done! by Ken Blanchard focuses on the powers of positive relationships in the workplace and is a quick read.

Improving Employee Relations

An article on Careermideast.com (2008) gives suggestions of how to improve employee relations. The key elements they mention include a written statement of the organization’s employee relations philosophy and a communications program that transmits information from top management to employees and then back to top management. A set of personnel policies and practices that is consistent with the organization’s stated philosophy would include topics such as absenteeism, tardiness, hiring, and pay. Some important topics to consider for an employee relations program are as follows:

• Corporate principles—Employees want to be comfortable with what an organization stands for; therefore, publish a clear vision that all employees can understand. • Employee feedback—Employee want to know that employers care about their opinions. A good way to ﬁ nd out what employees care about and what they think is through employee opinion surveys. • Fair treatment—Employees want to be treated fairly. For example, if you throw a birthday celebration for administrative staff members, ensure the same is done for all other employees. Employee Relations 189

• Employee participation—Employees want to be productive and involved. Create employee participation programs or networking group to involve all employees. Getting as many employees as possible to strategize about the success of the organization is a viable part of an employee relations program. • Employee recognition—Employees want to be appreciated and recognized for a job well done. Use different strategies to link performance with rewards, which can help to facilitate an entrepreneurial spirit and encourage team work. • Competitive compensation— Employees want to be paid competitively. Employee relations programs ensure that the organization values the knowledge, skills, and abilities of every employee. To ensure the salary of employees remains competitive, it is important to conduct annual salary surveys and ensure that the entire compensation package is competitive. • Challenges—People like to feel challenged and supported in taking on new challenges. Presenting an organizational challenge to employees will stimulate thinking and create excitement within the organization. • Training—Employees want to achieve the greatest possible results professionally and personally. Most employees provide training if there is money in budget, rather than budgeting for training ahead of time, which is a mistake. • Communication—Employees want to be knowledgeable about any changes within the organization. When employers fail to communicate with employees about what is going on, it causes dissent, rumors, and ill-will. Once communication occurs, employees feel a part of the larger organizational family. • Support—Employees want assistance in balancing their work and family needs. Establishing a good employee relations program has to do with understanding that employees have a life outside of your business. • Direct contact—Managing by walking around has a direct and immediate impact on employee relations. When a manager walks around the work area, talks with employees, participates in events that are planned by employees, and conducts monthly informal meetings employees, it can create an immediate boost in employee morale. Executives should keep employee relations foremost, although too much contact can undermine the chain of command.

There are often instances of aggression and vandalism in the workplace caused by employee dissatisfaction and stress. According to Bill Leonard (2011), this has been caused by the uncertainty of the U.S. economy after the recession of 2008. The weak U.S. job market has created a “bomb shelter” mentality and employees are hunkering down and trying not to “rock the boat” while they wait out the shaky economy, Leonard believes. In the meantime, employers felt the pinch of uncertainty among employees as performance declines and dissatisfaction rises. 190 The Encyclopedia of Human Resource Management: Volume One

The key to alleviate employee some of the upheaval is to concentrate on building and keeping the trust of employees. Employees need to be listened to and to cared about; employees want to know that their plight is understood and that improvements will be made. Strong top-down communication channels are essential to alleviating stress and tension in the workplace. Employers should take survey employees at least once a month, encouraging them to talk about issues and recommend solutions. The key is to listen attentively and not diminish the concerns shared, as employees must feel they can express themselves freely. If employees know that their input is being taken seriously and acted on, then the attitudes and productivity of employees could improve.

References

Blanchard, K. (2002). Whale done! The power of positive relationships. New York: The Free Press. Careermideact.com. (n.d.). Improving employee relations. Retrieved June 24, 2008, from http://careermideast.com/en/Employer/Resources/Articles/Improving.aspx. Cascio, W. (2006). Managing human resources (p. 546). New York: McGraw-Hill. Leonard, K. (2011). A look at employee relations in 2011. Alexandria, VA: Society for Human Resource Management. NASA’s Goddard Space Flight Center Ofﬁ ce of Human Relations. (2001). What is employee relations? Retrieved June 24, 2008, from http://ohr.gstc.nasa.gov/employee_reltaions/ whatis.htm. Roper, G. (2005). Human resources, managing employee relations. Annual editions, article 22 (p. 96). New York: McGraw-Hill. Society for Human Resource Management. (2011). A look at employee relations in 2011. Alexandria, VA: Author. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 34

EQUAL PAY ACT OF 1963

Emily R. Wilkins

Deﬁ nition of Legislation

The Equal Pay Act (EPA) was enacted on June 10, 1963, by President John F. Kennedy. It is an amendment to the Fair Labor Standards Act of 1938. The purpose of the act is to prohibit discrimination on account of sex in the payment of wages by employees engaged in commerce or in the production of goods for commerce. It requires that men and women working for the same establishment be paid the same rate of pay for work that is substantially equal in skill, effort, responsibility, working conditions, and establishments (U.S. Equal Employment Opportunity Commission, 1963). Employers who violate the Act may not reduce the wage rate of any employee to comply with the Act; instead employers must raise the rate of lower-paid employees, not lower the rate of the higher-paid employees. Compliance of the Equal Pay Act is monitored by the Equal Employment Opportunity Commission (EECO). The requirements of the legislation (skill, effort, responsibility, working conditions, and establishments) are further outlined below (Society for Human Resource Management, 2008).

1. Skill is the measure of factors such as experience, ability, education, and training required to perform a speciﬁ c job, not what skills the individual employees may have.

191 192 The Encyclopedia of Human Resource Management: Volume One

2. Effort is the amount of physical or mental exertion needed to perform the job. This means that regardless of whether the employee is a man or woman, the pay rate is determined based on the level of physical activity required by the job, resulting in higher pay rates for more labor intensity. 3. Responsibility refers to the degree of accountability required for performing the job. The higher the position level and the higher the responsibility, the higher the wages. 4. Working conditions are deﬁ ned as (1) physical surroundings and (2) environmental hazards. 5. Establishment can refer to anything that is a distinct physical place in the business, rather than an entire business or enterprise consisting of several places of business. However, in some circumstances, physically separate places of business should be treated as one establishment.

Based on the original decision of Congress, the rationale behind the amendment was to avoid following issues still present from the 1938 Act (U.S. Equal Employment Opportunity Commission, 1963):

1. Depresses wages and living standards for employees necessary for their health and efﬁ ciency; 2. Prevents the maximum utilization of the available labor resources; 3. Tends to cause labor disputes, thereby burdening, affecting, and obstructing commerce; 4. Burdens commerce and the free ﬂ ow of good in commerce; and 5. Constitutes an unfair method of competition.

Limitations of the Equal Pay Act

Pay differentials are not prohibited if they are based on factors other than gender. Factors that are allowed could be things like seniority, education, experience, merit systems, or systems that measure earning by quality or quantity of production. Differentials may also be paid for shift work, dissimilar working conditions, and additional job duties or additional skills. It is provided that an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee (U.S. Equal Employment Opportunity Commission, 1963). Along with limitations, there are many possible outcomes for violation of the EPA. These penalties include ﬁ nes and imprisonment. Next, there are Equal Pay Act of 1963 193

damages resulting from engagement in lawsuits and righting of the action; attorneys’ fees and costs, and termination of right of action. Finally, a company must pay wages and compensation, waiver of claims, actions by the secretary, limitations of actions, and savings provisions (U.S. Equal Employment Opportunity Commission, 1963). The EPA can be violated in many ways large and small. The Catholic University of America has compiled a list of some of these ways. The list below gives examples of some ways a business can be held liable for pay discrimination. The list is not comprehensive but offers a better understanding of how the act can be violated (The Catholic University of America, 2009):

1. An employer pays employees inside a protected class less than similarly situated employees outside the protected class, and the employer’s explanation does not satisfactorily account for the differential. 2. An employer maintains a neutral compensation policy or practice that has an adverse impact on employees in a protected class and cannot be justiﬁ ed as job-related and consistent with business necessity. 3. An employer sets the pay for jobs predominantly held by protected class members below that suggested by the employer’s job evaluation study, while the pay for jobs predominately held by employees outside that protected class is consistent with the level suggested by the job evaluation study. 4. A discriminatory compensation system has been discontinued, but salary disparities caused by the system have not been eradicated. 5. The compensation of one or more employees in a protected class is artiﬁ cially depressed because of a discriminatory employer practice that affects compensation, such as steering employees in a protected class to lower-paid jobs than persons outside the class hold or discriminating in promotions, performance appraisals, and procedures for assigning work or training opportunity.

HR Implications of the Equal Pay Act

HR should continually monitor pay discrepancies by conducting frequent salary surveys and educating managers about compensation and promotion processes. HR should review managers’ salary increase and promotion decisions. HR also should serve to educate employees on how their salaries are determined and what their rights are if they believe they’re victims of sex discrimination by managers. Failure to monitor can create a culture wherein discrimination is condoned and where employees feel powerless to make complaints internally and therefore feel the need to seek outside counsel. One way for an employer to do so is by 194 The Encyclopedia of Human Resource Management: Volume One

developing Equal Pay Act plans addressing the key issues below, published in HR Magazine (Stites, 2005):

1. Develop a lock-step program for compensation levels based on tenure with the company, work experience, and education level; 2. Review all written materials describing the compensation system’s accuracy; 3. Look for less-obvious factors that may affect compensation, such as premiums paid for hard-to-ﬁ ll or highly technical jobs; 4. Include bonuses and other cash incentives when analyzing compensation; and 5. Develop a program for compensating individuals based on measureable job- related factors.

Finally, it is important for an employer to perform self-audits on the development plans that have been established. Businesses can look at job descriptions and pay practices to see where they may not comply with the Equal Pay Act. The following tips are helpful in determining how a business is doing in terms of being in line with the Equal Pay Act. First, there needs to be an examination of existing job descriptions, making note of all jobs that perform work of a very similar nature. Even when job descriptions call for additional duties or additional skills, look closely to determine whether these added requirements are only occasional, irregular, or temporary. Second, a company needs to make sure that all employees are actually doing the work indicated in the job descriptions, as time goes on and responsibilities shift or change, the actual duties of a particular job may deviate from an older description. Performance evaluations should refl ect the actual requirement of the job, and organizations should tailor the forms to make them specifi c for a job or job category and make one aim of performance reviews be to refl ect and underscore the differences between various jobs. Third, it is important for companies to look at entry-level salaries, allowing disparate pay only to the extent that job candidates negotiate salaries, making sure the company keeps salary ranges small. Starting salaries often have far-reaching effects for long-term employees. Because many raises are based on a percentage of current pay, a low starting salary may create wider discrepancies. This disparity can become even more diffi cult to explain as time goes on. Fourth, look at the company’s highest-paying jobs and be prepared to explain why this is so. Scrutinize any company practices that may encourage one gender or discourage the other from fi ling certain positions. Finally, group the various job descriptions and categories together and look at midpoint salaries. Salary midpoints and/or averages are not absolute criteria Equal Pay Act of 1963 195

for indicating disparate pay practices, but can be useful in raising ﬂ ags during an audit (Johnson, 1999).

Proposed Legislations Changes

In 2008 the U.S. House of Representatives passed the Paycheck Fairness Act. This legislation enables employees new ways to seek damages for gender- based wage discrimination. Many oppose this bill because, as it is currently written, it imposes unlimited damages for even unintentional pay disparities. The Act also limits an employer’s flexibility to compensate employees based on current legal criteria, such as cost-of-living differences across geographic locations or different work responsibilities within similar job categories (Layman, 2008). The Lily Ledbetter Fair Pay Act, also passed through the House, establishes that the time clock for fi ling a wage discrimination charge with the Equal Employment Opportunity Commission restarts every time an employee receives a paycheck (or even a retirement check). The bill was passed by the Senate in 2009 and signed by President Obama on January 29, 2009, as an amendment to the Civil Rights Act of 1964. It also states that employers are liable for management decisions made years earlier for which there may be no available records or wit- nesses. This legislation signifi cantly expands current law by allowing not only an aggravated employee, but other individuals who were “affected” by an act of pay discrimination to fi le a claim; this includes spouses, children, and other relatives (Society for Human Resource Management, 2009). Overall, these two bills will lead to a greater restriction on employers’ ability to manage legitimate pay systems and expose employers to unprecedented liability. There had previously been no signifi cant changes to the 1964 Act. According to a recent article published by the Society for Human Resource Management, there are fi ve reasons why there may be changes in the Equal Pay Act in the future. The fi ve reasons listed were

1. President Obama was a big supporter of women’s equality during his cam- paign and it is likely that he will push for more changes in the future; 2. Important action on the Paycheck Fairness Act; 3. Signifi cant EECO activity in terms of monitoring policies of the Equal Pay Act; 4. Impact of cost-cutting measures because of the economic downturn; and 5. Specifi c industries are at a higher risk, including fi nancial service fi rms, construction companies, food service fi rms, and healthcare organizations. 196 The Encyclopedia of Human Resource Management: Volume One

References

Johnson, C. (1999, July). Equal Pay Act. Retrieved February 11, 2011, from www.shrm.org/ hrdisciplines/compensation/Articles/Pages/CMS_000057.aspx. Layman, M. (2008, August 15). Equal pay. Retrieved February 10, 2011, from www .shrm.org/Advocacy/GovernmentAffairsNews/HRIssuesUpdatee-Newsletter/ Pages/081508_1.aspx. Society for Human Resource Management. (2009). Pay equity. Retrieved February 10, 2011, from www.shrm.org/Advocacy/GovernmentAffairsNews/HRIssuesUpdatee-Newsletter/ Pages/011609_2.aspx. Society for Human Resource Management. (2010, March 8). Five reasons to focus on pay equity in 2010. Retrieved February 21, 2011, from www.shrm.org/hrdisciplines/ compensation/Articles/Pages/FiveReasons.aspx. Society for Human Resource Management. (2008, October 7). Equal Pay Act of 1963. Retrieved February 10, 2011, from www.shrm.org/LegalIssues/FederalResources/ FederalStatutesRegulationsandGuidanc/Pages/EqualPayActof1963.aspx. Stites, J. (2005, May 1). Equal pay for the sexes. HR Magazine, p. 4. The Catholic University of America. (2009, March 11). Summary of federal laws. Retrieved February 21, 2011, from http://counsel.cua.edu/fedlaw/Equalpay.cfm. U.S. Equal Employment Opportunity Commission. (1963, June 10). The Equal Pay Act of 1963. Retrieved February 10th, 2011, from www.eeoc.gov/laws/statutes/epa.cfm. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 35

EXECUTIVE COMPENSATION

Traci M. Pauley

xecutive compensation, simply defi ned, is how you pay the executives of your Eorganization. Executives should be accurately identifi ed and classifi ed within your organization. Companies need a competitive executive compensation package to attract new talent. The package should also retain the talent that is already employed. Before creating an executive compensation package, an organization should have a compensation philosophy that is specifi c to executive pay. Executive compensation packages are comprised of several elements and, now more than ever, are monitored by different agencies for integrity.

Executive Classiﬁ cation

The Fair Labor Standards Act of 1938 (FLSA) is the framework organizations use to correctly classify employees into two main categories, exempt and non- exempt (World at Work, 2007). Under FLSA there is an executive classifi cation, which defi nes the way companies should use the classifi cation correctly. One such requirement states that executives are considered exempt from overtime and minimum wages requirements. Companies should audit the classifi cations they use for their employees, and executives are no different. The Department of Labor has developed three

197 198 The Encyclopedia of Human Resource Management: Volume One

standardized tests to help organizations ensure their employees are correctly classifi ed as exempt or non-exempt. These tests can be used to determine whether an executive at an organization is classifi ed correctly. The fi rst test is a salary limit test. An executive must make the salary of $455 per week or $23,660 per year. The second test is a salary basis test. An executive must be compensated for the entire work week regardless of number of hours worked. Being paid the same amount regardless of hours worked is what makes an employee salaried versus hourly. The third test to perform is a duties test. To qualify under the executive exemption, the executive’s primary duty must be managing the business or managing a department or subdivision of the business (U.S Department of Labor, 2011). The executive must regularly direct the work of at least two other full-time employees or their equivalent. An example of the equivalent would be at least four half-time workers. The executive must have the authority to hire or fi re other employees, or else the employee’s suggestions and recommendations as to the hiring, fi ring, advancement, promotion, or any other change of status of other employees must be given particular weight.

Executive Compensation Philosophy

An executive compensation philosophy is a statement that deﬁ nes how you compensate your executives as compared to the market. The goal of an executive compensation philosophy is to help an organization reward and retain its current executives but also to attract new talent. Keeping and recruiting top talent is essential to help secure the company’s future. A philosophy will also serve as a guideline when recruiting new talent or discussing compensation packages for current executives. Human resources can receive a lot of pressure to increase the executive ben- eﬁ ts offered or be asked to baselessly increase pay for top executives. A well- thought-out philosophy is a tool to protect the organization from expensive litigation that could be brought on by current or former executives who feel certain executives are favored. Your philosophy should correlate to your organization’s strategic business plan (Koss, 2008). Straying from a compensation philosophy tied to the organization’s mission, vision, and values could hinder the organization’s ability to reach goals set by current leadership. The compensation philosophy should have senior leadership backing. The board of directors can also provide an opinion on the philosophy. Having the board review the philosophy can provide you with a non-biased outside opinion. Linking the philosophy to the organization’s strategic plan will allow senior leadership to understand the philosophy in their own terms. Executive Compensation 199

A philosophy linked to the organization’s strategic plan will also allow for easier buy-in from senior leadership.

Components of Executive Compensation

Executive compensation or total remuneration for executives has several components. Total remuneration can be deﬁ ned as all elements of compensation, including:

• Base salary is a fi xed amount of money paid for hours worked within a specifi c timeframe, for example a week, month, or year. • Bonuses are payments made as a reward following work done. They can be discretionary or planned. • Core company benefi ts are benefi ts such as medical, dental, and vision, along with long-term disability. These benefi ts are usually the standard benefi ts offered to all employees. • Severance packages are payment of salary after an employee’s termination. Rules can be tied to the length of a service, so the severance offered can vary. • Golden parachutes are lucrative benefi ts such as stock options and bonuses provided to executives who are suddenly dismissed due to a merger (Investopedia. com, 2011). • Incentives, long- and short-term, are adjustable payments that can be tied to the organization’s or individual’s production and ability to reach predefi ned goals. • Deferred compensation plans can come in several forms. A deferred compensation plan is one that allows a portion of the employee’s income to be deferred into an account and therefore not taxed immediately. After payment is received, an employee is taxed at ordinary income tax rates. Examples of such plans are stock options that allow executives to purchase company stock at a fi xed price. Executives can also be given a dollar allotment to purchase stock. Pensions and retirements plans are also considered to be deferred compensation plans. • Perquisites are benefi ts such as cell phones, automobiles, gas, country club memberships, association memberships, fi nancial planning, tax advising, and tuition reimbursement.

When designing an executive compensation package, the organization can include components it believes would make the package most attractive to both external and internal talent. What is offered can vary based on the market you are in and feedback from current executives. While you have the option to be ﬂ exible 200 The Encyclopedia of Human Resource Management: Volume One

with the components you offer, it is important to be consistent to maintain the equity of the package. With all other things equal, the right combination of the components will aid you in retaining executive talent.

Salary Surveys

How do you determine what to pay your executives? You have your philosophy, but that is your directive, not a dollar amount. When you acquire talent from a competitor in the market, you can use their previous compensation as a reference but you wouldn’t use that to build your entire executive compensation structure. Using tools like salary surveys from reputable companies will help you maintain internal and external equity in your executive compensation package. Such surveys can be used as a benchmark for compensation and beneﬁ ts. Most salary surveys are published every year, so the data you are referencing will be current. Typically, surveys require you to purchase the information, but they are a prudent investment. You will want to compare your organization to similar-sized organizations within the same industry. Surveys can provide you with information regarding, but not limited to, comparable pay for the same or similar job titles, beneﬁ ts offered, as well as compensation trends in the marketplace.

Factors Inﬂ uencing Executive Compensation

As the global economy continues to grow and the world seems to grow smaller, there are several factors that infl uence executive compensation because of this. It is important to consider these factors when designing a competitive package. Feedback from the board and senior executives can help you determine where the company should fall within its industry with regard to compensation. There are advantages and disadvantages to lagging, matching, and leading the market in pay. How much to pay can be more diffi cult to decide when there are fl uctuations in the industry and economy. How well the organization is doing can also infl uence any executive compensation package offered. Companies tend to be generous in good times and penny-pinchers in tough times. Remember that it is important to create an executive compensation package that satisfi es the intrinsic and extrinsic motivations of executives. Being able to entice executives to your corporation is important, but striking the right balance between what motivates them internally and what motivates them externally helps you to assign a monetary value to the package. Executive Compensation 201

Executive Compensation Governance

Due to a number of scandals in large corporations, the Sarbanes-Oxley Act was passed in 2002. This act was created to prevent and punish corporate fraud and corruption and require companies to give accurate and timely reports disclosing their earnings. It also protects any employee who reports potentially fraudulent actions by an organization that would violate regulations of the Securities and Exchange Commission (SEC). The act prohibits the company from retaliating against the reporting employee, who is commonly referred to as the “whistle blower.” If Sarbanes-Oxley is violated, top offi cers, mainly the chief executive offi cer (CEO) and chief fi nancial offi cer (CFO) can be sent to prison. In 2009 the SEC voted into place new rules requiring companies to “make new or revised disclosures about compensation policies and practices that present material risks to the company; stock and option awards of executives and directors; director and nominee qualifi cations and legal proceedings; board leadership structure; the board’s role in risk oversight; and potential confl icts of interest of compensation consultants that advise companies and their boards of directors” (SEC, 2009). The SEC is responsible for ensuring that employees receive fi nancial and other signifi cant information concerning securities being offered for public sale. Executive compensation components such as stock options and other investment avenues are carefully reviewed and must be reported. What this means for organizations is that, now more than ever, the decisions that they make regarding executive compensation must be sound. To protect itself when making decisions regarding executive compensation a corporation should enlist the help of its board of directors. Within the board, a compensation committee should be created to review proposed changes to the organization’s executive compensation plan and make recommendations. A board is typically made up of individuals who are not employed by the organization, and the same should apply to the compensation committee. The committee can make recommendations, but it is the job of human resources to oversee the process of executing recommendations.

References

Investopedia. (2011). Golden parachutes. Retrieved from www.investopedia.com/terms/g/ goldenparachute.asp. Koss, S. (2008). Solving the compensation puzzle: Putting together a complete pay and performance system. Chicago: Society for Human Resource Management. 202 The Encyclopedia of Human Resource Management: Volume One

U.S. Department of Labor. (2011). Fair Labor Standards Act. Retrieved from www.dol.gov/ compliance/laws/comp-fl sa.htm. U.S. Department of Labor, Wage and Hour Division. (2011). Fair pay. Retrieved from www .dol.gov/whd/regs/compliance/fairpay/fs17b_executive.htm. U.S. Securities and Exchange Commission (2010). 17 CFR PARTS 229, 239, 240, 249, and 274; Proxy Disclosure Enhancements. Retrieved from www.sec.gov/rules/fi nal/2009/33– 9089.pdf. World at Work. (2007). The World at Work handbook of compensation, benefi ts and total rewards. Hoboken, NJ: John Wiley & Sons. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 36

EXECUTIVE EDUCATION

Gerri Hura

xecutive education is the process used to develop, expand, or improve capa- Ebilities of current senior leaders or to position individuals for future senior leadership roles within an organization. The American Society for Training and Development (ASTD) states that executive education “is an ongoing systematic process that assesses, develops, and enhances one’s ability to carry out top-level roles in the organization” (Czarnowsky, 2008, p. 44). Organizations are spending up to $670 billion worldwide on corporate training and development (estimated $125.88 billion during 2009 in the United States [Patel, 2010]) and approximately $1 billion on executive development worldwide (Salopek, 2008). These monies are used to support educational and developmental initiatives with a growing intensity to deal with succession planning and leadership in emerging markets (Salopek, 2008). Eighty-eight percent of companies with revenues over $10 billion sustain some form of executive development processes, and 27 percent of smaller organizations (revenues less than $10 million) have some type of initiative in place (Czarnowsky, 2008). With a drive to remain competitive in today’s global environment, organizations are looking for that edge that will help them execute their strategic goals, and one solution is executive education and development.

203 204 The Encyclopedia of Human Resource Management: Volume One

Drivers of Executive Education

Additional drivers for organizations actively engaging in executive developmental processes include: talent acquisition, retention, and developing bench strength, responding to organizational strategy and future growth, driving innovation, globalization challenges (Bingham & Galagan, 2008), leading lasting change (Comner, 2010), collaboration (working across boundaries), organizational ﬂ exibility and change management, building effective teams, market and customer challenges (Martin, 2007), and corporate responsibility. Most business and organizations are dealing with the increasing numbers of retirements and are attempt- ing to grow leaders internally through a variety of management and executive development initiatives (Groves, 2007). The vetting processes include succession planning programs, job performance reviews, 360-degree feedback, mentoring, competency assessments, challenging assignments, and use of external (and internal) assessment centers (Czarnowsky, 2008). The succession planning processes, coupled with other developmental interventions, are often combined to become the integrated solutions for education of executives (Groves, 2007). The target audience for executive education initiatives varies but usually includes the top-most executives or ofﬁ cers within an organization, as well as board members and high-potential individuals. These senior leaders may hold “C” level titles (CEO, CIO, CFO), or titles of senior vice president, president, executive director, and so on. The emerging executives may hold a variety of titles or roles, but the key with these individuals is that they have been designated “high potential” through some internal or external process. Leskiw and Singh (2007) state that the critical success factors for the selection of these high-potential employees include “clear and objective criteria” (p. 450) and nominations by a committee rather than one individual. In addition, more organizations are realizing that succession planning must begin earlier and deeper into the organization and are instituting leadership development processes at lower levels (Leskiw & Singh, 2007).

Early Executive Education Initiatives

Executive education programs began at universities with degreed MBA programs at Wharton in 1881 and Harvard in 1908 with an initial audience of inexperienced managers hoping to further their business acumen (Crotty & Soule, 1997). Harvard and MIT gradually developed non-degreed programs to meet the developmental needs of the experienced manager. These short, ﬁ ve-week courses utilized MBA course content (Crotty & Soule, 1997). The non-degreed programs expanded during World War II with programs at Harvard targeted at Executive Education 205

the experienced manager to provide war production expertise (Crotty & Soule, 1997). Following World War II, specialized courses (marketing, accounting, sales, human resources, and others) were offered in a variety of venues, including vendor-provided programs offered through the American Management Association (AMA) (Werner & DeSimone, 2009). The university- and vendor-provided offerings evolved to corporate training and development programs and departments with early adaptors such as GE, IBM, and Motorola (Crotty & Soule, 1997). Many of the early company-sponsored executive programs were modeled after MBA programs or designed by faculty from the academic arena (Werner & DeSimone, 2009). Gradually, these corporate executive programs looked to internal, corporate leadership as the primary instructors, with the feeling being that the appropriate (and transferrable) experience came from within the organization and through relevant work experience (Werner & DeSimone, 2009). Corporate-sponsored executive education programs now utilize multiple approaches featuring academic and consulting “thought leaders” as instructors as well as corporate leadership. Companies ranked by chief learning ofﬁ cers, human resource executives, the Hay Group, and surveys as having exceptional executive education processes include GE, Boeing, Procter & Gamble, Ritz Carlton Hotels, Sun Microsystems, Fed Ex/ELI, Microsoft, Qualcomm, Intel, Carnival Cruise Lines (“2010 Best,” 2010), 3M Company, Coca-Cola, and HSBC Holdings (Donlon, 2008). General Electric’s John F. Welch Leadership Center at Crotonville is often used as one of the models for executive education, as well as other training and development processes (Groves, 2007).

Formats of Executive Education

Best practices in the format and design of executive education include conducting a needs assessment; deﬁ ning and selecting a suitable audience; developing the infrastructure to support the initiatives; designing, developing, and implementing a learning system (which could include readings, instructor-led content, web- based content, mentoring and coaching processes, social media sites, informal and formal learning activities, and so forth); development of the evaluation process for the learning system; and development of an assessment process to measure individual success and improvements. Executive education content is often founded on specific competencies and competency maps or knowledge, skills, and abilities (KSAs) determined by the organization to be the key skills and areas of expertise for the senior leaders (Blanchard & Thacker, 2004). These competencies or KSAs are frequently developed with the assistance of HR consulting organizations such as the Hay Group, Development Dimensions International (DDI), Personnel Decisions, Inc. (Boyatzis, 2008), and Lominger. Competencies in many executive positions include: 206 The Encyclopedia of Human Resource Management: Volume One

achievement orientation, humanistic approach, positive outlook, inclusiveness, integrity, balanced approach (Wood & Vilkinas, 2007), vision, organization, communication skills (Kotter, 1996), and the ability to execute (Bossidy & Charan, 2002). The interventions used to address competency development for present-day global executives include a variety of methods, with an increasing growth in action learning initiatives (Martin, 2007) and executive coaching (Blanchard & Thacker, 2004). Action learning activities aligned with strategic imperatives provide a realistic platform for executives and emerging executives to transfer the key skills to authentic situations (Groves, 2007). Coaching, in the past, was viewed as a corrective process targeted at specifi c inadequacies of executives, but in recent years this process focuses on the specifi c developmental needs of the executive (Blanchard & Thacker, 2004). Whether it is behavioral coaching, life planning coaching, strategic coaching, or organizational change coaching, the coaching process fi ts into the busy schedules of executives because it can be accomplished in one-on-one or team meetings, phone or Internet conversations, as well as through executive retreats. Programs or seminars with known “thought leaders” or “gurus” from various industries and fields (such as Ram Charan, Bill Gates, Marshall Goldsmith, Warren Buffet, and John Kotter) are also viewed by executives as strategic and appropriate just-in-time learning events (Walker, 2008). Other developmental solutions for executives range from internal corporate development programs; stretch or rotational assignments (including global assignments); corporate universities; university-sponsored executive and leadership programs; global-mobility programs (Guthridge & Komm, 2008); custom cases developed specifi cally for the target executive population and their organizations (Dover, Perkins, & Wylie, 2009); and programs sponsored by non- university-based organizations such as the Center for Creative Leadership. The delivery methods for these executive programs are often blended with a mixture of assessments, classroom- or web-based learning, on-the-job activities and assignments, experiential learning activities, and business simulations; the development of social networks (Leskiw & Singh, 2007), customized case activities (Dover, Perkins, & Wylie, 2009), the growing use of technology- based delivery including podcasts, teleconferences, networked communities of learning, and social media (such as Facebook or Twitter).

MBAs and Executive MBAs

The executive MBA programs (EMBAs) grew out of a need by the executive audience for condensed, accelerated, and targeted MBA programs (Bingham & Galagan, 2008). Executive MBA programs offered worldwide attract executives at more than two hundred business schools (Coombes, 2004), including Wharton, Executive Education 207

Kellogg, the University of Chicago, Darden, Washington University, INSEAD, Duke, Thunderbird, Michigan, the International Institute of Management Development (IMD), and Harvard. In recent years the MBA or the EMBA is viewed by executives and executive recruiters as an indicator of updated or expanded management skills (“Teaching top dogs,” 2011) as well as a retention strategy offered by companies for targeted talent (Dizik, 2008).

Future Challenges

Future challenges in the area of executive education is developing processes and measures to ensure that the target audiences are applying what they have learned and to rapidly respond to organizational challenges and issues (Bingham & Galagan, 2008). In addition, the risk of these talented executives leaving the organization remains an issue in the succession planning process (Groves, 2007). From the beginning of executive education, the issue of transfer of learning has existed, and the need to assess the dollars and time expended for development must be measured through some type of return of investment (ROI) or evaluation process. The success of the executives and the ability to measure these successes is contingent upon the organization’s culture as well as C-level support (Bingham & Galagan, 2008) and the strategic integration and alignment with the core business of the organization to provide the intended impact (Clarke, Bailey, & Burr, 2008).

References

2010 Best in leadership development. (2010). Retrieved March 11, 2011. from www .leaderexcel.com/best_ranking.html, Bingham, T., & Galagan, P. (2008, November). At C level: Herb Henkel, CEO. T+D, pp. 32–37. Blanchard, N.P., & Thacker, J.W. (2004). Effective training: Systems, strategies, and practices (2nd ed.). Upper Saddle River, NJ: Pearson/Prentice Hall. Bossidy, L., & Charan, R. (2002). Execution: The discipline of getting things done. New York: Crown Business. Boyatzis, R.E. (2008). Competencies in the 21st century. Journal of Management Development, 27(1), 5–12. Clarke, M., Bailey, C., & Burr, J. (2008). Leadership development: Making a difference in unfavorable circumstances. Journal of Management Development, 27(8), 824–842. Comner, M. (2010). Strategy at the center: Executive development for organizational results. Retrieved March 9, 2011, from www.naylornetwork.com/ahh-nwl/articles/index-v2. asp?aid=133165&issueID=22499. Coombes, A. (2004, May 19). Executive MBAs: Enrollment steady even as aid falls. Retrieved December 1, 2008, from www.embaworld.com/press_room/coombes.html. Crotty, P.T., & Soule, A.J. (1997). Executive education: Yesterday and today, with a look at tomorrow. Journal of Management Development, 16(1), 4–21. 208 The Encyclopedia of Human Resource Management: Volume One

Czarnowsky, M. (2008, September). Executive development: An ASTD research report. T+D, pp. 44–45. Dizik, A. (2008). Are they worth it? [Electronic Version]. The Wall Street Journal. Retrieved from http://online.wsj.com/article/SB122245000101279341.html. Donlon, J.P. (2008). The best companies for leaders [Electronic Version], from www.chiefexecutive.net/ME2/dirmod.asp?sid=&nm=&type=Publishing&mod= Publications%3A%3AArticle&mid=8F3A7027421841978F18BE895F87F791&tier=4&id =BF3221D721F74109BD2FA95B404E4AC6 Dover, P., Perkins, S., & Wylie, D. (2009). The role of customer case materials in action-based executive education programs. Journal of Management Development, 28(4), 285–300. Groves, K.S. (2007). Integrating leadership development and succession planning best practices. Journal of Management Development, 26(3), 239–260. Guthridge, M., & Komm, A.B. (2008). Why multinationals struggle to manage talent. McKinsey Quarterly, (4), 10–13. Kotter, J. (1996). Leading change. Cambridge, MA: Harvard Business School Press. Leskiw, S.L., & Singh, P. (2007). Leadership development: Learning from best practices. Leadership & Organization Development Journal, 28(5), 444–464. Martin, A. (2007). What’s next? The 2007 changing nature of leadership survey. (white paper). Greensboro, NC: Center for Creative Leadership. Patel, L. (2010). 2010 state of the industry report. Alexandria, VA: American Society for Training & Development. Salopek, J.J. (2008, March). Educating the “C” class. T+D, pp. 20–23. Teaching top dogs new tricks [Electronic Version (2011]. Business Management, (6). Retrieved March 15, 2011, from www.busmanagement.com/article/Teaching-top-dogs-new-tricks/ Walker, P. (2008, October 21). Hearing from the experts: CNN. Retrieved December 3, 2008, from www.cnn.com/2008/BUSINESS/10/21/execed.speakers/index.html. Werner, J.M., & DeSimone, R.L. (2009). Human resource development (5th ed.). Mason, OH: Thomson South-Western. Wood, J., & Vilkinas, T. (2007). Characteristics associated with CEO success: Perceptions of CEOs and their staff. Journal of Management Development, 26(3), 213—227.

Websites BusinessWeek (Executive Education Program Rankings): www.businessweek. com/bschools/01/exec_ed_rank.htm Center for Creative Leadership: www.ccl.org/leadership/index.aspx Conference for Management and Executive Education (CMED): www. proed.com/cmed/index.html Executive MBA Council: www.emba.org/index.htm International University Consortium for Executive Education (UNICON): www.uniconexed.org/bigﬂ ash/unicon.swf The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 37

EXECUTIVE ORDER 11246

Deborah Kaplan-Wyckoff

xecutive Order 11246 was signed into law on September 24, 1965, by EPresident Lyndon Johnson and is administered by the Department of Labor’s Offi ce of Federal Contract Compliance Programs (OFCCP). In the 1940s President Franklin Roosevelt issued an executive order (EO) indicating that it was the government’s duty to encourage full participation by all citizens in the national defense effort and then later issued one stating that federal government contractors should not discriminate on the basis of race. Additional executive orders in the 1950s further reiterated such a philosophy; but while there were provisions for committees to investigate accusations of discrimination, there was really no mechanism to provide for enforcement. EO 11246 was the fi rst time that a cabinet-level offi ce had the responsibility for overseeing equal employment rights for minorities in federal contracts. EO 11246 protects covered employees from discrimination due to race, color, religion, sex, and national origin. Contractors and subcontractors of the federal government who have contracts in the United States that exceed $10,000, or are expected to exceed that amount within a twelve-month period, are covered under this order.

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Exceptions to EO 11246

The following exceptions exist to Executive Order 11246:

• Contracts performed outside the United States by employees who are not recruited within the United States and which are for less than $10,000 are exempt from the order. • Contracts may be determined to be exempt if they are ascertained to be in the national interest or else for national security reasons. • Contracts that are performed on or near Native American reservations do not have to conform to the order. • Contracts with certain educational institutions such as religious oriented colleges are exempt. • Contracts or subcontracts with state or local governments, except for the speciﬁ c government entity that participates in work on or under the contract, are also exempt. (www.dol.gov/ofccp/regs/compliance/ca_11246.htm)

Contractors are expected to take “affirmative action” to see that “equal employ ment opportunity” is offered in all aspects of their hiring functions. However, the way in which this afﬁ rmative action obligation is applied differs between construction and non-construction contractors.

Non-Construction Contractors Program Requirements

Contractors with fi fty or more employees and contracts for more than $50,000 are required to have written affi rmative action programs; if the contract will exceed $1 million, it cannot be awarded until a pre-award review of the program is done. If a contractor has more than one work site, then a program must be developed for each site. An affi rmative action program (AAP) includes:

• A workforce analysis. This is a breakdown of every job title by rank, salary, and number of incumbents by sex and minority group. • An underutilization analysis. This consists of a determination by the employer whether his or her current employee percentage of women and minorities is lower than should be expected in relation to the percentage of qualiﬁ ed women and minorities in the local area labor market. • Corrective action. These are the employer’s written plans to remedy and correct any underutilization, such as expanding recruiting, initiating training programs, Executive Order 11246 211

utilizing community centers, and validating employment and promotion testing. A main aspect is the establishment of goals and timetables that can reasonably be expected if the contractor puts forth a good faith effort. • Auditing. Contractors must create internal audits and reports, which need to be ﬁ led with the OFCCP within thirty days after awarding of the contract. • Good faith. Compliance with an affirmative action program is judged by whether or not the contractor has made a good faith effort to reach its goals, and not by only meeting timetables. Employers do not need to employ ‘reverse discrimination’ or hire unqualiﬁ ed people to meet their goals, but the burden of proof of such a good faith effort remains on the contractor.

Construction Contractors Program Requirements

In the case of construction contracts, the OFCCP actually sets the requirements for goals and timetables. These are periodically issued by the director of the OFCCP within each trade and within geographical regions where the construction will take place. Goals for employing minorities vary by local region; however, goals for employing women are established on a nationwide basis. Again, as with non-construction contractors, construction contractors are bound to make good faith efforts to reach their required goals as a condition of their contract offers. Furthermore, they are required to document the steps that they take to assure equal employment and to take actions if needed to correct any identiﬁ ed inequali- ties. All employers are mandated to maintain a working environment free of harassment, to actively recruit women and minorities, and to provide equal access to training and promotion opportunities for all employees.

Monitoring Compliance

Annually, a federal contractors must ﬁ le the Employer Information Report EEO-1 (EEO-1). The EEO-1 is a count of employees by job broken down by ethnicity, race, and gender. This form is submitted to the Equal Employment Opportunity Commission, the Department of Labor, and the OFCCP (https://egov.eeoc.gov/ eeo1/eeo1.jsp). Every employer covered under EO 11246 is also required to promi- nently display an “Equal Employment Opportunity Is the Law” poster at its site. The OFCCP does conduct compliance reviews, at which time an officer checks the contractor’s personnel records and interviews employees. The investigator looks to see whether the employer is making efforts to enforce equal employment opportunity through the afﬁ rmative action program and whether 212 The Encyclopedia of Human Resource Management: Volume One

there are weaknesses that need to be addressed. If so, suggestions will be made to correct them and achieve equal employment opportunity. The OFCCP is available to consult and explain the contractor’s responsibilities when needed.

Filings by Individuals

Any employee of a contractor or subcontractor who feels that he or she has been discriminated against because of race, color, religion, sex, or national origin has the right to fi le a complaint with the OFCCP. One of the rights guaranteed by the Executive Order is protection from intimidation, harassment, or discrimination due to fi ling such a complaint or for participating in a proceeding. Covered employers are to ensure this. Normally, complaints must be fi led within 180 days of the alleged occurrence, although the fi ling time may be extended for a good reason. If the incident involves only one person, it will generally be referred to the Equal Employment Opportunity Commission (EEOC). However, if groups are involved or if there appears to be a pattern of discrimination, the OFCCP will investigate and resolve the issue (www.dol.gov/ofccp/regs/compliance/fs11246.htm). If a review uncovers legitimate issues, the OFCCP will work with the contractor to resolve the discrimination. Often, a conciliation agreement may be agreed on. This can include various affi rmative action measures such as back pay, promotions, recruitment efforts, or training. If these are not successful, then the case will be turned over to the Offi ce of the Solicitor for administrative enforcement proceedings, in which case there may be a formal hearing before an administrative law judge. If conciliation is not reached, the contractor is in danger of losing its contracts or subcontracts, depending upon the judgment. Sanctions may be issued, with the result that the contractor can be debarred, which means that he or she is ineligible for future government contracts. Debarments may be for a fi xed term or an indefi nite term. If for an indefi nite term, the contractor may be reinstated as soon as the violations have been shown to be resolved. If the debarment is for a fi xed term, this is considered a probationary period in which to show a commitment to affi rmative action and the ability to institute personnel practices that are in accordance with EO 11246.

References

Player, M.A. (1981). Federal law of employment discrimination. St. Paul, MN: West Publishing. U.S. Department of Labor. www.dol.gov/ofccp/regs/compliance/ca_11246.htm. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 38

EXECUTIVE SEARCH FIRMS

John D. Piccolo

xecutive search fi rms are also known as executive search consultants, executive Erecruiters, or headhunters. An executive search fi rm is a third-party agent who is paid a fee by client companies and organizations to help them attract, hire, and develop leaders. Executive candidates are identifi ed, verifi ed and presented to client companies via the executive search fi rm. Candidates are matched with organizations based on a job description developed by either the client company or the search fi rm, with input from the client company. Executive search fi rms work with many different types of companies, ranging from non-profi t organizations to Fortune 500 companies. Determining the potential fi t of a candidate for a specifi c job within a company or organization is a key deliverable offered by the search fi rm. The most common reason an executive search fi rm is hired by a company or organization is to save the time and resources involved with identifying qualifi ed candidates for a specifi c leadership position. Executive search fi rms have an intricate network of contacts from across the country and around the world, affording the client company access to the best and brightest. The vast majority of executives search fi rms identify and work with are already employed by other organizations and not necessarily looking for another job.

213 214 The Encyclopedia of Human Resource Management: Volume One

Types of Executive Searches

Executive search fi rms conduct two types of searches for client companies and organizations; a contingency search and a retained search. Contingency searches are typically used to locate junior and mid-level managers. When conducting a contingency search, the search fi rm only receives payment if the candidate they present to the client company or organization is hired. Since the competition with other search fi rms is much greater with a contingent search, fi rms will typically submit as many candidates as possible to their clients (Shors, 1997). The retained search is typically conducted to locate executives at the senior level. In this type of search, the search fi rm is given a set time frame to provide qualifi ed candidates. The fi rm is paid during the search process, regardless of whether a candidate is hired or not. When conducting a retained search, a fi rm will approach a small number of recruits, conduct the interviews, and make a recommendation to the client organization. A retained search gives the search fi rm much more fl exibility on the candidates that they can present. This is an important consideration for the client company when internal candidates are involved, since the search fi rm has no incentive to favor any candidate. Some organizations will hire a fi rm to conduct a contingency search in conjunction with a larger effort that might include an internal search (Beam, 2006).

Specialization

Executive search fi rms tend to either be generalists or they specialize in a particular niche market. Specialization can be in a specifi c fi eld such as government, higher education, transportation, fi nance, and high-end technology fi elds. Some fi rms will also specialize in a specifi c geographic market such as a region or city.

Advantages of Using a Search Firm

Bringing in an executive search fi rm can add great value to a client company by lending a fresh perspective and a perceived level of professionalism. This can prove to be quite helpful to companies that don’t have a human resources staff. Utilizing an executive search fi rm to conduct a search can make a positive impression on a candidate (Beam, 2006). Another advantage is the effi ciency of speed and resources. The livelihood of search fi rms depends on their ability to accumulate Executive Search Firms 215

databases of qualifi ed candidates. They can quickly and effi ciently conduct a search, saving the client company hours, days, and even weeks of effort, which ultimately translates into cost savings. Many executive search fi rms will guarantee a candidate placed by their fi rms. If the candidate leaves his or her position or is deemed unacceptable in the position, the fi rm will fi nd a new candidate at no cost to the client. Executive search fi rms can build an extensive relationship and understanding of the client company. This relationship can prove to be very helpful for fi nding a good match between the company and the candidate.

Disadvantages of Using a Search Firm

There are some disadvantages to utilizing an executive search fi rm. One of the biggest is the cost, which can be quite high. Commissions can sometimes be as high as 50 percent of the annual salary for senior-level positions. A cost/benefi t analysis should be conducted before deciding to use an executive search fi rm. Serious complications can arise if the fi rm does not spend the time up-front to understand the client company or organization. They can misrepresent the qualities and attributes required of a successful candidate, resulting in a poor match between the candidate and the client company. This situation is more likely to occur with a contingency search. The potential also exists for the executive search fi rm to employ unethical methods in their practice of placing candidates. This can be avoided if the executive search fi rm signs a contract stating that they will not take any of the client company’s employees and recruit them to other companies.

Conclusion

The increased use of executive search fi rms is a refl ection of a fundamental change in the U.S. labor market. As globalization continues to change the way we do business, so too does the relationship between employer and employee change. The ties that used to bind the two together have become much weaker. “Employers, for example, have become more willing to fi re employees as part of corporate reorganizations than they once were; employees, in turn, have been encouraged to think of changing jobs, and even careers, more frequently (Finley & Coverdill, 2002, p. 12). As the social media frenzy continues to evolve around tools such as LinkedIn, Facebook, and Twitter, a question that remains to be answered is whether social media will be the next big thing in talent acquisition. How effective 216 The Encyclopedia of Human Resource Management: Volume One

will social media sites be when searching for organizational leaders? and Will executive search fi rms exist in this new reality? According to Douglas Reiter (2010). social media sites can go a long way in getting your name out in the marketplace. But Reiter says that having all that information does not mean that organizations will dramatically change the way they look for, engage, and acquire talent. Today’s companies continue to rely on the talent of executive search fi rms for their most serious searches. Another reason that we continue to experience a demand for executive searches is that the executive labor market is beginning to shrink. There are two primary causes for this shrinking pool of candidates: (1) the Baby Boomer generation is beginning to retire and (2) the credentials required of high-level executives continue to increase. As globalization and the shrinking supply of qualifi ed candidates continues to change the complexion of the labor market, organizations will likely fi nd themselves relying more heavily on executive search fi rms.

References

Beam, T. (2006). Recruiting with ease. Business Leader, 17(9), 12. Finlay, W., & Coverdill, J.E. (2002). Headhunters: Matchmaking in the labor market. Ithaca, NY: Cornell University Press. Reiter, D. (2010). Recruiting high-level executives remains a relationship business. Employment Relations Today, 37(3), 33–39. Shors, J., II (1997). Headhunting. Des Moines Business Record, 93(18), 10. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 39

FLEXIBLE BENEFITS

Maurie Caitlin Kelly

he term “employee benefi ts” describes a form of indirect compensa- Ttion offered to employees by employers in addition to regular wage or salary compensation (Rosenbloom, 1996). Flexible benefi ts are an approach to employee benefi ts in which the employer provides the employee with the ability to select and customize the components of his or her benefi t package from a predetermined set of offerings from the employer. Flexible benefi ts have become progressively more common in the approach to employee compensation offered by both large and small employers. By 1995, studies showed that over one-third of employers provided some form of fl exibility in employee compensation plans (Barringer & Milkovich, 1998). In addition, a study done during the same period reported that 73 percent of Fortune 1000 fi rms offered fl exible benefi t plans (Ledford, Lawler, & Mohrman, 1995). However, these plans can be signifi cantly more costly than providing a single plan for all employees (Weathington, 2008). The evolution of fl exible benefi ts spans workplace history from early fringe benefi ts to the now more complex employee choice benefi t plans. The growth of fl exible benefi t plans not only refl ects changes in employer attitude but also provides signifi cant insight into our evolving work environment and the evolution of our society.

217 218 The Encyclopedia of Human Resource Management: Volume One

Background

Employee benefi t plans have evolved dramatically in the past fi fty years, in particular with the addition of fl exible benefi ts. Flexible benefi ts, also known as cafeteria plans or employee choice plans, differ from standard employee benefi ts or fringe benefi ts in that they allow the employee fl exibility to customize his or her benefi t package (Bloom & Trahan, 1986). These plans, now a common component of compensation packages, evolved from early concepts of fringe benefi ts that were usually minor extra compensation provided to employees by employers (Rosenbloom, 1996). Although the practice of providing benefi ts to employees in the United States dates back to the mid-1800s with the advent of paid vacation days for some employees, it was not until the end of World War II that the implementation of employee benefi ts became widespread. This evolution is, in many ways, a refl ection of the demographic changes that dramatically altered the composition of the workforce following the war. In particular, the percentage of women in the workforce in the four decades after World War II increased to 54 percent (Bloom & Trahan, 1986). Other factors that have had a signifi cant impact on the rise in fl exible benefi ts are the rise of dual earner couples and single parent homes. As these types of employees became the majority of the workforce, there was pressure to address specifi c interests or concerns arose and required an increase in the number and type of benefi ts provided by employers. Dual earner or single family homes required benefi ts that provide a wide range of choices, including family healthcare, life insurance, sick leave, maternity leave, as well as onsite child care. In addition, the competition for workers and the need for incentives to entice highly skilled or valuable employees to a particular company contributed to the increase in fl exible benefi t programs, since the ability to customize benefi ts was seen as an asset.

Types of Plans

The types of fl exible benefi t plans offered by employers is quite diverse. The range of benefi ts vary from paid/unpaid leave, pretax allocations that cover childcare, and customizable health plans to spiritual, physical, and mental health support services (Employee Benefi t Research Institute, 1995). The type of fl exible benefi t plan offered by an employer is driven by several factors, including employee satisfaction and cost to the employer. Flexible benefi t plans, as we know them today, emerged in the early 1970s but gained real popularity in the 1980s, eventually becoming part of a signifi cant portion of overall benefi t trends. These fi rst plans Flexible Benefi ts 219

were limited in their fl exibility and types of benefi ts they offered and tended to come in the form of salary reductions for services (Barringer & Milkovich, 1998). The current fl exible benefi ts literature lists four primary categories of plans: pretax salary reduction, pretax fl exible spending accounts, modular options, core plus options, as well as mix and match (Barringer & Milkovich, 1998; Tremblay, Sire, & Pelchat, 1998). The basic salary reduction option usually involves an employee paying for health, life, and other types of insurance with pretax funds from his or her salary. Flexible spending accounts expand on this by offering the employee the ability to contribute pretax dollars to an account used to pay for needs that may be necessary in the future but are currently unknown or undetermined. The remaining three options, modular plans, core plus options, and fl exible spending represent the most common types of fl exible benefi ts plans (Tremblay, Sire, & Pelchat, 1998). In the modular option, employees may choose among benefi ts and combine benefi ts with different levels of coverage (Barringer & Milkovich, 1998). Within the core plus model, employees select from a core list of benefi ts but also may select additional benefi ts customized to their individual needs (Tremblay, Sire, & Pelchat, 1998). Finally, the mix-and-match option allows employees to utilize credits to select any benefi ts they require (Barringer & Milkovich, 1998).

Trends Inﬂ uencing Flexible Beneﬁ ts

To comprehend the rise in fl exible benefi t plans, it is necessary to briefl y describe the fi ve primary societal infl uences driving employers toward the establishment of fl exible benefi t plans. First and foremost, the workforce has undergone signifi cant changes in composition in the past fi fty years. This shift in workforce demographics has placed pressure on employers to provide options to their employees to suit their individual needs. The greater diversity in the workforce has also given rise to the ideas of organizational fairness or justice. By offering fl exibility in benefi ts, employers are providing fair opportunities for all employees no matter what their needs or circumstances (Tremblay, Sire, & Pelchat, 1998). Second, cost is one of the most signifi cant aspects of the fl exible benefi ts discussion in particular and the employee benefi ts discussion in general. The increasing costs of employee benefi ts to employers has resulted in the need to not only accommodate employee needs but also to fi nd areas in which employers can achieve savings (Employee Benefi ts Plan Review, 1985). Third, the concept of enhancing the balance between work and family has received signifi cant attention. This issue is of particular interest to human resource personnel because it is their role in many cases to advocate and innovate where possible to address the duality of employees’ life roles. The manifestation 220 The Encyclopedia of Human Resource Management: Volume One

of these efforts has come in the form of providing support for work/family integration by offering employee assistance programs, encouraging high-level acceptance of policies such as fl extime or maternity/paternity leave, and developing approaches to dealing with stress and workplace satisfaction. Although the fourth infl uence is a more recent area of interest and research, the ideas of employee satisfaction and incentives for employee involvement in organizational improvement and development are emerging as significant infl uences in the types of rewards or benefi ts offered by employers (Ledford, Lawler, & Mohrman, 1995). Employee satisfaction is directly related to work/ family satisfaction and can be an important component in recruiting and retaining employees. Flexible benefi ts and related incentives that support work/family satisfaction can enhance employees’ commitment to the organization and allow them to feel engaged, valued, and involved in both aspects of their lives (Greenhaus, Collins, & Shaw, 2003). And fi nally, internal institutional pressures and competitor’s practices have infl uenced the adoption of fl exible benefi ts plans (Barringer & Milkovich, 1998).

Conclusion

Flexible benefi ts continue to be an area of great interest and great change. From the earliest origins of basic cafeteria choice plans to more complex plans, fl exible benefi ts have provided both opportunity and affordability to employers and employees alike. However, changes in taxation policies and governmental regulations will likely have a direct impact on the evolution of these offerings in the future (Beam & McFadden, 1996). If fl exibility increases costs to employers, it is possible that these types of plans will wane and that more concrete offerings will take their place. Alternatively, if trends in employee mobility, diversity in the workforce, and increased employee satisfaction remain as signifi cant as they are today, it is likely that fl exible benefi ts will continue to be a part of the workplace environment for the long term.

References

Barringer, M.W., & Milkovich, G.T. (1998). A theoretical exploration of the adoption and design of fl exible benefi t plans: A case of human resource innovation. Academy of Management Review, 23(2), 305–324. Beam, B.T., & McFadden, J.J. (1996). Employee benefi ts. Chicago, IL: Dearborn Financial Publishing. Flexible Benefi ts 221

Bloom, D.E., & Trahan, J.T. (1986). Flexible benefi ts and employee choice. New York: Pergamon Press. Employee Benefi t Research Institute. (1991). Flexible benefi ts plans and changing demographics. EBRI Issue Brief, 113. Washington, DC: Author. Employee Benefi t Research Institute. (1995). Fundamentals of employee benefi ts programs. Washington, DC: Author. Employers Council on Flexible Compensation. (1985). Flexible compensation 1985. Washington, DC: Employers Council on Flexible Compensation. Greenhaus, J.H., Collins, K.M., & Shaw, J.D. (2003). The relation between work-family balance and quality of life. Journal of Vocational Behavior, 63, 510–531. Ledford, G.E., Jr., Lawler, E.E., III, & Mohrman, S.A. (1995). Reward innovations in Fortune 1000 companies. Los Angeles: University of Southern California, Center for Effective Organizations. Lengnick-Hall, M.L., & Bereman, N.A. (1994). A conceptual framework for the study of employee benefi ts. Human Resource Management Review, 4(2), 101–115. Rabin, B. (1994). Assessing employee benefi t satisfaction under fl exible benefi ts. Compensation and Benefi ts Management, 10(3), 33–44. Rosenbloom, J.S. (1996). The environment of employee benefi t plans. In J.S. Rosenbloom (Ed.), The handbook of employee benefi ts: Design, funding, and administration (pp.3–13). Chicago: Irwin. Tremblay, M., Sire, B., & Pelchat, A. (1998). A study of the determinants and of the impact of fl exibility and employee benefi t satisfaction. Human Relations, 51(5), 667–688. Weathington, B.L. (2008). Income level and the value of non-wage employee benefi ts. Employee Responsibilities and Rights Journal, 20(4), 291–300. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 40

FAIR LABOR STANDARDS ACT OF 1938

Deborah Kaplan-Wyckoff

he Fair Labor Standards Act (FLSA) of 1938, commonly referred to as the TWage and Hour Law, is a broad piece of legislation covering overtime status and pay, minimum wages, record keeping, child labor laws, and various other administrative concerns. As originally written, it established a workweek of forty- four hours and required employers to pay covered employees a minimum wage of 25 cents an hour. Additionally, employers were obligated to pay these employees time and one-half for all work performed over the forty-four-hour week and to keep records to verify such compliance. While the original wage may hardly cause alarm in today’s economy, even then, President Franklin Roosevelt warned, “Do not let any calamity-howling executive with an income of $1,000 a day, who has been turning his employees over to the Government relief rolls in order to preserve his company’s undistrib- uted reserves, tell you . . .that a wage of $11 a week is going to have a disastrous effect on all American industry” (Time, 1938). Yet, this law was regarded as highly divisive in its time. It took years of political intrigue to get the law passed. Indeed, the Roosevelt Administration had to battle Congress, Unions—even the Supreme Court—to ﬁ nally get the FLSA passed in any form. As early as 1918 and 1923, laws had been passed setting minimum wages for women and abolishing child labor—but both were ruled unconstitutional by the Court. The National Industrial Recovery Act of 1933 originally guaranteed

222 Fair Labor Standards Act of 1938 223

similar protections, but this was overturned by the Supreme Court in Schechter Corp. v. United States in 1935. Not all workers were covered originally by the FSLA, and this is also true today. The Act covers those engaged in interstate commerce, those working in industries engaged in interstate commerce, or those who make goods used in interstate commerce. A business whose annual gross volume of business is not less than $500,000 is covered, an enterprise that runs a hospital, an institution for the treatment of mental health, a school or an institution of higher education, or a public agency—all fall under the auspices of the FLSA. While this may appear rather speciﬁ c, the courts have interpreted it very liberally (Hodgson v. Travis Edwards, Inc., and Mitchell v. Jaffe). Amendments and Court decisions have changed and expanded coverage, and now most private and public workers are covered and protected. Employees of organizations not covered by the FLSA may still be subject to the minimum wage, overtime pay, recordkeeping, and child labor rules, if the work they do is involved in interstate commerce. Those employees not covered generally are not viewed as needing these protections, such as business owners, independent contractors, volunteers, or those in managerial positions.

Exempt Versus Non-Exempt Coverage

Perhaps one area of greatest contention and confusion is whether an employee is considered exempt or non-exempt. Generally, there seems to be a misperception that simply paying an employee a ﬁ xed salary versus an hourly wage exempts him or her from overtime status. This is not the case in federal law. The legal, deﬁ ning conditions are job duties and manner of compensation. Employees must be paid at least $455 per week or $1971.66 a month on a salary basis. This is without regard for the amount of time worked or the quality or quantity of the work performed. Exempt employees are not paid overtime—they are paid for doing a job, not for punching a clock. Additionally, the employee must perform exempt duties. These are generally perceived as falling into the following categories: executive, administrative, professional, or highly compensated. Certain computer professionals, some sea- sonal and recreational employees, caregivers, and agricultural workers also may be considered exempt. Non-exempt employees may not waive their rights to overtime pay, nor may their employers refuse to pay such wages, even if company policy requires preap- proval for such overtime and it has not been previously obtained. FLSA does not 224 The Encyclopedia of Human Resource Management: Volume One

require employees to take a lunch break, so employers may not charge automatic deductions for lunch breaks if not taken. However, bona ﬁ de meal periods are not considered work time under FLSA and do not need to be compensated—only if the employee worked through the meal period. Rest periods though, are compensable time and must be counted as time worked

Recordkeeping

Recordkeeping is mandated and is important as one way for employers to prove that they have been complying with the regulations of FLSA. Documentation should include personal data on each employee, including name, address, Social Security number, date of hire and termination, hours worked, and tax and payroll fi ling information. These records are required to be retained for three years. Furthermore, all employers covered under FSLA have the legal responsibility to post the minimum wage and overtime regulations so that employees have access to them. The Department of Labor (DOL) provides materials that can be down- loaded For example, www.dol.gov/whd/regs/compliance/posters/fl sa.htm is a link to a poster that contains the requisite information and fulfi lls this requirement.

Child Labor Laws

The FLSA is intended to protect the welfare of minors and prohibit their employment in settings that are determined to be hazardous or under conditions that are detrimental to their health or well-being. The law regulates child labor in several ways. It sets a minimum age for jobs that are considered especially risky, it sets a minimum age for all other forms of employment, and it limits the total number of hours that children are allowed to work, with a few exceptions. Generally, they are not allowed to work during school hours as deﬁ ned by those of the school district in which they live. The minimum age for hazardous work in agriculture is sixteen, while the minimum age for hazardous work in other areas is eighteen. These regulations, issued at the discretion of the Secretary of Labor, describe what occupations are particularly hazardous to children and are called Hazardous Occupation Orders or HOs. In jobs that are not especially hazardous in agriculture, the minimum age at which children may be employed is fourteen, with three exceptions:

1. A child of age twelve or thirteen may work where a parent or guardian either consents to the child’s employment or is employed on the same farm as the child. Fair Labor Standards Act of 1938 225

2. A child under age twelve may be employed by a parent or guardian on a farm owned or operated by the parent or guardian, or the child is employed on a small farm as deﬁ ned in the FLSA, with the consent of a parent or guardian. 3. A child of age ten or eleven may work as a hand-harvest laborer for no more than eight weeks in a year.

In all other non-agricultural industries, there are four exceptions to the normal age sixteen minimum:

1. A child of fourteen or fi fteen may work in an occupation only if the Secretary of Labor determines that such work would not interfere with the child’s schooling or health and well-being. The exception to this being mining or manufacturing. Using this authority, the Secretary has issued regulations permitting children of ages fourteen and fi fteen to work in limited, specifi ed jobs in retail food and fast-food establishments, as well as gasoline service stations. 2. Child actors and performers are not subject to the FLSA’s child labor protections. However, other laws exist for the protection of these children that strictly limit the number of hours they are allowed to work, depending on their ages. 3. Children who deliver newspapers to consumers, “a newspaper route,” are not subject to the FLSA’s child labor protections. 4. Children working at home making evergreen wreathes are not subject to the FLSA’s child labor protections. (www.dol.gov/whd/childlabor.htm)

The basic rule of thumb with all child labor laws—with all FLSA laws, in fact— is that the most restrictive law takes precedence whether it is state or federal jurisdiction. The equal pay provisions of the FSLA require that men and women working at the same site who perform jobs that require equal skill, effort, and responsibility be paid the same wage. There may be no gender-based wage differences. These requirements are enforced by the Equal Employment Opportunity Commission (EEOC), as are other statutes related to discrimination in employment (www.dol .gov/whd/regs/compliance/hrg.htm).

Current Updates to the FLSA

In 2004, the FLSA was revised. However, many managers still continue to make some common mistakes, such as believing salaried employees are automatically exempt from overtime and misclassifying other employees, such as assistant managers. Another error is not paying employees for overtime when it has not been 226 The Encyclopedia of Human Resource Management: Volume One

approved in advance or else permitting them to waive their right to overtime. Both of these are illegal, since overtime must be paid if it has been earned (Workforce .com, 2006). In March 2010, a provision was added to Section 7 of the Act which affected nursing mothers. The Patient Protection and Affordable Care Act (PPACA) provides a break time for those women covered under the FLSA, to express milk for up to one year after a child’s birth. Moreover, the employer must provide a private location for this—a requirement that a bathroom, even if private, does not fulfi ll. The setting must be shielded and free from intrusion (www.dol.gov/whd/regs/ compliance/hrg.htm). As stated previously, the courts have a history of interpreting the FLSA quite liberally in favor of the employee. Thus, management would be advised to be sure that it has a clear understanding about employee classifi cation and that it has a defi ned and clearly stated policy on overtime and wages. The Department of Labor (DOL) website has many online publications that can be helpful to both employers (and employees) in understanding the law (www.dol.gov/whd/regs/ compliance/ca_main.htm.). Moreover, there is information on how to contact them by phone or email for help with any related questions.

References

Child Labor Coalition. (n.d.). Fair Labor Standards Act: An overview of federal child labor laws. www.stopchildlabor.org/aboutus/aboutclc.htm. Corley, R.N., & Robert, W.J. (1979). Principles of business law (11th ed.). Englewood Cliffs, NJ: Prentice Hall. “National affairs: For creatures of habit.” (1938, July 4). Time. Retrieved September 7, 2010, from www.time.com/time/printout/0,8816,759911,00.html. Player, M.A. (1981). Federal law of employment discrimination. St. Paul, MN: West Publishing. Top ﬁ ve mistakes under the FLSA. (2006, September). Workforce.com. www.workforce.com/ section/03/feature/24/50/34/. U.S. Department of Labor. (n.d.). Fair pay presentation. www.dol.gov/whd/ﬂ sa/ comprehensive.ppt. U.S. Department of Labor, Wage and Hour Division. (n.d.) www.dol.gov/whd/regs/ compliance/hrg.htm. U.S. Department of Labor, Wage and Hour Division, Child Labor. (n.d.). www.dol.gov/ whd/childlabor.htm. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 41

GLASS CEILINGS

Yongho Park

n the last few decades, the number of women in paid jobs and their participa- Ition rate in the workforce have steadily increased with their increasing post- secondary educational attainment (Barreto, Ryan, & Schmitt, 2009). In 2000, approximately 60 percent of U.S. women participated in the labor market, up from 33 percent in 1950. Women now account for roughly 48 percent of the workforce in the United States (Wentling, 2003). Also, women hold approximately 43 percent of management positions in business organizations. In other words, women have made considerable progress in participating in the labor market and moving into management positions in public and private organizations. However, women continue to comprise only 3 percent of top-level management positions. Women still tend to be converged in middle and lower levels in the management hierarchy. In spite of great increases in the number of women professionals, discrimination in job selection and promotion still exist (Fain, 2011). These trends often result in lower-level and lower-paying jobs for women (Inman, 1998). The term “glass ceiling” has been used to describe this situation for more than two decades. A glass ceiling is an impenetrable and invisible barrier preventing women from moving beyond middle management into senior management executive positions. “Glass” is a metaphor for the invisibility and impenetrability of the barrier. The existence of a glass ceiling is critical for both organizations and individuals because it could be a big barrier to using human resources effectively in our modern economy. Originally, the term was used as an explanation for women’s

227 228 The Encyclopedia of Human Resource Management: Volume One

career stagnation, but some researchers expanded the concept to the problems of racial and ethnic minority groups. In this article, the concept of glass ceiling is restricted to the women’s career situation.

Chronological Approach

One of the fi rst quantitative research studies on women senior managers was carried out by Korn/Ferry International and the Graduate School of Management at UCLA in 1982. The research found that only 4 percent of the top positions in corporations were fi lled by women. Even though there was some research conducted on women’s employment status within the organizational hierarchy, the term was coined in 1986. In a Wall Street Journal article, two reporters used the term to address the phenomenon that women managers tended to receive lower pay and have less authority than male managers. The glass ceiling metaphor pointed out women’s lack of mobility in organizations and the inability of organizations to identify the reasons for the problem. After the mid-1980s, the term was used frequently by public and private sectors in the United States. In 1989, the Department of Labor, the Offi ce of Federal Contract Compliance Program, and the Women’s Bureau commenced investigating the existence and causes of this glass ceiling in U.S. corporations. The fi rst federal report documenting fi ndings from the Department of Labor on the glass ceiling was released in August 1991. In the same year, the U.S. Congress passed the Civil Rights Act of 1991. As part of that law, the Federal Glass Ceiling Commission was established. The objectives of the commission were to investigate glass-ceiling barriers and to deliberate strategies about how to remove them. The Federal Glass Ceiling Commission released the fi rst report, Good for Business: Making Full Use of the Nation’s Human Capital, composed from public hearings, analyses of U.S. Census Bureau data, and surveys of CEOs. In that report, three levels of glassceiling barriers—societal, structural, and governmental—were identifi ed. Since the mid-1990s, researchers in public and private organizations have done many studies and reports on various topics related to the glass ceiling (Catalyst, 2000).

Barriers for Women’s Career Development

During the last few decades, many researchers have studied the barriers hindering women’s career development. Four barriers were mentioned most frequently in these studies. Discussion of these barriers is meaningful for understanding the Glass Ceilings 229 reality of the glass ceiling in an organization and in society. First, gender discrimination has been perceived as a major barrier for women’s career development. This type of discrimination means that, because of being women, they must work harder to prove themselves, they are not treated equally, and they are excluded from certain jobs. In this situation, being assigned the same titles as men does not mean that women receive equal treatment. The most obvious example is the difference of salary. Gender discrimination is often formed very subtly. Women, for example, are often excluded from some meetings or chances to obtain informal information. Second, some have thought the glass ceiling could be attributed to the work environment, including organizational structures and procedures. Lack of support from the boss, company reorganization/downsizing, and high competition can be examples of the work environment hindering women’s career development. Sometimes these barriers can be the reason for women’s self- selection away from top-level positions. Hackett and Betz (1981) presented a social cognitive approach based on Bandura’s self-effi cacy theory about women’s career development. In that article, Hackett and Betz suggest that, largely as a result of socialization experiences, women lack strong expectations of effi cacy in many career-related behaviors and cannot fully understand their own abilities. Lack of mentoring opportunities is a third obstacle. Mentoring has important meaning in an employee’s career development because it offers not only career guidance but also insight into the organizational culture and power hierarchy. Women still have diffi culties, especially as they are unlikely to have a woman as a role model and mentor for a management position simply because there are relatively few women at the management level. Finally, family responsibility is another major barrier for women’s career development. The workplace has tended not to accommodate combining work and family responsibilities, which tremendously impacts women. The level and nature of family responsibilities vary for women based on the income and job categories; however, stress, pregnancy, child care ,and elder care seem to create the most barriers for women’s career development (Wentling, 1998). Women often experience career interruption because of these issues. Although the situation has improved recently, women are still not well presented in the senior-management ranks of companies. The barriers mentioned above are often complex and diffi cult to break through. Related to overcoming these barriers, Inman (1998) suggested some career development strategies, including knowing oneself, developing multiple mentors, integrating work and family life, and developing fl uid and customized careers. 230 The Encyclopedia of Human Resource Management: Volume One

References

Barreto, M., Ryan, M.K., & Schmitt, M.T. (2009). The glass ceiling in the 21st century: Understanding barriers to gender equality. Washington, DC: The American Psychological Association. Catalyst. (2000). Cracking the glass ceiling: Catalyst’s research on women in corporate management. New York: Catalyst. Fain, J.R. (2011). Breaking the glass ceiling: Slow progress ahead. Contemporary Economic Policy, 29(1), 56–66. Hackett, G., & Betz, N.E. (1981). A self-efﬁ cacy approach to the career development of women. Journal of Vocational Behavior, 18, 326–339. Inman, P.L. (1998). Women’s career development at the glass ceiling. New Directions for Adult and Continuing Education, 80, 35–42. Wentling, R.M. (1998). Work and family issues: Their impact on women’s career development. New Directions for Adult and Continuing Education, 80, 15–24. Wentling, R.M. (2003). The career development and aspirations of women in middle management—revisited. Women in Management Review, 18(6), 311–324. Hymowitz, C., & Schellhardt, T.D. (1986, March 24). The glass ceiling: Why women can’t seem to break the invisible barrier that blocks them from the top jobs. The Wall Street Journal, 1. U.S. Department of Labor. (1991). A report on the Glass Ceiling Initiative. Washington, DC: GPO. U.S. Federal Glass Ceiling Commission. (1995). Good for business: Making full use of the nation’s human capital. Washington, DC: GPO.

Websites http://digitalcommons.ilr.cornell.edu/glassceiling http://digitalcommons.ilr.cornell.edu/key_workplace/120 www.breaktheglassceiling.com www.ethnicmajority.com/glass_ceiling.htm www.mdcbowen.org/p2/rm/aa/GlassCeiling.pdf The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 42

GLOBAL SUPPLY CHAIN MANAGEMENT FOR HR

Martin K. Starr

upermarket-based “supply chains” were not available to Robinson Crusoe. SHis story (Defoe, 1719) became inordinately popular because of the many ingenious ways he developed to produce food, water, and shelter that all of us take for granted. That is because in developed economies, consumers’ supply chains provide so many competitive alternatives that we do not recognize the degree to which great management skills are required to make them work effi ciently for society. These essential management abilities must be found, hired, nurtured, trained, and sustained by capable and sophisticated human resource managers. Emerging economies do not have ready access to such management skills. How to fi nd the right people and bring them on board is a growing challenge that HR faces as global systems continue to expand at a rapid rate. Manufacturing companies, food packers, and others are similarly dependent upon their suppliers of ingredients and components (called upstream suppliers). Finished goods are packaged and sent downstream to wholesale distributors, who store and ship goods to retailers who are further downstream. Customers who buy these items are at the downstream end of the supply chain channels. They are called the ultimate consumers (the people who buy and use the full spectrum of products transformed from raw materials into fi nished goods).

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The Association for Operations Management (APICS) defi nition of supply chain management is defi nitive. APICS’s dictionary of terms is used for plant fl oor certifi cation (APICS, 2010). “Supply chain management involves managing all the activities that go into putting commercial products in front of consumers. Further, this includes procuring supplies from suppliers, transporting them to and supervising the means of production, and distributing fi nished products to end- buyers.” This defi nition, while entirely accurate, is somewhat stilted. We will try to vitalize and energize the characteristics of supply chains in the text ahead. Supply chains are more accurately named supply and demand chains. Upstream vendors ship materials to downstream buyers, who use these materials to produce goods and services that are ultimately delivered to distribution outlets that can include wholesalers, retailers, and their customers further downstream. Marketing and distribution systems include retail stores (bricks), direct mail (cata- logs), and the Internet (clicks). Supply and demand are at work throughout supply chains. The ability to forecast demands in a reasonably accurate way is critical. Supplies are matched to meet demands—as closely as feasible, as quickly as possible. Understanding what buyers think they will need and how that translates into what they are likely to need is a vital ingredient. Consequently, good communication between suppliers and buyers is essential. Mutual understanding is necessary for accurate forecasting. In most instances, there are complex networks of suppliers, service providers, fabricators, assemblers, distributors, wholesalers, transporters, warehousers, retailers, and many ultimate consumers. With this perspective, the supply chain is like a network of input-output matrices within which each company’s business model originates and develops. Global transportation and communication expand supply chain geography. As a result, a multiplicity of locations, languages, and cultures must be understood and managed. Global supply chains have a large number of diverse participants that must act in concert, which poses a greater challenge than regional supply chains. In general, the breadth of international operations provides an unexpectedly great number of choices that can be exercised by buyers with respect to suppliers. Often, there are many potential suppliers for each item that a buyer wishes to procure. Buyers seek protection against a single supplier failure. Accordingly, more than one supplier is designated, and this further enlarges the system to be managed.

Global Supply and Demand Chains Are Value Chains

Complex systems interlink suppliers to suppliers, such as energy for agriculture. All suppliers are also producers. For example, miners of bauxite and copper add value by the extraction process and the shipments that they arrange for a variety of customers. Global Supply Chain Management for HR 233

Analysis of actual supply chains reveals cascades of materials, cash fl ows, and information moving between interacting suppliers, producers, and customers. Often, demand starts with raw materials that are grown, mined or pumped, and shipped to factories where producers transform these (raw) materials into parts, components, and, eventually, into fi nished goods that are delivered to customers. To grow food, cut trees, mine metals, make and deliver products, supply chain participants require energy derived from fuels that frequently have been pumped from seabed platforms to tankers that call at refi neries for processing. The fuels are then transported by ships and trucks and pipelines to “farms,” where they are stored until they are delivered to homes, factories, and offi ce buildings. Although all supply chains are similar in a generic sense, what they transform and transport requires unique management skills. It is a great challenge to hire, train, and motivate competent people with such special skills. Locating, hiring, and training people with needed combinations of specifi c-to-industry knowledge, as well as generic managerial supply chain skills, is required of human resource managers. Once they are hired, HR continues to train and retain people in order to benefi t from their inventories of valuable skills. To appreciate the full scope of global supply chain management, it is important to remember that supply chains are often called “value chains.” Materials fl ow downstream, while cash fl ows upstream. Profi ts derived from revenues minus costs are incurred along the entire chain of supply and demand. When sourcing moves outside of the domestic identity of the company and relocates in a place that is “foreign” to the company, the crossing of national boundaries is called “outsourcing.” This subcontracting to a third party requires analysis of the HR abilities and orientation of the third party involved. Historically, the motivation for outsourcing has been relatively short-term revenue maximization. However, if quality cannot be controlled adequately or costs rise, surpassing price targets at outsourcing sites, the long-term effects are recognized to be deleterious. Profi t goals cannot be sustained over time. Such dynamic forces drive change. Outsourcers will be replaced with on-shore sources HR faces great challenges in helping the organization adapt to necessary changes. Profi table supply chains are strong value-adding chains. Supply chains with many materials sitting and waiting for something to happen are low on added value. Competent supply chain managers abhor the wasted time and investment that are associated with low-level, value-adding supply chains. HR must know how to fi nd and hire value-adding managers and know when and how to replace non-value-adding managers. Materials actively undergoing quality-controlled transformations associated with fabrication, assembly, fi nishing, transportation, and distribution are candidates for high-margin returns on investments. Output qualities are dependent on the quality of input materials, labor skills, equipment capabilities, management knowledge, and 234 The Encyclopedia of Human Resource Management: Volume One

proper planning. High supply chain productivity is a constant goal. It is only achieved when most links in the chain are producing large quantities of quality output that have high demand volume and using cost-efﬁ cient inputs and operations. It is necessary to recognize that not every link in the supply chain must be at the optimal level of productivity. For example, situations exist for which risk must be tempered by having stock-on-hand in excess of just-in-time requirements. HR must be aware of the contrary requirements of supply chain personnel, that is, ability to target high productivity while managing risk.

Bottlenecks and Waiting Time Damage Value-Adding

Bottlenecks in supply chains diminish throughput rates, creating queues of work waiting for service. Parts wait for a machine; products wait for a truck to transport them to a required location; people wait for service at the cable company or they are in line waiting at a favorite restaurant for a table. Waiting is anathema to the realization of productive supply chain systems. Some waiting for work-in-process (WIP) is considered normal in job shops and batch work systems, but the less the better. There is need for an education program company-wide to alert operations and supply chain managers about the existence of methods to analyze queuing situations and to remove or control bottlenecks. This should be an HR mandate. In general, the goal can be set to have very little work waiting and less every day for a well-managed supply chain. Waiting in global supply chains is often hidden by dint of distance and management spread too thinly. Much waiting time in fl ow shops signals serious trouble. The managers of automobile assembly plants and continuous processing systems such as refi neries and plastic producers cannot afford stoppages and bottlenecks, yet, if bad product results from too much haste, training routines for minimizing stopping times is required. This is another HR consideration for hiring and training. Supply chains are particularly vulnerable to unexpected delays anywhere along the entire raw materials to fi nished goods and services processing system. For example, a delivery delay can stop a production system. For example, an out-of-stock gasket at a natural gas refi nery had to be fl own in from a distance of several hundred miles. The cost of the outage was in the millions of dollars because the refi nery was forced to reduce its production output substantially while waiting for the replacement part. Managers had thought there were several of the critical gaskets in stock because the computer records said so. The problem was that the in-stock gaskets had been mislabeled and did not fi t in the pipeline. “Critical” items in the supply chain are defi ned as those that produce exorbitant penalties when a stock outage occurs. Global Supply Chain Management for HR 235

The Bullwhip Effect Can Be Controlled

Throughout the supply chain, the expected time between placing an order for replenishing some item and the scheduled in-stock delivery time is called the “lead time.” The same applies to placing an order for service and the starting time of that service. When tire goes fl at, an oil transport pipeline ruptures, or a plane is grounded for weather conditions, there is a delivery delay. Parts of the system may be shut down waiting for a shipment to arrive. Sometimes it is possible to switch to alternative activities while waiting for delivery. More often, delays lead to out-of-stock situations, producing ordering anomalies. Unexpected changes in demand levels can distort normal supply chain ordering patterns, resulting in costly oscillations of inventory levels, or “the bullwhip” effect, best described by oscillations that shift between out-of-stock and overstock conditions. As this pattern repeats, the amplifi cation level increases signifi cantly. For example, assume that demand suddenly zooms for a particular brand of beer because a celebrity lauds it in a blog. Then throughout the downstream supply chain, that brand of beer is requested by retail customers. After this fi rst demand tsunami, beer buyers begin to experience out-of-stock conditions at their retailers, who fi nd that they cannot be supplied by their distribution centers. At its upstream location, the factory reluctantly ramps up its beer production rate. The producer is reluctant because marketing believes the spike in demand is temporary and stock in other brand names will be diminished if they are not being produced. Being under great pressure from its downstream supply chain partners, the factory complies. If the increase in demand is temporary, then the result will be overstock in the pipeline. The overstock condition subsequently leads to reduced orders at every level in the supply chain. The correction overshoots the mark and shortages occur again. The correction process, being diffi cult to control, often leads to oscillations (the bullwhip effect). What can be done about this costly phenomenon? The cause of the initial increase in demand must be analyzed and information provided about the likelihood of it continuing. The under-stock and overstock situations may be avoidable with good information. Both too little and too much stock on hand are costly to everyone participating in the value chain. It is classic to demonstrate supply chain distortions by means of The Beer Game, developed at MIT in the 1960s to show the advantages of integrated communication between buyers and sellers along the supply chain. Shared information assists players in taking corrective actions to prevent bullwhip effects from occurring. Global supply chains present additional problems. Making sure that information is shared between geographically dispersed partners who speak different languages is a feat in itself. When hiring is done by HR departments for companies located in 236 The Encyclopedia of Human Resource Management: Volume One

various countries that have supply chain linkages, coordination requirements tran- scend traditional solutions. For example, parts for the Boeing 787 Dreamliner are made all over the world, but production must be perfectly coordinated. The Airbus 380 was severely delayed when components made in Germany did not mate with the assembly units in France. It has been estimated that this (software) culture and language problem cost the European Aeronautic Defense and Space Company extreme delays, delivery penalties, and overall proﬁ t losses of more than $6 billion. This perfect case study for HR global world challenges might be called “How to Successfully Marry Global Supply Chain Partners.”

Service Proﬁ t Chains Require Special Understanding

A special analytic opportunity exists in service-system supply chains, where it has been shown that customer loyalty at the downstream terminus of the supply chain is a function of employee satisfaction with their upstream jobs. This is particularly true when strong contacts prevail between producers and their customers. Surprisingly, the relationship between employees and customers in the supply chain continues to be ignored by many leaders or organizational traditionalists, who do not view employees as having any power to help companies succeed in the marketplace. Employee contacts with customers in companies such as Apple Stores, Chick-fi l-A, FedEx Offi ce, JetBlue, Southwest Airlines, Taco Bell, and UPS are vital to enhance the brand loyalty of their customers. Articles and books on the “service-profi t chain” (Heskett, Jones, Loveman, Sasser, & Schlesinger, 1994) have cited clear empirical evidence that loyal employees generate conditions that enhance customer loyalty. This refl exive phenomenon is called the “mirror of satisfaction.” It is critical that HR departments of service organizations master this vital concept, that dissatisfi ed employees are infl uential in discouraging customer loyalty. Generally, this is found when employees are not empowered to correct and redress service failures.

Reverse Supply Chains

A relatively recent supply chain development is likely to be one of the most challenging for supply chain managers in the next two decades. The reverse supply chain (RSC) is concerned with the logistics of returning (old, used up, broken, and damaged) customer purchases to their producers for reclamation or disposal. RSC includes reuse, rework, and recycling. Various industries employ different terms—such as reconditioning, re-creating, refreshing, refurbishing, rejuvenating, Global Supply Chain Management for HR 237

renewing, renovating, restoring, and revamping (in alpha order). The words in languages other than English to convey the same ideas are worthy of study by international companies. HR must be on top of the growing requirements and governmental emphasis on RSCs. The pressure for RSC-thinking stems from legislation aimed at protecting the environment. It also arises when companies realize that smart design permits economically beneﬁ cial reuse of materials. Geographic differences exist. Europe is “greener” than the United States, but the latter is moving rapidly. U.S. companies in autos and computers have impressive records of achievement. Eventually, home appliances such as refrigerators and washing machines, TV sets, furniture, and hot water heaters will be returned to producers as much as paper products and glass are now.

Supply Chain Security

Security has become an issue of paramount importance for HR managers when hiring and training supply chain participants. In 2007, the U.S. Congress mandated that all cargo carried on passenger aircraft must be screened. The Transportation Security Agency (TSA), a division of the Department of Homeland Security, developed the Certiﬁ ed Cargo Screening Program (CCSP). It allows shippers to pre-screen cargo before airport arrival. The TSA tries to help shippers minimize their supply chain security costs. The TSA provides teams of transit inspectors and explosives-detection canines for cargo that moves by railroad. As a requirement of the Patriot Act, the TSA Hazardous Materials Endorsement Threat Assessment Program provides security threat evaluations and some controls over state-issued commercial driver’s licenses. Maritime port security is handled by the Coast Guard and U.S. Customs and Border Protection divisions of the Department of Homeland Security. More than six million cargo containers enter U.S. seaports annually. About 2 percent of these are physically inspected by customs. Carrier and cargo information has been developed to assure that what is being shipped poses no security threats. The safety of ports for ships, of rails and roads for trains and trucks, and of airports for planes—will continue to be part of the supply chain story until there are no more threats from terrorists. Relying on inspection alone is unrealistic. Shipment volumes through supply chain are too enormous. Instead, new technologies are emerging at an incredible rate to monitor cargo transfers. Radio frequency identiﬁ cation (RFID) is becoming increasingly powerful to spot the “what” and “where” for all kinds of shipments. Global computer systems will continue to improve their capabilities 238 The Encyclopedia of Human Resource Management: Volume One

to monitor systems for anomalies, which can be excellent indicators for taking protective actions. For HR, fi nding smart people who can rapidly assimilate ever- improving technologies is another new challenge. The literature on supply chains and supply chain management is too extensive to provide a “must read” list. Every aspect of management is involved in meeting the challenge for organizations, whether they are constituted for-profi t, not-for-profi t, governmental, or international agency goals. This list provides information for in-text references and the author’s favorites.

References

Advancing Productivity, Innovation, and Competitive Success (APICS). (2010). APICS dictionary (13th ed.). www.apics.org/dictionary. Cohen, S., & Roussel, J. (2005). Strategic supply chain management. New York: McGraw-Hill. Davis, E.W., & Spekman, R.E. (2004). The extended enterprise: Gaining competitive advantage through collaborative supply chains. Upper Saddle River, NJ: Prentice Hall. Defoe, D. (2003). The life and strange surprising adventures of Robinson Crusoe of York (originally published in 1719). New York: Penguin. Harrison, T.P., Lee, H.L., & Neale, J.J. (Eds.). (2004). The practice of supply chain management: Where theory and application converge. New York: Springer. Heskett, J.L., Jones, T.O., Loveman, G.W., Sasser, W.E., Jr., & Schlesinger, L.A. (1994, March/April). Putting the service-proﬁ t chain to work. Harvard Business Review, pp. 164–174. Simchi-Levi, D., Kaminsky, P., & Simchi-Levi, E. (2004). Managing the supply chain: The deﬁ nitive guide for the business professional. New York: McGraw-Hill. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 43

GLOBAL TEAMS

Tracy H. Porter, Sharon E. Norris

or many years leaders in various types of organizations have observed the Fbenefi ts of team-based job designs (Robbins & Judge, 2009). However, in recent years the globalization of the marketplace creates an additional challenge to their traditional organizational structures, creating a need for the development of global teams. Global teams are defined as a “group of people of different nationali- ties working together on a common project across cultures and time zones for extended periods of time” (Marquardt & Horvath, 2001, p. 4). A global team has a number of similarities to traditional teams; however, it important for organizations to also understand the unique difference in order to gain the most benefi t from global teams. Logistical organization of global teams can be challenging. Global teams are not only separated by time and space, but can often be quite different in national, cultural, and linguistic attributes (Zakaria, Amelinckx, & Wilemon, 2004, p. 17). The global team differs with respect to their functionality, and this only adds to the complexity of the group dynamics (Wheatley & Wilemon, 1999). Global teams are typically project-focused, connected through the power of technology and brought together to solve complex problems and promote organizational sustainability. Gluesing and Gibson (2003) note fi ve different dimensions that all global teams face: task, context, people, time, and technology. Each of these areas aids in the understanding of the unique differences associated with global teams.

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Task

A global team is fi rst and foremost a task-oriented team organized according to the complexity of their tasks. This complexity is described as a continuum built upon the level of workfl ow interdependence required in the task (Gluesing & Gibson). How this workfl ow is organized is dependent on the structure of the activities. Tasks that are low on interdependence can be completed by team members independently, and as the task becomes more interdependent the process becomes much more sequential between team members (Gluesing & Gibson). As tasks become more interdependent, the work fl ow will often be unidirectional between the members. This reciprocal nature can be benefi cial and also an additional challenge for team members.

Context

The second dimension involves the numerous context differences in which the global team functions. Context refers to the unique conditions, cultural assumptions, and history associated with the geographic region in which the team does business (Gluesing & Gibson, 2003). Some of these dimensions in context might include climate, nationality, education, politics, judicial systems, economic systems, corporate governance, management systems and incentive, and motivation or reward schemes (Gluesing & Gibson, p. 7). The context in which the team operates has a tremendous effect on how the team operates.

People

The third dimension deals with the people who are members of the team. One of the inherent strengths associated with the creation of a global team is the diversity of the people, who possess various skills, experience, and motivation levels. Global teams are internally diverse on many levels, which adds to the challenge of structuring such a team (Gluesing & Gibson, 2003). Another challenge is that often members are on the team on a part-time basis. Therefore, their commitment to the team is not as great and they may choose to participate in the team activity in varying degrees.

Time

The fourth component involves the time required to complete the given tasks of the team (Gluesing & Gibson, 2003). Groups that function under a tight time constraint might be unable to meld and therefore function as an effective team. Global Teams 241

Teams need time to adjust to one another’s styles and to develop the norms and roles within the group that complement one another (Robbins & Judge, 2009).

Technology

The fi nal dimension that must be considered is the level of technology available (Gluesing & Gibson, 2003). Certainly, in today’s business environment most organizations use technology to some extent. For global teams a virtual environment tends to be much more integral and the team relies on technology much more than those teams that function face to face. Global teams can be tremendous assets to organizations, as teams allow them to tap into overseas markets and possibly add to their customer base (Robbins & Judge, 2009). Global teams contribute to the development of alliances and partnerships, as well as extend an organization’s global reach (Marquardt & Horvath, 2001). The rise in multinational corporations has created global research and development teams that benefi t from site-specifi c scientifi c expertise that is not available in one location but is available throughout the world (Gluesing & Gibson, 2003). Other organizations have created global teams in specifi c functional areas, such as sales and marketing, and have representative from around the world on the team (Gluesing & Gibson). By building a team that extends across the globe, an organization can benefi t from the diversity of perspectives and services, which can in turn matches the needs of global clients. Many organizations have found “innovation portals” to be the key to global team effectiveness (Robbins & Judge, 2009). Innovation portals aid an individual employee with a problem or innovation idea, as he or she can tap into the global network of talent within the organization or even outside (Robbins & Judge). Innovation portals have taken the form of chat rooms or more sophisticated portals that reach across organizational lines. Chat rooms are primarily designed for employees to present new ideas or projects, to recruit team members for projects, to line up resources, and to draw on the research within a multinational fi rm (Robbins & Judge). For example, IBM set up such a portal to encourage entrepreneurial employees to draw on the cross-functional skills within the organizational structure to develop an idea. Chat rooms have also been an effective mechanism to solve problems quickly and draw on expertise throughout a global organization. Although most organizations use portals to develop global teams solely made of their own employees; smaller organizations have used innovation portals to build global teams with members who are not employees, linking specialists within their own companies to independent contractors or specialists in other companies (Robbins & Judge). Organizations use a number of models for innovation portals and global teams (Robbins & Judge, 2009). One model, the “orchestra,” is used when there 242 The Encyclopedia of Human Resource Management: Volume One

is a well-structured problem and one dominant member of the team who controls the process. An example of just such an approach might be Boeing, which used the portal to recruit partners from outside the organization to develop components for their new 787 airplane .Another model, a “jam session,” is used when a problem is unstructured and there is no dominant member of the team. An example of a jam session would be a team of academics and scientists who join together to ﬁ ght a global disease. Innovation portals create opportunities to create global teams that can accomplish tasks that are beyond the scope of any one employee individually. Although the research associated with global teams is just at the beginning stages, the central focus of any description of this type of team needs to address the team’s cultural diversity and team performance issues (Robbins & Judge, 2009).

References

Gluesing, J., & Gibson, C. (2003). Designing and forming global teams. Los Angeles: Center for Effective Organizations, Marshall School of Business, University of Southern California. Noe, R., Hollenbeck, J., Gerhart, B., & Wright, P. (2010). Human resource management (7th ed.). New York: McGraw-Hill. Marquardt, M.J., & Horvath, L. (2001). Global teams: How top multinationals span boundaries and cultures with high speed teamwork. Palo Alto, CA: Davies-Black. Robbins, S., & Judge, T. (2009). Organizational behavior (13th ed.). Upper Saddle River, NJ: Prentice Hall. Wheatley, K.K., & Wilemon, D. (1999). Global innovation teams: A requirement for the new millennium. Proceedings of the Portland International Conference on the Management of Engineering and Technology Management (PICMET). Zakaria, N., Amelinckx, A., & Wilemon, D. (2004). Working together apart? Building knowledge-sharing culture for global virtual teams. Creativity and innovation management, 13(1), 15–29.

ARTICLE 44

GRIEVANCE

William B. Werner

n the context of human resources management, a grievance is a claim that Ia collective bargaining agreement has been violated in some way. Over 90 percent of collective bargaining agreements contain some form of procedure for resolving disputes under the contract efﬁ ciently without the involvement of courts. For most employees covered by a labor contract, the grievance process is exclusive, meaning that any claims for violation of the contract must be submitted to the process for ﬁ nal and binding resolution. Grievance procedures vary widely depending on the size of the employer, the number of employees covered by the agreement, the term of the agreement, and other factors unique to the circumstances. A labor contract is not required to include a grievance process, but either party can legally insist upon one to the point of impasse in the negotiations. If the labor union or the employer in collective bargaining proposes a grievance procedure to deal with complaints that arise under the contract, the other party must bargain in good faith over the proposal but is not required to agree or to make concessions in its position.

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Types of Labor Grievance

Individual Rights Grievance More than half of all grievances arise out of some adverse action taken against an employee covered by the agreement. Depending on the language and other provisions of the agreement, an individual grievance might be based on a discharge, a disciplinary notice, a pay or beneﬁ ts dispute, or a violation of seniority or other contractual rights. The union is required to provide fair representation to the employee in the process, but is not required to pursue every employee complaint through the process. Many employer actions affect more than one employee, such as the decision to lay off an entire department or to change the pay rate for a job classiﬁ cation. Under some, but not all, collective bargaining agreements, multiple employee grievances arising out of one employer action can be brought together, similar to a class action in court.

Union Grievance Some provisions of a collective bargaining agreement may provide rights to the union representatives of the employees, such as access to the workplace and information about newly hired employees. When no individual employee is harmed by the employer’s violation of such a provision, the union is typically permitted to ﬁ le a grievance itself to enforce its own rights under the contract.

Employer Grievance Collective bargaining agreements also create or preserve rights of the employer and impose obligations on the union and the employees it represents, such as a promise not to strike during the term of the agreement. While the employer may have a legal remedy in the federal courts for the violation of such a provision, many labor agreements also require the employer to submit any such claim to the grievance procedure, the same as union and employee grievances.

Grievance Procedures The vast majority of collective bargaining agreements prescribe an exclusive process for the presentation and resolution of any disputes that arise under the agreement. The parties are free to agree to any fair and legal resolution procedure, Grievance 245 but grievance processes typically follow a simple pattern that begins with formal notice of the grievance, followed by mandatory informal meetings between the representatives, and arbitration if they are unable to agree. Grievance procedures establish deadlines much shorter than would be applicable in court, making the resolution of grievances more efﬁ cient and less costly. A labor union that represents a group of employees is required by federal law to represent all members of the group fairly. The law does not require the union to pursue every employee complaint to arbitration, but does provide a potential remedy in federal court for a union’s refusal to initiate or continue an employee’s legitimate grievance. Union representatives may decide themselves which grievances to assert and pursue, but those decisions must be fair, reasoned, and non-discriminatory.

Filing a Grievance. To be considered, a grievance must usually be presented in writing to the other party within a brief period established by the contract (typically seven to thirty days) after the alleged violation. If notice of a grievance is not given within the time limits prescribed by the agreement, then it is forfeited and cannot be pursued in arbitration or in court. Many contracts require the written notice to include speciﬁ c reference to the section of the agreement that is alleged to have been violated and a brief statement of the facts constituting the alleged breach.

Adjustment. There are as many terms to describe this stage of the grievance process as there are variations in the procedure itself. Nearly all labor agreements, however, require a relatively informal meeting of union and employer representatives before either party may proceed to arbitration of the dispute. This might entail a lengthy preliminary hearing, formal negotiations, or no more than a brief phone call, but in any case is designed to ensure reasonable and good faith effort to resolve grievances among the people most directly involved without proceeding to the next step in the process.

Arbitration. If the union and the employer do not agree to resolve a grievance despite following the prescribed procedure, then the matter is typically submitted to ﬁ nal and binding arbitration for a decision. Grievance arbitration is the most common means of deciding disputes that arise under collective bargaining agreements. The arbitrator hears the case in a procedure similar to a trial and renders a decision that is typically ﬁ nal and binding on all of the parties, including any affected employees. 246 The Encyclopedia of Human Resource Management: Volume One

Further Reading

Bureau of National Affairs. (2003). Grievance guide (11th ed.). Washington, DC: Author. Duane, M.J. (1993). The grievance process in labor-management cooperation. Westport, CT: Quorum. Lewin, D., & Peterson, R.B. (1988). The modern grievance procedure in the United States. New York: Quorum.

Websites https://hrnt.jhu.edu/elr/grievance.cfm www.adrlawinfo.com/unionnegotiation.html www.adr.org/sp.asp?id=22112 The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 45

GUILDS

Maurie Caitlan Kelly

guild can be defi ned as an association of individuals who had a specifi c A skill or trade, as well as the organization that supported the continuation and advancement of that skill or trade. The term “guild” is derived from the Anglo-Saxon “geld,” meaning “to pay or to contribute” as well as “an association of persons contributing to a common set of purposes” (Standing, 2009, p. 15). In terminology more commonly used today, members of guilds would be considered experts or professionals in their fi elds and their quality of work and expertise would be certifi ed by their membership in a particular type of guild. Guilds had formal organizational structures and were comprised of offi cers who managed the guild and members who were called master craftsmen. Although they were not members, the guilds also had control over the journeymen and apprentices who either worked with, in the case of journeymen, or directly for, in the case of apprentices, the master craftsmen (Epstein, 1998). There are signifi cantly differing opinions on the role of guilds and their impact on trade, innovation, and the political environment (Richardson, 2005). However, it is clear that guilds have had a lasting impact on the economic and societal structure of our world.

247 248 The Encyclopedia of Human Resource Management: Volume One

Background

The history of guilds spans the length of human history and has roots in the civilizations of Egypt, Greece, and Rome. Guilds have existed and fl ourished in countries as diverse as Germany, China, and India. Over time, guilds have been both loosely and strictly defi ned, depending on both time period and type of trade. There are countless examples of guilds, including lawyers, bankers, cloth merchants, painters, joiners, and stonemasons (Standing, 2009). These generally fell into several key categories, including craft guilds, service guilds, and professional guilds. Some of the most familiar guilds are those that fell within the craft category, such as shoemaker, weaver, baker, or smith, or in service guilds such as entertainers or drivers (Richardson, 2005). A family lineage refl ecting membership in a guild can be seen in many of our common surnames today. However, certain types of professions, such as doctors or lawyers, were also part of the guild framework (Krause, 1996). Early guilds, especially those prevalent in medieval Europe, were particularly strong and, in many ways, controlled signifi cant components of the economic infrastructure. The guilds were powerful organizations that often had advanced organizational structures that included offi cers and subordinates who coordinated member and organizational activity. One of the key components of a guild was maintaining quality control, as members were required to meet certain standards of quality and excellence. The guild structure also helped to maintain trade secrets for their members by tightly controlling the environment in which the guild functioned. The guild association was supported by fees that were collected from members and were often responsible for paying taxes to government entities on behalf of guild members. Master craftsmen played a primary role in the development and continuation of the guild. Masters were responsible for passing on knowledge to apprentices, who were brought into service at an early age and expected to learn from the master. Apprentices were officially and contractually bound to the master, in many cases, until age twenty-fi ve (Thompson & Hickson, 2000). The next step in the process toward becoming a master craftsman was to become a journeyman. The journeyman was an apprentice who had successfully progressed through an apprenticeship and had a proven level of competency accepted by the master craftsman. A journeyman, unlike an apprentice, was free to travel and acquire work on his own and was no longer under the tutelage or control of the master who owned all the tools and materials needed. The journeyman phase consisted of several years in which old skills were honed and new ones gained by collaborating with others outside of the town or region. Once the journeyman period was completed, the individual could apply for membership within the guild. Membership in the guild, which was the goal of most journeymen and apprentices, had many benefi ts. A guild member, or master, was given the opportunity to set Guilds 249

up his own shop or business in the trade. The fees collected by the guilds would often be used for the greater good of the members. The guild could pay expenses for widows, medical costs, and even burial expenses (Standing, 2009). Guilds also maintained their own court system for members (Krause, 1996). The history of guilds is punctuated by periods of both growth and decline. Often their growth would be dependent on the political environment in which they existed. As the fortunes of countries or regions rose and fell, so did the fortunes of the local guilds. If guilds were seen as too powerful or were cause for concern for their governments, they could easily be abolished (Epstein, 1998). In some cases the guilds were even responsible for political unrest and riots, and for creating an environment in which those in power were unseated. The power of these early guilds began to fade at the onset of the industrial revolution. This transition caused the individual to be replaced by the speed and efﬁ ciency of the machine and, just as importantly, the manufacturer maintained control of the tools that created the product.

The Impact of Guilds

There are several points of view regarding the immediate and long-term impact of guilds. One such view is that guilds were arbiters of quality standards, improved trade practices, and provided support and economic opportunity and security for their members (Epstein, 1998). In many respects they were the precursors of modern unions by protecting their members from unfair or aggressive external trade practices and, more recently, the potential model for the practice of total quality management by supporting uniformity through the transference of knowledge from master to apprentice, ensuring standards, and by developing innovative practices (Wolek, 1999). In addition, guilds motivated the change from the European feudal or serf model to one under which the individual had greater power and influence over his own destiny (Krause, 1996). Early critics of guilds, including Adam Smith and Karl Marx, proclaimed an alternate view of guilds, describing them as powerful, controlling institutions that negatively inﬂ uenced open trade, stiﬂ ed economies, suppressed innovation and invention, or enslaved workers (Richardson, 2005). Guilds were considered the monopolies of their day, controlling and owning trade secrets, just as patent owners do today. Their power was often so extensive that they served not only as economic regulatory bodies, but also as political, social, and even religious leaders of their towns or regions (Black, 1984). Another aspect of guilds that remains an area of contention is their role as suppliers of human capital for the military. Apprentices, who were contractually bound to masters and the guild, were primary candidates for military service and emergencies (Thompson & Hickson, 2000). 250 The Encyclopedia of Human Resource Management: Volume One

The Guild in the New Global Economy

The rise of information technology as a driving force in the current economy has caused a shift toward the development of new types of virtual guilds. As skills have become more portable, the association and affi liation with one business or fi rm over a span of decades is phasing out as the accepted mode of operation and being replaced by independent workers who are “virtual journeymen” (Laubacher & Malone, 2002). Unlike the traditional economic and employment structure involving a worker maintaining a long-term or life-long relationship with a single company, many workers today have emerged as members of loose associations of skilled individuals who utilize the Internet to sell their skills or products. These individuals, who are now supported by professional associations, consortia of organizations, or through regional collaborations, represent the “new guild” in the global economy (Laubacher & Malone, 2002). They retain independence and creative control but benefi t from organizing through the above associations in terms of access to benefi ts, standards, and compensation. Staffi ng agencies or workforce brokers also serve as key players in providing benefi ts to workers in these virtual guilds. As Laubacher and Malone (2002) state, these agencies are advocates for individuals with particular skills and talents and may represent the future of virtual guild development.

Conclusion

The future of workers and the workplace in the global economy will have a dramatic impact on the development of the new virtual guilds. It is likely that the future of guilds will be based on less formal organizational ties, utilizing a project- based approach to work, and accessing benefi ts and security from independent organizations (Ancona, Bialyn, Brynjolfsson, Carroll, Kochan, Lessard, Malone, et al., 2003). Whatever the future of this trend, it is clear that guilds have had a signifi cant impact on the economic and social structure of our world. From early Egypt and medieval Europe to the global economy of today, the role of the guild has had a long-lasting infl uence.

References

Ancona, D., Bailyn, L., Brynjolfsson, E., Carroll, J., Kochan, T., Lessard, D., Malone, T., Orlikowski, W., Rockart, J., Scott-Morton, M., Senge, P., Sterman, J., & Yates, J. (2003). What do we really want? A manifesto for the organizations of the 21st century, In T. Malone, R. Laubacher, & M. Scott-Morton (Eds.), Inventing the organizations of the 21st century (pp. 325–332). Boston: MIT Press. Guilds 251

Black, A. (1984). Guilds and civil society in European political thought from the twelfth century to the present. Ithaca, NY: Cornell University Press. Epstein, S.R. (1998). Craft guilds, apprenticeship, and technological change in preindustrial Europe. The Journal of Economic History, 58(3), 684–713. Krause, E.A. (1996). Death of the guilds. New Haven, CT: Yale University Press. Laubacher, R.J., & Malone, T.W. (2002). Retreat of the ﬁ rm and the rise of guilds: The employment relationship in an age of virtual business. Retrieved November 6, 2006, from http://ccs.mit.edu/papers/pdf/21CWP033.pdf. Richardson, G. (2005). Craft guilds and Christianity in late-medieval England. Rationality and Society, 17(2), 139–189. Standing, G. (2009). Work after globalization: Building occupational citizenship. Northampton, MA: Edward Elgar Publishing, Inc. Thompson, E.A., & Hickson, C.R. (2000). Ideology and the evolution of vital economic institutions: Guilds, the gold standard, and modern international cooperation. Boston: Kluwer Academic Publishers. Wolek, F.W. (1999). Ye olde total quality management. Total Quality Management, 10(7), 1077–1084. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 46

HR METRICS AND ANALYTICS

Donald P. Rogers

raditionally, performance of the HR department was measured in two ways: T(1) by the adequacy (quantity and quality) of the workforce and (2) by the effi ciency (time and cost) of the HR programs and services. We still measure adequacy of the workforce and effi ciency of HR programs, but we have added new measures of effective HR performance (outcomes of HR programs and services), effective employee performance, positive organizational impact, and stakeholder satisfaction and loyalty. Moreover, the process of measuring, analyzing, and evaluating HR performance has become more sophisticated. The increase in global competition has led fi rms to focus on results and to demand accountability for producing those results. Traditionally, HR added value by making good investments in human capital strategies and practices, hiring and developing good people, and avoiding complaints and work stoppages. Recently, many fi rms have adopted management by the numbers (Geneen, 1984) or evidence-based management (Pfeffer & Sutton, 2006) techniques to measure and analyze HR performance. The success of the “balanced scorecard” (Kaplan & Norton, 1996) and the HR scorecard (Becker, Huselid, & Ulrich, 2001) has led many HR departments to adopt metrics based approaches to measuring results.

252 HR Metrics and Analytics 253

Before discussing HR metrics, some basic concepts must be deﬁ ned:

• Research design is the process of planning what is to be measured, how concepts are to be operationally defi ned, how data is to be collected, and how data is to be analyzed. • Measurement is the process of gathering, classifying, and summarizing the data. • Measures are numbers representing values on a scale. For example, forty-four vacancies, means that there are forty-four (number) unfi lled jobs (vacancies). • Metrics are constructs or computations showing relationships between measures. For example, with vacancies = 44 and authorized headcount = 292, we can calculate a vacancy rate = 44/292 or 15.1 percent. • Analytics are tools for analyzing patterns in the relationships among metrics. Analytics may be quantitative, statistical, fi nancial, or comparative. For example, a GAP analytic evaluates the computed metric value against a standard. If the actual vacancy rate is 15.1 percent and the standard is that the vacancy rate should not exceed 9.99 percent, then standard – actual (9.99 – 15.1) equals –5.11 percent. • Heuristics are criteria for interpreting the products of the analysis. Heuristics implicitly suggest a course of action. In this case, the gap is negative, so the 15.1 percent vacancy rate is too high, and we should fill/close some of the vacancies or review the standard.

One of the basic questions about the use of HR metrics is “Why?” The simple answer is that metrics provide useful information to help make decisions about human capital, HR strategies, HR programs and services, and HR practices. There are a number of benefi ts to using metrics to evaluate HR performance. Metrics allow creation of stable indicators of workforce adequacy (quantity and quality), HR program effi ciency (time and expense), HR program effectiveness, employee performance, organizational impact, and stakeholder satisfaction and loyalty. Analysis of metrics over time permits knowledge of results, identifi cation of problems, guides to corrective actions, prediction of future performance, and proof of prior performance. The objectives of an HR measurement system include description of current levels of HR performance, verifi cation of performance through objective measures, explanation of performance levels and variances, prediction of future levels of performance, and control of future performance through changes in HR strategies, programs, services, or practices. There are a number of HR measurement models. Most fall into two categories, either single factor models or multivariate models. Table 46.1 shows some of the more common single and multiple factor measurement models. 254 The Encyclopedia of Human Resource Management: Volume One

TABLE 46.1. COMMON HR MEASUREMENT MODELS Single Factor Models Multivariate Models Measuring Performance from Measuring Performance from One Perspective Several Perspectives Marshall’s Proﬁ t Maximization Kaplan and Norton’s Balanced Scorecard Foster and Kaplan’s Market Value Added Becker, Huselid, and Ulrich’s Five Perspectives Moore’s Market Capitalization Fitz-enz’s Human Capital Performance Measurement Stewart’s Economic Value Added International City County Management Association’s Performance Comparison Phillips’ Return on Investment Rogers’ High Performance Management Huselid’s Progressive Practices Index

HR Metrics

Metrics are constructs or computations showing relationships between two or more measures. For example, the formula for computing the metric called “retention rate” is the number of employees on the payroll as of a particular end date (usually one year, but thirty-day and ninety-day retention rates are sometimes computed) divided by the number of employees at the start date (usually the beginning of the ﬁ scal year). If a company had 1,150 employees on January 1 and 975 of those people were still working for the company on December 31, then the retention rate would be 975/1150 = .8478 = 85 percent. The biggest challenge for most companies is selecting the right metrics. A large number of HR metrics are available. Fitz-enz and Davison (2002) list more than 130. Becker, Huselid, and Ulrich (2001) list more than one hundred HR metrics in the HR Scorecard. The temptation is to try to use them all, to go on a ﬁ shing expedition to see what works. This is called “the KICS Syndrome” for the kids in candy stores phenomenon. The most effective HR measuring systems focus on a few metrics. Bucknall and Wei (2006) list thirty-six key metrics used by Mercer Consulting. The most common categories of HR metrics include:

• Effectiveness/Impact/Results • Effi ciency/Activity/Time • Economy/Expense/Costs • Effi cacy/Equity/Ethics/Social Responsibility • Profi tability/ROE/ROC/ROI • Productivity/Output/Quantity/Quality • Satisfaction/Loyalty/Commitment • Growth/Change Rates • Consistency/Alignment/Fit HR Metrics and Analytics 255

One approach to selecting HR metrics considers the uses of the metrics as decision supports, drivers of change, or proofs of performance. If the metrics will be used for decision support, they must be before the fact, leading indicators, measures of potential, and predictors of performance. If they will be used as drivers of change, they must be current indicators, identifying problems to solve and issues to address, and measuring the efﬁ ciency of processes. If the metrics will be used to provide proof of performance, they must be after the fact, lagging indicators, and measures of effectiveness. Table 46.2 shows some of the common HR metrics classiﬁ ed by organizational level and decision stage.

HR Analytics

HR analytics are tools for evaluating performance against a standard. Depending on the purpose, the standards may be quantitative or qualitative; the tools may be descriptive, comparative, or statistical. The simplest tools specify a cutoff point. Threshold analysis begins with a standard that must be met for an HR process to continue. For example, the candidates for a job as a truck driver must present (performance) a current CDL (standard), if they don’t, the process is over. Checklists may specify that certain tasks must be accomplished. For example, a pre-employment background checklist may specify that the candidate must pass a reference check, credit check, criminal check, personality test, and drug test before an offer can be made. The HR recruiter performs the checks and tests. If the candidate fails any part of the screen there will be no offer. The most common form of HR analytic is comparative. Often these are presented in graphic form. Some of the common comparisons are

• Year to Year (Y2Y) analysis of changes in key metrics • Period to Period (P2P) analysis of changes • Business to Business (B2B) analysis, also called benchmarking • Business to Norms analysis • Unit to Unit (U2U) analysis comparing performance of different units of the same organization • Input-Output analysis of the impact of changes in inputs on changes in outputs • Goal to Actual, also called GAP or variance analysis

Other forms of analysis include statistical and probability tools (such as regres- sion analysis for measuring impacts of HR initiatives or discriminate analysis for separating the impacts), operations research tools (linear programming for workforce scheduling), or decision science tools (Boolean algebra for evaluating options). 256 The Encyclopedia of Human Resource Management: Volume One

TABLE 46.2. HR PERFORMANCE METRICS BY LEVEL AND STAGE Leading Indicators Current Indicators Lagging Indicators Levels HR Input Metrics HR Process Metrics HR Outcome Metrics Strategic HR Value Proposition HR Value Added Revenue / Emp. Indicators Core Competencies HR Value Innovation Earnings/Emp. (Achieving Competitive Outsourcing Ratio Assets/Emp. Objectives) Advantages Market Value/Book Value Labor Market Trends Innovation Performance Growth Reputation Satisfaction (Expectations Met) Commitment Operations Workforce Stafﬁ ng Ratios Productivity Indicators Competencies Administrative Intensity Total Labor Costs (Solving Workforce Flexibility Budget Ratios Retention Rate Workforce Pride Return on HR Investment Engagement Ratio Problems) Self-Managed Teams Return on HR Expenses Operating Income/Emp. Employee Relations HR Expense/Revenue Operating Expenses/Emp. HR Staff Ratio HR Expense/ Earnings Value Added by HC HR Expense/Operating Return on HC Expenses HR Expense/FTE Promotions from Within Compliance Ratio HR Legal Costs Time to Proﬁ ciency Process Workforce Size Total New Hires Labor Cost/Revenue Ratio Indicators Workforce Costs per Hire Labor Cost/Earnings Ratio (Managing Composition Time to Hire Turnover Rate HR Staff-Line Selection Ratio Voluntary Turnover Rate HR Tasks) Cooperation Overtime Hours Early Turnover Rate Absenteeism Safety Rate Grievance Rates # Training Hours/ Emp. # Attendees Participation Rate Cross Trained Ratio Appraisal Ratio Merit Pay Ratio Performance Pay Ratio Project Team Ratio HR Metrics and Analytics 257

References

Becker, B.E., Huselid, M.A., & Ulrich, D. (2001). The HR scorecard: Linking people, strategy, and performance. Cambridge, MA: Harvard Business School Press. Bucknall, H., & Wei, Z. (2006). Magic numbers for human resource management: Basic measures to achieve better results. Hoboken, NJ: John Wiley & Sons. Fitz-enz, J. (2000). The ROI of human capital: Measuring the economic value of employee performance. New York: American Management Association. Fitz-enz, J., & Davison, B. (2002). How to measure human resources management (3rd ed.). New York: McGraw-Hill. Geneen, H.S. (1984, October 1). The case for managing by the numbers. Fortune. Kaplan, R.S., & Norton, D.P. (1996). The balanced scorecard. Cambridge, MA: Harvard Business School Press. Olve, N., Roy, J., & Wetter, M. (1999). Performance drivers: A practical guide to using the balanced scorecard. Hoboken, NJ: John Wiley & Sons. Pfeffer, J., & Sutton, R.I. (2006). Hard facts, dangerous half-truths, and total nonsense: Proﬁ ting from evidence based management. Cambridge, MA: Harvard Business School Press. Phillips, J.J. (2000). The consultant’s scorecard. New York: McGraw-Hill. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 47

HUMAN RESOURCES COMPLIANCE

Peter M. Wald, Marcus Winterfeldt

ompliance can be defi ned as the conformity of processes concerning all Crelevant legislation in organizations. It defi nes the demand on the behavior of all organizational members at all organizational levels. Compliance is closely connected to organizational governance on the one hand and the management of organizational risk on the other. Organizational risks are systematically avoidable by respecting internal as well as external rules, regulations, and policies. HR compliance is defi ned as maintaining and monitoring rules, regulations, and obligations assigned to employees in their particular job roles and tasks. An organization shows compliant behavior if all its employees are following those rules, regulations, and policies. Compliant behavior is only possible if management and employees are managed appropriately and behave according to these set rules, regulations, and policies. There are several employment-related rules, laws, and acts to consider according to regional regulations, particularly for HR-compliant behavior (for example, the Fair Labor Standards Act and Occupational Safety and Health Act in the United States; Sex Discrimination Act, Race Discrimination Act, and Employment Equality Regulations in the UK; and Allgemeines Gleichbehandlungsgesetz in Germany). Internationally, there are generally laws and regulations in existence against sexual harassment, anti-discrimination , data protection, and other issues (Hansen, 2000).

258 Human Resources Compliance 259

HR compliance affects all kinds of different HR activities. These include HR strategy and policy, HR core processes, and HR supporting processes. HR Strategy and Policy functions are obliged to be designed compliantly. Core processes like workforce planning, employee selection, deployment, employee retention, employee development, and even redundancy need to be compliant. Supporting processes such as reporting or administrative areas have to integrate compliance rules with value-adding contributions.

Theory of HR Compliance

Currently, HR compliance issues are not broadly discussed in academic literature. This serves as one reason for setting up a compliance framework. Under the conditions of incomplete asymmetric information, the principal can suffer moral hazard or conﬂ icts of interest with the agents. The main goal of compliance is to prevent such problems from occurring. An organization is compliant if there are set rules and regulations in place and its agents demonstrate adherence. In theory, compliance regulations are not required in an organization with fully committed employees and principals having full access to information. In practice, organizations cannot ensure that provisions prevent hidden actions by employees, such as money laundering, data abuse, and business fraud. However, organizations can include the editorial principle in decision making, the separation between operational business and corporate ﬁ nance, and the allocation of decision responsibilities to decision-makers (job rotation in vulnerable departments).

The Role of HR Management Within Compliant Organizations

The alignment of all HR activities must be based on the execution of the company’s strategy. HR activities can be differentiated using the widely known roles established by Ulrich (1997, 2009). Applying Ulrich’s work, three groups of HR functions can be identiﬁ ed:

1. Strategic functions: HR should initiate the development and modiﬁ cation of compliance rules and take responsibility for structuring and establishing rules and processes to avert any damage to an organization by its employees. These rules and processes are often consolidated in a code of conduct (Lieber, 2010). In this case, HR takes responsibility for the development and documentation 260 The Encyclopedia of Human Resource Management: Volume One

of this code of conduct. It is not enough for employees to sign a moral commitment, but crucial to ensure that all employees conform. HR also indirectly contributes by gaining the conﬁ dence of customers, stakeholders, and employees. 2. Consulting functions: The main objective in this area is a stronger focus on value creation through HR activities, which can be realized through professional consulting and coaching line managers and employees. The consulting function provides transparency, change management services, and specialized compliance training. 3. Service functions: In this area, HR contributes to increased operational efﬁ ciency through balanced labor costs and lean operational processes. The main objective is improved services, with a focus on transactional processes or operational excellence. These processes can often be realized technically.

Applying HR compliance for these functions means describing, monitoring, and improving HR practices. It begins with personnel resource planning. HR stafﬁ ng managers have to consider whether job candidates formally meet existing compliance rules. They must not only evaluate professional abilities but also personal characteristics, such as integrity or reliability. Background checks (where allowed) may be appropriate here. After hiring, the HR department is responsible for training on the company’s code of conduct. Using rituals to culturally integrate employees is recommended, through intranet portals, databases, FAQs, professional training, or workshops. For internal recruiting and promotions, the checking of integrity and reliability should be tied to performance appraisals. Dismissal of employees also requires compliance procedures (exit interviews, preventing the loss of company data).

The Risk of an Integrity Deﬁ cit

The lack of employee integrity and commitment (an integrity defi cit) can cause serious damage to organizations. Such deficits must be monitored by HR to reduce the threats of criminal actions, such as fraud, defalcation, insider trad- ing, or data manipulation. Employee attitude surveys, workshops, or interviews can serve to monitor such risk. However, monitoring is a part of supervision. Ideally, organizations treat employees responsibly and respectfully and practice values that increase employee identifi cation with and loyalty to the organization. Increased employee retention is one way to monitor the risk of an integrity defi cit and employees’ identifi cation with the organization and its practices. HR provides rules and regulations that describe the organization’s expectations of employees. Such rules and regulations must be supported by managers in daily Human Resources Compliance 261

work life. Training and coaching managers in how to treat employees respectfully is important. Another useful tool is the creation of a whistle blower position to channel information about employee infractions anonymously.

How to Implement and Conduct HR Compliance Programs

HR compliance programs have to be implemented systematically. The following steps are typically taken by HR departments:

1. Analysis of HR processes and deduction of potential risks; 2. Inventory and addition of compliance rules and tools; 3. Deﬁ nition, consolidation, and test of internal controls and sanctions; 4. Communication of rules and regulations; and 5. Ongoing monitoring and modiﬁ cations of rules and regulations.

All HR-related policies, tools, processes, procedures, and programs supporting the HR function should be evaluated regularly. Managing employees compliantly, that is, applying the stated rules and procedures correctly, is a challenging task for businesses of any size. Several tools can help to support compliance. These typically include:

• Employee Handbooks • Job Description Manuals • HR Policy Check-Ups/HR Audits • Compliance Posters • Workplace Safety Manuals • Regional Law Handbooks • Whistle Blowing Positions

Employees have to be trained regularly on compliance rules and regulations. Such training should be mandatory and present a consistent message about employees’ responsibility for ethical behavior in the workplace (Lieber, 2010). Employees should be required to follow the company’s code of conduct. In practice, violations cannot be fully prevented. Therefore, procedures to follow in case of recurring violations must be created beforehand. HR assumes the responsibility for establishing these procedures and carrying out the appropriate disciplinary measures for infractions. This seems to be a challenging task for global organizations due to the more complex organizational structures and local rules and regulations. 262 The Encyclopedia of Human Resource Management: Volume One

New types of HR compliance procedures are necessary for social media such as blogs and networking sites, as they can potentially lead to disgruntled employees defaming the organization’s reputation. Organizations should provide a framework for employees on the use of social media at work, being clear on how employees can communicate on social networks in the workplace.

Typical Criticisms of HR Compliance

It is often said that compliance systems deliver less than they promise. The main reason for this is that compliance is often used as a cosmetic process to meet regulatory requirements. It is possible that the wrong compliance system is implemented or the right compliance system is not implemented appropriately (Parker & Lehmann, 2009). HR compliance is often associated with autocratic leadership, where employees are required to strictly follow management’s orders. Management provides close supervision, regular monitoring, and strong control systems for its employees, who are seen as being without their own intellectual capabilities and good judgment. We believe there has to be a balance between control by management and initiative by employees for any compliance program to succeed.

Related Topics • Risk management • Compliance regulations • Code of conduct • HR practices & procedures • HR audits • HR compliance and social media

References

Curtice, J. (2004). The HR audit for legal compliance and safe business practices. Employment Relations Today, 31(2). Hansen, F. (2000). The importance of compliance. Compensation & Beneﬁ ts Review, 32(16). Lepak, D.P., & Snell, S.A. (2002). Examining the human resource architecture: The relationships among human capital, employment, and human resource conﬁ gurations. Journal of Management, 28(4). Lieber, L.D. (2010). HR´s role in creating and maintaining a code of conduct to promote an ethical organizational culture. Employment Relations Today, 37(1). Human Resources Compliance 263

Parker, C., & Lehmann, V. (2009). Corporate compliance systems: Could they make any difference? Administration & Society, 41(3). Ulrich, D. (1997). Human resource champions: The next agenda for adding value and delivering results. Cambridge, MA: Harvard University Press. Ulrich, D., & Brockbank, W. (2009). The HR business-partner model: Past learnings and future challenges. People & Strategy, 32(2).

Websites • http://blog.kpaonline.com/ • www.complianceonline.com/ • www.complianceonline.de The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 48

HUMAN RESOURCE STRATEGY

Laura A. Mindek

human resource (HR) strategy is a plan produced by the HR staff function Afor deploying people resources, that is, the talent, energy, and performance of people, to achieve the business strategy and objectives. People resources include individual and team capabilities and performance, functional/organizational services and results, culture, leadership, management, and talent across the enterprise. A business-focused HR strategic plan addresses the management practices that will create a competitive advantage for the business. Because so much of a business’ competitive advantage comes from people performance today, strategy is about managing people better than the competition does. Such a strategy contains an HR organization component to ensure HR is an efﬁ cient and effective support function, but ultimately, it is owned by line management. Over the last twenty-ﬁ ve years HR strategy has evolved from a plan to build HR processes, to one for developing people capabilities, to one focused on business results and outcome strategies. In the future as HR strategy continues to evolve in parallel with business strategy, the next generation will focus on the future, the external environment, and cross-functional/global processes. It will be supported more by data analysis than best practices and human capital management will become a mature science.

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The Goal of HR Strategy. The goal of creating an HR strategic plan is to translate business strategy into people capabilities and actions that enable desired business results.

The Importance of HR Strategy. Aligning HR strategy with business strategy ensures the business strategy becomes a reality. The success of a business hinges on ensuring that the right number and types of people are organized efﬁ ciently, managed effectively, and focused on customer/business requirements and drivers.

Assumptions

When developing an HR strategy, we generally assume that the business has a deﬁ ned strategy; the strategy requires people capabilities to be successful (rather than only ﬁ nancial assets, materials, or natural resources); the HR function is necessary for the operations of the business; an HR strategy can provide a competitive advantage; and the HR function follows best practices. All of these elements need to be in place for the strategy to work.

Process

The process for developing an HR strategy is similar to one for developing a business strategy. It contains the following elements:

• Identify pivotal customer and competitor issues in the external environment; • Articulate business strategy, including strengths, weaknesses, opportunities, threats, and drivers; • Translate drivers into core business competencies and core business competencies into required people capabilities; • Identify pivotal people issues and outcomes; • Weigh the opportunities that will give the business a competitive advantage; • Identify pivotal strategies based on strengths, timelines, and probability of success; • Identify actions and timelines to accomplish strategies, including HR skills, processes, and technology; • Communicate, implement, and track the plan and outcomes; • Review the plan formally once a year and informally when the business changes; and 266 The Encyclopedia of Human Resource Management: Volume One

• Adapt the plan to changes in the business plan, talent demand, competitor moves, and technology innovations throughout the year.

A ﬂ exible plan is one that focuses on priorities and involves all levels of the organization in creating the future state of the business through ongoing dialogue and feedback.

HR Strategies

HR strategies identify the priorities and actions line managers must take to manage people so they can achieve the company’s objectives. An example might be to redeﬁ ne the sales position as a consulting role and to staff the sales function with talent recruited from outside the industry so the company can increase its presence in a particular market. Another strategy might be to hire innovative technology students before they graduate to close the competition out of the talent market.

Three Components of an HR Strategic Plan

The HR plan has three components: business strategy, people issues/opportunities that will make the business strategy a reality, and HR’s role in supporting the line in providing the policies and processes that will take people performance to the next competitive level. In general you can take the following steps to build a plan. First, articulate business challenges and opportunities in strategic and functional terms. This requires a thorough understanding of the industry, customers, competitors, and the context of the ﬁ nancial environment. Enterprise-level strategies like growth, globalization, and innovation have to be translated into speciﬁ c objectives, for example: obtain 20 percent of the pre-teen market share by introducing pocket-size entertainment devices; introduce condiments to the Chinese market in cities with high net worth individuals; or increase the number of FDA approved drugs introduced to the over-the-counter market by 20 percent over last year, and 10 percent each year for the next three years. Use the following questions to create a description of your company’s business strategy:

• What are the customer, political, and economic trends in the industry? • What is your company’s position in that industry? Strengths? Weaknesses? Opportunities? Threats? Human Resource Strategy 267

• What four to six strategies are pivotal because they will have a significant impact on the company’s success in the next one to three years? • How is success deﬁ ned? How will the future be different from the past? • What business drivers define the capabilities needed to achieve future success? • How do these drivers translate into core people capabilities/competencies?

Second, list the people issues/enabling factors and their impact on business out comes. For example, build the leadership capability to manage a global entity in time for the launch of a new product line in China; increase productivity in the global work environment by 20 percent; develop an Internet-savvy marketing function, staffi ng 25 percent of the organization from companies with a strong marketing presence, 25 percent from technology fi rms, and 50 percent by developing internal marketing staff. There should be no more than four to six key strategies that drive thinking, decision making, and action. Typically, they represent a two-to-fi ve-year time horizon and are future-focused. You can use the following questions to identify enabling human resource strategies:

• What are the people issues associated with each business strategy? • How do you and other industries manage these issues? How do your competitors manage them? • Of all the people issues which are pivotal, that is, which ones will have more strategic impact on the business than any others? • What are the human resource strategies that will address each pivotal issue? • How will the human resource strategies be integrated to achieve a competitive advantage? • How will the plan be communicated and how will implementation be sustained?

The key elements of an HR strategy to consider are performance management and talent acquisition, development, and retention. Third, to increase the effectiveness and efﬁ ciency of the HR function, identify the enabling strategies that develop staff professionalism, take advantage of new technologies to reduce costs, and increase the speed and availability of people analytics. Typically, HR tracks both people metrics, such as depth of succession, retention, employee satisfaction, and diversity ratios, and HR function metrics, such as internal client satisfaction, head count/employees ratio, and time-to-ﬁ ll open positions. 268 The Encyclopedia of Human Resource Management: Volume One

You can use the following questions to identify HR function strategies:

• What HR processes, policies, or technologies will enable the people strategies? • What pivotal HR functional strategies support each people strategy from a competitive standpoint? How will HR support line leaders in carrying out these strategies? • What outcomes will be tracked and analyzed? For what audience and in what time frame? How will they be linked back to the business strategy? • How will the HR staff continue to develop the competencies, skills, and knowledge to take the function to the next level? • How well is the HR function positioned to communicate, inﬂ uence, and measure these strategies? • How well is the HR function positioned to communicate, inﬂ uence, and measure the HR strategy? How will you improve the process as you roll it out?

Current Debate

Critics vary on their evaluation of how well HR strategies are aligned with business strategies and how well HR as a function can address company issues, not just HR processes. Some contend that HR has little control over business outcomes; others say it is HR’s responsibility to make the linkages and strive to improve the analytics. Despite the degree of skepticism present, the trend is to make the case that HR strategy is connected to business strategy and to steer clear of strategies that represent best practices for the sake of best practices. While engaging in the debate, we need not lose sight of the value that best practices bring to people performance.

The Future

As the function matures and evolves to a decision science, more and more HR strategic plans will consider: (1) the value and impact of a strategy instead of solely its cost, (2) the logical connection between differences in performance and business outcomes, (3) the integration of HR practices such as stafﬁ ng, training, and compensation, and (4) how business tools, such as scenario planning, risk analysis, and supply chain framework, can be used in the management of people performance. Human Resource Strategy 269

As the function evolves in an environment in which change is the norm, HR strategies will focus increasingly more on the capability of people and organizations to adapt and anticipate changes in the business environment and on temporary competitive advantages that achieve effectiveness; and it will become more of an adaptive, changing organization itself, as will the strategic HR plan.

Further Reading

Boudreau, J., & Ramstad, P. (2007). Beyond HR: The new science of human capital. Cambridge, MA: Harvard Business School Press. Cappelli, P. (2007, January–March). A supply chain approach to workforce planning. Organizational Dynamics, 30(1), 11. Fitz-Enz, J. (2010). The new HR analytics: Predicting the economic value of your company’s human capital investments. New York: AMACOM. Gubman, E. (2004). HR strategy and planning: From birth to business results. Human Resource Planning, 7(1), 13–24. Jamroq, J.J., & Overhot, M.H. (2004). Building a strategic HR function: Continuing the evolution. Human Resource Planning, 7(1), 51–63. Kearns, P. (2010). HR strategy: Creating business strategy with human capital (2nd ed.). New York: Elsevier Press. Lawler, E.E. III, & Worley, C.G. (2006). Built to change. San Francisco: Jossey-Bass. Ulrich, D., & Brockbank, W. (2004). The HR value proposition. Cambridge, MA: Harvard Business School Press. Walker, J. (1992). Human resource strategy. New York: McGraw-Hill. Wright, P., Snell, S., & Jacobsen, P. (2005). Current approaches to HR strategies: Inside-out versus outside-in. Human Resource Planning, 27(4).

Websites Human Resource People and Strategy, www.hrps.org Human Resources for Today’s Workplace, www.workinfo.com Human Capital Institute, www.hci.org. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 49

MERGERS AND ACQUISITIONS

Jim Bowles

uman resource (HR) involvement in mergers and acquisitions (M&A) has Hcontinued to evolve as deal managers and corporate leadership address an issue that has become an incontrovertible truth: a vast majority of acquisitions fail to yield projected returns because integration activity associated with “culture” was left to chance or was poorly managed. The actual number of failures attributed to cultural integration has been estimated to be in the 75 to 80 percent range. While this would clearly be a diffi cult statistic to validate, any failure of a merger due to lack of attention to organizational culture is arguably one too many. “Trying to buck the tide of the culture is like swimming up rapids. Ignoring culture has drowned many mergers” (Fitz-enz, 2000, p. 217). As signifi cant as the culture factor is, from an HR perspective it is the tip of the iceberg relative to the application of professional consultation/involvement opportunities. Key touch points in the evolution of a merger or acquisition include front-end “due diligence,” pre-close research and planning, post-close plan execution, and ongoing outcome measurement/reporting. Within each of these critical stages, key HR practices are integral to the overall M&A plan. It goes without saying, that the role HR plays, while evident in each stage, may take a back seat to the initiatives and priorities established by fi nancial managers, project leaders, senior executives, and lawyers, who make up the other critical elements of an M&A team. The voice that HR carries on the team will be a function of the

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credibility and infl uence of the HR leader, as well the actual perceived depen- dencies the “deal” has on HR-related issues. In many cases external fi rms with HR capabilities are brought in to assist in one or more of the stages mentioned above. The degree of confi dentiality involved in the work and the availability of internal resources can infl uence the degree to which external resources are utilized. For additional information, a well-researched, linear model on the critical stages of M&A can be found in the Watson Wyatt Deal Flow Model (Watson Wyatt Worldwide, 2000).

Due Diligence

Due diligence is the careful fi nancial analysis on the part of dealmakers to determine the viability of a proposed merger or acquisition. The “go/no go” analysis inherent in this stage of the deal is in many cases just a straightforward fi nancial analysis. However, key areas requiring skilled HR involvement include assets and liabilities associated with benefi t plan, compensation plans, executive compensation plans, impact of change of control agreements, employment contract liabilities, severance plan requirements, and other issues associated with the balance sheet and potential future fi t. Third-party involvement may be required if a competitive relationship exists between the parties.

Pre-Close Research and Planning

Once an agreement to consummate the deal has been reached, the time interval between the handshake and numerous external approval steps involving fi nancial organizations, regulators, or stockholders may infl uence the legal close. In the face of this external scrutiny, the internal M&A team is faced with a signifi cant change management exercise touching all facets of the business. Generally, a project management team, augmented with internal/external support, begins the tedious work of planning. An example is the 2005 merger of Cingular Wireless and ATT Wireless, the largest “all cash” deal in merger history. Five hundred project plans were generated and managed as part of the integration/planning phase. The complexity of coordinating the parts fell to an internal project management team led by a senior manager in the business. The period of time from deal signing to close was eight months, and the work conducted in the planning phase of this merger led to arguably one of the most successful mergers, given post-merger business results. Whether in a mega-merger like the Cingular/ATT 272 The Encyclopedia of Human Resource Management: Volume One

merger or much less complex smaller acquisitions, the attention of the merger team is focused heavily on the following key HR issues:

• How leadership will be identiﬁ ed and selected; • If there is to be a force reduction, how to ensure that it is done in a way that is minimally disruptive; • How to quickly align the leadership team around the vision of the new company; • How to retain critical intellectual capital; • What changes will be required in total compensation plans and under what time frame that will occur; • What technology will be used to support key HR processes and how to transition to common systems; • How to ensure that on day one of the new venture employees are continuing to meet the needs of the customers and grow the business; and • How to achieve the synergies that were conveyed to the ﬁ nancial community without taking one’s eyes off the ball (executing the plan).

Post-Close Plan Execution

The change management work moves into full swing once the deal is closed and employees and other stakeholders are watching closely to see whether the deal will be a bang or a bust. Plans conceived during pre-close work become operating plans for business units and consume a great deal of team resources and energy as plans move to reality. Beyond the nuts and bolts in the planning stage, the work of cultural integration should gain great traction immediately after close. Galpin and Herndon (1999) identify ten areas that should be the focus of continuous cultural integration work. These include:

• Rules and policies • Goals and measures • Rewards and recognition • Stafﬁ ng and selection • Training and development • Ceremonies and events • Leadership behavior • Communications • Physical environment • Organizational structure Mergers and Acquisitions 273

Each of these areas should be a focus of the HR team as the integration moves forward. Understanding the pre-merger state for each of these key topics and ongoing involvement are critical to ensure that there is the appropriate level of sensitivity to employees who were acquired. A sophisticated communications strategy must keep everyone informed about each of these topics. Employees in the new company will expect timely, thorough, and honest communication about issues that will affect them on a personal level. This, incidentally, is not exclusively a “low touch” endeavor. Management exposure and involvement from the day of the close onward not only is important from a leadership perspective, but it also is critical for rallying the troops around the work at hand.

Measurement and Reporting

Once integration activities are in full swing, there will be plenty of scrutiny around the financial impact, which will be the ultimate measure of success. Behind fi nancial measures, attainment of synergy targets, customer response, and employee measures will be extremely important when assessing the sustainability of the deal. Measures related to human capital for which the HR team will be held accountable are typically associated with the conversion of people systems (ERP, RMS, LMS), the management of force reductions, trends in undesirable employee churn, movement (and impact) of moving, to common compensation and benefi t plans. From a cultural standpoint, best practice would also suggest periodic “tem- perature checks” of employee attitudes. There are several approaches, including random sampling (common key questions), full scale all-employee surveys, or surveys specifi cally developed to measure cultural attributes critical during post-merger integration. One such instrument, Accenture’s Culture Value Analysis (CVA) is used to measure impact of mergers on culture so that attention can be paid to issues that might pose a threat to a merger’s success. The CVA measures thirty-three elements of an organization’s culture around shared values, norms, and practices that are operating at both conscious and unconscious levels. Many other instruments exist that can be used to measure culture at critical post-integration junctures. The advantages of widely used published instruments are in the availability of norms and external expertise that may help with determining appropriate follow-up steps. Obviously, off-the-shelf survey software and less formal approaches can be used. According to Fitz-enz (2000), human resources has a central role to play throughout any merger, yet are rarely invited to participate until well into the 274 The Encyclopedia of Human Resource Management: Volume One

process. Understanding the critical touch points where HR can make a contribution leads to the function having credibility. HR must be prepared to add value, and to do so must understand the key elements of the process. If they do, it increases the odds of HR playing a key role—and perhaps having a measurable impact on the end result.

References

Fitz-enz, J. (2000). The ROI of human capital. New York: AMACOM. Galpin, T.J., & Herndon, M. (1999). The complete guide to mergers and acquisitions: Process tools to support M&A integration at every level. San Francisco: Jossey-Bass. Watson Wyatt Worldwide. (2000). Watson Wyatt deal ﬂ ow model. www.watsonwyatt.com.

Website www.watsonwyatt.com/us/pubs/insider/showarticle.asp?ArticleID=9319 The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 50

HUMAN RESOURCE MANAGEMENT

Donald P. Rogers

he phrase “human resource management” (HRM) refers to the process of Tcreating, implementing, and evaluating policies and practices for acquiring, developing, and engaging large numbers of employees to do the work of the organization. As with most process deﬁ nitions, this one is complex because it is shorthand way to refer to a large number of related concepts.

HR Responsibilities

The human Resource function (HR) generally includes seven practice areas (Rothwell, Bergstrom, Maldonado, & Prescott, in press):

• Human resource management/HR strategy • Employment and stafﬁ ng/talent management • Workforce development/management and leadership development • Performance management/assessment/knowledge management • Total rewards/compensation management • Employee and labor relations • Organizational change and development

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According to the Bureau of National Affairs (2006), HRM is responsible for managing a wide range of tasks, including HR planning, defi ning HR objectives, measuring HR impacts, maintaining the organizational culture, organization development, employee communications, employee attitude surveys, workforce planning, job descriptions and specifi cations, recruiting, pre-employment testing and screening, drug testing, interviewing and selection, temporary and contract labor administration, orientation of new employees, performance appraisal, employee discipline, management/leadership development, skills training, career development, tuition reimbursement, productivity improvement, wage an salary administration, executive compensation, payroll administration, job analysis and evaluation, bonus and incentive plans, award and recognition programs, vacation policies & programs, insurance benefi ts administration, retirement plan administration, unemployment compensation administration, workers’ compensation administration, fl exible spending accounts administration, profi t sharing and stock options administration, health and wellness programs, employee assistance programs (EAPs), relocation services, promotion/transfer/separation processing, outplacement services, exit interviews, complaint and grievance procedures, EEO compliance programs, union/labor relations, HR/employee recordkeeping, and HR information systems (HRIS). HRM engages in crisis management, confl ict management, cultural management, change management, image management, project management, and the traditional management functions of planning, organizing, coordinating, and controlling. HRM also incorporates the managerial tasks of decision making, communication, and leadership. HRM is important to organizations for several reasons. Effective HRM (asset management/appreciation) can add signifi cant fi nancial value to an organization (Ulrich & Brockbank, 2005). HRM practices (for example, hiring, training, and performance management) directly affect employee productivity. HRM practices (particularly communication and incentives) have a signifi cant impact on the organization’s ability to innovate. HR is responsible for the single largest aspect of operating budgets in most service organizations (compensation and benefi ts). HRM can create competitive advantages, value propositions, core competencies, organizational cultures, and public images.

Evolution of HRM

Prior to 1880 the only organizations with large numbers of employees were military. Many of the early HR policies (take care of your people) and practices (ten-hour work days) came from the military. Most businesses, government agencies, and private institutions had fewer than three hundred employees. But industrialization, Human Resource Management 277 urbanization, and migration changed that. From 1880 until 1920 the growth of industry lured people from the rural areas to the cities. Businesses created jobs and people moved to the jobs. But for the most part, the new employees were not prepared for their new jobs and lifestyles. Someone had to take care of them (Kaufman, 1993). The earliest HR people were called Employee Welfare or Social Welfare Workers. Their jobs were to teach the new personnel how to cope with industrial and urban life. Some of this was as basic as teaching people how to tell time (so they could be at work on time). They also kept records on the progress of new personnel. The name of the function changed to “personnel administration.” During World War I, the U.S. and British governments introduced taxes on income, required employers to keep records on worker pay and to withhold portions of the pay to be sent to the Internal Revenue Service (Inland Revenue in the United Kingdom). This changed pay practices from cash to check (or script) and signifi cantly increased recordkeeping and paperwork responsibilities. Since the personnel department already maintained records on employees, payroll and tax reporting duties were frequently assigned to them. In the next twenty years, several more pieces of social legislation required companies to implement workplace policies (regarding a variety of issues), maintain records, and report. These administrative responsibilities were also assigned to the personnel department. These new responsibilities earned HR the nick- name “clerk of the works.” These HR specialists (such as recruiters, trainers, benefi ts administrators, and such) focused, at a technical level, on doing their jobs as well as possible. Moreover, in the 1930s unions gained power, organized successfully, and began bargaining with management. These bargaining responsibilities were generally assigned to an industrial relations department. After World War II, personnel and industrial relations departments frequently merged. In the post-WWII era HR generalists focused, at an operating level, on implementing the initiatives, campaigns, programs, and projects that would maximize productivity (job skills training) or minimize downtime (accident prevention). The HR role was to remove barriers to performance. On a more proactive note, HR people were concerned with organizing the HR initiatives (such as pay for performance or tuition reimbursement), fi nding the necessary resources, explaining the programs, monitoring the results, and solving the inevitable problems. In the 1970s the term “human resources” became popular, reflecting a realization that people were a critical competitive resource in a post-industrial, services-driven economy. The HR department was still responsible for taking care of the employees, maintaining personnel records, and removing barriers to productivity, but increasingly, HR was held accountable for developing and implementing strategies that would produce results through people. HR executives were 278 The Encyclopedia of Human Resource Management: Volume One

concerned, at a strategic level, with analyzing the business environment (including global labor market trends) and formulating strategies, policies, and programs that would provide the organization with the kind of workforce it needed to achieve its objectives and implement its strategies and programs. In 2010 the HR function is still concerned with developing HR strategies for implementing business strategies; implementing HR strategies; conducting standard HR operations; and performing routine HR tasks (Becker & Huselid, 2006), but two new concepts have emerged. The fi rst new concept is “human capital management,” which contends that HRM could be more effi cient and contribute more to the organization by becoming a more analytical, impersonal, decision science (Boudreau, 2010; Fitz-enz, 2010). The contention is that HR managers could make better decisions about the selection, deployment, development, and compensation of employees if they used analytic methods to predict, guide, and justify those decisions. The second new concept is “people management,” which contends that organizations could be more effective if they let their employees take the lead in improving productivity, cycle time, waste management, and so on (Lawler, 2003; Pfeffer, 1998; Sartain & Finney, 2003). The contention is that people can make organizations more successful and organizations can make people more successful through processes that permit interaction, cooperation, engagement, fl exibility, cooperation, and creativity.

References

Becker, B., & Huselid, M. (2006). Strategic human resource management: Where do we go from here? Journal of Management, 32(6). Boudreau, J. (2010). Retooling HR: Using proven business tools to make better decisions about talent. Cambridge, MA: Harvard Business School Press. Bureau of National Affairs. (2006). HR department benchmarks and analysis 2006. Washington, DC: Bureau of National Affairs. Fitz-enz, J. (2010). The new HR analytics. New York: AMACOM. Kaufman, B. (1993). The origins and evolution of industrial relations in the United States. Ithaca, NY: Cornell University ILR Press. Lawler, E.E., III (2003). Treat people right! San Francisco: Jossey-Bass. Pfeffer, J. (1998). The human equation: Building proﬁ ts by putting people ﬁ rst. Cambridge, MA: Harvard Business School Press. Rothwell, W.J., Bergstrom, E., Maldonado, C., & Prescott, R.K. (Eds.). (in press). The encyclopedia of human resource management. San Francisco: Pfeiffer. Sartain, L., with Finney, M. (2003). HR from the heart: Inspiring stories and strategies for building the people side of a great business. New York: AMACOM. Ulrich, D., & Brockbank, W. (2005). The HR value proposition. Cambridge, MA: Harvard Business School Press. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 51

INTERNSHIPS

Jennifer Belinda DeSormoux

Deﬁ ning an Internship

Acquiring an internship is an excellent opportunity to both apply disciplines learned from the academic world and translate practice into performance. Internships have evolved over time from being recognized as a temporary, tedious, administrative position to what is now a competitive environment that seeks individuals for capital investment. Interns are contributing a diverse mix of talent, education, abilities, and experiences to the betterment of the many companies they are interning in. The millennial deﬁ nition of internships can be described as the process whereby students gain proﬁ cient, supervised, practical work experience in areas in which they have some interest and adeptness. Now more than ever in this progressively competitive environment, students are eagerly applying for two types of internships: academic and non-academic. Academic internships provide experience for earning college credit, and performance is evaluated in order to meet graduation requirements. Non-academic internships are mainly used to apply key learning, training, and skill sets acquired from college courses to various positions within a company. The experience achieved by interns can be highlighted on their résumés, and quite possibly position them as attractive candidates for job openings.

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The purpose of an internship is to present students with an invaluable learning experience that will not only present networking opportunities and make it possible for them to practice what they know, but essentially, interns can try it out to see whether a job is a ﬁ t. This experience presents both students and employers with relevant information in order to evaluate whether interns are indeed a match to the organizational culture and a good ﬁ t in the corporate environment.

Creating an Internship

In order to get the best talent, companies are forced to begin their talent searches early. Campus recruiting at the career service center, information tables at job fairs, alumni socials, and employee referrals are some of the creative ways employers seek and recruit interns. Companies that have solid relationships with colleges and universities are most likely to have the best selection. Employers seek individuals who meet the qualifications for specific jobs. Employers with solid reputations have an advantage in that they can attract the best and the brightest students.

Structuring an Internship

A well-structured internship experience is usually comprised of shadowing a specialized function in a speciﬁ c department for twelve weeks during the summer. Students have the opportunity to gain meaningful project-based work experience and interact with key leaders and executives in all levels of management. The internship program usually involves a sequence varying from company orientation and registration to department orientation, division of work load, expectations, and project details, all of which are designed to enrich the experience. To kick off the program, an orientation is conducted to clarify the employer’s objectives and expectations, and expected learnings for the interns. Interns are brieﬂ y introduced to the company’s history and immersed into the company culture and systems, corporate policies and procedures. A thorough overview is given of the internship program, key dates, departments, and positions, along with expectations and desired results. Support materials are provided such as forms, policies, and the company handbook. Orientation is the place to welcome and acknowledge interns, make them feel comfortable, and introduce them to their teammates and leaders. Interns are often paired with “buddies,” who play a vital role in their success. The buddy’s role is to coach, mentor, and guide the intern through his or Internships 281

her internship. Buddies answer questions pertaining to relocation, the local area, and the company. They are friends to bounce ideas off as they lead, coach, and develop interns in business acumen, project specifi cs, and best practices. Buddies are selected on the basis of being positive, infl uential individuals who are greatly successful in their own careers and who have shown a commitment to helping others develop as professionals. An additional part of orientation is introductions to the departments they will be working in and becoming familiar with their workspace. It is important that the space is ergonomically comfortable, visibly manageable, and complete with all the tools and resources needed to do their jobs effectively. A brief introduction to the phone, computer, and intranet systems is next so they can hit the ground running. A good internship program’s objectives, job responsibilities, and assignments are all designed for interns to gain a better understanding of the company, involve them, and keep them challenged. Interns want meaningful projects and aggressive goals and thrive in an environment that fosters creativity and diverse ideas. Interns can bring their talents and imagination to the table and add something to the company. Interns tend to have a passion for learning and gain pleasure from a variety of tasks that enable them to learn, grow, and develop. It is very important to monitor their daily tasks and pay close attention to signs that they may be overwhelmed with too much work or, on the contrary, not enough. Signs of a champion intern are those who take initiative, are proactive, ask questions, keep focused, and go above and beyond what’s expected. Project responsibilities should be designed to enhance productivity, give a sense of accomplishment, and welcome fresh ideas and perspectives—all while being specifi cally defi ned and the objectives clearly stated. Just as essential as the other components of the internship are the social aspects, which include networking and building relationships. Interns are encouraged to have fun and participate in as many “meet and greets” with upper management, social events, departmental speaker series, lunch and learns, team-building workshops, and community activities as possible. These are only a few of the many opportunities available for interns to build strong relationships and skills.

Evaluating an Internship

Feedback should be given on a daily basis in order for interns to improve upon their performance, grow from, and make the most of the program. In addition, a self-evaluation and job performance review should be given in an informal setting midway through the program and in a formal setting as the internship comes to a 282 The Encyclopedia of Human Resource Management: Volume One

close. An exit interview should be scheduled to inform the intern about his or her performance and areas for improvement, provide feedback on whether expectations were met, and to conﬁ rm results. The written and formal assessment tool used at the conclusion of the program should document business results, leadership skills, performance behaviors, strengths, general accomplishments, and contributions and contain supporting comments and areas for improvement. Interns should be assessed as if they were new hires or ﬁ rst-year employees. The assessment can be used as a reference for any future employment within the company. In addition feedback from the intern about the program should be relayed to human resources so they can improve the internship program. HR seeks recommendations and suggestions from those who have experienced the program. This feedback is important in order for employers to stay competitive and attract only the best interns and employees in the future.

Outlook for Internships

Internships are very effective for workforce growth, especially when a company follows best practices. Companies can recruit new hires who have work experience, even if it is from an internship. Employers have started to plan and recruit interns earlier in their college careers. A growing trend is recruiting in high school. Future interns, for their part, are looking for programs that offer a variety of experiences and allow them to concentrate on speciﬁ c areas of study. Because internships are not always available for special interest studies, another trend is for students to approach companies and convince them to internship programs that meet their goals and interests. As the labor market becomes more selective, expect to see companies implement internships and recruit and retain interns. Employers are realizing that interns can be the key to developing a high- quality workforce and that they are potential candidates for employment.

Further Reading

Athavaley, A. (n.d.). Trends: Students craft internships to ﬁ t interests job description? Some enterprising applicants write their own. Wall Street Journal Career Journal. Choosing the right internship. (2007, February 25). BusinessWeek. Geisel, R.W. (2004, December). Interns on the payroll. HRMagazine. Herman, R., & Gioia, J. (n.d.). A turnkey approach to internships. The Herman trend alert. www.hermangroup.com. Internships 283

Sessions, D.J. (2007, August). Why well-structured internship programs work. CPA Practice Management Forum. Talbott, J., Bukovinsky, D., & Sprohge, H-D. (2006, August). Harnessing intern enthusiasm. CMA Management. Two experiences, two views. (2006, April 26). BusinessWeek.

Websites http://externs.com www.internships.com www.internweb.com www.internjobs.com www.internshipprograms.com www.internzoo.com The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 52

JOB ANALYSIS

Katy Lynn Wilson

job analysis is the methodical process of accumulating all information rel- Aevant to a distinct job within an organization for the specifi c purpose of defi ning and evaluating that job. It can be coupled with a job evaluation, which is used to create job hierarchy and organization structure. A job analysis can be conducted for any purpose within the organization, including clarifi cation of hiring standards, promotion criteria, and training requirements. A job analysis will uncover and identify all the responsibilities and behaviors required to perform that job and pinpoint the true intent of having the role in the organization. Complete, relevant, and up-to-date job descriptions are the primary outputs of a job analysis.

Importance

Job analyses are used by organizations to identify similarities and differences among various jobs in order to ensure their established job structure is internally equitable and aligned with their business needs. Conducting these analyses allows the company not only to update job descriptions but also to verify that the jobs enable the company to effectively achieve their vision and accomplish corporate goals. Completing a job analysis leads to the establishment of the competencies required for that job.

284 Job Analysis 285

When completed fully and utilized correctly, a job analysis aids a company on many levels. Results can be used to support changes in both the organizational and pay structure. A job analysis that identiﬁ es competencies required for jobs can aid the company in candidate selection as well as appraising job performance. Identifying competency data will also assist the company in recognizing and addressing training needs. Results from a job analysis are legally defensible for claims under ADA, workers’ compensation, and even wrongful termination suits.

Focus

When conducting a job analysis, information should be sought relating both to the job itself and to the knowledge, skills, and abilities (KSAs) of the employees currently performing the job. Although data is needed about both, it is important to note that the analysis should just be of the job and not used as a tool to appraise the performance of the employee. Job data includes both the nature of the job (job tasks, responsibilities, work conditions) and its level in the organization (in terms of responsibility and accountability). Employee data includes employee characteristics, KSAs, and internal and external business interactions. This data will enable the company to identify speciﬁ c behaviors that affect job performance. The data needed to complete a job analysis can be obtained from two types of sources. Primary data comes from those employees (or supervisors) currently in the role being analyzed. This data can be collected utilizing personal interviews (individual or group), questionnaires, or by simply observing the employee ( job shadowing). Secondary data is collected from sources other than the current employee (or supervisor). This data can come in many forms, including survey data, industry data, workﬂ ow studies, existing job descriptions, or organization charts.

Structure

Before initiating the job analysis process, several preliminary factors must be addressed, including obtaining management approval and employee buy-in. Management must be aware of the legal implications the analysis will address (as far as maintaining compliance with such laws as FLSA, ADA, and the Equal Pay Act) and how the completed analysis will increase organizational efﬁ ciency and effectiveness. It’s equally important to gain acceptance from the employees prior to initiating the process. In order to be able to collect vital primary data from the employees, they must understand the reasons behind conducting the analysis and 286 The Encyclopedia of Human Resource Management: Volume One

how the results will be utilized. Fully communicating the process to both management and employees will help gain their acceptance and eliminate potential obstacles as the analysis proceeds. Once approval is received, it is necessary to identify the individuals who will be involved. While it is common practice to have human resources involved, representatives outside the HR department should also be included to ensure a full, valid, and inclusive analysis. Team members to consider can include department managers, position incumbents, or even external consultants specializing in job analyses. After identifying the team members conducting the job analysis, the next step is to review existing documentation and data about the jobs. This could involve reviewing existing job descriptions, survey data, organization charts, performance management data, manuals, employee handbooks, policies and procedures, and additional secondary sources. Reviewing this data allows the team to develop an initial understanding of the job being analyzed and the organization’s structure. Once the secondary data have been reviewed, it is appropriate to start collecting data from primary data sources. This step is when the team should complete worksite tours and observations of the employees doing their jobs. While observing, the team should be sure that the employees understand why the observation is happening and be as inconspicuous as possible not to interrupt or interfere with the job functions. The data collected should include not just the tasks performed but also the behaviors utilized, tools required, and the actual environmental factors (working conditions) faced while completing them. The team members should make notations regarding any relationships with both co-workers and customers that are necessary to complete tasks. The next step in conducting a job analysis is to schedule interviews with both employees and supervisors. Observations alone will yield some important data, but more detailed information could be missed unless interviews are also conducted. When interviewing, team members should be sure that the employee understands not just why the interview is occurring but what the data will be used for. Clarity on these issues will facilitate the interviews and remove apprehension that may cause the employee to hold back information. These interviews should be utilized to collect information regarding the department, job responsibilities, time requirements, and inhibitors to the process. Scheduling group interviews, and even setting up interviews with the customers, are some additional steps to consider to gather more details regarding the competencies and behaviors needed for the speciﬁ c job. If an employee doesn’t feel comfortable participating in an interview, an alternative would be to have the employee complete a questionnaire. Once all the data have been collected and the interviews have been completed, the data must be consolidated and analyzed. The data should be compiled Job Analysis 287

to create job descriptions outlining the responsibilities, tasks, and competencies required for the job. Within the responsibilities, the team must also be sure to distinguish the essential job functions from the non-essential functions. Essential functions are those that only limited employees can perform, as they are highly specialized and were the primary reasons why the job was created. These job descriptions should include speciﬁ cations regarding the KSAs required to complete the job, as well as the working conditions and a summary of the job’s objectives.

Result Evaluation

After a job analysis is completed, the resulting job descriptions should be evaluated. The analysis team should ensure the results are valid and useful. The team should also ensure that the job descriptions are reliable and that all parties involved (managers, employees, interviewers) agree to the resulting description of each job. Job descriptions must be accepted and approved by management, the supervisors, and the employees performing the jobs. Job descriptions should be a valid representation of the skills required to complete and perform a job. The organization should be able to use the resulting job descriptions to assist in evaluating organizational structure, pay policies, promotion criteria, performance appraisals, and so on. A job analysis performed thoroughly produces job descriptions with enough detail to enable organizations to make necessary changes to structure and policies, leading to increases in organizational efﬁ ciency and employee satisfaction.

Further Reading

Milkovich, G., & Newman, J. (2008). Compensation (9th ed.). New York: McGraw-Hill. SHRM. (2007). Module 2: Workforce planning and employment. SHRM learning system. Alexandria, VA: Author. WorldAtWork. (2007). The WorldAtWork handbook of compensation, beneﬁ ts, and total rewards: A comprehensive guide for HR professionals. Hoboken, NJ: John Wiley & Sons.

Websites www.job-analysis.net/ www.shrm.org (Society for Human Resource Management) The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 53

JOB DESIGN

Sharon E. Norris, Tracy H. Porter

ob design is the division of work tasks assigned to an individual in an organi- Jzation that specifi es what the worker does, how, and why. Effective job design contributes to the achievement of organizational objectives, motivation, and employee satisfaction. One of the most well-known approaches to job design is the Job Characteristics Model (Hackman & Oldham, 1975). In the job characteristics model (JCM), fi ve core characteristics are considered: (1) skill variety, (2) task identity, (3) task signifi cance, (4) autonomy, and (5) feedback. Skill variety refers to the variety of different skills and talents that an employee uses while completing a job. The more variety in skill, the more likely the employee will be motivated and satisfi ed, according to Hackman and Oldham. Examples of skill variety might include assigning sales clerks who normally only serve customers to additional duties such as stocking inventory or changing storefront displays. Task identity is the extent to which the employee recognizes identifi able outcomes of the job and also has the opportunity to complete aspects of a job from start to fi nish. Examples of this might include the ability to begin a project from the start and to complete it. Task signifi cance refers to the impact of the job on the employee as well as other members of the organization. For example, this might include employees who sell medical equipment who have a high level of specialization associated with their jobs. The reason why such a position would have high task signifi cance might be the seminars and additional training required of the employee in order to do the job effectively.

288 Job Design 289

Autonomy refers to the amount of control an employee has over how to complete the work and when the work is completed, such as control over scheduling. Jobs that have a high level of autonomy offer the employee freedom, independence, and discretion in scheduling the work and determining the procedures required in order to complete the task. In a truly autonomous job, the employee has the ability to make his or her own decision, rather than relying on the detailed instruction from supervisors or procedural manuals. Feedback refers to the degree to which employees can tell how well they are doing on the basis of direct sensory information from the job itself. Feedback is important so the employee can obtain knowledge of the impact of his or her actions on results to determine personal effectiveness. An example of feedback might include airline pilots, who can tell how well they are able to land an aircraft, or road crews, who see how well they have prepared the roadbed and completed repairs. It is believed that the fi ve core characteristics of a job (skill variety, task identity, task signifi cance, autonomy, and feedback) infl uence employee internal motivation and job satisfaction. The extent to which the core characteristics of a job impact these outcomes is determined by three psychological states that serve as mediators: (1) meaningfulness of the work, (2) responsibility for work outcomes, and (3) knowledge of the results of work performance. Meaningfulness of the work refers to the extent to which an individual perceives works tasks to be valuable and worth performing. Skill variety, task identity, and task signifi cance directly contribute to the job’s meaningfulness. A job with high levels of these three characteristics makes it more likely that employees performing it feel the job is meaningful. In turn, the meaningfulness of a job declines as one or more of these characteristics drops. Responsibility for work outcomes results when the employee perceives personal accountability associated with work performance. Autonomy directly contributes to the feeling of responsibility. Ideally, employees would be assigned control of their work environments or components of their environments in order to feel responsible for their successes and failures. Knowledge of the results of work performance is important so an employee can determine the effectiveness of his or her actions. Employees want information about their jobs and information on the consequences of their work efforts. Knowledge of results can originate from co-workers, supervisors, or clients; however; job design focuses on knowledge of result for the work itself. Three strategies are necessary for organizations to increase the motivation potential of any job (Hackman & Oldham, 1975): job rotation, job enlargement, and job enrichment. Each of these offer options for mangers to implement in order to effectively design jobs. 290 The Encyclopedia of Human Resource Management: Volume One

Job rotation refers to the practice of moving employees from one job to another. By rotating jobs organizations can experience signifi cant improvements in productivity, quality, and motivation. Job enlargement refers to adding tasks to an existing job. Job enlargement might include combining two or more jobs into one or just adding one or two more tasks to an existing job. Job enlargement offers increased skill variety to employees, as there are additional tasks to perform, and effi ciency and fl exibility within the job are improved. Job rotation and job enlargement strategies afford employees the opportunity to bring an increased number of skills to complete work assignments. Job enrichment refers to employees being given more responsibility for tasks such as scheduling, coordinating, and planning their own work. Job enrichment allows employees to take on greater responsibility for their work with accountability for performance results. This enriched job experience leads to higher job satisfaction and work motivation, as well as lower absenteeism and turnover. The core propositions of JCM can be applied to most people, according to Hackman and Oldham (2010), but they also acknowledge that “not everyone responds positively to large, challenging jobs” (p. 464). Expanding the job will not necessarily increase work motivation for every individual in every situation. Oldham and Hackman report that the strength of the need for growth, job-relevant knowledge and skills, and work context moderate the connection between the use of job design strategies and performance outcomes. They growth need as “the degree to which an individual values opportunities for personal growth and development at work” (p. 464). Oldham and Hackman further say that, without job-relevant knowledge and skills, an employee experiences more failure than success. Without a satisfactory work climate, employees are preoccupied and work motivation is muted (Oldham, Hackman, & Pearce, 1976). The required skills and knowledge are necessary to master more challenging work. Without the necessary skill and knowledge, the level of stress the employee experiences will increase and job performance will decrease. Likewise, if the work climate is unsatisfactory, then employees will not respond favorably to job rotation, job enrichment, or job enlargements because they are preoccupied with the unsatisfactory organizational circumstances. For the design of 21st century jobs, JCM can be a method for creating a positive work environment that will infl uence employee perceptions of the job in a way that will intrinsically motivate them, increase the quality of work, and improve social connections among employees. Based on the social information- processing model (Salancik & Pfeffer, 1978), leaders provide cues that contribute to the way employees assess the work environment and their work tasks. Together, the design of work tasks and the way leaders frame work experience and help Job Design 291

employees manage meaning will help to increase employees’ internal motivation and improve their satisfaction. Hackman and Oldham (2010) report that some of the same quality of work life and organizational productivity problems from the 20th century remain (low work motivation, turnover, shoddy products, worker alienation, and job dissatisfaction). Yet, the problems are no longer focused on the rank-and-fi le worker but include knowledge workers, professionals, and managers. Interventions need not be solely focused on the design of individual jobs but also on the social interaction of teams of individuals working together toward collective purposes. The new core dimensions of job design should include not only an organizational structure that better distributes power, infl uence, and information, but job design that takes into account the social components, such as “altruistic behavior at work, helping behavior, satisfaction with co-workers, or the cohesiveness of the unit where the work is performed” (Hackman & Oldham, 2010, p. 469). These core dimensions are new social attributes that serve as moderators of effective job design on organizational performance outcomes for the jobs of the future. The fast-changing work environment of the future will also change the way future employee jobs are designed. Employee jobs will need to be designed with fl uid composition and boundaries that can rapidly change in size and shape as the winds of change form and reform internal work requirements.

References

Hackman, J.R., & Oldham, G.R. (1975). Development of the job diagnostic survey. Journal of Applied Psychology, 60, 159–170. Hackman, J.R., & Oldham, G.R. (2010). Not what it was and not what it will be: The future of job design research. Journal of Organizational Behavior, 31, 464–479. McShane, S., & Von Glinow, M. (2010). Organizational behavior (5th ed.). New York: McGraw-Hill. Oldham, G.R., Hackman, J.R., & Pearce, J.L. (1976). Conditions under which employees respond positively to enriched work. Journal of Applied Psychology, 61, 395–403. Salancik, G.R., & Pfeffer, J. (1978). A social information processing approach to job attitudes and job design. Administrative Science Quarterly, 23, 224–254.

Websites www.arrod.co.uk/archive/concept_job_characteristics.php www.mindtools.com/pages/article/newTMM_23.htm www.scribd.com/doc/18002089/Job-Analysis-Job-Design-and-Quality-of- Work-Life The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 54

JOB SATISFACTION

Wanda M. Costen

ob satisfaction, or how happy one is with a job, has been linked to important Jorganizational outcomes like customer satisfaction, as well as an employee’s organizational commitment and intent to stay with the organization (Antolik, 1993; Ghiselli, LaLopa, & Bai, 2001). Even more importantly, research shows that job satisfaction is inversely related to turnover (Bluedorn, 1982; Camp, 1994). Since the cost of turnover is high and negatively impacts an organization’s proﬁ t, it is important to understand what inﬂ uences an employee’s job satisfaction.

What Is Job Satisfaction?

Job satisfaction is how positively or negatively a person feels about different aspects of his or her job (Schermerhorn, 1996), as well as how one responds to different work conditions (Camp, 1994). It is also an assessment of the gap between what an employee wants from a job and what the job gives back to the employee (Locke, 1969). An employee evaluates how happy he is with the specifi c components of the job, supervisor, and overall work environment. According to Hackman and Oldham (1975), there are fi ve job characteristics that measure an employee’s job satisfaction: autonomy, skill variety, task identity, task signifi cance, and task feedback. Autonomy is the amount of freedom an employee feels she has in making decisions related to her job, especially scheduling and

292 Job Satisfaction 293

how the job is performed. Skill variety is how many different challenging skills are needed to do the job. Task identity is how much completing the job results in some type of complete, whole output or an identiﬁ able piece of work. Task signiﬁ cance is how much impact the employee feels the job has on others, either inside or outside of the organization. Finally, task feedback is the amount of information the employee receives about his job performance (Clark, 2000).

What Inﬂ uences Job Satisfaction

Several aspects of work infl uence an employee’s attachment to his job. One such infl uence is the relationship an employee has with her co-workers and supervisors. If an employee feels he has support from his co-workers and works well with them, this has a positive infl uence on his overall job satisfaction (Fletcher & Williams, 1996). A manager or supervisor’s leadership style also infl uences how an employee perceives her job. Employees who believe that their managers are competent, consistent, and fair have a more positive perception of their jobs, and thus higher job satisfaction (Rogg, Schmidt, Shull, & Schmitt, 2001). Training and socialization also contribute to job satisfaction. Training programs provide an employee with the tools he needs to do his job effectively. If an employee feels that the organization is committed to providing her with the necessary skills, that employee builds a stronger emotional attachment to the organization and therefore has higher job satisfaction (Taormina, 1999). Socialization is the process of wel- coming an employee into the organization and educating her on the organizational culture. One example of socialization is a new employee orientation. During this session, new employees learn pertinent information about the organization, as well as essential policies and procedures. Organizations that invest time in creating a positive experience for new employees create a positive attachment with the new employee, which enhances the employee’s job satisfaction (Taormina, 1999). Perceived workplace fairness also determines how satisfi ed an employee is with her job. Workplace fairness is whether or not an employee believes the organization makes the “right” decisions in terms of treating its employees equally. The fi ve dimensions of workplace fairness are pay rules and internal equity, pay administration, work standards, pay level and external equity, and job supervision (Bettencourt & Brown, 1997). Internal equity is the degree to which an employee feels pay, raises, and promotions within the organization are fairly distributed. Pay administration relates to how fair an employee feels his supervisor is in determining pay, raises, and promotions. Work standards evaluate the degree of fairness in maintaining acceptable behavior in the workplace. External equity is how fair an employee feels her pay is relative to those in similar positions in other organizations. Finally, 294 The Encyclopedia of Human Resource Management: Volume One

job supervision measures how fair an employee believes his supervisor is in distributing the work load (Bettencourt & Brown, 1997). An employee who believes that her workplace is fair will have higher job satisfaction.

The Impact of Job Satisfaction

Job satisfaction is related to other important aspects of work as well. Job satisfaction has a positive impact on organizational commitment, which subsequently inﬂ uences turnover and an employee’s intent to stay with an organization. Employees who have positive feelings about their jobs tend to be more committed to their organizations. The more committed employees are to an organization, the less likely they are to leave (Camp, 1994; Mathieu & Zajac, 1990). Job satisfaction and loyalty are also related. Loyalty is a precursor to organizational commitment. When one is loyal to an organization, she takes pride in and supports the organization (Niehoff, Moorman, Blakely, & Fuller, 2001). Both loyalty and job satisfaction lead to organizational commitment. There is also a relationship between job satisfaction and customer satisfaction. Research supports what many managers already know: happy employees deliver good customer service, which creates happy customers who keep coming back (Rust, Stewart, Miller, & Pielack, 1996).

Final Thoughts

Understanding employee job satisfaction is important because job satisfaction is directly linked to turnover. Focusing on the aspects of the workplace that infl uence job satisfaction can help an organization signifi cantly reduce its turnover. Employees who are happy in their jobs are committed to their organizations and intend to stay at those organizations long-term. Happy employees also deliver quality customer service, which results in customer satisfaction, which can positively impact an organization’s profi t. Thus, keeping one’s employees happy can ultimately yield greater profi t.

References

Antolik (1993). Increasing discrimination increases turnover. Hotel and Motel Management, (208), 15–20. Bettencourt, L.A., & Brown, S.W. (1997). Contact employees: Relationships among workplace fairness, job satisfaction, and prosocial service behaviors. Journal of Retailing, 73(1), 39–61. Job Satisfaction 295

Bluedorn, A.C. (1982). A uniﬁ ed model of turnover for organizations. Human Relations, 35, 35–53. Camp, S.D. (1994). Assessing the effects of organizational commitment and job satisfaction on turnover: An event history analysis approach. Prison Journal, 74, 279–306. Clark, D. (2000). Job survey. Retrieved 8 November 2006 from www.nwlink.com/~donclark/ leader/jobsurvey.html. Fletcher, C., & Williams, R. (1996). Performance management, job satisfaction, and organizational commitment. British Journal of Management, 7, 169–179. Ghiselli, R.F., LaLopa, J.M., & Bai, B. (2001, April). Job satisfaction, life satisfaction, and turnover intent among foodservice managers. Cornell Hotel and Restaurant Administration Quarterly, pp. 28–37. Hackman, J.R., & Oldham, G.R. (1975). Development of the job diagnostic survey. Journal of Applied Psychology, 60, 159–170. Locke, E.A. (1969). What is job satisfaction? Organizational behavior and human performance, 4, 309–336. Mathieu, J.E., & Zajac, D.M. (1990). A review and meta-analysis of the antecedents, correlates, and consequences of organizational commitment. Psychological Bulletin, 108, 117–194. Niehoff, B.P., Moorman, R.H., Blakely, G., & Fuller, J. (2001). The inﬂ uence of empowerment and job enrichment on employee loyalty in a downsizing environment. Group & Organization Management, 26(1), 93–113. Rogg, K.L., Schmidt, D.B., Shull, C., & Schmitt, N. (2001). Human resources practices, organizational climate, and customer satisfaction. Journal of Management, 27, 431–449. Rust, R.T., Stewart, G.L., Miller, H., & Pielack, D. (1996). The satisfaction and retention of frontline employees. International Journal of Service Industry Management, 7, 62–80. Schermerhorn, J.R. (1996). Essentials of management and organizational behavior. Hoboken, NJ: John Wiley & Sons. Taormina, R. (1999). Predicting employee commitment and satisfaction: The relative effects of socialization and demographics. International Journal of Human Resource Management, 10(6), 1060–1076. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 55

LEADERSHIP DEVELOPMENT

Robert K. Prescott, Keri Laine Williamson

uman resource (HR) professionals have been dissecting the core of orga- Hnizations for centuries. Organizations are comprised of many elements, including the act of management. Management as a concept exists in various forms; however, it has been widely suggested that the success of management is fueled by a concept called “leadership development.” It is true that, without it, management can still exist. However, with it, management is given oxygen, thereby the ability to breathe life into an organization. Human resources has a signifi cant role in developing the leadership of an organization. The core of leadership is the ability to motivate, develop, and retain leaders in order to increase the overall quality of managers at all levels of the organization. What exactly is leadership development? For this article, “leadership” will be defi ned as the ability to infl uence people in an organization by providing purpose, direction, and motivation to accomplish goals, build commitment, and improve the organization. All organizations begin and end with people, and HR has a paramount privilege and responsibility in developing those people into leaders. Recognizing that leadership is what adds torque to management, HR

*Special recognition goes to Lauren Candito for conducting the initial research in the development of this article.

296 Leadership Development 297

departments are establishing leadership development programs to identify the employees who have leadership potential and guide them along the road to being better leaders. Development is one of many HR functions designed to preserve and enhance employees’ competence in their jobs, by strengthening their knowledge, skills, abilities, and other characteristics. If you pair this with HR’s strong emphasis on leadership, the result is a constantly growing process of increasing the organization’s vision, purpose, and strengths by developing the key players within it. It is strengthening the organization from the inside out, instead of the outside in. HR plays such a vital role in this process because HR determines and handles the majority of hiring standards and interviews. Once the employees are hired, HR is in charge of orientation and training, and at the end of the employee’s life cycle for the company, HR often conducts exit interviews for feedback purposes. It is during the middle step, orientation and training, when HR can really determine who the leaders are and provide them with individual development plans.

Evolution of Leadership Development

Leadership develop ment has been in existence, whether formally or informally, for thousands of years, dating back to the time of Aristotle (384 BC–322 BC). In the past century, there have been notable advances in the theory of leadership, including (1) a study identifying the primary styles of leadership originally conducted by Don Clark in 1939 and reprinted in 2004; (2) the British military using a functional approach to leadership training while preparing soldiers for World War II; and (3) even the Boy Scouts of America adopting eleven skills of leadership into their program in 1973. Leadership development has evolved over time as more and more organizations have studied, tested, and enhanced the principles. Even the training involved in developing leaders has evolved. Whereas previously most leadership courses were based solely on traditional classroom- based learning, currently more and more organizations take their leadership trainees out of the ofﬁ ce. Gina Hernez-Broome and Richard L. Hughes (2004) say: “One clear trend over the past twenty years has been the increasing use and recognition of the potency of a variety of developmental experiences. Classroom- type leadership training—for long the primary formal development mode—is now complemented (or even supplanted) by activities as diverse as high ropes courses or reﬂ ective journaling journaling” (p. 2). 298 The Encyclopedia of Human Resource Management: Volume One

Components of Leadership Training

Leadership development is an ever-changing fi eld. Inger Buus (2005) agrees, claiming that “it must be appreciated that this is a ‘moving target’ and because new individuals and new strategies are introduced all the time companies should proactively customize a solution based on these needs” (p. 2). The top performing organizations do not simply wait patiently for these new approaches and strategies to be developed; they are the ones working to develop them. Buus believes that there are four “best practices” in leadership development solutions that organizations need to be aware of when creating their own leadership development programs. First, organizations need to link leadership development to strategy, as determining the organization’s shortcomings will help determine what aspects of leadership need to be worked on. Second is the need for real-time continuous feedback and immediate program modifi cations, not just simply at the end; changes should be made whenever necessary to ensure that the program is as effective and effi cient as possible. Third, organizations must create customized action learning, where the development program is focused around what the organization is currently dealing with, thus allowing the leadership trainees to integrate what they learn into their ongoing work. Fourth, the organization must share the results of the development programs with their shareholders (Buus, 2005, p. 3). Many different types of activities are now included in leadership training programs. Hernez-Broome and Hughes (2004, p. 4) assert that “leadership development initiatives today typically offer performance support and real-world application of skills through such methods as:

• Training programs • Mentor/coaching programs with executives • Action learning • Developmental assignments • Leadership retreats • Development and understanding of individual’s strengths and weaknesses • Building trust among co-workers • Developing teamwork skills • Six sigma projects

Leadership Development Models

It is important for HR departments to realize there is not “one best way” to do leadership training; it is based on the situation. A primary role of HR is to decipher the organization’s needs and apply the appropriate development tool. Leadership Development 299

Although there are several different leadership development models being used currently, this article will touch on two in order as an example of the diverse approaches available.

Be, Know, Do The Be, Know, Do model (BKD) is used in many organizations, but most well known for its success with the U.S. Army. The model is comprised of several different skills, attributes, competencies, and values that, when put together, develop effective leaders. The model helps determine the speciﬁ c characteristics that leaders of an organization should have and teaches that organizations need to focus on the Be (personal skills and characteristics) of their employees, their Know (skills and competencies), and their Do (actions). The key to using this model is determining what key characteristics an organization wants to have and then using the model accordingly.

Leadership Development Framework The Leadership Development Framework is centered on the assumption that the most important part of a leadership development system is “you.” This model indicates that if a person can understand how his or her actions inﬂ uence others, and he or she has the ability to lead him- or herself, then the person is a leader and can surely lead others. This is a very personal style of leadership development, focusing on the individual rather than the team or business unit. Both models make valid arguments, and what works for one organization may not work for the next. It is up to HR to determine what the needs of the organization are and then create a leadership development plan from there. It is clear that leadership development is crucial to any organization looking to grow and prosper and that it is HR’s responsibility to develop a leadership plan, monitor feedback, and continually update the plan based on the goals of the organization.

The Law of Process

John C. Maxwell (1998) considers leadership to be like an investment; it builds over time. Maxwell believes that what matters most in leadership development is that you work toward it day after day, “letting your assets compound over time. . . . Successful leaders are learners. And the learning processes ongoing, a result of self-discipline and perseverance” (pp. 23–24). Maxwell answers the question “Why should I grow as a leader?” by offering a four-step process for leadership development: (1) I don’t know what I don’t know, 300 The Encyclopedia of Human Resource Management: Volume One

(2) I know what I don’t know, (3) I grow and know and it starts to show, and (4) I simply go because of what I know. The fi rst step refers to the people who don’t believe in the value of leadership and are convinced they will do just fi ne without changing. These people usually have not had any strong leaders in their lives and do not believe that they themselves can become leaders. As Maxwell says, “It’s unfortunate because as long as a person doesn’t know what he doesn’t know, he doesn’t grow” (p. 24). Maxwell’s second step occurs when we are suddenly thrust into a position of leadership, whether we wanted it or not, “only to look around and discover that nobody is following us. That’s when we realize that we need to learn how to lead” (p. 24). Once the realization comes, the learning can begin, which is the third step: “I grow and I know and it starts to show.” This phase takes time, and it certainly is not easy. Maxwell argues that, in order to be effective in learning, one must absorb as much about leadership as possible via seminars, books, and classes. “I believe that in about twenty years you can be a great leader,” he says (1998, p. 26). When a person is in the third phase, Maxwell believes that he or she can be a “pretty effective leader” (p. 27). But the person is constantly working at it and thinking about what to do and when. Once you have moved into the fourth phase, however, leadership becomes a part of who you are and “your ability to lead becomes almost automatic” (p. 27). This is not an easy process, and you must work in order for your ability as a leader to grow, but in the end the reward is well worth it. The fourth stage is exactly as it sounds: I simply go because of what I know. This is when the knowledge and practice converge to a synergy of success, pushing the leader in a forward direction. The fi rst three stages culminate in this fi nal phase, and the leader continues to develop his or her strengths through practice and experience at this level.

Conclusion

In conclusion, leadership development has always had a part in organizational management and there have always been a lot of theories about how to go about it. However, the concept is becoming center-stage in the 21st century with the fast pace and many challenges of organizational life. Leadership development is not only about leaders having purpose, direction, and motivation to strengthen the core of an organization. It is also about them knowing how to identify and use those tools to inﬂ uence employees. Today business is no longer solely about products and assets—business is equal parts people and results. Leadership Development 301

References

Adair, J. (2005). How to grow leaders: The seven key principles of effective leadership. New York: Kogan Page. Buus, I. (2005). The evolution of leadership development: Challenges and best practices. Industrial and Commercial Training, 37(4/5), 185. Campbell, D.J., & Dardis, G. (2004). The “be, know, do” model of leader development. Human Resource Planning, 27(2). Clark, D.R. (2004). The art of science and leadership. Retrieved July 1, 2011, from http:// nwlink.com/~donclark/leader/leader.html Hernez-Broome, G., & Hughes, R.L. (2004). Leadership development: Past, present, and future. Human Resource Planning, 27(1). Maxwell, J.C. (1998). The 21 irrefutable laws of leadership. Nashvill, TN: Maxwell Motivation. Stopper, W.G. (2005). Outsourcing’s effect on HR leadership development. Human Resource Planning, 28(4).

Websites www.managementhelp.org/ldr_dev/samples/samples.htm www.lockheedmartin.com/wms/ﬁ ndPage.do?dsp=fec&ci=12947&rsbci=6 &fti=0&ti=0&sc=400 www.banffcentre.ca/departments/leadership/ www.nwlink.com/~donclark/leader/leader.html pinetreeweb.com/TLD-1974.htm The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 56

LEARNING AND DEVELOPMENT

Karen L. Milheim

ontinued learning and development (also referred to as human resource Cdevelopment) of employees is crucial to the success of any organization. The competence, quality, and ability of the workforce within an organization can signiﬁ cantly affect its success in today’s global economy. It can range from honing the technical skills of machinists to conducting mass training on a new software program to succession planning of key executives. Regardless of the scope and range, learning and development is critical at all levels in business and industry.

Types of Learning and Development

The scope of learning and development is quite broad; according to Harrison (2005), the deﬁ nition of learning and development is “an organizational process to aid in the development of knowledge and the achievement of organizational and individual goals. It involves collaborative stimulation and facilitation of learning and developmental processes, initiatives, and relationships in ways that respect and build on human diversity in the workplace” (p. 23). Gilley, Eggland, and Gilley (2002) expand the deﬁ nition of “development,” referring to the advancement of people’s knowledge, skills, and competencies for the purpose of improving performance within an organization. In the workplace, learning and development can occur in a variety of ways, with formalized training programs being one of the most common forms. These

302 Learning and Development 303

types of learning and development opportunities typically occur when an organization has a new technology tool, system, or program that must be learned by groups or individuals. Learning and development also occurs informally and incidentally within organizations. While researchers have yet to agree on one, single deﬁ nition of informal or incidental learning, Marsick and Watkins (2001) provide a comprehensive distinction between the types of learning that fall in these areas. Informal learning opportunities include self-directed learning, networking, coaching, mentoring, and performance planning. Incidental learning, which is more unconscious, includes learning from trial and error or from one’s own mistakes. Technology also plays an important role in learning and development that occurs within organizations. In addition to offering learning opportunities at the convenience of the employee through tools such as self-directed tutorials and computer-based information repositories, it also has the capability to launch on a global scale via distance education programs. These programs also provide employees an opportunity to communicate more easily with peers in other areas of the country, or even the world, from the comfort of their own computers. Collaborative training and development opportunities that did not exist a decade ago are now being used regularly.

Promoting Learning and Development

Without adequate, supportive learning and development programs, an organization will most likely fi nd it diffi cult to remain competitive; yet, whether formal or informal, the achievement and knowledge of employees must be cultivated. Organizations often fi nd themselves facing employees’ resistance to these types of programs and opportunities. Factors such as relevancy of training, time, and cost-effectiveness have considerable infl uence on the success of a program. Employees may be resistant to learning new skills and become disinterested in development opportunities, prompting businesses to fi nd ways to cultivate interest in these programs. The development of skills and knowledge of employees is also crucial in succession planning, particularly in leadership roles within an organization. As employees move into new roles or leave an organization, appropriate succession planning often proves to be critical in the preparedness of individuals to move upward into different roles. The ongoing learning and development of employees at all levels can infl uence the success of the succession planning strategies within business and industry. Organizations prepare learning and development strategies in anticipation of the roles their employees must be prepared to take in short- and long-term business plans. This includes enhancing informal learning opportunities on a daily basis (Garrick, 1998); supporting collaboration, such as mentoring and 304 The Encyclopedia of Human Resource Management: Volume One

coaching; providing formalized training programs; and implementing support systems, such as online, self-directed learning opportunities, that encourage skill and knowledge development. These programs will allow employees to build on and share knowledge, feel a sense of accomplishment (both in the short and long term), and have immediate impact on the individual’s role within the organization.

Future Trends

Technology has certainly impacted the learning and development strategies available to organizations. Computer-based training programs, distance learning, and other forms of media have made it easier for businesses to reach out to large numbers of employees at multiple site locations. This trend will continue into the future, as technology-based training delivery systems become more popular and allow organizations to implement learning and opportunities via these methods. Also, attention has been given to the role of informal learning and collaboration with respect to learning and development. As the workforce becomes more technologically aware, with individuals seeking more knowledge and skills to be more competitive in their careers, the role of self-guided learning and development will continue to become more important in business settings. Organizations will have to continue to look beyond traditional, face-to-face training settings and focus their attention toward alternative ways of knowledge and skill acquisition to remain current and competitive.

References

Garrick, J. (1998). Informal learning in the workplace: Unmasking human resources development. New York and London: Routledge. Gilley, J.W., Eggland, S.A., & Gilley, A.M. (2002). Principles of human resource development (2nd ed.). Cambridge, MA: Basic Books. Harrison, R. (2005). Learning and development (4th ed.). London: Chartered Institute of Personnel and Development. Marsick, V.J., & Watkins, K.E. (2001). Informal and incidental learning. New Directions for Adult and Continuing Education, 81, 25–34.

ARTICLE 57

LEISURE COUNSELING

Steven N. Waller

he amount of time spent in non-work activities has exceeded the amount Tspent in paid work. Subsequently, the importance of leisure for people’s lives should not be underestimated or obscured by the focus on paid work at certain points in the life course (Haworth & Lewis, 2005, p. 71). People often talk about the choice of working long hours because they enjoy the work. Frequently, the choice is an illusion when working harder and longer is a consequence of changes in work and companies, such as downsizing and mandatory overtime. For some, there is a profound sense of enjoyment from intense work. Nevertheless, if work is impinging on leisure and other personal activities on a large scale, it becomes imperative to examine the broader and long-term effects on individual well-being, families, and communities (Haworth & Lewis, 2005, p. 72). Ultimately, where there is no balance between work and leisure, there lies the danger of employees becoming “workaholics”—a work dysfunction. Work dysfunctions may emanate from one’s inability to realize the value of leisure—the time away from work necessary for rejuvenation and enjoyment.

Workaholism

The label “workaholism” is commonly used to describe a socially atypical focus on work, originally derived from the assumption that excessive working stemmed from an underlying addiction. The term also conceptualizes the behavior as an

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excessive and uncontrollable need to work incessantly that disturbs health, happiness, and relationships (Oates, 1971). The most widely used operational deﬁ nition of workaholism speciﬁ es comparably high work involvement (psychological involvement with work in general), high drive (an inner pressure to work), and low work enjoyment (work-related pleasure). Moreover, workaholism is summarized as a “personal reluctance to disengage from work evidenced by the tendency to work (or to think about work) anytime and anywhere” (McMillan, Brady, O’Driscoll, & Marsh, 2000, p. 11). The threat of workaholism is detrimental to both the employee and the company. Despite the litany of negative impacts stemming from workaholism, leisure counseling is a therapeutic intervention that can be utilized to promote the physical and psychological well-being of employees. Educating and counseling people on how to make best use of their work and leisure time can have a great impact on their physical and mental health. Treatment of work dependency is essentially about helping those with it to see that work is only a part of, and not the only component of, life.

Leisure Counseling Concepts and Deﬁ nitions

There are multiple defi nitions of leisure counseling, with no one defi nition being used predominately in the literature or professional practice. Leisure counseling is defi ned by Loesch and Wheeler (1982) as:

• “A helping process which facilitates interpretive, affective and/or behavioral changes in others toward attainment of their leisure well-being” (p. 69) • “A careful examination of a person’s background, beliefs, values, and attitudes related to work and leisure and becomes education process as well as a remedial counseling service” (p. 70)

Leisure education, a critical element of leisure counseling, is also a process designed to facilitate maximal leisure well-being. However, leisure education is more of a self-help process, whereas leisure counseling is an individualized or small group helping process guided by a leisure counselor (Leitner & Leitner, 2005, p. 38). Leisure counseling is a vital therapeutic technique that can be used to address the needs of workaholics or employees suffering from burnout. Leisure counseling is more intensive than leisure education and is preferable to leisure education in most situations in which the employees’ problems are more severe. There are at least four commonly used modalities of leisure counseling, but the developmental-educational approach may be most beneﬁ cial to employees. Leisure Counseling 307

Developmental-Educational Approach

In the developmental-educational approach, the counselor works closely with the employee to discover new leisure interests and activities. The principle objectives of developmental-educational leisure counseling is to help the employee identify an “ideal” leisure lifestyle and then assist the employee to bridge the gap between his or her real leisure lifestyle and his or her ideal leisure lifestyle through goal setting. This approach offers the employee the opportunity to (1) understand the importance of leisure in one’s life and (2) to identify attitudes and values toward leisure that serve as barriers to leisure fulﬁ llment. Leitner and Leitner (2005) propose that developmental-educational leisure counseling efforts should include the following steps:

• Pre-counseling assessment. In this step, the employee completes leisure interest inventories and other relevant questionnaires that can be analyzed by the counselor prior to the fi rst counseling session to expedite understanding the employee’s leisure attitudes and behavior. • Establishing rapport. In this step, the counselor should attempt to develop a trusting relationship with the employee. In order for meaningful dialogue to occur in which the employee self-discloses a great deal, a trusting relationship is imperative. • Defi ning concepts. Some of the more important concepts to discuss and defi ne in this step include leisure, recreation, work, and ideal leisure. Very often, counselors and clients defi ne these terms differently. If these concepts are not defi ned and discussed at the beginning of the counseling process, discussions in the later stages would be confusing. • Identifying leisure needs. In this step, the counselor helps the employee identify the relationship of basic human needs (the need for physical activity, social interaction, new experiences, etc.) to leisure. This step also prepares the employee for the next step, goal setting. Once real and ideal means of satisfying needs have been identifi ed, goals designed to bridge the gap between real and ideal leisure lifestyles are more apparent. • Identifying leisure goals. The purpose of the goal-setting phase is for the employee to set realistic goals for improving his or her leisure and setting reasonable boundaries for work, both in the short range (within the year), and long term (beyond one year). • Obstacles to goal attainment. In this phase, the counselor helps the employee to identify potential obstacles to attaining the goals identifi ed in the previous phase. Strategies for overcoming obstacles are crafted. Discussion should focus on internal obstacles (overwork, guilt, procrastination, motivation, etc.) that the 308 The Encyclopedia of Human Resource Management: Volume One

employee can act on to overcome, as opposed to discussing external obstacles over which the employee has little control (weather, cost, etc.). • Identifying performance criteria. In this stage, goals are further refi ned so that each goal has clearly identifi able behavioral indicators that will serve as criteria for success in goal attainment. The key concern in this phase is to be sure that goals are stated in terms of observable, measurable behaviors and that the desired direction of change is stated. • Leisure alternatives and consequences. In this step, alternative ways to goal attainment are explored and evaluated. After examining the consequences of alternative means of meeting a goal, the most feasible alternative should be selected as an action plan for meeting the goal. • Disseminate information. In this phase the counselor provides the employee with useful information on leisure resources, which will enable the employee to act on his or her chosen alternatives for meeting his or her goals. The counselor should provide the employee with agency names, phone numbers, program information, and other relevant information. • Participation and evaluation. The purposes of this phase are to ensure that the employee does become involved in the recreational programs and activities identifi ed during the previous phases and to evaluate the employee’s progress in terms of goal attainment. As necessary, goals should be revised, or alternative means of meeting goals should be re-examined. • Termination and follow-up. Once satisfactory progress toward goal attainment has been achieved, the counseling process should be terminated. The last session should summarize the counseling process in a manner that leaves the employee with a clear direction for continuing to work to improve his or her leisure. Follow-up contacts should be made with the employee after terminating the process in order to gauge the employee’s progress. (pp. 42–46)

In summary, the developmental-educational approach to leisure counseling is an in-depth approach that attempts to help employees expand their leisure horizons and improve their leisure well-being.

Beneﬁ ts of Leisure Counseling

Effective leisure counseling can yield the following beneﬁ ts for the employee and company:

• Enable the employee to increase positive attitudes toward leisure, thereby removing attitudinal barriers to participation in leisure activities; Leisure Counseling 309

• Assist the employee and his or her family in planning and organizing leisure, enabling them to create a desired sense of structure for their leisure, which can help to maximize their enjoyment of it; • Empower the employee to actively participate in the planning of his or her leisure time as it encourages the person to be proactive, to take control of his or her life; • Help to reduce the number of loss days stemming from physical illness or symptoms of burnout; and • Aid the employee in maximizing productivity due to a positive outlook on work and life outside of work.

Coordination of Leisure Counseling Services

As in any form of professional counseling, leisure counseling is best done by a professional. Professional leisure counselors, certiﬁ ed therapeutic recreation specialists, and vocational psychologists are among those qualiﬁ ed to conduct leisure counseling. The critical aspects of treatment are to change attitudes, values, and, most importantly, behaviors about work and leisure. Employee assistance programs frequently do not provide this counseling resource but often a referral can be arranged.

References

Haworth, J., & Lewis, S. (2005). Work, leisure and well-being. British Journal of Guidance & Counseling, 33(1). Leitner, M.J., & Leitner, S.F. (2004). Leisure in later life (3rd ed.). Binghamton, UK: Haworth Press. Leitner, M.J., & Leitner, S.F. (2005). The use of leisure counseling as a therapeutic technique. British Journal of Guidance & Counseling, 33(1). Loesch, L.C., & Wheeler, P.T. (1982). Principles of leisure counseling. Minneapolis, MN: Educational Media Corp. McMillan, L.H.W., Brady, E.C., O’Driscoll, M.P., & Marsh, N.V. (2000). A multifaceted validation study of Spence and Robbins’ (1992) Workaholism Battery. Unpublished manuscript, University of Waikato, New Zealand. Oates, W.E. (1971). Confessions of a workaholic: The facts about work addiction. New York: World Publishing Company.

ARTICLE 58

LOYALTY

Andrea Burns

ccording to MetLife’s Ninth Annual Study of Employee Benefi t Trends Aconducted during the fourth quarter of 2010, while employees are eyeing the exit, employers feel that employees are just as satisfi ed as they were a few years ago. According to the study, 47 percent of employees felt loyal to their employer, down from 59 percent in 2008. More than one-third of employees hoped to work for a different company in the next twelve months. Loyalty can be defi ned as employees who plan to stay with their current employer for more than two years and are willing to protect and save face for another person. It is one of the key dimensions that make up the concept of trust. Loyalty can be affected by several issues, such as benefi ts and pay, working environment, job satisfaction, and customers. Companies strive to create loyalty among their employees, as turnover is so costly to the bottom line. One of the ways to improve loyalty at work is to engage internal customers and make them a part of the solution. Fostering an employee feedback system can be benefi cial to employees, helping them feel important to the organization. An employee feedback system creates open communication between management and the employees, and if employees feel listened to and recognized, they will be more loyal to an organization and more able to build trust. The core focuses of any business is to reduce absenteeism, maintain a productive workforce, keep customers happy, boost employee morale, and reduce hiring and training costs. If one were to conduct research looking for an

310 Loyalty 311

organization with high retention, great productivity, and great customer satisfaction, one should ﬁ nd a great recognition program. A recognized employee will be a loyal employee. Having a strong recognition program, such as merit-based points programs, instant recognition, and anniversary programs, help to decrease churn and improve the proﬁ ts of an organization. Cheri Swales, a contributing writer at Monster.com, stated that a great way to build employee loyalty is to ensure that the mission and vision statement are appropriately communicated, since individuals who share similar goals feel a part of a larger purpose and more aligned to each other. According to Jhana Berry, worker loyalty has been slowly ebbing since the recession began in 2008, and it is important for employers to take time to turn the tide around. A company can create loyalty in the following ways, among others:

• Communicating—When an organization lets employees know what is happening, employees feel more included and trusted, and are therefore more loyal. • Training—Continuous training coupled with tuition reimbursement is translated as an investment in employees, which will lead to the employees being equally invested in the organization. • Expecting greatness—When you raise the bar, employees will meet your expectations and feel valued. • Career development—When you focus on helping employees to grow within the organization, they will feel valued and in turn be loyal. • Rewards and recognition—What is rewarded is repeated. • Engaging employees—Include employees in the decision-making process, as this will make them feel important and more committed to the goals of the organization. • Conducting exit interviews—Encourage employees who are leaving to complete an exit interview so employers will understand the reasons they are leaving and can choose to improve. • Encouraging work/life balance—Childcare beneﬁ ts and ﬂ exible schedules allow employees to balance work and home life and increase their loyalty to an organization that allows this. • Increasing responsibility—Add additional projects to increase work load to keep employees interested and willing to stick around.

According to Cascio (2006), downsizing, restructuring, and mergers can affect employee loyalty to a company. Normally, during mergers restructuring of the organization takes place, which leads to an elimination of jobs. Employees quickly understand that years of loyal service can mean little at such times. Their uncertainty 312 The Encyclopedia of Human Resource Management: Volume One

can increase stress, decrease satisfaction, lower commitment and intentions to stay, and lower perceptions of an organization’s trustworthiness, honesty, and caring about employees. U.S. companies now lose half their employees every four years, half their customers in fi ve years, and half their investors in fewer than twelve months. Cascio also states that loyalty can vary by age of employee. For example, the median years of tenure for workers twenty-fi ve to thirty-four is 2.7 years, compared with employees fi fty-fi ve to sixty-four, which is 9.9 years. Companies such as Xerox understand that it is only possible to create customer loyalty when employees are loyal. Decreasing churn in customers, employees, and investors means improvement to the bottom line. Providing training, a solid compensation package, a competitive benefi t plan, and ability for advancement in the organization are all steps in the right direction for building employee loyalty. Loyalty means different things to different generations. Stephanie Armour (2005) wrote an article about Generation Y in USA Today, pointing out that “Generation Y has a different attitude than the older generations”: Generation Y employees need an opportunity to excel and training to gain loyalty for a company. This generation saw their parent or parents sacrifi ce family time in pursuit of career, only to be eventually downsized. This reality has caused Generation Y to sacrifi ce their careers in exchange for family time and more downtime. They will be loyal to a cause but impatient if they feel betrayed. Generation Y are not afraid to switch jobs at the hint of greener grass or when things don’t seem to be going their way at a current job. Baby Boomers respect employers with established policies who play by the rules. The parents of boomers were from a generation that had strong employer/ employee commitments based on trust and tenure. Their upbringing has made it desirable for them to work for a company that is loyal to employees and values hard work and years of dedication. Generation X, born 1965 to 1980, were among the fi rst to see their parents laid off multiple times by corporations that no longer valued loyalty or were fi nancially affected by multiple recessions. They value longstanding companies, with strong portfolios, plans for the future, and longevity. Flexible work arrangements and work/life balance are important to Generation X, because they are in the prime child-bearing age range. Rick Dacri (2005) examined the reasons employees are no longer loyal to companies. Some of these reasons included effects of cost-cutting by laying off employees, lack of job security, high health insurance, 3 percent merit increases, and skyrocketing top executive salaries, bonuses, and stock options. When Lee Iacocca, then CEO of Chrysler, opted to cut his salary to $1 so he could get a much needed reduction in the hourly pay rate of autoworkers, they reacted with a dramatic increase in loyalty to the company. Employers must realize that the key to higher productivity, better quality service, and improved retention is employee loyalty. Without motivated, focused Loyalty 313

employees, employers cannot operate efﬁ ciently. Employers who take care of their employees ﬁ nd that their employees take care of them and the company. Employees want to be treated fairly, they want employers to be empathetic to their needs, and they want to be respected. In today’s economic climate, with rising costs, growing foreign competition, increasingly organizational success is dependent on a loyal workforce. Rick Dacri (2005) suggests that organizations partner with employees and take care of them to create employee loyalty. Loyalty is a two-way street.

References

Aoki, M. (n.d.). Gen Y challenges employee training. Retrieved June 27, 2008, from http:// reﬂ ectivekeynotes.com/call_center_generation_y.htm. Armour, S. (2005). Generation Y: They’ve arrived at work with a new attitude. USA Today. Berry, J. (2011). Employee loyalty is waning study says . . . The Arizona Republic. http:// azcentral.com/arizonarepublic/business/articles/2011/04/10/20110410biz-insider04– 10berry.html. Cascio, W. (2006). Managing human resources. New York: McGraw-Hill. Dacri, R. (2005). Who killed company loyalty. Retrieved June 27, 2008, from http://mtcma. org/publications/Dacriloyalty.doc. Employee loyalty is waning study says . . . (2011). The Arizona Republic. http://azcentral.com/ arizonarepublic/business/articles/2011/04/10/20110410biz-insider04–10berry.html. MetLife. www.metlife.com/business/insights-and-tools/industry-knowledge/employee- beneﬁ ts-trends-study/index.html#highlights. Walker. (2005). Walker loyalty report. Retrieved June 27, 2008, from www.walkerinfo.com/ what/loyaltyreports/ Swales, C. (2008). Build employee loyalty: Make sure your mission and vision are aligned. Retrieved June 27, 2008, from http://leadership.monster.com/articles/loyalty/ The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 59

MERIT PAY

Karen McMillen Dielmann

erit pay is a wage or salary increase given by the company to an individual Memployee, usually based on his or her individual performance. The amount of the pay increase is usually determined by the supervisor’s evaluation of the employee’s performance. Unlike a bonus (which is often a lump sum, one-time payment), merit pay usually becomes a part of the employee’s base salary and thus is factored into any pay differentials, such as working an undesirable shift, and is counted as part of base salary when determining an overtime rate. There are advantages and disadvantages to merit-based pay. Those in favor of utilizing merit pay plans state that pay or other rewards that are tied directly to performance motivate employees to perform up to and above expected performance standards. In contrast to across-the-board pay increases, individuals who perform above expectations will be rewarded for doing so—which is not the case when everyone receives the same increase. Moreover, a widely accepted theory of employee motivation holds that performance that is rewarded is most likely to be repeated. Employees expect to be rewarded for their behaviors, they are goal-oriented and ﬁ nancially motivated. If a pay for performance plan can assist in motivating employees to achieve goals that will increase the organization’s performance, both the organization and the employees will beneﬁ t. However, those who do not favor merit pay point to the inadequacy of many companies’ performance appraisal processes. According to Dessler (2011), unfair or

314 Merit Pay 315

poorly completed performance appraisals will by nature lead to unfair or poorly determined merit pay increases that are tied to them. In addition, unless properly trained and encouraged to the contrary, supervisors and managers tend to play down the differences in employee performance so that all employees will receive approximately the same increase. This is probably a result of not wanting to upset employees, wanting to be liked, or wanting to give everyone an adequate raise based on the rising cost of goods and services. Moreover, many employees believe their performance is above average—and if the supervisor does not believe this to be the case, and a merit raise refl ects this difference of opinion, employees can become discouraged and perhaps less productive or even diffi cult to deal with. Many companies also are concerned with merit pay increasing base pay in the future, regardless of whether or not exceptional performance continues. If this is a concern, it is an option to offer the merit raise in a lump sum so that is not part of the employee’s salary and is not being paid year after year (Dessler, 2011). As more companies are utilizing teams to accomplish tasks or specifi c projects connected with jobs, pay that is based only on an individual’s performance may encourage that person to be narrowly focused on his or her own goals and thus undermine teamwork. An alternative might be to tie merit awards to both individual performance and team or organizational performance. In this way, employees have incentives to work toward team and/or organizational goals, not just their individual performance goals (Dessler, 2011). Focus on the group rather than individuals is a method found in companies with a union presence. Unions may prefer across-the-board increases or negotiated increases based on seniority, as opposed to merit pay plans. Labor organizations may see merit pay plans as a threat to union solidarity if employees are placed into competition for pay increases. Labor unions (and, frankly, many employees as well) are often doubtful regarding the fairness of merit pay plans and mistrustful of the objectivity of supervisors in utilizing performance appraisals or other tools to determine employees’ level of performance for pay purposes. Additionally, use of merit pay may be misleading in the sense that it rewards employees for exceptional performance—assuming their performance was completely because of their skills or abilities. However, sometimes poor performance is really dependent on things that an employee cannot control, such as lack of cooperation from co-workers, market conditions, unfair biases of the evalua- tor, or lack of resources to perform the job in the manner in which it should be performed. When a merit pay increase is low because of these conditions, the employees may perceive the system as unfair (Noe, Hollenbeck, Gerhart, & Wright, 2011). Although compensation can be a tricky area for HR professionals in terms of complying with equal employment and anti-discrimination law, merit pay is 316 The Encyclopedia of Human Resource Management: Volume One

permitted under the Equal Pay Act of 1963. In other words, although the Equal Pay Act requires that the women and men doing the same job in the same organization receive the same pay, an exception is made for pay differentials that are based on merit (that is, performance).

References

Dessler, G. (2011). Human resource management (12th ed.). Upper Saddle River, NJ: Pearson Prentice Hall. Noe, R.M.. Hollenbeck, J.R., Gerhart, B., & Wright, P.M. (2011). Fundamentals of human resource management (4th ed.). New York: McGraw-Hill/Irwin. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 60

NATIONAL LABOR RELATIONS ACT

Cory Smith

History

The National Labor Relations Act (NLRA), also known as the Wagner Act after Senator Robert F. Wagner, was a piece of legislation that limited the powers of employers in the private sector in regard to labor relations. Passed in 1935 in the midst of the Great Depression, it was designed to protect employees and employers, encourage collective bargaining, and curtail certain management and labor practices.

Provisions

The NLRA grants the right to private-sector employees to organize and collectively bargain with their employers. They are also given the right to form labor unions when none exist. It also forbids both employers and labor unions from coercing, interfering with, or restraining workers from exercising their rights relating to forming, joining, or assisting a labor union in collective bargaining or engaging in protected concerted activities (National Labor Relations Board). The NLRA speciﬁ es ﬁ ve unfair labor practices:

• Interfering with, restraining, or coercing employees in their rights under Section 7. These rights include freedom of association, mutual aid or protection,

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self-organization, to form, join, or assist labor organizations, to bargain collectively for wages and working conditions through representatives of their own choosing, and to engage in other protected concerted activities with or without a union. [from NLRA Section 8(a)(1)] • Assisting or dominating a labor organization. [from NLRA Section 8(a)(2)] • Discriminating against employees to encourage or discourage acts in support of a labor organization. [from NLRA 8(a)(3)] • Discriminating against employees who ﬁ le charges or testify. [from NLRA 8(a)(4)] • Refusing to bargain collectively with the representative of the employer’s employees. [from NLRA 8(a)(5) (National Labor Relations Board)]

NLRA coverage extends to private-sector employees, both union and non-union. However, some individuals are excluded. They include individuals who are employed (National Labor Relations Board):

• As agricultural laborers • In the domestic service of any person or family • By a parent or spouse • As an independent contractor • As a supervisor (supervisors may be covered for relief from discrimination based on refusal to violate NLRA provisions) • By an employer subject to the Railway Labor Act, such as railroads and airlines • Federal, state, or local governments • Any other person who is not an employer as deﬁ ned by NLRA

Enforcement

One of the provisions set for by the NLRA is the creation of a new government agency, the National Labor Relations Board (NLRB). The NLRB has two major functions: (1) to prevent and remedy unfair labor practices covered under NLRA and (2) to establish whether or not certain groups or employees desire labor organization representation for collective bargaining purposes, and if so, by which labor union. The NLRB consists of a fi ve-person board and a general counsel. These members are appointed to fi ve-year terms by the President and confi rmed by the Senate (National Labor Relations Board). The general counsel acts as prosecutor, and the board is essentially an appellate judiciary body. The NLRB oversees more than thirty regional offi ces. The regional offi ces hear complaints and investigate. If a violation is believed to have occurred, the case is taken before an administrative law judge. The judge’s decision may then be reviewed by the National Labor Relations Act 319

ﬁ ve-member board. The board’s decision itself is then reviewable by the U.S. Court of Appeals. The NLRB has no legal power to administer decisions and must rely on injunctive relief from the courts for enforcement (National Labor Relations Board).

As Amended

The NLRA was amended in 1947 by the Labor-Management Relations Act (LMRA), the Taft-Hartley Act. As the name implies, the legislation was supported by Senator Robert Taft and Representative Fred A Hartley, Jr. While opposed by President Harry Truman, congress enacted the LMRA over his veto. The LMRA added a list of prohibited labor practices on the part of unions to the NLRA’s list of unfair labor practices by employers. These include jurisdictional strikes, wild- cat strikes, solidarity or political strikes, secondary boycotts or picketing, closed shops, and monetary donations by labor unions to federal political campaigns. The LMRA also granted the NLRB discretionary power to investigate labor unions as well as employers (Columbia University Press).

In Action

NLRB v. Kentucky River Community Center—In 1997 a labor union approached the NLRB about representing employees for Caney Creek Developmental Complex. Kentucky River Community Center, Caney Creek’s parent company, objected under the condition that Caney Creek’s nurses were “supervisors” and thus exempt from the provisions of NLRA. Under the provisions of NLRA, employees are supervisors if they exercise “independent judgment” in “responsibility and directing” other employees in the “interest of the employer.” In the ensuing hearing, the NLRB placed the burden of proof on Kentucky River and found that Kentucky River failed to in its evidence, thus rejecting their claim. The NLRB found that employees don’t use “independent judgment” when they exercise “ordinary professional or technical judgment in directing less skilled employees to deliver services in accordance with employer specifi ed standards.” Kentucky River then refused to bargain with the labor union and the NLRB issued a bargaining order. Ultimately, the case went before a court of appeals, which refused to enforce the bargaining order, as it found fault with the NLRB’s interpretation of the NLRA’s defi nition of “independent judgment” and it had erred in putting the burden of proof on Kentucky River. The case went to the Supreme Court, where by a vote of fi ve to four the court agreed with the fi ndings of the appeals court (Oyez). 320 The Encyclopedia of Human Resource Management: Volume One

References

Columbia University Press. (n.d.). The Taft-Hartley Act. The Columbia Electronic Encyclopedia (6th ed.). www.infoplease.com/ce6/bus/A0847620.html. National Labor Relations Board. (n.d.). Board overview. www.nlrb.gov/About_Us/ Overview/ National Labor Relations Board. (n.d.). Board overview. www.nlrb.gov/About_Us/ Overview/board/ National Labor Relations Board. (n.d.). Employee rights. www.nlrb.gov/workplace_rights/ employee_rights.aspx. National Labor Relations Board. (n.d.). Employees/employers who are not covered. www.nlrb.gov/workplace_rights/employees_or_employers_not_covered_by_nlra.aspx. National Labor Relations Board. (n.d.). National Labor Relations Act. www.nlrb.gov/ About_Us/Overview/national_labor_relations_act.aspx. Oyez. (n.d.). Supreme Court Media. NLRB v. Ky. River. Cmty. Care. www.oyez.org/ cases/2000–2009/2000/2000_99_1815 The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 61

NATIONAL LABOR RELATIONS BOARD

William B. Werner

he National Labor Relations Board (NLRB ) is an independent agency of Tthe federal government established in 1935 to administer and enforce the National Labor Relations Act (NLRA or Wagner Act). That law and its subsequent amendments guarantee private-sector employees the right to join labor union organizations, require employers to bargain collectively with the employees’ chosen representatives, and empower the NLRB to conduct offi cial union elections and enforce the other provisions of the law. The fi ve members of the NLRB are appointed by the President for staggered fi ve-year terms. They may be reappointed, but may not be replaced during their terms except for misconduct. The President also appoints the general counsel, who has authority to investigate and prosecute cases alleging violations of the NLRA.

Jurisdiction and Authority

The NLRB has exclusive jurisdiction over nearly all cases arising under the NLRA, although its decisions can be appealed to the U.S. Circuit Court of Appeals. The NLRB’s authority in most cases is delegated to thirty-three regional directors throughout the United States, whose decisions are subject to review by the NLRB. The NLRB has no authority to enforce its decisions and orders independently, but can obtain enforcement of its decisions in the federal courts.

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The NLRB’s primary function is to administer and decide two types of cases: representation cases and unfair labor practice cases. Both types are initiated by ﬁ ling papers with the local regional director’s or resident ofﬁ ce.

Representation Cases The NLRA prescribes a government-operated procedure for labor union elections and gives the NLRB the authority to facilitate and enforce the process in representation cases. A representation case begins when a person or labor union fi les a petition with a regional director for an NLRB-supervised representation election. The petition must include evidence that at least 30 percent of a group of employees desire union representation. If the regional director determines that the composition of the identifi ed group of employees is appropriate under NLRB guidelines, then an election is scheduled, typically within eight to ten weeks after the petition was fi led. Agents of the regional director conduct the secret ballot election, usually at the worksite, over a suffi cient number of hours or days to allow every eligible employee an opportunity to vote. The union must attain a majority of the votes cast in order to be elected. The regional director decides any disputes and objections over the conduct of the election and then certifi es the outcome. Either party may appeal the regional director’s certifi cation to the NLRB. Absent an appeal, the regional director’s certifi cation of an election in favor of a union gives rise to the employer’s legal obligation to bargain in good faith with the union representatives.

Unfair Labor Practice Cases In addition to establishing union election procedures, the NLRA prohibits certain conduct by the employer and the union before, during, and after the election itself. Violations of these provisions are called “unfair labor practices” and include threatening and coercing employees and discriminating against union supporters. An employee, employer, or union claiming an unfair labor practice may ﬁ le a charge with the regional director within six months after the date of the alleged violation. The NLRB does not have the authority to initiate a charge on its own, but its agents investigate the case and the regional director decides whether to issue a formal complaint. The general counsel typically delegates his authority as prosecutor to the regional director, but retains the power to review and reverse the regional director’s decision whether to issue a complaint. If the regional director declines to issue a complaint and the general counsel concurs, then there is no other legal remedy for the alleged unfair labor practice. If the regional director issues a complaint, then the case is heard and decided by an administrative law judge appointed from a civil service roster by the NLRB. The judge’s decision may be appealed by either party to the NLRB. National Labor Relations Board 323

Remedial Powers of the NLRB In unfair labor practice cases, the NLRB has the power to impose a remedy to correct the actual harm caused by an unfair labor practice, such as reinstate- ment of an illegally discharged employee with back pay, but cannot order other monetary damages or penalties. The NLRB can also order the offending party to cease and desist and to post a written notice in the workplace acknowledging the violations and promising to respect the employees’ legal rights. The NLRB has no independent authority to enforce its orders, but can petition the local U.S. District Court for an injunction to enforce an order or to cease a continuing unfair labor practice. When it ﬁ nds that unfair labor practices have likely inﬂ uenced the outcome of an election, the NLRB is authorized to void the results and order a new election. If an employer’s proven unfair labor practices are so pervasive or severe as to render a fair re-run election virtually impossible, the NLRB has limited authority to certify the union without conducting another election. The NLRB’s authority to issue such a “bargaining order” is limited to rare and extreme cases, and such orders are not always enforced by the federal courts.

Enforcement of NLRB Decisions An order for enforcement of an NLRB decision may be obtained in the U.S. Circuit Court having territorial jurisdiction over the employer. The courts typically defer to the NLRB’s expertise in labor matters and reverse only those decisions that are based on clearly inadequate evidence or misapplication of the law. The decisions of the Courts of Appeal can be appealed to the U.S. Supreme Court.

Further Reading

Garren, B., Fox, E.S., Truesdale, J.C., Darby, T.J., Higgins, J.E., & Norris, J.A. (Eds.). (2000). How to take a case before the NLRB (7th ed.). Washington, DC: Bureau of National Affairs. Hardin, P. (Ed.). (2002). The developing labor law: The board, the courts, and the National Labor Relations Act (4th ed.). Washington, DC: Bureau of National Affairs. McCulloch, F.W., & Bornstein, T. (1974). The National Labor Relations Board. New York: Praeger. Modjeska, L., & Modjeska, A.C. (1994). Federal labor law: NLRB practice (rev. ed.). Deerﬁ eld, IL: Clark Boardman Callaghan.

ARTICLE 62

NEGLIGENT HIRING

David Washington

egligent hiring is the legal liability created by an employer when a reasonable Ninvestigation of an employee’s background is not conducted and the potentially dangerous employee is assigned to a job where he or she may inﬂ ict harm. The core element of negligence is duty, which is a responsibility to act or refrain from acting. The employer has the responsibility or duty to ensure the safety of his or her customers and employees. Employers exercise this duty by conducting background checks on applicants before hiring them. The employer must exercise reasonable care to ensure the safety of individuals who may come in contact with the organization. The law does not require employers to be perfect in their selection actions, but that employers act as “reasonably prudent” people would in the same or similar situation. Five conditions that must be present for a claim of negligent hiring are the following:

1. The individual who committed the offense must be an employee of the organization; 2. The employee must be incompetent or inappropriate for the position; 3. The employer knew, or should have known, of the employee’s incompetence or inappropriateness; 4. The employee’s act or omission caused the plaintiff ’s injuries or harm; and 5. The hiring of the employee was the proximate cause of the injury or harm.

324 Negligent Hiring 325

In order for the employer to be held liable for the actions of another, the individual must be an employee of the organization. An employee is defi ned as an individual who is in service of another; the employer has the right and power to control and direct the employee in the material details of how work is to be performed. In the court case Riverbend Country Club v. Patterson, 399 S.W. 2d 382, the courts held that an employer can be liable for the actions of an employee who is acting within the scope of his or her employment; this is often referred to as vicarious liability. In a negligent hiring claim, it must be established that an employment relationship existed. The second condition of a negligent hiring claim is that the employee must be incompetent or inappropriate for the job. An example of inappropriateness would be if a daycare center employed a pedophile. It is clear that a pedophile would be inappropriate for any position within a daycare center, because the pedophile places the children at risk. The hiring of a pedophile for a daycare would be negligent hiring. The third condition of a negligent hiring is that the employer knew or should have known of the employee’s incompetence or inappropriateness. An example of this is found in the case Blair v. Defender Services, Inc, 386 F. 3d 623. Kristin Blair was attacked by an employee of Defender Services on her college campus. It was later discovered that the employee had a protective order against him for assaulting another woman in a neighboring county. Defender Services never conducted a background check on the employee (which it was contractually obligated to do for all its employees). The court held that the employee showed a propensity for violence against women and, had Defender Services conducted a background check, this would have been discovered. The fourth condition of a negligent hiring claim is that the employee’s act or omission caused the plaintiff ’s injuries or harm. In the Blair case, the employee’s physical attack against Blair was the source of her injuries. The employee was the perpetrator of the attack and, had he not been employed with Defender Services, the attack would not have occurred. The fi nal condition of a negligent hiring is the hiring of the employee was the proximate cause of the injury or harm. According Black’s Law Dictionary (1968), “Proximate cause is a natural and continuous sequence unbroken by any effi cient intervening cause, produces injury, and without which the result would not have occurred.” In other words, by hiring the incompetent employee, it set in motion the injuries or harm that occurred to the plaintiff. As stated in the afore- mentioned example with the pedophile; if a child was harmed in the daycare center the proximate cause of the harm would stem directly from the action of hiring the pedophile. 326 The Encyclopedia of Human Resource Management: Volume One

References

Bennett-Alexander, D.D., & Hartman, L.P. (2008). Employment law for business (4th ed.). New York: McGraw-Hill. Black, H.C. (1968). Black’s law dictionary: Deﬁ nitions of the terms and phrases of American and English jurisprudence, ancient and modern. Minneapolis, MN: West Publishing Company. Kionka, E.J. (1993). Torts (2nd ed.). St. Paul, MN: West Publishing Company. Player, M.A. (1999). Federal law of employment discrimination. St. Paul, MN: West Publishing Company. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 63

NEW EMPLOYEE ORIENTATION

Jim Bowles

ocialization, assimilation, orientation, and on boarding—all are terms Sdescribing the indoctrination period of new employees during their initial time in a new work setting. To some employers, orientation is all about win- ning the “hearts and minds” of new employees during the fi rst few weeks on the job. Other organizations are focused on ramping an employee up quickly to a “positive contribution” threshold (a point at which the investment in preparing a new employee yields a “net positive” return to the organization). According to research by the Society for Human Resource Management (2006), 83 percent of companies use some form of formal orientation program for new employees. The goal of most organizations is not to completely win over the “hearts and minds” during this process. Orientation (frequently referred to as on-boarding) is the process through which organizations equip new employees with the essential knowledge required to be successful, refi ne the skills required to yield required results, and establish enough attraction to the organization to retain beyond a “positive contribution threshold.” Orientation may (and arguably should) be comprised of role-specific as well as level-specific programs. In fact, it is not uncommon to fi nd professional coaches who are hired solely for the purpose of quickly ramping up key executives where the implications for quick returns on the hiring investment are substantial. These programs are generally referred to as “leadership assimilation” or “leadership transition” programs, and are generally constructed in tandem with corporate leadership development programs.

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“On average, the time for new external hires to achieve full productivity ranged from eight weeks for clerical jobs to twenty weeks for professionals to more than twenty-six weeks for executives” (Williams, 2003). While research supports the importance of on-boarding as a factor in driving employee attachment and engagement, the approaches are varied and range from the highly regimented to the very informal. Program structure is highly dependent on organizational context and design and is generally considered an important attribute of organizational culture, as it sets the stage for future employee contributions. For organizations that want immediate employee alignment to their culture, where that culture is considered to be closely linked to the success of the organization, a very structured orientation is usually an essential step to quick assimilation and optimum productivity.

Common Outcomes

Knowledge Acquisition Orientation elements related to knowledge transfer typically have to do with “me issues.” While new employees are usually handed reams of documents about beneﬁ ts and pay plans at time of hire, they are usually in need of additional assistance in making sense of this information. Additional knowledge tied to speciﬁ c job expectations is critical at this juncture as well, with the most effective discussion and documentation occurring through very structured “performance expectations” discussions with the supervisor. In addition, the orientation provides an opportunity to learn more about the business so that employees can better understand the structure and the mechanisms that drive success. Much of this knowledge can be acquired through blended learning experiences through which “online” content can be married up with application discussions with supervisors (or orientation leaders) so as to help tie all critical elements together.

Skill Attainment Woven into the new orientation experience is usually the opportunity to learn or reﬁ ne skills critical to success in the role. This can be accomplished via a formal “new hire training” curriculum, depending on the complexity of the skills required, or done more informally through assigned mentors or blended learning opportunities. Skill acquisition tied to orientation can go beyond role-required skills; they should also include skills required to survive in the new organization. For instance, use of technology-support tools that are introduced over time to an existing employee base (such as an employee portal, a learning management New Employee Orientation 329

system, a career portal, an online travel management tool, or an online supply ordering tool), may be second-nature to existing employees, but will be signiﬁ cant learning opportunities for new employees if they are to quickly ramp up in their positions. Building mastery of these tools will enable them to be leveraged as assets by new employees, as opposed to potential productivity barriers.

Organizational Attachment Knowledge and skill enhancement ultimately are contributors to creating what perhaps is the most important outcome for an orientation program—driving a higher probability of attachment through engagement. If designed appropriately, the orientation process provides the opportunity to push many of the levers known to promote employee attachment and improve the likelihood of retention. These include clearly understanding expectations, developing a supervisory relationship, relationship of role to critical organizational outcomes, attachment to a group (peers), familiarity with tools required for success, understanding of total compensation elements, and establishing reliable communication channels. Use of orientation to enhance attachment will vary by role and level. An understanding organizational strengths and weaknesses relative to employee satisfaction through use of data from an employee survey process can be helpful in designing an orientation program that closes identifi ed gaps and leverages existing organizational strengths. As indicated earlier, technology has paved the way for new and creative “low touch” approaches to orientation. Given the proliferation of podcasts and other forms of mobile learning technology, classroom orientation events will become less pervasive and modular approaches more accepted. These experiences will need to be interwoven with “high touch” opportunities as well, to ensure that there are multiple points of attachment to the organization for new employees. Among these critical points of attachment are supervisor, peers, and leadership. Measurement of on-boarding effectiveness can be achieved through multiple methodologies, including examination of employee churn rates as well as productivity/results metrics and feedback. Doris Sims (2001) concludes that no one size fi ts all when it comes to orientation programs: “This is the thing about orientations: every single one has to be highly customized. You can’t just pull something off the shelf.” Some innovative and interactive approaches to employee orientation include the use of scavenger hunts and business simulations. Approaches vary in duration and level of immersion. Some organizations will take more of a “boot camp” approach, with orientation/new hire training comprising all that a new hire does during the fi rst several weeks of employment. Residual experiences may continue 330 The Encyclopedia of Human Resource Management: Volume One

after the initial session to reinforce learning and build on new experiences. In some cases, mentors (or buddies) might be assigned to continue to work with employees during a predetermined period of time. This is more common for “leadership directed hires,” when high-potential employees are brought into the organization and are groomed quickly for key mid-level and up leadership roles. Organizations set a very important stage during the first few months of employee participation. The opportunities for positive fi rst impressions can be left to chance or structured systematically during this period of time. The research strongly favors a more structured approach. Investment in the development of new hire orientation programs can vary signifi cantly. In its most simple form, it is a matter of consolidating existing information and learning opportunities in a way that drives that learning to new employees immediately after hire and requires a supervisor to test comprehension, either formally or informally. In its most complex and expensive form, organizations may elect to assign resources to dedicated orientation sessions, with employees removed from their assigned roles for a required period of time to become fully profi cient at required skill sets.

Summary

In summary, the beneﬁ ts of on-boarding can be signiﬁ cant and lasting. According to the Corporate Leadership Council (2004), “Effective on-boarding improves employee engagement, which drives discretionary effort. Discretionary effort describes an employee’s willingness to go ‘above and beyond’ the call of duty, such as helping others with heavy workloads, volunteering for additional duties, and looking for ways to do their jobs more effectively.” In short, having employees start out of the gate with a well- designed orientation program can yield an attractive return on the investment.

References

Corporate Leadership Council. (n.d.). Driving performance and retention through employee engagement. Washington, DC: Corporate Executive Board. SHRM online survey. (2006, August 22). Alexandria, VA: SHRM. Sims, D. (2001). Creative new employee orientation programs: Best practices, creative ideas, and activities for energizing your orientation program. New York: McGraw-Hill, Williams, R. (2003). Mellon curve research study. New York: Mellon Corp.

Websites www.managementhelp.org/trng_dev/orientng/orientng.htm www.shrm.org/ema/library The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 64

OMBUDS

John Dolan

n the age of increased awareness of corporate malfeasance and Sarbanes-Oxley IAct requirements, the position of an ombuds has become a more prominent and important role in organizations. An ombuds (also known historically as an ombudsman) is an offi cial within an organization, corporate or government, who is charged with representing the interests of the public and/or employees and addressing the concerns and complaints by these individuals (Williams & Redmond, 2001). He or she helps employees to resolve any work-related issues, ranging from codes of conduct to such matters as concerns with performance appraisals, favoritism in the workplace, career development, or the hiring process. He or she has deep knowledge of fi rm policies, rules, channels, and resources within the organization and often focuses on helping the complainant fi nd an equitable solution to the problem before escalating it within the organization. As a conversation with an ombuds does not constitute formal notice of the company, employees can be free to discuss resolution options without fear of reprisal or losing control of the situation. The only exception to that would be in the event that the ombuds is made aware of serious criminal activity that requires reporting. The ombuds can also provide the senior leadership of an organization with unfi ltered communication, early warnings, written or oral reports about issue trends, analyses, and change opportunities to help prevent recurrence of problems (Wagner, 2000). In the United States, ombuds traditionally report in to senior-level executives within the organization. The role has international signifi cance, as ombuds are often very high-ranking individuals in governments in Europe.

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Expansion of federal regulations over such matters as employment discrimination and safety issues has contributed to the expansion of the ombuds role into the corporate world. The public is also more demanding of corporations to act responsibly and ethically. As a result, companies have been motivated to build internal systems for resolving ethical problems before they become public issues. In fact, the Sarbanes-Oxley Act requires publicly traded organizations to establish procedures for “the conﬁ dential, anonymous submission by employees of the (company) of concerns regarding questionable accounting or auditing matters” (Redmond & Williams, 2004, p. 50).

History

Evidence of this type of a role exists as far back as the Qin Dynasty in China and Korea in the 3rd century, although modern use of the term is traditionally credited to Sweden. The profession has grown considerably since its introduction into the United States in the 1960s. Ombuds positions began to appear in organizations, particularly in the academic, likely due to the unrest that was taking place at many colleges and universities during that time period. Michigan State University is credited with being the fi rst major school to establish such an offi ce in 1967. The existence of the ombuds role in companies started to gain momentum as well, with a swell of growth occurring in the 1980s due to pervasive reports of corporate misconduct. The defense contracting industry in particular was under scrutiny for questionable behavior, such as sexual harassment and discrimination. To help improve their governance and restore faith in their organizations, over a dozen U.S. defense contractors joined together to create a standard code of ethics and governance systems to which they would all abide. The inclusion of an ombuds role was part of this initiative. As a result, the number of ombuds positions in U.S. businesses grew to the point that, in 1984, the fi rst corporate ombuds conference was held with attendees from a wide variety of institutions and organizations (Howard, 2010). Today more than 150 exist in the U.S. and Canada (Stieber, 2000). However, they have grown in varying directions with varying roles and responsibilities. For example, in academic institutions, some ombudsmen are faculty, administrators, and even students.

Trade Association

Up until 2005, there were two different trade associations that served the ombuds communities. It was then that The Ombudsman Association and the University and College Ombuds Association merged and became the Ombuds 333

International Ombudsman Association. The IOA is the largest international association of professional organizational ombuds practitioners in the world. It is a forum for the sharing of knowledge and best practices, and it aims to improve the quality and value of the ombuds profession by developing guidelines for dealing with difﬁ cult issues and by providing continuing professional education. It supports the profession through research, lobbying, and support to organizations interested in developing an ombuds program (Redmond, Daigneault, & Williams, 2006).

Standards of Practice

The IOA has created a set of standards of practice for ombuds. It states that the ombuds must be independent, holding no other position within the organization that may compromise independence. He or she must be neutral and impartial. All interactions with the ombuds must be treated with conﬁ dentiality, which means that only aggregate trends are reported out, and all notes, appointment books, phone messages, and other identifying records must be secure and protected from inspection by others (Bauer, 2000). The ombuds also operates informally; he or she never makes binding decisions, mandates policies, or formally adjudicates issues for the organization (Redmond & Williams, 2005). Finally, the ombuds strives to be worthy of the trust that is placed in the ofﬁ ce.

Organizational Beneﬁ ts

Ombuds’ actions have resulted in such changes as the correction of misleading fi nancial reporting; cessation of fraudulent vendor relationships; elimination of safety issues; termination of abusive leaders; avoidance of lawsuits; and the reduction of codes of ethics violations. In an educational institution, an ombuds provides a college or university a stronger framework for managing problems and disputes among its constituents (Field & Barnes, 2003). Generally, ombuds processes are evaluated through surveys and self-reports of those in the role. Their results are quantifi ed through the benchmarking of the number of grievances heard and resolved, cost-effectiveness, and the ombuds’ perceptions of the complainants’ satisfaction. Corporate ombuds average three hundred contacts and cases per year. Resolution rates range from 35 to 97 percent. They have shown to be cost-effective, with cost-to-savings ratios estimated to range from 1:1.63 to 3–6X cost of the offi ce. Ombuds have claimed client satisfaction rates of 80 to 90 percent (Harrison, 2004). Considering that the average cost to settle a discrimination lawsuit in the United States has been reported as 334 The Encyclopedia of Human Resource Management: Volume One

$297,000, excluding legal costs, an investment in an ombuds seems very practical (Saleh, 2005). To answer the concern that the ombuds role overlaps too much with traditional compliance and human resource departments, it should be noted that compliance offi ces, legal departments, and human resource practitioners cannot perform the same role as the ombuds offi ce (Redmond & Williams, 2003). They are not permitted to be informal, off-the-record, offi cially neutral, and offi cially confi dential, as an ombuds is. An ombuds also serves in a different capacity than a “whistle blower hotline” that some organizations have in place, in which employees can call a central number, normally a voicemail box, to anonymously report concerns about organizational misbehavior. A recent study by the Ethics Resource Center indicated that, even though the number of these “hotlines” has increased, their use has declined. The utilization of an ombuds, perhaps due to the fact that the employee can have a face-to-face conversation with a person about a concern, has proven to be three to ten times higher than those of a hotline (McBride & Hostetler, 2008). Finally, an ombuds can also act as a bellwether for the organization and alert senior leadership in advance about problem areas of proposed policy and strategy that may be misconstrued by the organization so they can be reviewed and amended. Support for the role of the ombuds is strong. The National Association of Corporate Directors recently stated that an organizational ombuds role is one of the most powerful tools available for boards to succeed (McBride & Hostetler, 2008).

Challenges

One of the main challenges an ombuds can face is credibility, and where the function resides within the organization is critical to how the role is perceived. In some organizations, an ombuds may report to several layers beneath the top level of the administration. In an educational setting, he or she may lack faculty or administrative rank. This perceived lack of stature and authority may be an impediment to the success of the person in the role. As a result, the work of the ombuds may be marginalized. He or she may not be expected to publish formal reports or, if they are published, the reports may be ignored. This is especially likely to happen in an academic environment when the ombuds is a student or reports into a student organization. Additionally, corporate ombuds are also at risk when a ﬁ rm faces budget constraints, as this role could be perceived as expendable. Ombuds programs are also becoming more pressured to divulge their sources, positioned as part of the “zero tolerance” approach of questionable ethical practices (Shelton, 2000). Ombuds 335

Conclusion

In spite of the constraints and some confl icting interpretations of the traditional ombuds role among organizations, it is clear that the role of an ombuds plays a signifi cant role in the governance and ethical behavior. Employees may feel better protected, and the manner in which the organization conducts itself and makes decisions is perhaps more thoughtful and careful because of the knowledge that the ombuds offi ce exists.

References

Bauer, F. (2000). The practice of one ombudsman. Negotiation Journal, 16(1), 59–79. Field, R., & Barnes, M. (2003). University ombuds: Issues for fair and equitable complaints resolution. Australasian Dispute Resolution Journal, 14(3), 198–210. Harrison, T.R. (2004). What is success in ombuds processes? Evaluation of a university ombudsman. Confl ict Resolution Quarterly, 21(3), 313–335. Howard, C. (2010). The organizational ombudsman: origins, roles and operations: A legal guide. Chicago: ABA Publishing. McBride, J., & Hostetler, J. (2008, May). Board champions for the ombudsman. Directors Monthly, pp. 15–17. Redmond, A., Daigneault, M., & Williams, R. (2006). Ombudsman to the rescue. Board Member, 15(3), 6. Redmond, A., & Williams, R. (2003). The organizational ombuds: Complementing the ethics offi ce. Ethikos, 17(2), 1–7. Redmond, A., & Williams, R. (2004, September). Risk Management, pp. 48–54. Redmond, A., & Williams, R. (2005). Three chief compliance offi cers’ points of view on the value of an ombudsman program. Compliance and Ethics, pp. 30–39. Saleh, D. (2005). The role of the ombudsman. The CPA Journal, 75(4), 12. Shelton, R.L. (2000). The institutional ombudsman: A university case study. Negotiation Journal, 16(1), 81–98. Silver, I. (1967). The corporate ombudsman. Harvard Business Review, 45(3), 77–87. Stieber, C. (2000). 57 varieties: Has the ombudsman concept become diluted? Negotiation Journal, 16(1), 49–57. Wagner, M. (2000). The organizational ombudsman as change agent. Negotiation Journal, 16(1), 99–114. Williams, R., & Redmond, A. (2000) An ombuds program: A governance and ethics best practice. Human Capital Strategies, 288, 1–8. Williams, R., & Redmond, A. (2001). Ombuds? Sounds familiar . . . New York Law Journal, 255(24), S5. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 65

ORGANIZATIONAL CITIZENSHIP

Victoria Derderian

s applied to human resource management, organizational citizenship behavior A(OCB) can be defi ned as “extra-role behaviors that exceed delineated role expectations but are important and even crucial for an organization’s survival” (Somech & Drach-Zahavy, 2004). Three main features differentiate citizenship behavior from task behaviors. First, the behavior must be voluntary; not required by a job description. Next, the behavior must knowingly benefi t an organization from the organizational perspective; behaviors that occur arbitrarily do not qualify. Finally, OCB is multidimensional. There are two distinct categories of citizenship behaviors; those that benefi t individuals (OCBI), and those that organization as a whole (OCBO). Organizations place high value on employees who consistently display OCB, and employers strive to cultivate these behaviors in order to maintain a strong sense of corporate culture. In the broadest of causal descriptions, organizational citizenship is a product of effective motivation and positive feedback.

Beneﬁ ts

Citizenship behaviors are encouraged due to their direct impact on company culture and the subsequent effects on the overall functioning of an organization. When employees voluntarily engage in behaviors that reap beneﬁ ts to those around them, there is often internal motivation that propels these acts. However,

336 Organizational Citizenship 337

managers must take a participative role in providing incentive for employees to continuously engage in such behaviors. This is pivotal to maintain a consistent level of OCB within an organization, because ongoing action without recognition or feedback will diminish an employee’s drive to perform that action (Somech & Drach-Zahavy, 2004). Organizations that understand the importance of facilitating OCBs develop a key competency in this arena that competitors are unable to easily replicate. The benefi ts of encouraging OCB within an organization are numerous; employees who display these behaviors are happier and more enthu- siastic, which directly translates into the quality of their work. In other words, job satisfaction is improved along with an increase in OCB. Additionally, increased quality of work has a signifi cant impact on an organization’s bottom line—the most tangible advantage of citizenship behavior. Another important benefi t of OCB in the workplace is the creation of social capital (interpersonal relationships among employees). When employees spend time acting in ways that are not vital for success in their designated jobs, but nevertheless benefi t those around them, a sense of camaraderie and trust in one another and the organization is built (Bolino & Turnley, 2003). Organizations that exhibit high levels of social capital are able to recruit and retain employees with high levels of commitment, talent, enthusiasm, and many of the other qualities mentioned above. All of these benefi ts work together to maintain a positive, cohesive atmosphere in the workplace.

Antecedents

A work environment can encourage OCB by implementing certain processes. There is differentiation between the context that promotes OCBI and the context that promotes OCBO (Somech & Drach-Zahavy, 2004). However, one consistency is the presence of a supervisor feedback environment. This type of environment helps to align the demands of a job with resources to eliminate stressors. Supervisors who provide an “advantageous feedback environment” are likely to increase employees’ positive attitudes and desire to repay the organization by exhibiting citizenship behaviors (Pend & Chiu, 2010).

OCBI These types of behaviors result in beneﬁ ts for particular individuals. Thus, antecedents on a more personal level are necessary in order to spark such behaviors. Managers who display certain characteristics set a promising foundation to inspire OCBI within their organizations. Examples of these characteristics include: 338 The Encyclopedia of Human Resource Management: Volume One

• Empathy • Trust • Supportive leadership • Charisma • Loyalty

Although this is an incomplete list, it is notable that managers must make themselves relatable, trustworthy conﬁ dants in their employees’ eyes in order to gain increased citizenship behaviors in return. It is a more personal context that elicits OCBI behaviors. Somech and Drach-Zahavy (2004) found that OCBI is strongly linked with the presence of organizational learning mechanisms (OLMs), which are “concrete arenas in which the experiences of individual organization members are ﬁ rst analyzed and shared by organizational members” (p. 284). More simply, OCBI can be fostered by requiring employee input and providing personalized feedback. Employees who feel as though their unique voices are valued by their employers are likely to develop a greater level of trust, heightening the inclination to perform acts above and beyond their concrete roles within an organization. This is one example of the way a supervisor feedback environment works.

OCBO These types of behaviors beneﬁ t the organization as a whole as opposed to individuals. Antecedents for OCBO tend to be more contextual rather than personal (Somech & Drach-Zahavy, 2004). One important example of context inﬂ uencing behavior is an organization’s structure. Organizations that are less formal and hierarchical are more likely to have employees engage in OCB due to a collaborative atmosphere that promotes extra-role behaviors. Stemming from this concept, “individuals who perform or fail to perform OCB do not do so in a vacuum; the organizational context in which these behaviors are performed undoubtedly serves to encourage or discourage them” (p. 283). Additionally, organizational culture plays a role in establishing employees’ beliefs and values, which determine an employee’s willingness to engage in OCB. In this way an organization’s propensity toward collaboration or competition affects employee behavior.

Issues

As evidenced, the presence of citizenship behavior in the workplace beneﬁ ts an organization. However, there are potential problems in relation to OCB that organizations might face. When employers have an awareness of the possible downfalls Organizational Citizenship 339

of encouraging OCB, precautionary measures can be taken before issues arise. In fact, how employers manage these pitfalls is related to how effectively citizenship behaviors positively affect the workplace (Bolino & Turnley, 2003, p. 68). If OCB reaches the point at which it becomes rewarded, tasks associated with a job scope may be given less attention than citizenship behaviors. Giving OCB the same weight as other performance metrics could serve as motivation for employees to cut back on job responsibilities. Bolino and Turnley also emphasized the links between monetary rewards, individual goals, and discouragement of citizenship behaviors. On the other hand, goals created on the organizational level leading to company-wide outcomes are more likely to stimulate OCB (p. 67) But should an organization choose to appraise personal performance and reward OCB, observable behaviors rather than broad-spectrum personality traits provide a foundation for citizenship behaviors. Managers play a signifi cant role in how their employees interpret their work environment; when feedback is encouraged and appropriate, employees develop more clarity and job satisfaction. More importantly, when managers do not provide these outlets, it diminishes an employee’s positive attitude toward an organization, leading to more stressors and less OCB (Pend & Chiu, 2010). Another issue with OCB is impression management, which is defined as “behaviors that individuals use in order to try to create a favorable image of themselves among their colleagues and supervisors” (Bolino & Turnley, 2003, p. 68). By defi nition, citizenship behaviors are positive contributions to the workplace and performed in an altruistic manner. When impression management becomes an issue, employees will engage in OCB, not to inspire success in an organization, but rather to lead their employers to believe that they deserve recognition. This is a cause for concern because employees acting this way can heighten the power of offi ce politics, with managers who do not search for the motives of OCB fueling the fi re. Thus, those who engage in citizenship behaviors truly for good become indistinguishable from those who perform the same behaviors only to appear as if they are doing good for an organization (pp. 68–69).

Conclusion

Organizations that understand the beneﬁ ts of and encourage organizational citizenship behaviors maintain employees with increased levels of job satisfaction, enthusiasm, and ability to collaborate with peers and employers. Managers can promote these types of behaviors by understanding the differences between OCBI and OCBO and how each of these can be harnessed to create a positive work environment. There are potential pitfalls of using citizenship behaviors to inspire an organization’s success, but if managers can effectively predict and address these problems before they occur, they have a greater chance of maximizing the beneﬁ ts of OCB. 340 The Encyclopedia of Human Resource Management: Volume One

References

Bolino, M.C., & Turnley, W.H. (2003). Going the extra mile: Cultivating and managing employee citizenship behavior. Academy of Management Executive, 17(3), 60–71. Peng, J-C., & Chiu, S-F. (2010). An integrative model linking feedback environment and organizational citizenship behavior. Journal of Social Psychology, 150(6), 582–607. Somech, A., & Drach-Zahavy, A. (2004). Exploring organizational citizenship behavior from an organizational perspective: The relationship between organizational learning and organizational citizenship behavior. Journal of Occupational and Organizational Psychology, 77, 281–98. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 66

OUTSOURCING

Ashley Snyder

he practice of outsourcing is building momentum in organizations across Ta variety of industries. With organizations under increasing pressure to cut costs and “do more with less” in the wake of the recent economic downturn, examining this important issue becomes increasingly relevant.

What Is Outsourcing?

Outsourcing is the choice by an organization to have functions of its business operations completed by a third-party fi rm. These fi rms may be located domestically or overseas and can vary greatly in terms of size and specialization (Amiti & Wei, 2004). Although outsourcing of certain business functions is more common than others, a large variety of roles are potential candidates for outsourcing decisions. In a 2008 survey of the types of jobs employers planned to outsource abroad, 32 percent were computer programming roles, 32 percent were software programming roles, 25 percent were customer service roles, 16 percent were systems analyst roles, and 7 percent were roles in HR (Anonymous, 2008). Similar trends are observable domestically, with outsourced jobs encompassing a broad range of functions. Outsourcing is generally executed utilizing contracts or “service level agreements” that defi ne the relationship between the organization and the third party and may stipulate requirements, penalties, and incentives for performance (Michie, 2010).

341 342 The Encyclopedia of Human Resource Management: Volume One

Potential Reasons for Outsourcing

Although a number of different elements of the internal and external environment may predicate a decision to outsource, some commonalities exist across organizations. Arguably the most common factor that motivates an organization to consider outsourcing is the need to reduce costs (Michie, 2010). Particularly within the context of macroeconomic turmoil, many organizations are experiencing increasing pressure to reduce spending. A reduction in salary expense is often a key strategy for improving the company’s bottom line. Although outsourcing may allow organizations to reduce actual salaries, particularly in the case of outsourcing internationally, this is not always the case. In many cases, the greater saving is derived from eliminating funds that would be allocated to benefi ts provisions for company employees. While a third party may require compensation commensurate to existing employee salaries, the company will not responsible for providing the third-party labor force with the broad range of benefi ts they would otherwise be expected to provide their employees (Michie, 2010). In addition to reducing the organization’s responsibility to provide benefi ts, other residual cost savings can result from eliminating an in-house labor force within certain functions. Outsourcing the function of a department or a large part of the organization may allow company to reduce the facilities needed to operate, which can result in reduced rent or real estate costs (Michie, 2010). Companies could also choose to reallocate these physical spaces within the organization to increase the effi ciency of other departments with operations that remain in-house. An additional relevant potential benefi t of outsourcing is eliminating the need to update technologies and equipment that may be required to complete organizational functions. High-tech job functions in particular may require frequent and costly equipment refurbishments, upgrades, or replacement. Rather than continuing to invest in these improvements, organizations may choose to outsource these functions, placing the burden on the third party to make upgrades necessarily to provide competitive services (Henneman, 2005). In addition to reducing costs, many businesses believe that outsourcing actually improves organizational effectiveness and may offer new career options for individuals in many functions. By outsourcing elements of certain functions, employees of the company are free to focus on tasks that play a more central role in maintaining the company’s competitive advantages. In human resources, for example, outsourcing components of this function frees employees within the company to focus on the human resources strategy, increasing overall effi ciency (Meisinger, 2004). Outsourcing 343

Offshoring

Offshoring, or outsourcing to third-party fi rms outside of the United States, is an option selected by many companies. A potentially augmented cost savings may exist by choosing international outsourcing, as differences in the cost of living and wage standards vary widely in other markets. In the fi eld of software development, for example, professionals in India may require only 25 to 50 percent of the salaries that employees would require domestically (Michie, 2010). The jobs that are the most appealing for potential outsourcing internationally are those that can retain high quality without direct interpersonal interaction. Technological advances have facilitated the offshoring of many services that in the past would have been diffi cult to delegate to a third party (Anonymous, 2008). Enhanced communication and data management technologies have allowed greater integration between companies and the international fi rms they outsource to. In a survey of employers in 2007, 13 percent indicated that their fi rms used international outsourcing within their organization and planned to continue doing so in the future (Anonymous, 2008).

Negative Implications of Outsourcing

Although the benefi ts of outsourcing are clear, there are also a host of negative outcomes that may result from a fi rm’s decision to outsource. A negative perception of fi rms that outsource internationally is growing increasingly strong among some consumer groups. One study conducted by the University of Maryland suggests that there has been a signifi cant decline in support for free trade from 1999 to 2004 among individuals with incomes over $100,000 (Amiti & Wei, 2004). Losing the support of this extremely affl uent segment of customers could be incredibly detrimental for many companies and is a factor that must be considered before making outsourcing decisions. Symptomatic of this trend, recently proposed legislation within the United States and in other developed countries may discourage companies from outsourcing in the future. For example, fi rms that outsource a certain proportion of their business activities could fi nd themselves ineligible from competing for government contracts (Amiti & Wei, 2004). The negative impact that eliminating jobs will have on morale and employee engagement are factors that must carefully be considered when making outsourcing decisions (Henneman, 2005). Although hard cost savings may be realized initially, ineffi ciencies that could result from a disengaged workforce may ultimately have a detrimental impact on the company’s profi tability. From an ethical perspective, 344 The Encyclopedia of Human Resource Management: Volume One

the impact that the elimination of jobs internally will have on employees at the individual level may be a core concern. Although there may not be a net loss of employees within the organization as a whole, outsourcing a particular function may represent the end of a long, loyal career for some employees of the company. Although this many not have a direct ﬁ nancial impact on the company, the ﬁ rm should continue to consider the impact outsourcing decisions may have on former employees and on the local community.

Additional Considerations

Once a ﬁ rm has made the decision to outsource, a number of suggestions should be considered to increase the likelihood of the successful execution of this strategy:

• Organizations may consider including standards and penalties for poor or non-performance as well as incentives for superior performance in service agreements (Michie, 2010). Although the fi rm cannot directly manage the operations of their outsourcing partners, including these stipulations in agreements will encourage the third party to operate in ways that are benefi cial to the organization. • Measurements and metrics to monitor the effectiveness of outsourcing should be an organizational priority. Baseline performance measures taken before outsourcing a function will allow a company to assess the effi cacy of their outsourcing decisions and made adjustments as necessary (Henneman, 2005). • Organizations should carefully consider their motivations for making an outsourcing decision. This will decide the metrics the company selects when assessing the effectiveness of an outsourcing decision (Henneman, 2005). • In addition to the short-term goals of the organization and the immediate gains experienced after outsourcing a function, standards for success over time should also be considered. This will allow organizations to consider whether or not outsourcing is a viable long-term strategy (Henneman, 2005).

Conclusion

It is clear that outsourcing will be an increasingly critical issue for organizations to consider in the future. It is only with a balanced and informed perspective that organizations can make prudent decisions regarding the suitability of outsourcing for their individual organizations. Although some beneﬁ cial and detrimental aspects of outsourcing are relatively universal, the suitability of outsourcing for Outsourcing 345

an individual organization is largely continent on its goals, structure, and a host of other unique variables. With an ever-changing operating environment, ﬂ uctuations in the macroeconomic and regulatory environment will constantly change opinions on this issue. Organizations should monitor industry-wide statistics as well as measurements within their organizations when evaluating the implementation of or continuation of outsourcing.

References

Amiti, M., & Wei, S-J. (2004). Demystifying outsourcing. Finance & Development, 41(4). Anonymous. (2008). Will more offshoring be a result of economic uncertainties? HR Focus, 85(6). Henneman, T. (2005). Measuring the true beneﬁ t of human resources outsourcing. Workforce.com. www.workforce.com/section/09/feature/24/10/69/ Meisinger. (2004). Outsourcing: A challenge and an opportunity. HRMagazine, 49(9). Michie, P. (2010). To outsource or not to outsource? That is the question. Sales and Marketing Management. 162(1), 13. Retrieved April 15, 2010, from ABI/INFORM Global. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 67

PAY GRADES

Karen McMillen Dielmann

pay grade is a grouping of jobs that are comparable in content or worth Aas determined by the company. Generally, the company decides that these similar jobs should be paid within an equivalent pay range (Noe, Hollenbeck, Berhart, & Wright, 2011). Pay grades are usually determined following a job evaluation—a formal and organized process of comparing jobs to determine the worth of one job relative to another in the company, resulting in a hierarchy of jobs by their value to the organization. The belief underlying the process is that jobs that require more education, skill, knowledge, and abilities involve more intricate job duties and demand greater responsibility so should be paid more than jobs with lesser requirements. A job evaluation usually involves comparing jobs to one another in relation to predetermined aspects of the job, such as effort required to do the job, the amount of responsibility, and the skills involved. The job evaluation process is often completed by a committee (Dessler, 2011). A number of different types of job evaluation procedures can be used; however, it is common to focus on some pre-established factors that the jobs in the company might have in common. These factors, called compensable factors, set forth how the jobs compare to each other and determine the rate of pay for each job. Companies are free to determine their own compensable factors—the work-related criteria that the organization considers to be the most important in determining the value of its jobs. However, many ﬁ rms use factors that have been established by some well-known job evaluation systems or by the Equal Pay Act, which established four compensable

346 Pay Grades 347

factors: skills, effort, responsibility, and working conditions. Whatever compensable factors are determined to be important, it is common practice to evaluate each job against other similar jobs using the same compensable factors. Several approaches to job evaluation can be used. A ranking method is the least complex, as the jobs are simply ranked relative to all of the other jobs in the organization, based on some broad factor such as the diffi culty. Another method for evaluating jobs involves categorizing jobs into groups; usually all of the jobs in the same group are of similar value to the organization. A third method is a point method whereby a number of compensable factors are identifi ed as important and the degree to which those factors are present in each job is assigned points. The result of this determination is a quantifi able point rating for each of the jobs. A fourth method is a factor comparison by which each job is ranked several times, once for each of the compensable factors. The rankings for the individual factors are then combined into a total numerical score for each job. Regardless of the type of job evaluation method used, the end result is a determination of the relative worth of each job to the organization. In an attempt to simplify the process, many companies, especially larger ones, will group similarly ranked or scored jobs into grades for purposes of pay. A pay grade is made up of jobs that are similar in terms of diffi culty or importance to the organization, as revealed by the job evaluation process. For example, if the point method of job evaluation was used, a pay grade might consist of all of the jobs that fall within a certain range of points. In another example, if the ranking method was used, a pay grade might consist of jobs that fall within a predetermined number of ranks. Once the pay grades are determined, the company must determine pay ranges for the grades. It is uncommon for an employer to pay only one pay rate for all of the jobs within the same pay grade, so a range must be established for the grade. A pay range typically establishes minimum, midpoint, and maximum hourly rates of pay or annual salaries for each grade. The use of pay ranges for the various pay grades allows a company to be more fl exible in recruitment and selection of employees, taking into account the experience and abilities of various candidates. Additionally, pay ranges associated with the pay grade allow the company to pay people within the grade at different rates to account for performance differences and/or tenure with the organization.

References

Dessler, G. (2011). Human resource management (12th ed.). Upper Saddle River, NJ: Pearson Prentice Hall. Noe, R.A., Hollenbeck, J.R., Berhart, B., & Wright, R.M. (2011). Fundamentals of human resource management (4th ed.). New York: McGraw-Hill/Irwin. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 68

PERFORMANCE AIDS

Robert D. Jackson

performance aid, also known as a job performance aid (JPA), or simply a job Aaid, is a tool that supports people in performing a task more efﬁ ciently and effectively. In the slang vernacular, a job aid is often called a “cheat sheet.” The job aid may be anything a worker uses on the job to improve or speed along or to ensure consistency in the work product. A job aid could be as simple as an informal note written by the worker on a 3-by-5 card and kept in a workspace to remind him or her of important dates. Or a job aid could be an elabo- rate quick-reference system for help desk operators that lists possible solutions to operating problems. The pre-ﬂ ight checklist used by pilots and astronauts is an advanced form of a job aid.

A Brief History

The concept of a performance aid has been around—in one form or another— since cave dwellers wrote on their walls. The modern day performance aid may be traced back to the systematic on-the-job training method called job instruction training (JIT), which began as a printed card that contained step-by-step instructions for performing a speciﬁ c task so a worker did not have to memorize the steps to a process. According to Clark (1999), JIT was popularized during World War II when fast, efﬁ cient training was required. Job aids were developed more as an instructional

348 Performance Aids 349

intervention or as a substitute for learning, not as a learning tool. If learning does occur from the use of a job aid, it was more incidental than intentional.

Basic Types of Job Aids

There is no established format that a job aid must assume. It may range from a simple slip of paper to a large electronic database. Rossett & Gautier-Downes (1991) described three primary major categories of job aids: informational, procedural, and decision-making or coaching job aids.

Informational Job Aid. This is the most basic job aid, with the primary function of making needed information such as concepts or facts available quickly and easily according to the needs of the user. Informational job aids are constructed to meet the user’s needs and are developed so that the user does not have to commit certain information to memory. These job aids are also used to ensure accuracy of the work product.

Procedural Job Aid. These job aids provide the user with the logical steps or procedures to perform a task quickly and accurately. Procedural job aids also take on many forms, from a simple sticker on a gasoline pump that illustrates operating instructions to a multi-volume checklist for astronauts to follow in their space travel. Users may heavily depend on job aids at ﬁ rst, but reduce reliance on them over time when the task becomes more automatic.

Decision-Making or Coaching Job Aid. This type of job aid is designed to guide the user in making correct decisions or in responding to questions quickly and accurately. The types of questions answered could be “Why is this important?” or “What might I consider before I make this decision?” Decision- making and coaching job aids are often designed in a trial-and-error format so the user can adopt a correct decision based on a certain situation. Two examples of a coaching job aid are the troubleshooting table in a product user guide and a matrix that lists actions to take when comparing an employee’s performance with his or her potential.

Formats for Job Aids

Beuerlein and Gardner (2002) categorized six formats of job aids: step, worksheet, array, decision table, ﬂ ow chart, and checklist. 350 The Encyclopedia of Human Resource Management: Volume One

Step. This job aid helps the user follow procedures required for a process to be completed accurately and rapidly.

Worksheet. The worksheet contains a list of standard categories or task options and provides a column—or more—to list associated numbers, costs, or other data.

Array. The array format lists a series of codes or other data and translates data into meaningful information.

Decision Table. Decision tables make problem solving easy, as they guide the user through a series of steps from inputs to various options and then reveal the ﬁ nal output based on decisions made by the user.

Flow Chart. Similar in function to the decision table, a ﬂ ow chart graphically provides the user with a variety of “if-then” decision options.

Checklist. This is a job aid commonly used with a speciﬁ c set of actions or directions that must be performed—with no deviation—in order to successfully complete an activity.

Appropriate Uses of a Job Aid

There are times when using a job aid is more important than at others. According to Rossett and Schafer (2007), these are instances in which the use of a job aid supports performance:

• When the task is performed infrequently; • If the task is complex; • When there is no margin for error in the performance of a task or series of tasks; • When a large amount of data or information is used in the performance of a task; • When there are frequent changes in either the process, appropriate information, or data used in performing a task; • When there are frequent changes of personnel who perform the task; and/or • When there is limited time or resources to train the task. Performance Aids 351

When a Job Aid Should Not Be Used

Job aids are excellent tools to use in preparing for an action or while performing an action. However, there are certain situations in which a job aid is not practical and should not be used.

Immediate Emergency Situation. A job aid should not be relied on in an emergency situation when a split-second decision must be made and there is no time to consult a job aid. If a building is burning, there is no time to consult a decision table or checklist before evacuating. However, in that moment, the sticker with an emergency phone number in bold print and pasted on the telephone is the most important job aid the occupant could want.

Subject-Matter Expert. An expert in a particular profession should not totally rely on job aids through an entire job performance. An attorney at a trial cannot rely on a step or checklist job aid during heated cross-examination. However, that same attorney could use a time line as a job aid to refresh the memory of a witness.

Distraction. If a job aid distracts the user during the performance of a task, that job aid should not be used. In most cases, an airline pilot will refer to a checklist job aid prior to and following the airplane landing. However, during the actual landing, the pilot is concentrating on the wheels touching the runway.

Job Aids and Technology to the Rescue

For any organization, the benefi ts of job aids are enormous. Just as job aid formats are endless, so are their benefi ts in saving time, easing the transference of skills from training to the workplace, and providing job and product standardization. As job aids are prepared, great care must be taken to ensure that the outcome produced through the use of the aid is identical to what is learned in the user’s training process. Excessive “short cuts” or unclear job aids may be disastrous to work product outcome. As advances in wireless technology proliferate, job aids can be easily and quickly adapted to personal digital assistants (PDAs), cell phones, and iPods. “When technology is combined with information about the user and the context and workfl ow, customized guidance can be delivered when and where it is needed” (Rossett & Schafer, 2007, p. 36). 352 The Encyclopedia of Human Resource Management: Volume One

Performance Support

Rossett and Schafer (2007) take the concept of job aids to a higher level, referring to performance support as job aids on steroids. They formally deﬁ ne performance support in this way: “A helper in life and work, performance support is a reposi- tory for information, processes, and perspectives that inform and guide planning and action” (2007, p. 2). Two types of performance support highlighted by Rossett and Schafer (2007) are planners and sidekicks. Planners are used when preparing for an action or task as well as when reviewing the action after it has been completed. Sidekicks provide support as a task is being performed. A basic example of a planner and a sidekick is using a paper map or printing directions from mapquest.com (the planner), versus using a GPS for instant, real-time directions as you drive (the sidekick). Another example of a planner is a sports playbook that provides pre-planned offensive and defensive strategies and plays, while a sidekick is a football quarterback’s armband that contains plays to use in situations when a scripted play may fail. As the workforce changes . . . as tasks in the workplace change . . . as learning changes . . . as technology changes, the key to success continues to be helping workers maximize their performance on the job.

References

Beuerlein, E.L., & Gardner, B. (2002). The skinny on job aids. In B. Hoffman (Ed.), Encyclopedia of educational technology. San Diego: San Diego State University Press. http:// coe.sdsu.edu/eet/articles/jobaids2/start.htm. Clark, D. (1999). Big dog and little dog’s performance juxtaposition. www.nwlink .com/~donclark/hrd/history/jit.html. Rossett, A., & Gautier-Downes, J. (1991). A handbook of job aids. San Francisco: Pfeiffer. Rossett, A., & Schafer, L. (2007). Job aids and performance support: Moving from knowledge in the classroom to knowledge everywhere. San Francisco: Pfeiffer. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 69

PERFORMANCE MANAGEMENT

D. Renee Tanner

erformance management is a process of continuously setting, aligning, and Pachieving common goals at all organizational levels. It involves measuring performance, communicating data, and working together to make mid-course decisions. Historically, performance management meant just performance appraisal. Today, appraisals are effective only when included in a whole system approach with clear understanding of precise enterprise goals, line of sight to each individual’s expectations, and continuous feedback. This article focuses on the broad subject of performance management and is not a comprehensive description of performance appraisal. Finally, performance is not just about what is done—results—it is also about how it is done (Cardy, 2004, p. 5).

Performance Management

The goal of performance management is continuous improvement in the mutual success of all stakeholders focusing on the things that matter most. Ultimately, it drives the highest possible return on investment in human creativity and resource- fulness, key competitive advantages (Hall, 2006, p. vii). That return is measured through things like productivity and quality that lead to proﬁ tability. In addition, documenting unsatisfactory performance is critical to supporting management decisions when they are challenged legally (Bernardin, 2007, p. 7).

353 354 The Encyclopedia of Human Resource Management: Volume One

Performance management infl uences selection, development, compensation, retention, promotion and termination (Bernardin, 2006, p. 175). Most importantly, it impacts the bottom line. Armed with a complete picture of the links between individual work and profi ts, managers and workers can continuously improve strategies, processes, job designs, organizational structures, and so on to ensure profi table, stable growth. Without it, the future is anyone’s guess.

The Performance Management Process

Performance management starts with the organization’s goals (Hall, 2006, p. 3; Kaplan & Norton, 2001, p. 212; Kaplan & Norton, 2006, p. 3). “Each member of the enterprise contributes something different, but all must contribute toward a common goal. Their efforts must all pull in the same direction and their contributions must ﬁ t together to produce a whole—without gaps, without frictions, without unnecessary duplication of efforts. Performance requires that each job be directed toward the objectives of the whole organization” (Drucker, 1973, p. 430).

Step 1. Set and Regularly Revise Enterprise Directives Strategic objectives defi ne the specifi c paths to success that the organization will pursue. Forward-looking outcome- and output-oriented metrics called key performance indicators (KPIs) measure progress toward strategic objectives in both fi nancial and non-fi nancial terms. Finally, critical initiatives are large-scale projects that must be completed in order to hit KPI targets. Taken together, strategic objectives, KPIs, and critical initiatives make up the organization’s scorecard, sometimes also called a “dashboard.” Regardless of what you call it, the fi rst step in performance management is to clearly defi ne and articulate these enterprise directives. These are typically set in the context of the organization’s vision and mission through an annual strategic planning process. In addition to checking the vision and mission for current and near future relevance, strategic planning involves situation analysis and goal setting. Situational analysis is commonly known as SWOT, which stands for strengths, weaknesses, opportunities, and threats (Simmons, 2000, p. 18). Opportunities and threats are identifi ed by analyzing the external situation or trends among things like customers, suppliers, competitors, substitutes, investors, regulations, and innovations. Strengths and weaknesses are identifi ed by analyzing the organization’s ability to sustain itself while capitalizing on opportunities and avoiding or mitigat- ing threats. The analysis focuses on things like talent, facilities, processes, strategic Performance Management 355

relationships, and so forth. Because of the convenient acronym, organizations sometimes start the situation analysis with strengths and weaknesses rather than opportunities and threats. In doing so, they must be cautious to avoid an overly internal point of view. Goals are set that address the opportunities, threats, strengths, and weaknesses identifi ed in the situation analysis and also maintain current or minimal performance required to sustain the organization. These goals, both short-term and long-term, are expressed specifi cally as enterprise directives (strategic objectives, KPIs, and critical initiatives) and are further distilled into budgets and business plans, operating plans, and fi nancial plans. Typical annual strategic planning takes into account that which is “known” and “expected”—the projected impact of factors studied in the situation analysis as well as the organization’s means of addressing them. However, the world does not stand still. Therefore, regular strategic reviews must provide for mid-course corrections and modifi cations to enterprise directives.

Step 2. Translate Enterprise Directives to Goals Throughout the Organization The next step is to cascade KPIs and critical initiatives to each work unit and individual, also known as establishing clear line of sight (LOS). To cascade the enterprise-level scorecard, it is translated into KPIs and critical initiatives for each work unit level: division, department, or team. For individual LOS, work unit goals are translated to each person. Besides a clear line of sight, cascading allows people at every level to have input into the goals (Hall, 2006, pp. 2–5). This increases understanding and commitment resulting in greater probability for success. Effective regular strategic review processes include reviewing and revising lines of sight as enterprise directives change. Therefore, cascading must also be regularly recurring process.

Step 3. Coaching The third step is coaching, which is regularly measuring progress and providing feedback to employees. Using performance data to frequently coach workers ensures goal achievement and uncovers development opportunities or required corrective actions in a timely manner (Cardy, 2004, p. 80). Most employees seek regular feedback, especially when it is given in a supportive, forward-looking, non- threatening way. High performers want to know how they are doing in advance of their performance appraisals so that they have ample time to improve if needed. In addition, continuous feedback makes the formal appraisal simple and free 356 The Encyclopedia of Human Resource Management: Volume One

from surprises. In fact, conducting frequent informal appraisals during the performance period is recommended. Further, as data is shared up, down, and across the organization, every person and team can continuously work together to make mid-course changes.

Step 4. Performance Appraisal As stated previously, performance appraisal is one step in a holistic performance management system. While performance management is continuous, performance appraisal is the fi nal step in the process for a specifi c performance period. Appraisal systems can include rating achievement of performance goals as well as demonstrating the job’s required levels of knowledge, skills, abilities, and other competencies. While behavioral feedback is best delivered in a timely manner, the employee’s ability to demonstrate “key behaviors” related to the organization’s values should also be determined. Appraisal in each of these areas has its benefi ts and challenges. The results can help determine lateral moves, promotions, succession, and cultural fi t. Accordingly, the best systems use a combination of rating methods such as management by objectives (MBOs), behavioral anchor ranking systems (BARS), and narratives, among others. With management by objectives, individuals’ past performance is measured against specifi c goals in the current job. Performance for each objective is usually rated using simple numerical ratings such as 1, 2, and 3 for performance below, at, and above numeric targets. Narrative rating systems are often used to assess competencies and to support MBO ratings. The approach yields the most information, as raters document performance throughout the period. When using the critical incident approach, details are recorded only as specifi c events occur. Either can be conducted by the supervisor and/or by others inside or outside the work unit. Behavioral anchor ranking systems (BARS) assess performance in the most critical current job requirements, rather than against goal achievement. Raters choose statements from predefi ned checklists that describe different levels of performance for each level of knowledge, skill, or ability. This approach focuses on current performance in the current job and the potential for improvement. Methods of appraisal that compare individuals’ performance are best used for planning for development and staffi ng needs rather than for assessing performance against objectives and/or job requirements (Bernardin, 2007, p. 175). Three common methods are used:

• Straight ranking is simply listing all workers in order from the best of the best to the worst of the worst, like Jack Welch’s famous “top and bottom 10 percent” at GE. Performance Management 357

• Paired comparison involves comparing each individual to every other individual systematically. • Forced distribution requires raters to “force” each employee into a category, usually by requiring certain percentages of the total number of employees into low, medium, and high performance ratings.

Generally, performance coaching and appraisals are conducted by an employee’s direct supervisor. In addition, workers can undertake self-evaluations that give detail and insight to the appraiser. Peers, direct reports, other managers, and even executives may also provide valuable information for determining performance ratings. This type of 360-degree feedback has evolved as an effective tool for discovering and developing leaders in particular. Whatever the method of appraisal, it will be most effective when those determining performance ratings are highly skilled and genuinely interested in achieving mutual beneﬁ t for the person being appraised and for the organization.

Criticisms of Performance Management

Ineffective performance management systems can be time-consuming, difﬁ cult to use, and unfair to employees, leading to undesirable legal ramiﬁ cations. In addition, they can be meaningless when they are not clearly linked to pay, lateral moves, promotions, or other opportunities. It is imperative to use a well-designed and executed system.

Effective Performance Management Systems

The most effective performance management systems incorporate many, if not all, of the following attributes:

• Designed and updated collaboratively by cross-functional groups of employees from all organizational levels; • Uniform across the enterprise, but tailored appropriately for each unique work unit; • Regularly audited for improper use and unintended adverse impacts • Not too difﬁ cult or time-consuming; • Clearly understood and considered objective and fair by the evaluators and those being evaluated; • Equal emphasis on planning, continuous feedback, and appraisal; 358 The Encyclopedia of Human Resource Management: Volume One

• Clear goals that are measurable, achievable with a stretch, time-bound, outcome-oriented, and agreed-on, with speciﬁ c measurements like quality, quantity, cost-effectiveness, and timeliness; • Clear line of sight; • Clearly deﬁ ned performance period; • Intrinsically motivated employees in the right roles with clear job descriptions; • Highly skilled and motivated managers who are held accountable; • Problem diagnosis from systemic perspectives of equipment, materials, and environment as well as individual attitude and aptitude; • Multiple integrated rating methodologies resulting in the most accurate and accepted appraisals; • Room for sound managerial judgment rather than purely numerical computation of overall ratings; • Multiple sources of performance data for validation and bias avoidance; • Built-in controls for typical rating errors; and • Tied to extrinsic motivators such as compensation, job growth through lateral moves, and promotions.

Performance management can take many forms. It is most effective when the system takes advantage of current best practices that are tailored to the organization’s unique business, culture, and strategies and when it is focused on the highest levels of fairness and objectivity. Done well, performance management shows how the output of every person drives the organization’s bottom-line results.

References

Bernardin, H.J. (2007). Human resource management: An experimental approach. New York: McGraw-Hill/Irwin. Cardy, R.L. (2004). Performance management: Concepts, skills, and exercises. New York: M.E. Sharpe. Drucker, P.F. (1973). Management: Tasks, responsibilities, practices. New York: HarperCollins. Hall, B.J. (2006). Harvard business essentials—Performance management: Measure and improve the effectiveness of your employees. Cambridge, MA: Harvard Business School Press. Kaplan, R.S., & Norton, D.P. (2001). The strategy focused organization: How balanced scorecard companies thrive in the new business environment. Cambridge, MA: Harvard Business School Press. Kaplan, R.S., & Norton, D.P. (2006). Alignment: Using the balanced scorecard to create corporate synergies. Cambridge, MA: Harvard Business School Press. Simmons, R. (2000). Performance measurement and control systems for implementing strategy. Upper Saddle River, NJ: Prentice Hall. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 70

PROGRESSIVE DISCIPLINE

Wanda M. Costen

rogressive discipline is the process of increasing the severity of consequences Pdesigned to change undesired behavior (Gomez-Mejia, Balkin, & Cardy, 2006). This process gives the employee several opportunities to correct his or her behavior, while providing the employer with justiﬁ cation for terminating employment. The goal of progressive discipline is to improve employee performance or eliminate inappropriate behaviors. In general, there are four steps to progressive discipline: verbal warning, written warning, suspension, and termination. In order to progress through this process, the employee doesn’t necessarily have to exhibit the exact same behavior. If the behaviors are similar, they can be counted as being in the same general classiﬁ cation, and therefore it would not be necessary to start the process from the beginning. Moreover, some behaviors are so severe that it is inappropriate to follow the process.

Progressive Discipline Process

Verbal Warning The ﬁ rst step in the progressive discipline process is to issue a verbal warning. At this stage, the supervisor has a discussion with the employee about his or her performance or behavior. The supervisor should clearly describe the behavior,

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review the performance standards, and then gain commitment from the employee to work toward changing the behavior. Although this is a verbal warning, the discussion still needs to be documented.

Written Warning At this step of the process, the supervisor needs to fully explain why the problem must be resolved. The supervisor should ensure the employee completely understands the implications of his or her behavior. Again, the supervisor should gain commitment from the employee to change the behavior, and solutions should be included in the documentation. The supervisor must also explain what will happen if the behavior or poor performance persists.

Suspension If the behavior or poor performance continues, the next step in the process is time off without pay. Suspensions are typically three days, but can be up to ﬁ ve work days. During this discussion, the supervisor must express the seriousness of the situation. The employee must understand that the next step is termination. Time off is granted to allow the employee time away from the workplace to consider his or her commitment to the organization. Whenever possible, a witness should be present at this stage of the process. It is also important to inform the human resources (HR) professional responsible for this segment of the organization. Since the next step in the process is termination, HR must be consulted to ensure compliance with the organization’s policies and procedures.

Termination The fi nal step is to terminate the employee. If the supervisor has done a thorough job of working with the employee and ensuring the employee is aware of the consequences, this meeting is actually not a surprise to him or her. Whenever possible, an HR professional should be present at this meeting. The supervisor should review the entire history of the problem and the discussions and action plans developed previously. The employee should be reminded of the opportunities he or she has had to correct the problem. The supervisor or HR professional should also review information about the fi nal paycheck, benefi ts, and any other pertinent information. Throughout the discussion, it is imperative that the supervisor maintain the dignity and respect of the employee. Progressive Discipline 361

Follow-Up One of the most important components of the progressive discipline process is follow-up. After each discussion, the supervisor should keep in touch with the employee and provide positive reinforcement. In particular, the supervisor should attempt to notice and comment when the employee is exhibiting positive behavior or performing to the established standard. Failing to acknowledge employee attempts to improve behavior may actually cause the employee to give up and return to old habits.

Documentation

By far the most important thing to remember when it comes to discipline is to document, document, and document! Each and every disciplinary discussion should be formally documented in writing. The document should contain the following information:

It is important to inform the employee that his or her signature is not a statement of agreement with the document, but acknowledging that the discussion took place. If the employee refuses to sign the document, merely indicate that on the document. The employee should receive a copy of the document with all signatures.

Appeals Process

Occasionally, employees feel they have been disciplined inappropriately. Sometimes the employee feels the disciplinary action is too harsh or unfair, and at other times the employee feels that he or she has been disciplined for doing something that others have not been disciplined for doing. An appeals process gives the employee an opportunity to be heard. 362 The Encyclopedia of Human Resource Management: Volume One

The appeals process can take many forms. One of the most typical forms is a review board comprised of a mixture of front-line employees and managers. The board is governed by an HR professional, whose primary responsibility is to ensure fairness. The employee presents his or her case, and the board members review the disciplinary action. The board can uphold the disciplinary action imposed or may recommend other measures be taken.

Communication

It is imperative that the progressive discipline process be clearly communicated to all employees. The best way to do this is to include the process in the employee handbook. Employees should also be made aware of the steps in the process during each disciplinary discussion. Supervisors should maintain conﬁ dentiality at all times. They should not discuss disciplinary actions with anyone other than their own supervisors. Furthermore, all discussions should maintain the dignity and respect of the individual employee.

Final Thoughts

It is important to remember that the primary goal of discipline is to change behavior, not to change the person. Progressive discipline is designed to help the employee improve his or her performance.

Reference

Gomez-Mejia, L.R., Balkin, D.B., & Cardy, R.L. (2009). Managing human resources. Upper Saddle River, NJ: Pearson Prentice Hall. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 71

PROJECT MANAGEMENT

Lynda Carter, Gerri Hura

roject management is deﬁ ned as the application of knowledge, tools, and Ptechniques used to manage the organization’s resources (people, technology, facilities, equipment, and funding) necessary to achieve a goal or objective (Project Management Institute, 2009). Projects originate in all areas of an organization, and in recent years, HR and HRD professionals utilize the key components and activities of project management to manage instructional design processes, new program and process development and implementation, and process improvement initiatives. These projects vary in size and complexity from the design of a job aid to the implementation of a performance management system, to the design and development of the web-based learning modules to support the engineering department’s global training program (Morrison, Ross, Kalman, & Kemp, 2011). Whether project management is used to support technical applications or human performance applications, the process is the same. Time, budget, and acceptance are the triple constraints under which all projects must be managed. The acceptance constraint can also be called quality, scope, or performance. Project completion ﬁ ts into one of three categories:

• Successful—completed within the constraints, • Challenged—completed while missing one or two of the constraints, or • Failed—cancelled early or completed without meeting any of the time, cost or acceptance criteria constraints. (The Standish Group International, 2009)

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The Standish Group produces a CHAOS report that tracks project success in information technology projects across multiple industries. In 1994 the ﬁ rst CHAOS report documented that 16 percent of projects were successful, 31 percent failed, and 53 percent were challenged (The Standish Group International, 2009). In the latest CHAOS report, published in 2009, project success rates have jumped to 32 percent, failed projects are at 24 percent, and challenged projects were at 44 percent (The Standish Group International, 2009).

A Brief History

Formalized project management began in the United States in the 1940s as a strategy to bring under control cost overruns of 200 to 300 percent in the aerospace and defense industries (Kerzner, 2009). By the 1950s and 1960s, project management was required on all government work (Kerzner, 2009). It was not until the late 1960s through the mid-1980s that businesses began applying project management concepts to complex projects (Kerzner, 2009). This form of project management was often modeled after government programs and became seen as bureaucratic and ineffi cient. From the 1990s to present, project management application has been seen as a competitive advantage and necessary for survival. A variety of project management methodologies, products, and software solutions are available from vendors, consortiums, and non-profi t organizations. The most prevalent international provider of project management advocacy and research is the Project Management Institute (PMI), founded in 1969 (Project Management Institute, 2009). The PMI researches and promotes international best practices in project management and provides project management certifi cation in multiple focus areas.

Core Knowledge Areas

The PMI publishes the international standards for project management knowledge in their PMBOK Guide, which contains best practices in the following knowledge areas:

Knowledge Area Sample of Related Tools and Techniques Communication Management (timely Stakeholder identiﬁ cation and analysis, and appropriate generation, collection, status reporting, communication dissemination, storage, and ultimate sharing requirements analysis, communication of project information) methods, and communication models Cost Management (project budgeting) Estimating, budgeting, ﬁ nancial analysis, and earned value management (continued) Project Management 365

Knowledge Area Sample of Related Tools and Techniques Human Resource Management (effective Performance appraisals, conﬂ ict use of the project team) management, negotiation, training, team building, roles and responsibilities, RACI chart, rewards and recognition Integration Management (coordination of Issue management, scope management project elements) Procurement Management (acquire goods Make-or-buy analysis, contracts, and and services from outside the organization) procurement audits Quality Management (satisfy the business Flowcharting, benchmarking, statistical need) controls, and quality audits Risk Management (identifying, analyzing, Brainstorming, SWOT analysis, probability and responding to project risk) and impact matrix, mitigation strategies, contingency strategies, risk reserves, decision trees, and risk audits Scope Management (all the work required Facilitated sessions, project scope statement, to complete the project successfully) work breakdown structure (WBS), and the scope management plan Time Management (timely completion of Estimating, sequencing, Gantt charts, the project) network diagrams, critical path, resource leveling, and critical chain

Project Management Lifecycle

There is no one standard deﬁ nition of the ideal lifecycle (or process group) of a project; all projects move through stages of development. Project management methodologies provide detailed steps, procedures, templates, and roles and responsibilities. The number of lifecycle stages in different methodologies may vary, but their intent is similar. A summary of lifecycle phases include:

• An initial stage (often called initiation or feasibility) to determine the purpose of the project, the high-level estimate of time, cost, and resource constraints in order to determine whether there is organizational commitment to pursue the project • A planning stage (planning) to gather the details of how the project goal will be achieved and to determine more accurate estimates of time, cost, and resource requirements • An execution stage (execution or build) during which the project plan is executed and work is completed to achieve the project goals • A monitoring stage (monitoring or controlling) that runs concurrent with the execution stage to track and evaluate project progress 366 The Encyclopedia of Human Resource Management: Volume One

• An ending stage (closing or wrap-up) to determine how the project performed against the time, cost, and acceptance criteria baselines, in order to gather lessons learned and provide organizational learning

Project (or Program or Portfolio) Management Ofﬁ ce

Companies may create either a temporary or permanent offi ce to facilitate the coordination of project efforts. These offi ces are usually called PMO. The “P” can stand for project, program, or portfolio. Below are the defi nitions of each:

• Project—a temporary endeavor to create a unique project, service, or result • Program—a group of related projects managed and coordinated to obtain ben- eﬁ ts not available from individual projects • Portfolio—collection of programs or projects

PMOs can provide: training, mentoring and coaching, project leadership, standards, processes, tools, forms and templates, knowledge repositories, and coordination of organizational resources. PMOs can be established to service a speciﬁ c business area such as information technology or new product development or as a strategic business unit. PMOs that drive project success are likely to be staffed with project management professionals who provide training, coaching, and support to project teams and collect performance metrics (Doerscher, 2008).

PM Maturity

Project management applications have various levels of maturity based on the amount of standardization and integration of project management concepts in daily work. The levels of project management maturity, like the project lifecycle stages, may be given different labels, but represent the same level. In general the levels of maturity are:

• Ad-hoc: projects are run by the “seat of the pants”; basic project management processes are not used. • Planned: individual project planning occurs; there is no organizational standard. • Managed: standardized planning and project control occurs throughout the organization. Project Management 367

• Integrated: project management becomes integrated into how work is viewed. • Sustained: continuous process improvement in the application of project management is practiced. (Carnegie Mellon University Software Engineering Institute, 1994)

Implementation Considerations

Successful implementation of project management requires a project mindset. Implementation follows project management best practices, which include:

1. Begin by determining the organizational purpose. Clearly defi ne the goal, who will be impacted, what will be created (for example, standardized life cycle, forms, templates, or training), and how success will be measured. 2. Based on the goal and organizational impact, determine who will provide implementation leadership. Defi ne specifi c roles and responsibilities for the leadership team and the impacted areas. 3. Assess the current state of project management within the organization. Use the stages of PM maturity to determine both the current state and the desired future state. Analyze the current project management skills and determine the future state project management competencies. Complete a gap analysis on both the organizational maturity and the skill gap. 4. Create an implementation plan based on the gap analysis. 5. Execute the implementation plan to reduce the gap. Implementation may include introducing project management: • Procedures, processes, templates, and forms • Training and coaching • Compliance audits. 6. Monitor the project management maturity against the implementation goals and success criteria.

Uses of Project Management in HR and HRD

While project management methodologies have traditionally been used in the technical ﬁ elds, the relevance and viability of the tools and processes in all aspects of the organization, especially HR and HRD, is growing. As seen in the PMBOK (2009) listing of project management best practices, this systematic process is used throughout organizations. 368 The Encyclopedia of Human Resource Management: Volume One

With the need to manage and develop programs and processes in organizations with speed and minimal waste of human and ﬁ nancial capital, project management provides the framework to control the development and deployment of organizational initiatives. Through use of project management techniques, critical success factors such as buy-in from senior management and communication issues between key team members (Rothwell, Butler, Hunt, Maldonado, & Peters, 2006) as well as the ability to manage changing priorities can be addressed and managed. HR and HRD program design and development that follows a project management lifecycle structure enhances the ability of the project team to be successful and to identify focused outcomes (Martin, 2006). There is also the advantage of capitalizing on knowledge objects and templates that work within the organization, thus enhancing speed to delivery as well as cost savings. In the current American Society for Training and Development (ASTD) Competency Model, the role of project manager is listed as one of the four key roles (additional roles are learning strategist, business partner, and professional specialist) taken on by a learning professional (ASTD, 2011). Project management has also become the framework for instructional design initiatives utilizing (Cennamo & Kalk, 2005; Morrison, Ross, Kalman, & Kemp, 2011):

• Project planning: scope of work, scheduling, and budgeting; • Management activities: managing resources, tracking, and project reporting and documentation; and • Project launches.

Tools and techniques heavily utilized in a project management environment are also components of a HR or HRD planning or process improvement initiative. These tools and techniques include fl owcharting, determining value added and non-value added aspects of a process or function, storyboarding, force-fi eld analysis, and the nominal group technique, to name a few. Project management professionals, given the designation of PMP by the Project Management Institute (PMI), have not only had project management experience, but also have taken and passed a rigorous certifi cation test through PMI. Human resource staff should be aware of this designation in the recruitment, selection, and hiring process. PMPs must continue their education through obtaining professional development units (PDUs) to maintain their certifica- tion through PMI; education traditionally fi nanced by the project manager’s organization. Project Management 369

Additional Resources/Related Topics http://ofﬁ ce.microsoft.com/en-us/templates/CT012261931033 .aspx?ofcresset= www.gantthead.com/ www.pmi.org www.prince-ofﬁ cialsite.com/home/home.asp

References

ASTD. (2011). The ASTD WLP competency model. www.astd.org/content/research/ competency/AreasofExpertise.htm. Carnegie Mellon University Software Engineering Institute. (1994). The capability maturity model guidelines for improving the software process. Reading, MA: Addison-Wesley Longman. Cennamo, K., & Kalk, D. (2005). Real world instructional design. Belmont, CA: Thomson Wadsworth. Doerscher, T. (2008). PO 2.0 survey report: The continued evolution of the project, program and portfolio management ofﬁ ce (PMO). Austin, TX: Plainview, Inc. Kerzner, H. (2009). Project management: A systems approach to planning, scheduling, and controlling (10th ed.). Hoboken, NJ: John Wiley & Sons. Martin, V. (2006). Managing projects in human resources, training and development. Philadelphia: Kogan Page. Morrison, G.R., Ross, S.M., Kalman, H.K., & Kemp, J. E. (2011). Designing effective instruction (6th ed.). Hoboken, NJ: John Wiley & Sons. Project Management Institute. (2009). A guide to the project management body of knowledge: PMBOK® guide (4th ed.). Newtown Square, PA: Author. Rothwell, W.J., Butler, M.N., Hunt, D.L., Li, J., Maldonado, C., & Peters, K. (2006). The handbook of training technologies. San Francisco: Pfeiffer. The Standish Group International, Inc. (2009). www.standishgroup.com/newsroom/ chaos_2009.php. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 72

QUALITY CIRCLES

Eric Bergstrom

he focus of quality circles has been to harness the engagement and collective Tcooperation of all organizational members at all levels to improve production processes and product quality. The speciﬁ c ways of engaging employees through quality circles have included:

• Engaging volunteer members of the workforce in identifying process improvement or product quality opportunities; • Providing employees with the opportunity to suggest ways to improve processes or product quality; and • Empowering employees to implement suggestions and to evaluate the impact of those changes on process ﬂ ow and product quality.

According to Hajime Karatsu, a Deming Award winner and one of the best- known Japanese quality experts, “The Japanese QC circle movement began at the grassroots level in 1962” (Karatsu, 1988, p. 96). The success of Japanese ﬁ rms in creating quality products with and through the engagement of workforce members drew the attention of American business executives. In the late 1970s and early 1980s, manufacturing executives of American organizations began benchmarking Japanese manufacturers in search for ways to improve their product quality and to improve bottom-line performance. Analysis of high-performing, high-quality Japanese organizations revealed that the engagement of production

370 Quality Circles 371

workers in problem solving and process improvement quality circles was the key to Japanese business success. Quality circles developed over time as a way for organizations (both in Japan and in America) to tap the creative talent and innovative capabilities of employees at all levels. Quality circles often took the form of small teams of employees (six to twelve members), typically led by a member of management, that met for periodic, short meetings to address work-related issues or problems. The teams used a variety of team problem-solving and decision-making tools to diagnose problems, to develop a list of suggested prioritize actions, and then present the suggestions to the management team for approval. The decision-making and problem-solving tools used by teams included, but were not be limited to the following:

• Brainstorming techniques with ﬂ ip charts; • Force-ﬁ eld analysis; • Fishbone diagrams; and • Nominal group techniques.

Some of the ﬁ rst quality circles in American industries began in the early 1980s, marking a signiﬁ cant cultural change from a traditional, hierarchical organization with leader decision making to an employee-engaged, group decision-making workforce. The role of HR in supporting quality circles involved the training of team members in group process activities. HR facilitators also provided training on group process techniques, consensus decision making, data collection/data analysis, and presentation techniques. HR also assisted in change management strategies when teams implemented the approved improvements. While quality circles ushered in the engagement of the American worker in decision making that impacted their well-being on the job and improvements, studies showed that the existence of quality circles in American industry were short-lived. A 1985 study performed by A.T. Kearney showed that within eighteen months of implementation of quality circles in organizations, approximately 83 percent of the circles were dropped by the organizations (Poirer & Houser, 1993). However, quality circles opened the door to many of the employee involvement activities we see in organizations today. Because quality circles were built on the foundation of employee involvement, it seemed only natural that HR professional support the concept. Lessons learned by human resource professionals when supporting quality circles helped those professionals build capabilities for supporting self-directed work teams that became commonplace in American organizations in the late 1980s. 372 The Encyclopedia of Human Resource Management: Volume One

References

Banks, J. (1989). Principles of quality control. Hoboken, NJ: John Wiley & Sons. Cortada, J.W. (1993). TQM for sales and marketing management. New York: McGraw-Hill. Karatsu, H. (1988). TQM wisdom of Japan. Cambridge, MA: Productivity Press. Poirier, C.C., & Houser, W.F. (1993). Business partnering for continuous improvement: How to forge enduring alliances among employees, suppliers, and customers. San Francisco: Berrett-Koehler. Womack, J.P., & Jones, D.T. (2003). Lean thinking: Banish waste and create wealth in your corporation. New York: The Free Press. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 73

RECREATION PROGRAMS

Steven N. Waller, Ni-Eric D. Perkins

lobally, more than three thousand progressive companies, including more Gthan two thousand in the United States, have discovered the value of recreation programs as a beneﬁ t to employees, their families, and the communities in which the company is located. Many of “the best companies to work for” and “family-friendly companies” feature recreation programs. While programs vary, employee recreation services exist to empower employees to live balanced lives and to help the company achieve its ﬁ nancial goals, because valued and happy employees are more likely to be productive and loyal to the company.

Evolution of Employee Recreation

In the late 1890s entrepreneur and philanthropist John H. Patterson began providing a wide range of services for his employees at National Cash Register (NCR) Corporation in Dayton, Ohio. Patterson provided an assortment of services for his employees, ranging from exercise programs to corporate-sponsored athletics leagues. He labeled the provision of this array of corporate based services “industrial recreation.” Patterson’s involvement in recreation and employee welfare is summarized in the following quotation: “There is no charity in anything we do. Isn’t it just good business to lose three cents on a girl’s lunch and get back

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ﬁ ve cents’ worth of work?’’(Schleppi, 1979, p. 7). Whether applied to earning money, exercising, or recreation, Patterson’s motto emphasized the beneﬁ ts to the individual and to the company. In the mid-1960s the term “corporate recreation” became popular with the advent of large-scale employee recreation programs sponsored by Fortune 500 companies such a Brunswick, General Motors, Johnson Wax, and Texas Instruments. In the 1990s the term “employee services management” was popularized and the scope of services provided to employees and their families expanded. Examples of services provided included in-house recreation and health programs, team-building consultants, and ropes course management.

Strategies for Developing Employee Recreation Programs

Where funding is not a challenge, companies hire full-time recreation managers to coordinate company-sponsored initiatives. These professionals work collaboratively with human resources professionals and labor unions to encourage employee participation. Sport and athletic, ﬁ tness, health and wellness, child and elder care, special events, company-sponsored enrichment seminars, programming for singles, and employee discount programs remain popular areas for programs. An alternative strategy commonly utilized to implement a company-sponsored recreation initiatives is to contract with a local parks and recreation agency. Local or regional authorities have an abundance of areas and facilities and staff with programming expertise that can design a comprehensive recreation program for the corporation. For example, the Glenview, Illinois, park district provides corporate recreation services on a contractual basis for local businesses. Amenities made available to local companies include softball and baseball fields, golf courses, swimming pools, a health and wellness center, tennis courts, and ice rinks. The scope of programming includes company picnic and outings, athletic leagues and tournaments, customized health and wellness programming, and enrichment programming targeting company employees and their families (Glenview Park District, 2006).

Beneﬁ ts of a Recreation Program

The beneﬁ ts of developing an employee recreation program are numerous. The most common reported by companies that sponsor recreation programs include a reduction in absenteeism, accidents, and employee turnover; a heightened capacity Recreation Programs 375

to attract and retain new employees; increased productivity; higher levels of satisfaction among company retirees; and improved relations between employees and management (Employee Services Management Association, 2001). Overall, company executives, labor unions, and industrial sociologists agree that recreation programs contribute to the well-being of the employee and the company. Employee services, inclusive of recreation programs, and practical solutions to work/life issues are essential to sound business practices (Edginton, DeGraaf, Dieser, & Edginton, 2002).

A Beneﬁ ts-Based Approach to Developing a Recreation Program

In examining the process of developing a recreation program for companies, Benefi ts Based Programming (BBP) is the standard. BBP is an outcome-oriented approach that focuses the programmers’ efforts on producing specifi c benefi ts for participants as a result of their participation in specifi c recreation (Rossman & Schlatter, 2003). The fi rst step in BBP is identifying target issues and goals. One major social issue for all companies is employee recognition and appreciation. As an element of an overarching recreation program, recognition and appreciation programs are important in creating a quality work environment. Companies that acknowledge their employees’ contributions and efforts build a sense of pride, loyalty, and mutual respect within the organization. Once a baseline level of programming is established, the next step is to implement activities that address the target issues and goals through performance objectives, daily activities and procedures, processing activities, and monitoring. For example, utilizing the idea of acknowledging employee efforts, programmers would then develop objectives. An objective could be to obtain 75 percent employee membership and participation in the activities offered. A daily activity could consist of a Pilates class that releases the daily stress from working. Feedback is obtained from participants to determine whether the activity is assisting in maintaining the target goals. Finally, the activity is monitored to ascertain changes needed. In the third phase, programmers evaluate the benefi t outcomes related to issues and target goals. A well-structured evaluation plan is important. By using control groups of individuals within the company, programmers would assess the success of those goals. An example of a goal assessment could be a survey of employee satisfaction from the time when recreational programs and activities began to the present. 376 The Encyclopedia of Human Resource Management: Volume One

The ﬁ nal component of BBP involves beneﬁ ts-based awareness. This idea involves comparing best practices among companies with recreation programs. The aim is to examine successes in program implementation and replicate them when possible. Communication tools that can be used to effectively assess successful practices of other companies include news releases, promotional materials, annual reports, and websites.

The Employee Services Model

Building on the beneﬁ ts-based approach to developing an employee recreation program; the Employee Services Management Association (ESMA) is the model for the provision of employee recreation services. Established in 1941, and formerly known as the National Employee Services and Recreation Association (NESRA), ESMA is a one-stop resource for how-to information, suppliers, and services for employee programs. The ESMA model consists of ten core components:

1. Employee Stores. Employee stores are physical retail establishments or online buying sites that allow employees to purchase a variety of items, which saves employees time and money. The top-selling items in employee stores are logo clothes/items, T-shirts, discount tickets, sundries, and greeting cards.

2. Community Services. Employees rally to engage in meaningful community service projects. These programs help unite employees at all levels and reinforce a positive statement about their employers, who are providing outlets for them to make a difference in their communities.

3. Convenience Services. On-site services such as dry cleaning, discount ticket sales, resource and referral services, car services, and more, attract and retain qualiﬁ ed employees in today’s tight labor market. Online employer sponsored value plans (ESVPs) bring products, services, and savings for employees. These programs make it convenient for employees to run errands, buy gifts during lunch, and return to work on time, which contributes to lower absenteeism rates.

4. Recreation Programs. Sports leagues and special interest clubs allow employees to express themselves as individuals. Through involvement in various activities, employees develop a broader range of skills, learn to be leaders, and enjoy coming to work. Recreation Programs 377

5. Special Events. Holiday parties, company picnics, and other company celebra- tions are offered by employee services providers plan to further direct company goals and unite employees.

6. Voluntary Benefi ts. Employees turn to employee services providers to help them search for the best values on voluntary, portable insurance policies, services, and warranties. ESM Association’s Employee Preferred is the offi cial provider of insurance at a value price. Insurance policies include automobile, home, long- term care/personal care, serious illness, group life insurance, prepaid legal and home offi ce; services include benefi ts consulting and Internet banking; and warranties include automobile and home service agreements.

7. Dependent Care. Employee services managers provide employees with solutions to the demands of eldercare, childcare and even pet care. Whether they are managing onsite facilities, a consortium backup center, summer day camps, lunchtime education programs, or outsourcing research and referrals, employee services providers help employees address dependent care issues.

8. Recognition Programs. Employers of choice quickly reward employees for solid contributions to the company’s goals.

9. Travel Services. Services range from planning group trips to providing discount information packets for speciﬁ c destinations.

10. Wellness. Programs focus on health promotion by offering lunchtime seminars, ﬁ tness incentive programs, personal development opportunities, on-site ﬁ tness centers, ropes courses, experiential training, and more. These programs encourage healthy lifestyles and help reduce medical claims, in turn saving employers money.

Implementing a Recreation Program

The primary concern is usually the initial cost for development of a recreation program or expanding existing efforts. To counter this concern, contracting with an existing agency such as the YMCA or a municipal parks and recreation agency to provide services represents a viable alternative. Finally, organizations may express concern over how to measure the tangible beneﬁ ts of implementing a recreation program against costs. Utilizing the beneﬁ ts-based programming model 378 The Encyclopedia of Human Resource Management: Volume One

and working collaboratively with the company’s human resources department or a local college or university to design an effective program evaluation method can yield fruitful results.

References

Busser, J. (1990). Programming for employee services and recreation. Champaign, IL: Sagamore. Edginton, C.R, DeGraaf, D.G., Dieser, R.B., & Edginton, S.R. (2002). Leisure and life satisfaction: Foundational perspectives. New York: McGraw-Hill. Employee Services Management Association. (2001). The 10 components of employee services. www.esmassn.org/tencomponents.htm#stores. Glenview Park District. (2006). Corporate recreation programs. Glenview, IL: Author. www .glenviewparkdist.org/pr-corp-recreation.htm. McLean, D.D., Hurd, A.R., & Brittain-Rogers, N. (2004). Kraus’ recreation and leisure in modern society (7th ed.). Boston: Jones-Bartlett. Rossman, R.J., & Schlatter, B.E. (2003). Recreation programming: Designing leisure experiences (4th ed.). Champaign, IL: Sagamore. Scheleppi, J.R. (1979). It pays: John H. Patterson and industrial recreation at the national cash register company. Journal of Sports History, 6(3), 7.

Websites Employee Services Management Association: www.esmassn.org Government Employee Associations and Military MWR Groups: www .recgov.org National Recreation and Park Association: www.nrpa.org Wellness Councils of America: www.welcoa.org The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 74

RECRUITMENT AND SELECTION

Wanda M. Costen

ecruitment and selection comprise one of the essential functions of human Rresources (HR) (the other two are training and development, and the catch- all employee relations). Although recruitment is often considered the ﬁ rst stage of the selection or hiring process, each is actually a separate and distinct process altogether. These two processes combined ultimately determine the quality of the employees in an organization.

Recruitment

Recruitment is the process of gathering a pool of qualifi ed candidates for a position (Gomez-Mejia, Balkin, & Cardy, 2009). The goal of recruitment is to generate a diverse pool of candidates, who are qualifi ed for the available position. Diversity refers to not only the demographic characteristics of the candidates, but also their backgrounds and experience. One must not limit the pool to those with similar skills, knowledge, and abilities, but must consider where to fi nd people who might have transferable skills that will allow the candidate to perform well in the position. Recruitment is often thought of as casting a wide net to gather potential candidates for available positions. The focus should be on fi nding candidates that possess the essential knowledge, skills, and abilities necessary to perform the job duties at the level of the established standards. The quality of the pool ultimately

379 380 The Encyclopedia of Human Resource Management: Volume One

determines the quality of the employees in an organization, because new employees will be selected from this group.

Strategic Recruitment

Strategic recruitment involves fully comprehending the type of pool needed to implement the business strategy. This approach clearly implies that HR is fully involved in the development of the organization’s business strategy and an equal business partner. Securing, developing, and motivating talented people with the right skills and approaches is crucial in strategic recruitment. Strategic recruitment has two components: talent management and acquisition and development (Hartley, 2004). According to Hartley, talent management is the process of recruiting people and developing strategies to carry out the various activities in an organization. This process provides direction for an organization to strategically recruit highly qualifi ed individuals for specific tasks, meet company goals, and optimize performance. Talent management also incorporates succession planning, human capital management, resource planning, and employee performance management (Hartley, 2004). While the acquisition of talent is clearly a component of recruitment, development is realized in training programs and career management processes that corporations have designed to retain their most accomplished employees. Employees who continue to develop skills and increase personal value within an organization are recognized as talented, resourceful people. The process of determining the core competencies of each group of jobs or job classifi cation is another component of strategic recruitment. High-level managers must discuss the essential characteristics required to perform at each level in the organization. These competencies infl uence the overall approach to fi lling positions at different levels in the organization.

Recruitment Strategies

Once the organization has aligned its recruitment approach to its business strategy by documenting the types of positions available and decided whether candidates should be sourced internally or externally, HR begins the process of developing a recruitment strategy for each position or job classiﬁ cation. A recruitment strategy involves creating a plan of action to generate the pool of candidates from which to select employees (Brown, 2005). This process could include determining whether or not to outsource the entire recruitment process, where to recruit, who participates in recruiting trips, and when these trips are taken. Recruitment and Selection 381

The initial decision is whether to recruit internally or externally. Internal recruitment entails looking within the organization for a candidate to fi ll the vacant position. This involves exploring succession plans, reviewing recent performance appraisals, and talking with other managers about their direct reports. External recruitment is the process of going outside the organization to fi nd a qualifi ed candidate.

Internal Recruitment Today many organizations use their company intranets to distribute information about job openings to existing employees. Others post jobs on bulletin boards and use word-of-mouth advertising. Another approach is to contact other managers within the organization to ﬁ nd out whether there are candidates who are both qualiﬁ ed and interested in the opportunity. One must be careful of this approach, however, because many managers hoard or “protect” their employees, which means managers want to keep certain employees to themselves. Having an annual in-depth discussion with all managers can help to prevent this hoarding behavior from happening. Annual discussions provide the entire management team with knowledge of the growth potential of employees, as well as opportunities to plan lateral moves and promotions.

External Recruitment External recruitment involves searching for qualiﬁ ed candidates outside the organization. It is important to refer to the required competencies ﬁ rst, to determine which approach is appropriate for sourcing external candidates.

Recruiting Management Talent

When recruiting candidates for management positions, it is important to fi rst identify the essential knowledge, skills, and abilities (KSAs) needed in the position. This information can typically be found in the job description, a list of the duties, tasks, functions, and responsibilities of a position. Core competencies should also be consulted. Once the essential KSAs and competencies are identifi ed, the next step is to determine where people with these skills can be found. If the position is an entry- level management position, one of the best places to fi nd this talent is on college and university campuses (see the campus recruiting article in this text). A member of the management team should be assigned to each college or university where 382 The Encyclopedia of Human Resource Management: Volume One

the organization recruits. This team member should contact Career Services on campus and begin establishing a relationship with the academic departments where individuals can earn degrees in the specifi c area of interest. Career Services will assist the organization to set up interviews and information sessions. Partnering with academic departments provides an organization with the opportunity to interact with potential candidates in a less formal way. Organizational members can be guest lecturers in classes, mentors for students, and even advisory board members. The organization’s involvement on campus increases its exposure and enhances its reputation among potential management candidates. If the position requires more experience, one can use a recruiting fi rm or headhunter. These fi rms typically specialize in senior management positions at the director level and above. There is a retainer fee for such services. The recruiting fi rm or headhunter meets with organizational leaders to gain a thorough understanding of the ideal candidate. The headhunter or recruiting fi rm then identifi es potential candidates and becomes the liaison between the candidates and the organization. A fee is paid if one of the candidates provided by the headhunter or recruitment fi rm is hired. While this approach is often more costly than traditional methods of hiring, the time to fi ll the position is usually signifi cantly less and the organization has a degree of comfort that all of the candidates inter- viewed will be qualifi ed for the senior-level position. Another approach to filling experienced positions is to partner with the alumni associations of the colleges and universities at which your organization already recruits entry-level managers. Again, building strong relationships with these academic institutions will enhance the organization’s reputation, while providing additional insight into candidates from faculty and advisors.

Recruiting Front-Line Employees

Again, the fi rst step in the recruitment process for front-line (typically hourly) employees is identifying the essential KSAs. Many hiring managers skip this process and simply move candidates who apply for jobs through to the selection process. This practice is probably most responsible for the high turnover that exists in most organizations at the front-line level. (Turnover is the number of times a position is refi lled in some time period.) Once the position’s essential KSAs are identifi ed, one can look for candidates with these specifi c attributes. Consider where candidates with these qualities might work and visit those places. Keep an open mind and focus less on experience in a particular industry, and more on the characteristics workers possess. Always be on the lookout for talent. While traveling, dining, or shopping, if Recruitment and Selection 383

one has an exceptionally good interaction with a front-line employee, share that information with the individual and give her or him your business card. Let the individual know that your organization is always looking for quality people and that he or she can contact you for information about opportunities within your organization. This is an excellent way to boost a potential employee’s self-esteem and send the person a message that your organization is a quality place to work.

Broad-Based Recruitment Methods

There are various ways to recruit, including all the practices mentioned above. One of the most popular methods is advertising openings in the local newspaper. While this method is an effi cient way to generate a large candidate pool, it is the least effective at generating qualifi ed candidates. If the decision has been made to use advertisements, then these should be directed at specifi c periodicals. For example, focus on magazines, newspapers, association newsletters, and other periodicals that target specifi c industries. This approach will limit the number of applicants who are merely submitting applications in search of any type of employment. With the growth of technology, the trend is to post openings on the Internet on national websites such as Monster.com, Careerbuilder.com, Jobster.com, Employment911.com, and Careers.org. These sites allow an employer to list job qualifi cations, as well as announcement the opening. Employee referral is another readily available recruitment method, but this approach comes with unique challenges. It is important to realize that people tend to have social networks comprised of people just like themselves. Thus, if your organization is comprised of people with similar demographic characteristics, you will more than likely fi nd more of the same, which can limit the ethnic diversity in an organization. Moreover, a conscientious employee is likely to refer someone who is also conscientious, but an employee who may not have a good work ethic might refer a candidate with the same perspectives. Yet another recruitment method is sourcing former military personnel. As a result of their experiences in the military, these individuals possess unique characteristics that are important in any industry. Most ex-military people have an incredible work ethic, are trustworthy and dependable, and often possess leadership skills. While these potential candidates might not have the specifi c technical skills an organization is seeking, they have skills that cannot be trained. It might be best to identify candidates with these necessary characteristics and train them on the technical aspects of the jobs. Former military people also tend to be committed, so they will recognize the investment being made in them and be equally willing to invest in your organization. 384 The Encyclopedia of Human Resource Management: Volume One

Selection Process

Once the organization has a pool of qualiﬁ ed candidates, it is time to evaluate these candidates. The selection process, often called the hiring process, assesses candidates to determine who ultimately will be hired. The goal of the selection process is to determine the best candidate for the position. It is important to remember that who is determined to be the best candidate is established by the criteria used to assess candidates. Managers must be careful to ensure that the selection criteria are not biased or create adverse impact on protected classes. (Adverse impact is when seemingly neutral employment criteria negatively affect a protected class.) Title VII of the Civil Rights Act of 1964 deﬁ nes protected classes as sex, race/ethnicity, color, national origin, and religion (Gomez-Mejia, Balkin, & Cardy, 2009). Age, able-bodiness, and Vietnam-era vet- eran are also protected by other employment laws. While sexual orientation is not included in Title VII, many states, counties, and cities have laws prohibiting discrimination based on sexual orientation.

Selection Criteria The established criteria should be those absolutely necessary to perform the job at the desired level. As mentioned above, these criteria are based on the essential knowledge, skills, and abilities outlined in the job description, coupled with the competencies required. These criteria should not be broad or vague, but speciﬁ c to the position. Additionally, the criteria should be easily measurable and able to be assessed during an interview.

The Process The selection process itself contains several steps, each designed to reduce the number of candidates, and ultimately decide which candidate is the best fi t for the position. The fi rst step in the process is to review the candidate’s application or resume. This step is typically conducted by an HR professional. The human resources professional is comparing the abilities, skills, and experience listed on the resume or application to those needed according to the job description. Those candidates who do not meet the job specifi cations are eliminated at this stage of the process. Step two of the process is an interview with the HR professional. At this step, the HR professional is trying to determine if the candidate is a fi t with the overall organization. The HR professional will typically ask questions to understand a candidate’s work ethic, values, and overall background. If the candidate’s background does not fi t the position, s/he is eliminated at this stage of the process. Recruitment and Selection 385

Step three of the process is an interview with the line manager responsible for the position. Ultimately, the manager who has the opening makes the hiring decision with guidance from the HR professional. During this step, the hiring manager asks questions to determine the specifi c qualifi cations of the candidate, and whether s/he would be a contributing member of the work team. These questions relate to the specifi c tasks the candidate would be performing in the job. Candidates who do not possess the necessary KSAs for the position are eliminated at this stage of the process. At this point, the qualifi ed pool of candidates should be signifi cantly narrowed to two or three potential hires, unless one candidate clearly possesses signifi cantly more qualifi cations than the rest of the pool. It is often helpful to rank order the candidates at this time. Next the HR professional conducts a background check and contacts the candidates’ references. The HR professional is trying to gather additional information that will provide insight into how the candidate will actually perform in the position. If there is not a clear candidate at this stage, candidates may be asked to interview with another manager in the facility, or with a panel. This panel can be comprised of co-workers or other supervisors. The panel assessment is combined with the line manager’s assessment, background check, and references to determine the most qualifi ed person for the job. Once someone is identifi ed, either the line manager or the HR professional extends an offer of employment to the successful candidate. The offer should be in writing, and include the start date, salary or wage, work schedule, benefi ts information, supervisor contact information, and any additional information that might be important to a new employee (i.e. orientation and training dates). If the organization conducts drug screening, this is conducted after the offer is made. Since drug addiction and alcoholism recovery are covered under the Americans with Disabilities Act (Gomez-Mejia, et al., 2009), employment cannot be conditional upon passing a drug screening test. However, an employee can be terminated for failing a drug screen, if the employee did not notify the organization in advance that s/he had an addiction problem.

Interview Questions One of the most important things to remember when interviewing is that every candidate should be asked the same questions. Questions that provide information about a candidate’s protected class status are illegal! For example, one may not ask how old a candidate is unless that information is a bona ﬁ de occupational qualiﬁ cation (BFOQ). For example, in many states, one must be twenty-one in order to serve alcohol; thus, one may ask this question when interviewing serv- ers. Interviewers may not ask about a candidate’s marital status, race/ethnicity, national origin, or religion. One may ask about a candidate’s religion if it is a BFOQ. For instance, if selecting a candidate for a position as a religious education 386 The Encyclopedia of Human Resource Management: Volume One

teacher in a Catholic parish or Jewish day school, where one’s religion is directly related to the responsibilities of the position, an interviewer can inquire about a candidate’s religious afﬁ liation. In general, the interview questions should be directly related to the duties, responsibilities, skills, knowledge, and abilities speciﬁ c to the position. The best approach is to also develop possible responses to the questions in advance and then to rank order the responses. This approach provides documentation on how each candidate responded to the questions and clear guidelines on how each candidate was evaluated.

Final Thoughts

Recruitment and selection is one of the most essential HR components for an organization. Line managers and HR professionals must work together to determine how to attract and select qualiﬁ ed individuals for open positions. Speciﬁ c and measurable criteria must be developed to reduce bias and ensure that all candidates are treated and assessed fairly. Ultimately, the quality of these processes determines the quality of the organization’s employees. The process discussed in this article is shown in Figure 74.1.

FIGURE 74.1. THE SELECTION PROCESS

Application/Resume

HR Interview

Line Management Interview

Employment Offer

Background Check/References Recruitment and Selection 387

References

Brown, P. (2005). The evolving role of strategic management development. Journal of Management Development, 24(3), 209–222. Gomez-Mejia, L.R., Balkin, D.B., & Cardy, R.L. (2009). Managing human resources. Upper Saddle River, NJ: Pearson Prentice Hall. Hartley, D.E. (2004). Tools for talent. Training & Development, 58(4), 20–22 The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 75

SELF-DIRECTED WORK TEAMS

Wendy S. Becker

elf-Directed Work Teams (SDWTs) are groups of employees who manage them- Sselves and their work. They are unique in that they perform all of the tasks necessary to produce a product or service and they govern themselves. Team members—not supervisors—decide how best to perform the work. For example, team members determine work schedules and assign work roles—tasks more typically performed by a supervisor. However, SDWTs do have limits to their decision-making authority. While they organize their own work, they do not have control over policy and procedures that affect colleagues in other work units. Other names for SDWTs include self-managed work groups, self-regulating work groups, autonomous work groups, sociotechnical systems, and empowered teams (Cohen & Bailey, 1997; Manz & Sims, 1987; Sundstrom, McIntyre, Halfhill, & Richards, 2000). SDWTs are characterized by their involvement in decisions related to production methods, ﬁ nancial and budgetary matters, human resource issues, and business goals. Team members have increased organizational responsibility and may be required to monitor and improve their own work performance. For example, they may be involved in selecting new members, disciplining other team members, writing formal peer evaluations, coordinating daily production schedules, cross- training, scheduling vacations, and other duties. To meet these challenges, SDWT members are cross-trained in a variety of skills related to these tasks. Seventy-nine percent of Fortune 1000 companies have work teams with some degree of self-direction (Lawler, Mohrman, & Ledford, 1998). Organizations

388 Self-Directed Work Teams 389

implement SDWTs to reduce costs, improve productivity, and improve quality; SDWTs are also implemented as a way to increase employee involvement and to empower workers. Organizations that downsize, particularly middle management positions, may implement SDWTs to restructure work beyond the traditional top-down hierarchical structure. Cohen, Ledford, and Spreitzer (1996) tested four categories of variables thought to predict the effectiveness of self-managing work teams, which they defi ned as both high performance and high quality of work life. Three concepts were found to be important to team effectiveness—group task design, group characteristics, and employee involvement context; surprisingly, encouraging supervisor behaviors were not found to be important (Cohen, Ledford, & Spreitzer, 1996). Team behaviors can be divided into four useful subcategories, each containing specific dimensions that are important to the success of the team (Rousseau, Aube˙, & Savoie, 2006). The subcategories include preparation of task accomplishment (team mission analysis, goal specifi cation, and planning), task-collaborative behaviors (coordination, cooperation, and information exchange), work assessment behaviors (performance monitoring and systems monitoring), and team adjustment behaviors (back-up behaviors, intra-team coaching, collaborative problem solving, and team practice innovation). Interestingly, a SDWT is not a specifi c type of team per se, but rather implies a continuum of possible team designs (Langfred, 2000). This is important because it means that organizations can transition to SDWTs by increasing the autonomy and self-direction of the work itself. There are signifi cant human resource implications for organizations that would like to have SDWTs. Great care must be taken in selecting employees into SDWTs because team members must possess both the ability and the desire to learn new skills.

What Practitioners Need to Know

A simple formula for implementing SDWTs is to (1) create a real team and not a team in name only, (2) use the right number and mix of employees, and (3) be sure that the team has a clear and compelling purpose and goal (Hackman & Woolley, 2008). Implementing a SDTW will require changing both organizational structure and philosophy. Traditional work units have managers who make all key decisions, while SDWTs use consensus decision making and meetings to determine how the work will be done. A leader is chosen by the team to coordinate activities, and the leadership role may be rotated among qualiﬁ ed team members. The mission, scope of operations, budget, and amount of authority given to SDWTs varies among organizations. For example, SDWTs may be given authority 390 The Encyclopedia of Human Resource Management: Volume One

to make operating decisions, set performance goals, determine quality standards, assign work, confi gure work schedules, determine work procedures, purchase supplies and materials, deal with customers and suppliers, evaluate team member performance, and handle employee performance problems. Advanced SDWTs may be responsible for personnel decisions such as selection or dismissal of team members, and even pay rates and bonuses, within specifi ed limits. SDWTs offer many potential advantages for an organization. Greater autonomy and variety can result in more satisfi ed employees, with lower turnover and absenteeism. Cross-training workers to do all of the jobs increases team fl exibility. Increasing employee knowledge of work processes helps team members solve problems and suggest improvements. Employees who are empowered to make decisions and initiate changes are more likely to take responsibility for their work and may be more motivated to produce a high-quality product or service. How many of these potential advantages are realized depends on the extent of implementation in an organization. When used in an appropriate way, SDWTs increase employee commitment and improve quality and productivity (Ilgen, Hollenbeck, Johnson, & Jundt, 2005; Kirkman & Rosen, 1997; Kozlowski & Ilgen, 2006). A potential paradox of SDWTs is that autonomy at the individual employee level may confl ict with autonomy at the group level, which can impact the cohesiveness and effectiveness of the work group (Langfred, 2000). The location and level of autonomy and empowerment is critical and dependent on the nature of the work and the structure of the organization. While transitioning to SDWTs may reduce the need for management oversight and costs, managers may resist SDWTs because they lose control over work processes (Douglas & Gardner, 2004). SDWTs are most appropriate for projects and tasks that require a high level of employee initiative and skill. They require a lot of work to implement and may fail if used in the wrong situations. For example, SDWTs are not appropriate for jobs that are better performed individually by employees. Necessary conditions for SDWT success include clearly defi ned team objectives, complex and meaningful work, relatively small size, stable team membership, substantial discretion over work processes, access to relevant business and operational information, appropriate recognition and rewards, support from top management, team members with strong interpersonal skills, and a competent leader who can liaison with formal management and with other teams (Cohen & Bailey, 1997; Goodman, Devadas, & Hughson, 1988; Hackman, 1986; Hackman & Wageman, 2005; Pearce & Ravin, 1987; Sundstrom, DeMeuse, & Futrell, 1990; Yukl & Becker, 2006). Table 75.1 summarizes research findings on conditions that facilitate or inhibit SDWT implementations, including characteristics of the organization, employees, and the work itself. While the conditions may appear to be common sense, additional research is needed to support and verify these general guidelines. Self-Directed Work Teams 391

TABLE 75.1. FACILITATING CONDITIONS FOR SELF-DIRECTED WORK TEAMS Work Conditions Unfavorable Favorable Team objectives Ambiguous or not defi ned. Clearly defi ned. Work and task Simple, repetitive tasks, Complex, non-routine and complexity technology dictates workfl ow, challenging tasks, fl exible customer transactions take technology, customer place in a short time interval. interactions involve continuing Low cost, standard product or relationships. Customized, highly service. differentiated product or service. Team size, structure, Large, highly centralized and Small team size with stable and stability formal structure. members, decentralized, and low formalization. Discretion over work Employees lack freedom in Employees have freedom in processes deciding how work is done and deciding what work to do and lack control over their work. how to do it. Employees have a sense of control over and participate substantively in the work. Access to information Business information/resources Access to appropriate business are scarce or non-existent. and operational resources, funds, materials, facilities and information. Recognition and None or very little. Recognition and reward rewards systems invest employees in the organization’s success. Management support Management culture does not Flexibility, learning and allow mistakes, internal politics, participation, fair, constructive criticism of new ideas, negative judgment of ideas, reward and internal competition, avoidance recognition, mechanisms for of risk or an overemphasis on developing new ideas, an active status quo. fl ow of ideas and shared vision. Employee personal and Low achievement motivation, Employees have high need interpersonal and skills low self-confi dence, and for achievement, high self- an external locus of control confi dence and self-effi cacy, orientation. and an internal locus of control orientation. Leadership Appointed by management, do Elected by team members, serve not model team behaviors. as role models, set appropriate goals, support SDWTs, value individual contributions, show confi dence in employees, serve as liaison with management and other teams.

Source: Yukl and Becker, 2006, p. 225 392 The Encyclopedia of Human Resource Management: Volume One

Case Study: Miller Brewing

The Miller Beer facility in Trenton, Ohio, is an example of an organization built on SDWT principles. This “brewery of the future” uses cross-functional teams of six to nineteen people to manage the entire brewing, packaging, and distribution process. SDWT responsibilities include administration, personnel, safety, quality, productivity, and maintenance. Employees are provided information for every aspect of the competitive brewery business. In comparison to Miller’s other plants, SDWTs have increased productivity by 30 percent, turnover is less than 7 percent, and absenteeism is less than 2 percent. The Trenton facility has received several awards as an innovative union operation. Managers attribute its success directly to the SDWT design, as the plant’s physical operating features are identical to its other (non-SDWT) plants (Becker & Mathieu, 2003).

Cast Study: Harley-Davidson

Another example of a successful SDWT organization is Harley-Davidson’s fi nal assembly plant in Kansas City, Missouri. There are no team leaders at this plant; decisions are made by consensus in work teams that consist of natural work groups. SDWTs are responsible for assembly, fabrication, paint, and operational support, including computers, human resources, and materials. The team concept was conceived and implemented jointly by management and the union. Flexibility is built into each SDWT, which consists of ten employees; customers dictate production demands. Team members monitor budgeting and production and have access to fi nancial and operational data. Compensation is based on attaining a skill level of at least 75 percent of all tasks performed and continuous training is an important part of the overall system. One study of the plant found that SDWT cohesiveness was related to employee perception of the fairness of plant leadership and the infl uence that employees had on staffi ng and training decisions (Chansler, Swamidass, & Cammann, 2003).

Conclusion

SDWTs provide clear benefits to organizations in terms of worker attitudes, behaviors, and performance. Employee performance and attitudes in SDWTs are superior to those in other forms of work organizations, and autonomy and participation are associated with higher performance (Cohen & Bailey, 1997). SDWTs are a positive way to empower workers and, although they require a lot of care to implement, SDWTs offer great rewards. Self-Directed Work Teams 393

References

Becker, W.S., & Mathieu, J.E. (2003). Team performance. In J.E. Edwards, J.C. Scott & N.S. Raju (Eds.), The human resources program-evaluation handbook (pp. 285–300). Thousand Oaks, CA: Sage. Chansler, P.A., Swamidass, P.M., & Cammann, C. (2003). Self-managing work teams: An empirical study of group cohesiveness in “natural work groups” at a Harley-Davidson Motor Company plant. Small Group Research, 34(1), 101–120. Cohen, S.G., & Bailey, D.E. (1997). What makes teams work: Group effectiveness research from the shop ﬂ oor to the executive suite. Journal of Management, 23(3), 239–290. Cohen, S.G., Ledford, G.E., Jr., & Spreitzer, G.M. (1996). A predictive model of self-managing work team effectiveness. Human Relations, 49(5), 643–676. Douglas, C., & Gardner, W.L. (2004). Transition to self-directed work teams: Implications of transition time and self-monitoring for managers’ use of inﬂ uence tactics. Journal of Organizational Behavior, 25, 47–65. Goodman, P.S., Devadas, R., & Hughson, T.G. (1988). Groups and productivity: Analyzing the effectiveness of self-managing teams. In J.P. Campbell & R.J. Campbell (Eds.), Productivity in organizations. San Francisco: Jossey-Bass. Guzzo, R.A., & Dickson, M.W. (1996). Teams in organizations: Recent research on performance and effectiveness. Annual Review of Psychology, 47, 307–338. Hackman, J.R. (1986). The psychology of self-management in organizations. In M.S. Pallack & R.O. Perloff (Eds.), Psychology and work: Productivity, change, and employment. Washington, DC: American Psychological Association. Hackman, J.R., & Wageman, R. (2005). A theory of team coaching. Academy of Management Review, 30(2), 269–287. Hackman, J.R., & Woolley, A.W. (2008). Creating and leading analytic teams. In R.L. Rees & J.W. Harris (Eds.), A handbook of the psychology of intelligence analysis: The human factor. Burlington, MA: Centra. Ilgen, D.R., Hollenbeck, J.R., Johnson, M., & Jundt, D. (2005). Teams in organizations: From I-P-O models to IMOI models. Annual Review of Psychology, 56, 517–544. Kirkman, B.L., & Rosen, B. (1997). A model of work team empowerment. In R. Woodman & W. Pasmore (Eds.), Research in organizational change and development (Vol. 10, pp. 131–167). Greenwich, CT: JAI Press. Kozlowski, S.W.J., & Ilgen, D.R. (2006). Enhancing the effectiveness of work groups and teams. Psychological Science in the Public Interest, 7, 77–124. Langfred, C.W. (2000). The paradox of self-management: Individual and group autonomy in work groups. Journal of Organizational Behavior, 21, 563–585. Lawler, E.E., III, Mohrman, S.A., & Ledford, G.E., Jr. (1998). Strategies for high performance organizations. San Francisco: Jossey-Bass. Manz, C.C., & Sims, H.P., Jr. (1987). Leading workers to lead themselves: The external leadership of self-managing work teams. Administrative Science Quarterly, 32(1), 106–129. Pearce, J.H. II, & Ravlin, E.C. (1987). The design and activation of self-regulating work groups. Human Relations, 40, 751–782. Rousseau, V., Aube˙, C., & Savoie, A. (2006). Teamwork behaviors: A review and an integration of frameworks. Small Group Research, 37(5), 540–570. Sundstrom, E., DeMeuse, K.P., & Futrell, D. (1990). Work teams: Applications and effectiveness. American Psychologist, 45, 120–133. 394 The Encyclopedia of Human Resource Management: Volume One

Sundstrom, E., McIntyre, M., Halfhill, T., & Richards, H. (2000). Work groups: From the Hawthorne studies to the work teams of the 1990s. Group Dynamics, 4, 44–67. Yukl, G., & Becker, W.S. (2006). Effective empowerment in organizations. Organization Management Journal, 3(3), 210–231.

Websites Industrial-Organizational Psychology Learning Module Work Teams: www.siop.org/instruct/WorkTeams/Work%20Teams%20Module.ppt Publications by J. Richard Hackman: www.people.fas.harvard.edu/ ~hackman/csvsearch.cgi?search=hackman Small Group Research: An International Journal of Theory, Investigation, and Application: http://sgr.sagepub.com/ Team Building: The Path to Team Building Success: http://humanresources .about.com/od/involvementteams/a/team_one_stop.htm Team Performance Management: An International Journal: http://info .emeraldinsight.com/products/journals/journals.htm?id=tpm#samples The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 76

SOCIAL RESPONSIBILITY

Peggy B. Fayﬁ ch

ocial responsibility at its best is the voluntary accountability by an organiza- Stion for the impact of its actions on economic performance, the environment, and society in general. This article provides an expanded defi nition of social responsibility touching on its evolution, levels of acceptance, examples, and the role of human resources in developing profi table, ethical, and socially responsible organizations. The basis of this expanded defi nition is a review of literature and research by leading experts in competitive advantage, social, consumer, and marketing research, including William Frederick and Archie Carroll for their historical perspective and Michael Porter and Mark Kramer, Peter Senge, Andrew Winston, Bob Willard, Daniel Yankelovich, Chris Lazo, Christine Arena, and Jane Nelson for more contemporary views. The contemporary experts conclude from their respective research that strategically aligning social activities with core business strategy can produce strong performance for business and society.

Evolution of Deﬁ nition

Business with a social purpose can be traced to the late 1700s when Moses Brown built a textile mill to provide work so the needy could support themselves. In the early 1900s Andrew Carnegie embarked upon a philanthropic career that continues to beneﬁ t society today (Lewis, 2008). Social responsibility as a concept

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and field of study really began to develop in the early 1950s (Carroll, 1999; Frederick, 2006). Concepts range from laissez-faire ideology that espouses making a company profi table is in itself ethical good to philanthropic check writing (Yankelovich, 2006) to strategic philanthropy (Porter & Kramer, 2002) to corporate social responsibility (CSR), which includes themes such as corporate social performance, but perhaps most signifi cantly the concept of sustainability as a major component. CSR is often defi ned as: “the integration of business operations and values, in a way that refl ects the interests of all stakeholders including investors, customers, employees, the community and the environment” (CSRWire, 2011). Sustainability requires additional accountability for “meeting the needs of the present without compromising the ability of future generations to meet their own needs” (Brundtland Commission, 1987). Originally focused on environmental issues, Brundtland’s defi nition of sustainability increasingly is serving as a fi lter for broader strategic decision making.

Levels of Acceptance

The acceptance of social responsibility principles by corporations ranges from business practices that do no harm to practices that strategically align societal needs with business growth without compromising the ability of future generations to meet their own needs. In its early stages, supporters of CSR pitted environmental and social issues with profi ts, resulting in arguments that social responsibility and profi ts were mutually exclusive and that the sole responsibility of business is to generate profi ts for its shareholders (Friedman, 1970). Recently, the CSR movement has gained more serious attention due to renewed emphasis on business ethics and transparency as a result of corporate scandals such at Enron, Worldcom, and Tyco in the late 1990s and the global financial crisis of 2008; however, critics still remain. Aneel Karnani argues “The idea that companies have a duty to address social ills is not just fl awed. It also makes it more likely that we’ll ignore the real solutions to these problems” (Karnani, 2010). Clive Crook (2005) suggested that managers should stick to running their businesses and leave social issues to governments. Jane Nelson (2008), on the other hand, reminds us that it was business not government that responded most effi ciently to the needs of Hurricane Katrina victims in 2005. Supporters and critics do agree that most recent CSR efforts are perceived as cosmetic, or green washing, in response to activist organizations or to comply with government regulatory and reporting requirements. This era of superfi cial activities is coming to an end as organizations and leaders will increasingly be assessed on longer-term impact on societal well-being as well as short-term immediate results (Kanter, 2010). Social Responsibility 397

The journey will not be easy and, as with all signifi cant behavior change, it will take time to strategically integrate social responsibility activities into business. Simon Zadek (2004) suggests that every company must go through the following stages of change: defensive—it’s not our job to fi x it; compliant—we’ll do just as much as we have to; managerial—it’s the business, stupid; strategic—it gives us a competitive edge; and civil—we need to make sure everybody does it. There is growing evidence through integrated reporting that the journey is worth it (Blanding, 2011). Supporters offer evidence that the companies whose principles, strategies, and operating practices authentically embrace CSR and sustainability do report strong performance while contributing to building capacity for communities and society at large. Porter and Kramer (2006) have shown us how social and economic goals of industry are not inherently confl icting but integrally connected. They suggest the greatest benefi t can be gained by all stakeholders when an organization shares its capabilities to address social issues, which in turn increase opportunities for the business.

Examples

Following are a few examples of representative successful, socially responsible organizations from different business sectors:

• Ben and Jerry’s, The Body Shop, and Starbucks were among the fi rst to successfully create and build businesses based on social values that were integrally connected with economic goals. • GAP was the fi rst retailer to publish its own social responsibility report, and it was broadly commended for transparency in reporting less than favorable factory conditions in its own supply chain. Its vendor scorecard measures all of Gap’s factories along fi ve factors: cost, quality, speed-to-market, strategic capability, and social compliance. When the scorecard system was fi rst implemented, none of its factories were in compliance with Social Accountability International (SAI) requirements. Today many of its factories are SAI certifi ed, and buyers use scorecard results in deciding where to place orders. Vendors are happy with the benefi ts of improved conditions, higher quality, and especially the larger orders as a result of the overall score. Other major retailers including Levi Strauss & Co. are following Gap’s lead (Wright, 2007). Gap’s actions are driving industry-wide change and improving labor conditions throughout the world. • Nestlé’s approach to working with small farmers exemplifi es the symbiotic relationship between social progress and competitive business advantage. When it decided to enter the Indian market, Nestlé’ set up processes, training, 398 The Encyclopedia of Human Resource Management: Volume One

and technology for local farmers that resulted in a prosperous business for Nestlé and a signifi cantly higher standard of living in the district of Moga in India. The Moga experience was repeated in other parts of the world, and in each case Nestlé and the community have prospered (Porter & Kramer, 2006). • Wal-Mart, historically weak on the social side, is leveraging its strength on the environmental side for a positive social impact. As an example, Wal-Mart is working with cotton farmers in its supply chain, making organic cotton more competitive and more widely available and increasing the economic status of farmers world-wide (Lazlo, 2008). Given its size, Wal-Mart is profoundly driving the “next big idea”—creating value by applying a sustainability lens to business and supply chain strategies. (Winston, 2009) • Sales of Toyota’s Prius remained strong, even after very negative publicity over a forced recall of millions of Toyota’s other model cars due to gas pedals sticking. Toyota’s decision to invest in the energy-effi cient Prius, when other automakers were still making gas-guzzling SUVs provides a good example of short-term risk taking for long-term growth. “Prius has given Toyota such a lead that other car companies are licensing the technology.” (Porter & Kramer, 2006) • BT Group plc leverages core telecommunications capabilities and business strategy to build capability in emerging and disadvantaged communities or countries. Lifelines India, in partnership with Cisco Systems, provides a sophisticated digital platform to deliver life-critical advice to farmers by phone. It’s good for society and good for business. (Blake, 2007) • Dell Computer’s waste initiative is one of the most extensive. Dell was fi rst in its industry to recycle its computers for free and recycle other electronics for a small fee. (Arena, 2007) • DuPont is an example of a company that is doing well by doing good. It has moved from a top polluter to a top green company (Lazlo, 2008) by creating products that are environmentally friendly and developing special products for third world countries. Over two decades, DuPont cut greenhouse gases by an astonishing 72 percent, and in 2008, DuPont embarked upon a new bold energy plan that resulted in a 6 percent reduction in energy usage while increasing sales 40 percent. (Phillips & Phillips, 2011) • Coca-Cola and World Wildlife Federation are not exactly seeking the same objectives, but they have enough in common to change the way business and NGOs work together. They are partnering to think and work systemically on operational excellence and smart water usage throughout the world. (Senge, Smith, Kruschwitz, Laur, & Schley, 2008) • Pfi zer established public-private partnerships in developing countries and initiated a unique program of international corporate volunteering. Its programs Social Responsibility 399

link philanthropy and employee development. In this model, partner organizations help defi ne needs and HR departments of for-profi t organizations help select people who can benefi t from a volunteer opportunity to enhance their own leadership competencies while developing capacity in society. (Vian, McCoy, Richards, Connelly, & Feeley, 2007)

The Role of Human Resources

Research by C.B. Bhattacharya, Sen Sankar, and Daniel Korschun (2007) shows growing evidence that a company’s emphasis on corporate social responsibility activities comprise a legitimate, compelling, and increasingly important way to attract and engage good employees. Recent research also highlights the wide range of meanings, concepts, and involvement demonstrated by human resources functions and human resources professionals with regard to corporate social responsibility (Colbert & Kurucz, 2007). All of this suggests there is a key learning opportunity and leadership role for the human resources professionals to accept. Following are some ways to begin:

1. Treat your employees as valued resources and avoid long-term depletion for short-term gain. Ensure fair treatment, open clear communication, innovative development opportunities, and, when necessary, ethical rede- ployment. Be familiar with UN Global Compact Ten Principles. These are voluntary; however, many may make sense for your organization. 2. Determine where your organization is on the social responsibility scale— defensive, compliant, managerial, strategic, or civil. 3. Apply the lens of CSR and sustainability to decision making for alignment of human resources policy, processes, and practices to support and achieve ethical, proﬁ table, socially responsible, and sustainable business goals. 4. Stay on top of emerging issues in ethics, CSR, sustainability, and global issues in general. 5. Establish performance targets; monitor and measure your progress and results using a disciplined approach such as the green scorecard. (Phillips & Phillips, 2011)

Conclusion

Proﬁ ts and socially responsible activities do not have to be mutually exclusive. Corporate social responsibility including sustainability can be a source of opportunity, innovation, and competitive advantage, leading to long-term growth for 400 The Encyclopedia of Human Resource Management: Volume One

individuals, organizations, and societies when the same decision-making frameworks that guide core business choices are used to align socially responsible activities with business strategies (Porter & Kramer, 2006; Senge, Smith, Kruschwitz, Laur, & Schley, 2008). Failing to do so can result in devastation like that created by the BP oil spill and the West Virginia Massey Mine disaster of 2010, leading owners and the public to place increased demands for accountability on all businesses. Nelson (2008) advises that “businesses will have no choice but to concern themselves with the public good—at least those public goods and issues that directly inﬂ uence business risks and opportunities, are likely to affect the success, security, and sustainability of the communities and countries in which they operate. The ability to identify and prioritize these public goods and issues and then determine the best strategies for addressing them, either individually or collectively, will be an increasingly important mark of business leadership in the years ahead” (p. 1). Human resources professionals who seize this huge opportunity and assume a key role in developing socially and sustainability responsible practices and processes and leaders must position their organizations to thrive in this increasingly dynamic and competitive new era, which requires innovation and highly ethical accountability to all stakeholders.

References

Arena, C. (2007). The high purpose company: The truly responsible—and highly profi table—fi rms that are changing business now. New York: HarperCollins. Bhattacharya, C.B., Sen, S., & Korschun, D. (2007). Using corporate social responsibility to win the war for talent. MIT Sloan Management Review, 49(2), 37. Blake, J. (2007). Caring for the bottom Line. Human Resources Planning, 30(1), 36–41. Blanding, M. (2011, May 23). Corporate sustainability reporting: It’s effective. Working Knowledge. Brundtland Commission. (1987, June). Report of the World Commission on Environment and Development: Our common future (Chapter 2: Towards sustainable development). Geneva, Switzerland. www.un-documents.net/ocf-02.htm. Carroll, A.B. (1999, September). Corporate social responsibility: Evolution of a defi nitional construct. Business & Society, 38, 268–295. Colbert, B.A., & Kurucz, E.C. (2007). Three conceptions of triple bottom line business sustainability and the role for HRM. Human Resources Planning, 30(1), 23–28. Crook, C. (2005, January 20). The good company. The Economist. CSRWire. www.csrwire.com/categories. Frederick, W.C. (2006). Corporation be good: The story of corporate social responsibility (pp. 6–22). Indianapolis, IN: Dog Ear. Social Responsibility 401

Friedman, M. (1970, September 13). The social responsibility of business is to increase its profi ts. The New York Times Magazine. Kanter, R.M. (2010, October). It’s time to take full responsibility. Harvard Business Review. Karnani, A. (2010, August 23). The case against corporate social responsibility. The Wall Street Journal. Lazlo, C. (2008). Sustainable value: How the world’s leading companies are doing well by doing good. Palo Alto, CA: Stanford University Press. Lewis, M. (2008, October 16). The history of doing good. Forbes.com. Nelson, J. (2008). CSR and public policy: New forms of engagement between business and government. Corporate Social Responsibility Initiative Working Paper No. 45. Cambridge, MA: John F. Kennedy School of Government, Harvard University. Phillips, P.P., & Phillips, J.J. (2011). The green scorecard: Measuring the return on investment in sustainability initiatives. Boston: Nicholas Brealey. Porter, M., & Kramer, M. (2002, December). The competitive advantage of corporate philanthropy. Harvard Business Review, p. 22. Porter, M., & Kramer, M. (2006, December). Strategy and society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, pp. 4–16. Senge, P., Smith, P., Kruschwitz, N., Laur, J., & Schley, S. (2008). The necessary revolution: Working together to create a sustainable world. New York: Broadway Books UN Global Compact. (n.d.). www.unglobalcompact.org/AbouttheGC/TheTENPrinciples. Vian, T., McCoy, K., Richards, S., Connelly, P., & Feeley, F. (2007). Corporate social responsibility in global health: The Pfi zer Global Health Fellows International Volunteering Program. Human Resources Planning, 30(1), 30–35. Willard, B. (2009). Sustainability champions guidebook: How to transform your company. Gabriola Island, BC: New Society Publishers. Winston, A.S. (2009). Green recovery: Get lean, get smart, and emerge from the downturn on top. Cambridge, MA: Harvard Business School Press. Wright, P. (2007). Corporate social responsibility at Gap: An interview with Eva Sage-Gavin. Human Resources Planning, 30(1), 46. Yankelovich, D. (2006). Profi t with honor: The new stage of market capitalism. New Haven, CT: Yale University Press. Zadek, S. (2004, December). The path to corporate responsibility. Harvard Business Review, p. 39.

Further Reading

Esty, D.C., & Winston, A.S. (2006). Green to gold: How smart companies use environmental strategy to innovate, create value and build competitive advantage. New Haven, CT: Yale University Press. Fox, A. (2008, June). Get in the business of being green: Capitalize on environmental concerns among employees to reap beneﬁ ts from them—and your company. HRMagazine. Global Reporting Initiative. (n.d.). Sustainability report June 2004–July 2007. www .globalreporting.org/NR/rdonlyres/A4C5FA04–3BD3–4A02-B083–6B3B00DEAF61/0/ G3_IP_Economic.pdf. Kamenetz, A. (2011, April). Apocalypto: Betting big on sustainability is an act of faith. Fast Company, pp. 50–52. 402 The Encyclopedia of Human Resource Management: Volume One

Kinnicutt, S., & Pinney, C. (2010). Getting to the roots of success: The leadership competencies that grow corporate citizenship pros. The Corporate Citizen, (4), 26–30. Lubin, D.A., & Esty, D.C. (2010, May). The sustainability imperative: Lessons for leaders from previous game-changing megatrends. Harvard Business Review, pp. 43–30. Orlitzky, M., Siegel, D., & Waldman, D. (2011, February 24). Strategic corporate social responsibility and environmental sustainability. Business Society, 50(1), 6–27. Savits, A.W., & Weber, K. (2006). The triple bottom line: How today’s best-run companies are achieving economic, social, and environmental success—and how you can too. San Francisco: Jossey-Bass. Sroufe, R., Liebowitz, J., & Sivasubramaniam, N. (2010). Are you a leader or a laggard? HR’s role in creating a sustainability culture. People & Strategy, 22(1). The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 77

STRATEGIC HUMAN RESOURCE MANAGEMENT

Donald P. Rogers

trategic human resource (HR) management refers to the process of developing, Simplementing, and evaluating HR strategies intended to support business strategies. Strategic HR management uses a strategic thinking process to work through a ﬁ ve-step cycle in which HR formulates objectives, creates strategies to achieve those objectives, implements those strategies through a variety of activities, monitors the results, and evaluates the actual results against. Figure 77.1 graphically illustrates the cycle. The arrows indicate that the process is continuous and completing the cycle repeats the cycle.

Set HR Objectives

Effective HRM begins with the formulation of HR objectives. The basic objective is to support the corporate- or business-level objectives of creating a sustainable value proposition, competitive core competencies, and competitive advantages by having the right people, with the right skills, in the right places, at the right time,

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FIGURE 77.1. THE HR MANAGEMENT CYCLE

Set HR Objectives

Evaluate Create HR Results Against Strategies Objectives

Monitor Implement Results Strategies

ready, willing, and able to do the right things, at the right cost. More speciﬁ cally, HR objectives might include improving:

• Customer service • Employee innovation • Employee loyalty/commitment • Employee productivity • Employee retention • Employee satisfaction • Product quality • Teamwork/cooperation • Workforce competencies/talent • Workforce engagement/involvement • Workforce ﬂ exibility/agility • Workplace safety

The primary criterion for selecting HR objectives is consistency or alignment with business objectives. For example, if the business objective is to increase earnings by lowering costs to lower prices to increase revenues, then the HR objectives would include increasing productivity and managing labor costs. If the business objective is revenue growth, then the HR objectives might include increasing employee innovation and workforce ﬂ exibility. Strategic Human Resource Management 405

In addition, the HR objectives should be compatible with the wants, desires, needs, expectations, and objectives of the key stakeholders. A stakeholder is an individual, group, or class of people who have a legitimate interest in the decisions and actions of an organization because they interact with the organization and/or are affected by those decisions and actions. Some HR stakeholders are the organization’s employees, managers, executives, suppliers, customers, or investors. If HR objectives are compatible with managers’ expectations, there will be little resistance to the pursuit of those objectives. When setting alignment objectives, HR should ask what the business objectives are, what HR should do to support the business objectives, and what objectives HR should set in support of the business objectives. In setting stakeholder objectives, HR should ask who the key stakeholders are, what their objectives are, whether the stakeholders’ objectives are compatible with the business objectives, and what HR should do to support the stakeholder objectives. (Note: The answer to the last question could be “Nothing.”)

HR Strategies

The second phase in the HR cycle involves developing strategies to achieve the objectives. A strategy is an integrated set of decisions. Thus, an HR strategy is an integrated set of decisions about the best way to achieve HR objectives. Strategies may be generic (growth through innovation) or specifi c (generate revenue by serving the downtown Winter Park, Florida, lunch trade). Many fi rms can pursue a generic strategy successfully, but only a few fi rms can pursue a specifi c strategy successfully. Assuming the HR objective is increased productivity, creating a strategy to achieve the objective starts with an analysis of the forces that lead to success and the forces that prevent success. Table 77.1 shows a sample analysis of some of these forces.

TABLE 77.1. FORCES INCREASING AND CONSTRAINING EMPLOYEE PRODUCTIVITY Goal: Increasing Productivity Driving Forces Constraining Forces Talent and ability Lack of knowledge, skill, or experience Pride in performance Lack of tools or equipment Ability to adapt to change Poor supervision Ability to work well with others Unclear expectations Commitment to the organization Lack of rewards or recognition 406 The Encyclopedia of Human Resource Management: Volume One

TABLE 77.2. HOW HR PROCESSES CAN INCREASE PRODUCTIVITY HR Processes Goal = Increasing Productivity Recruiting Recruit for ability Selection Hire for skills/experience Orientation Reinforce pride in performance Recognition Recognize productivity improvements Rewards/incentives Bonuses for meeting productivity goals Training Speciﬁ c job skills training Development Experiences in adjusting to change Team building Build culture of commitment Communication Clarify expectations Appraisal Provide feedback on performance Job design Specify tools/equipment needed

Next, HR processes that would strengthen the driving forces, weaken (or eliminate) the constraining forces, or change the ratio between drivers and constraints are identifi ed. For example, how could we use specifi c processes to increase productivity? Table 77.2 shows how selected HR Processes could be used to increase productivity. Finally, all of the various HR processes into a single strategy for increasing productivity are integrated. The resulting plan of action would specify (1) the key individuals, their roles and responsibilities in the strategy; (2) where the strategy fi ts into the organizational structure (a short-term project, an ongoing program, a service purchased from an outside vendor, etc.); (3) the resources that are available for implementing the strategy (staff, budget, facilities, equipment, etc.); (4) the schedule (including milestones) for implementing the strategy; and (5) the process for monitoring and evaluating the implementation.

HR Practices

The third phase in the HR cycle is implementing HR strategies through the day-to-day use of HR practices, that is, how something is done. Most organizations want to hire the best people, but in practice this could mean hiring the person with the most experience, the best skills, the right attitude, the greatest competencies, the most talent, the best match to the job, the best credentials, the Strategic Human Resource Management 407

most potential, and so on. HR practices position an organization. They create an image and a culture. There is evidence that good HR practices have an impact on people. Good practices create core competencies and capabilities, which, in turn, produce good organizational results (Becker & Huselid, 2006). The weakness of HR best practices is that they generally work best when several practices are focused on the same objective. HR practices do not lend themselves to the small, incremental changes preferred by most managers. Some examples of good HRM practices include extensive communication, selective hiring, decentralized decision making, comparatively high-performance based compensation, extensive training, performance management, and employment security (Pfeffer, 1998).

HR Results

The fourth phase of the HR cycle is results. There are ﬁ ve important kinds of results from effective HRM. These ﬁ ve result areas and some performance indicators are shown in Table 77.3. The direction of the arrows indicates the direction of the desired change.

TABLE 77.3. KEY HR RESULTS HR Results Common Indicators Effi cient Implementation of HR Practices Budget/Cost Effi ciency Time/Schedule Effi ciency Effi cient Facility/Equipment Utilization Effi cient Use of HR Staff Adequate Resources and Capabilities Workforce Size Workforce Availability Flexibility/Adaptability Talent/Ability/Competencies Diversity Effective Employee Performance Productivity Quality Innovation Customer Service Engagement/Involvement/Integration (continued) 408 The Encyclopedia of Human Resource Management: Volume One

TABLE 77.3. (CONTINUED) HR Results Common Indicators Accident/Workers Compensation Rates Lost Time Waste Expenses/Cost Positive Organizational Impact Competitive Advantage Defensible Value Proposition Distinctive Value Innovation Sustainable Core Competencies Strengthened Infrastructure Stronger Corporate Culture Revenues and Earnings Reputation/Image Stakeholder Satisfaction and Loyalty Shareholder Value Shareholder Satisfaction Customer Value Customer Satisfaction Customer Retention Employee Value Employee Satisfaction Employee Retention

One of the important sets of HRM practices is the frequent monitoring, evaluation, and feedback on the effectiveness of implementation practices, employee performance, and organizational results. HRM can use the feedback from this monitoring process to make decisions, identify and solve problems, allocate resources, and provide proof of performance.

Conclusion

Most organizations can signiﬁ cantly improve their performance by improving the effectiveness of their HRM systems. Better HRM would give them better capabilities; internal efﬁ ciencies; improved productivity, innovation, and quality; Strategic Human Resource Management 409

competitive advantages, core competencies, and sustainable value propositions; improved ﬁ nancial performance; and greater stakeholder satisfaction. But improving HRM requires vision and risk taking.

References

Becker, B., & Huselid, M. (2006). Strategic human resource management: Where do we go from here? Journal of Management, 32(6). Pfeffer, J. (1998). The human equation: Building proﬁ ts by putting people ﬁ rst. Cambridge, MA: Harvard Business School Press. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 78

SUCCESSION PLANNING AND MANAGEMENT

Lori A. Johnson-Vegas, Kathleen E. Wolfhope

uccession planning and management has moved higher on the list of priori- Sties for organizations that recognize planning for the future is necessary in order to stay healthy and remain competitive. The questions “Who will be the next leader?” and “Where will the next leader come from?” are on the minds of many boards of directors, shareholders, and stakeholders of organizations. Replacing leaders due to retirement was once the primary reason organizations had to search for new talent. Now with the labor market on the mend and the downfall of many chief executive ofﬁ cers, the importance of developing leaders within the organization has become a priority.

Purpose of Succession Planning

The purpose of succession planning and management is to have qualified employees ready to replace key leaders in organizations upon retirement, resig- nation, termination, military deployment, illness, or death.

410 Succession Planning and Management 411

Deﬁ nition

Succession planning and management is the deliberate and systematic effort by an organization to ensure leadership continuity in key positions to retain and develop intellectual and knowledge capital for the future and encourage individual advancement in an organization. This occurs when an organization adapts speciﬁ c procedures to ensure identiﬁ cation, development, and long-term retention of talented individuals (Rothwell, 2001).

Current Issues Affecting Succession Planning and Management • Aging workforce and retirement of Baby Boomers • Changes in the work environment • Changes in the workforce (diversity) • Globalization • Military conﬂ icts • Technology accelerators • Tight labor market • Unethical and unprofessional behavior of organization leadership

Companies that plan and manage the succession of leadership can expect the following results:

• Improved employee retention; • Improved employee satisfaction and morale; • Improved employee commitment, dedication, and loyalty; and • Improved leadership.

Deﬁ nitions of Terms

Brain Drain The departure of trained and talented individuals due to high job turnover, downsizing, and Baby-Boomer retirements is creating a dilemma for organizations, which are facing a critical mass of knowledge shortage. Investment in education and training is lost when a trained individual leaves and does not return to the organization (Endres & Alexander, 2006, p. 26) 412 The Encyclopedia of Human Resource Management: Volume One

Career Development Career development has the two-fold purpose of providing direction and purpose for an individual’s career, while at the same time ensuring that an organization has an appropriate supply of human resources to meet present and future demands. Career development comprises both individually oriented career planning and organizationally oriented career management. Career planning helps individuals identify future job or occupational opportunities inside or outside their organizations; career management helps organizations identify the numbers and kinds of people needed to meet future work requirements (Rothwell & Sredl, 2000, p. 12).

Competencies A set of observable performance dimensions, including individual knowledge, skills, attitudes, and behaviors, as well as collective team, process, and organizational capabilities, that are linked to high performance and provide the organization with sustainable competitive advantage (Athey & Orth, 1999, p. 216).

Competency Model A competency model is a list of competencies, often organized into ﬁ ve or more groupings or clusters, attributable to satisfactory or exceptional employee performance for an occupation (managers, auditors, etc.) or group of titles and/or core competencies. The model can be used to identify the competencies employees need to develop to improve performance in their current jobs or to prepare for other jobs via promotion or transfer. Employees’ competencies are be compared to the appropriate model to determine where the gaps exist. Individual training and development plans are then developed to bridge the gaps specifying the knowledge, skills, attitudes, and other abilities that lead to exemplary performance in positions within the organizations (New York State Department of Civil Service/Governor’s Ofﬁ ce of Employee Relations Work Force and Succession Planning, 2006).

Contingency Planning Management’s ability to prepare for, response to, recovery, and reestablish critical business functions when pandemic or a disaster affects the administrative functions of an organization (Massachusetts Institute of Technology, 1995).

Demand Forecast A future stafﬁ ng assessment that examines and anticipates the workforce that will be needed to accomplish the work that will be done in the future and how Succession Planning and Management 413

that work will be performed, resulting in a forecast of the type of competencies, numbers, and locations of employees who will be needed in the future to carry out the mission of the organization (Pynes, 2004, p. 391).

Employee Development Employee development focuses on the individual as a tool for organizational improvement. It is used as a way for the organization to manage individual preparation for meeting long-term organizational needs, usually from the top down (Rothwell & Sredl, 2000, p. 319).

Gap Analysis A gap analysis is a formal assessment process involving formulating, documenting, and supporting the discrepancies between an organization’s current competency requirements and future potential performance. Understanding and knowing what and where the knowledge, skills, and abilities of your employees are is essential and critical in the modern working environment. Recognizing individual employee strengths and being aware of their weaknesses will allow an organization to optimize peoples’ strengths and support their weaknesses (Durham College, 2006).

Individual Development Plans (IDP) Individual develop plans clarify and compare the development gap by narrowing the requirements between what individuals know and do and what they need to know and do to qualify for advancement (Rothwell, 2001, p. 221).

Learning Organization A learning organization is one in which people are encouraged to learn and one in which learning leads to performance (Rothwell & Sredl, 2000, p. 187).

Psychometrics Psychometrics are assessments used to measure a person’s ability (knowledge or skills) or personality in a measured and structured way. There are three main types: ability, personality, and aptitude. Examples of assessments may include 360-degree, Myers-Briggs Type Indicator™, DiSC Personal Proﬁ le®, INSIGHT Inventory, and Leadership Proﬁ le (Psychometric assessment for . . . , 2006). 414 The Encyclopedia of Human Resource Management: Volume One

Replacement Planning This term refers to the planned effort in an organization to reduce the chance of a catastrophe resulting from the immediate and unplanned loss of key job positions (Rothwell, 2001, p. 7).

Retention Risk Analysis A risk analysis is a systematic process of estimating the projected departure dates for each individual in the workplace for reasons of retirement or other turnover (Rothwell, 2001).

Secondments Mainly used in European countries, secondments is temporary move of an employee within an organization or from one organization to another to provide for the development of the individual to meet short-term operational needs and opportunities for employees to gain experience that will assist with their career development, taking into account the needs of both the organization as well as the employees. Assignments/ secondments are used to develop employees’ skills, to retrain surplus employees, or to meet temporary operational requirements (Kur & Bunning, 2002, p. 771).

Succession Analysis These analyses are used to forecast the supply of people for certain positions by identifying potential personnel changes (Pynes, 2004, p. 393).

Systematic Succession Planning Effort Self-explanatory, this is the deliberate and systematic effort by an organization to ensure leadership continuity in key positions to retain and develop intellectual and knowledge capital for the future and encourage individual advancement in an organization. This occurs when an organization adapts speciﬁ c procedures to insure identiﬁ cation, development, and long-term retention of talented individuals (Rothwell, 2001, p. 6).

Talent Pool Talent pools are groups of people being prepared for more challenging responsibilities (Rothwell, 2006). Succession Planning and Management 415

Talent Management Talent management is the crucial way of securing, developing, and motivating people with the right skills and approaches to meet business objectives. Talent management decisions are often driven by a set of organizational core competencies as well as position-speciﬁ c competencies. The competency set may include knowledge, skills, experience, and personal traits (ASE, 2006).

Training Training is a short-term learning intervention, intended to build on individual knowledge, skills, and attitudes to meet present or future work requirements (Rothwell & Sredl, 2000, p. 9).

Workforce Succession Planning This is an organization’s he ability to adapt to changes in an effective manner by analyzing realistic information on the capabilities and talents of current employees in the implementation of human resource activities, policies, and practices that support or improve the organization’s operational and strategic goals and objectives (Pynes, 2004, pp. 389, 393).

Key Elements of Succession Planning

Rothwell, Jackson, Knight, and Lindholm (2005) state that “between 1998 and 2008, almost twice as many job openings are occurring or will occur from people retiring rather than from economic expansion” (p. xiii). According to these authors, succession planning has the role of ensuring that the organization has the right people in the right places at the right times. A succession planning team can monitor an organization’s talent pool to ensure that it is continuously “stocked.” Training is one means by which to build the competencies that individuals need to qualify for higher-level, or different, work responsibilities. Training is thus a means to the end of building bench strength and an active ingredient in building a talent pool (pp. 149–150). According to Rothwell and Sredl (2000), most succession planning systems include several key elements: (1) an evaluation of individual skills; (2) an evaluation of individual experiences; (3) individual development plans; (4) an assessment of individual characteristics; (5) a current job analysis; and (6) a strategic analysis of future needs (Rothwell, 1994, as cited by Rothwell & Sredl, 2000, p. 320). 416 The Encyclopedia of Human Resource Management: Volume One

Kim Soonhee (2003) states, “One of the key components of succession planning management is assessment of both the organization and its employees” (p. 533). Soonhee also believes identifying and analyzing key positions, along with creating and assessing candidates and selecting people, are the main components of succession planning.

References

ASE. (n.d.). Targeted talent management. ASE psychometric tests. Retrieved November 24, 2006, from www.ase-solutions.co.uk/feature.asp. Athey, T.R., & Orth, M.S. (1999). Emerging competency methods for the future. Human Resource Management, 24(3), 215–225. Behn, B.K., Dawley, D.D., Riley, R., & Yang, Y. (2006). Deaths of CEOs: Are delays in naming successors and insider/outsider succession associated with subsequent ﬁ rm performance? Journal of Managerial Issues, 18(1), 32–46. Durham College. (2006). Knowledge/skills gap analysis. Retrieved November 24, 2006, from www.dc-uoit.ca/bids/index.php?page=skillsgap. Psychometric assessment for selection and development. (1999, July 23). Encyclopedia of psychology. Retrieved November 24, 2006, from www.psychometrics.co.uk/test.htm#What and www.psychology.org/links/Environment_Behavior_Relationships/Measurement/ Endres, G.M., & Alexander, J. (2006). Two government agencies look at succession planning. Organizational Development Journal, 24(2). Kur, E., & Bunning, R. (2002).Assuring corporate leadership for the future. The Journal of Management Development, 21(9/10). Massachusetts Institute of Technology. (1995). MIT Business continuity plan. Retrieved November 24, 2006, from http://web.mit.edu/security/www/pubplan.htm. New York State Department of Civil Service/Governor’s Ofﬁ ce of Employee Relations Work Force and Succession Planning—Tools and resources. (n.d.). Development of competency models. Retrieved November 24, 2006, from www.cs.state.ny.us/ successionplanning/workgroups/competencies/competencies2devel.html. Pynes, J.E. (2004). The implementation of workforce and succession planning in the public sector. Public Personnel Management, 33(4). Rothwell, W.J. (2001). Effective succession planning (2nd ed.). New York: AMACOM. Rothwell, W.J. (2006, September). Ten key steps to effective succession planning. Halogen eSuccession, white paper. Retrieved November 24, 2006, from www.halogensoftware .com/support/Ten_KeySteps_in_SuccessionPlanning.pdf. Rothwell, W.J., & Sredl, H.J. (2000). The ASTD reference guide to workplace learning and performance: Present and future roles and competencies, volume 1 (3rd ed.). Amherst, MA: HRD Press. Rothwell, W.J., Jackson, R.D., Knight, S.C., & Lindholm, J.E. (2005). Career planning and succession management: Developing your organization’s talent—for today and tomorrow. Westport, CT: Praeger. Soonhee, K. (2003). Linking employee assessments to succession planning. Public Personnel Management, 32(4), 533–547. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 79

TRAINING NEEDS ANALYSIS

William J. Rothwell

raining needs analysis, sometimes called training needs assessment, is the Tprocess of identifying what training is needed. Commonly abbreviated as TNA, it is the step in the instructional systems design (ISD) process that immediately follows performance analysis, the process of distinguishing problems that may be solved by training from those that must be solved by management action. TNA is not necessary if the problem can be solved by management action such as changing reporting relationships, changing reward systems, changing selection methods, and taking other actions under the control of management.

The Goal of TNA

The goal of TNA is to identify the precise knowledge, skills, or attitudes (KSAs) necessary for workers to perform their jobs efﬁ ciently and effectively and to compare how well individuals are presently equipped to do their jobs based on what they know and can do, or how they feel about it. TNA thus compares individuals’ current KSAs (that is, what is) to the essential KSAs needed to do the work and achieve necessary results (what should be). Once the training needs are identiﬁ ed, instructional objectives are created that, when met, will meet the needs and thereby close the gap between what is and what should be.

417 418 The Encyclopedia of Human Resource Management: Volume One

The Importance of TNA

TNA is the single most important step in training design for the simple reason that, if TNA is not performed or is not performed properly, the training will not be properly focused. The result will be that the training will not cover what people really need to know to do their jobs. Decision-makers will predictably ask for return on investment (ROI) studies of the training, and such studies—when conducted—will show disappointing results.

How TNA Is Conducted

TNA is sometimes confused with the data collection process—that is, how information is collected about needs. Examples might be “doing a survey,” “conducting interviews,” or “organizing and running focus groups.” But those are merely the means to the end of identifying training needs. A ﬁ rst step is clarifying the problem or need. Trainers must determine:

• Who or what is the focal point for needs assessment; • What is known about the problem or need; • What is happening and what should be happening; • When the performance problem fi rst became apparent; • How that performance may have changed over time, if at all; • Where the problem or need is most keenly felt; • Why the problem or need is important; • How the problem or need fi rst became apparent; • Who the stakeholders are who are interested in solving the problem or meeting the need; • What accounts for their interest at this time; • How much the problem or need is costing the organization; • How the impact of the problem or need is measured; • Who is affected by the problem; and/or • What benefi ts will result from solving the problem or meeting the need.

A second step is collecting background information about the problem or need. Trainers must clarify performance requirements for the job, the performance of the individual(s) targeted for training, and the characteristics of the work environment in which the training will eventually be applied. A third step is reﬁ ning the problem or need to focus it clearly. A needs analysis is difﬁ cult to focus initially, since trainers may not know much about the problem or need. Training Needs Analysis 419

But after many questions have been answered and background information has been collected, they can focus the TNA. One way to do that is to limit the investigation to one group or one problem rather than look at everything. Trainers may choose, for instance, to focus on one high-priority job category, occupation, department, or area. A fourth step is formulating questions to be answered. At this point trainers decide exactly what questions they wish to have addressed by the conclusion of the needs analysis. These questions should, of course, provide information about differences between what is and what should be. A fi fth step is planning the training needs analysis project. At this point they choose subjects, clarify ways to control or manipulate variables, and evaluate outcomes. The result of this step is usually a detailed project plan for conducting the needs analysis. A sixth step is specifying exactly how information about needs will be collected. What data collection methods will be used? How will they be used? Common approaches to collecting data include interviews, focus groups, surveys, observations, or other means. A seventh step is specifying how information about needs will be analyzed. This step is dependent, of course, on the decision made in the previous step. The choice of how to analyze the training needs will depend on what data collection methods are chosen. It will also depend on who cares the most about the information, the stakeholders. An eighth step is implementing the needs analysis project. Trainers collect the information about the problems or needs. They conduct their mail surveys, interviews, and document examinations or use other methods. This step is carried out using the plan prepared in the fi fth step. A ninth step is evaluating results, drawing conclusions, and noting issues for future investigation. Trainers analyze the results of their data collection efforts, draw conclusions, and make interpretations. They may also identify issues warranting further examination. A tenth and final step is presenting the results to key stakeholders and establishing an action plan for solving problems or meeting needs. In this fi nal step, trainers present the results to stakeholders. In an organization, that may be prospective participants or operating managers. The aim is to determine the nature of the training needs, target instructional objectives, and decide what to do and how to do it to meet the needs.

Typical Criticisms of TNA

TNA is often the focus of criticism, which focuses around several issues. One such issue is that the TNA is not conducted at all, or is not conducted properly. A second issue is that some trainers do not know what to do with the results of a TNA, 420 The Encyclopedia of Human Resource Management: Volume One

using it as a basis to focus and economize training efforts. A third issue is that TNA tends to focus on problems rather than emphasize building on strengths.

References

Gupta, K. (1998). A practical guide to needs assessment. San Francisco: Pfeiffer. McConnell, J. (2003). How to identify your organization’s training needs: A practical guide to needs analysis. New York: AMACOM. Peterson, R. (1998). Training needs assessment (2nd ed.). London: Kogan Page.

Websites www.giamngheomt.org.vn/en/docs/train_guide_tna_conducting_en.pdf www.hesda.org.uk/activities/projects/ssda/tna_report.html www.trainingneedsanalysis.co.uk/tna_article2.htm The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 80

VIRTUAL TEAMS

Wendy L. Bedwell, Eduardo Salas

virtual team (VT) is most generally defi ned as a group of non-collocated indi- Aviduals who interact across temporal, geographical, and/or organizational boundaries to varying degrees using information and/or telecommunication technology (Jarvenpaa & Leidner, 1999; Townsend, DeMarie, & Hendrickson, 1998). Virtual teams can consist of individuals from the same organization or multiple organizations, can be culturally homogeneous or heterogeneous, and can have any combination of collocated and distributed members (Kirkman & Mathieu, 2005). Much like their face-to-face counterparts, virtual team members have complementary skills, interdependent performance goals, and a shared responsibility for outcomes. However, researchers are moving away from defi nitions that contrast VTs with traditional or “conventional” teams that are collocated toward the consideration of VTs as an entirely new type of team or towards a description of any team based on the degree of virtuality (Bell & Kozlowski, 2002; Cohen & Gibson, 2003; Griffith & Neale, 2001; Griffith, Sawyer, & Neale, 2003; Guzzo & Dickson, 1996; Martins, Gilson, & Maynard, 2004). Virtual teams are not necessarily comprised of teleworkers. Teleworkers are those employees who work from their homes. While teleworkers may indeed be part of virtual teams, virtual teams can consist of clusters of individuals working in different corporate offi ces to multinational teams comprised of individuals scattered across the globe.

421 422 The Encyclopedia of Human Resource Management: Volume One

Why Virtual Teams?

Advances in technology have created the necessary architecture for distributed coordination space whereby teamwork and team performance can occur across temporal, organizational, or geographic boundaries, without incurring the costs associated with traditional face-to-face collaborations. This type of collaboration allows organizations to effi ciently operate in today’s dynamic, global environment by bringing together distributed functional expertise to address a specifi c need while noting signifi cant cost savings. Employers no longer incur the costs associated with travel, including lost work time. Additionally, employees of today demand fl exibility and are more experienced with sophisticated technology. Companies are thus free to attract and retain the best talent, regardless of their geographic location. Finally, the nature of work is continuing to shift from production to service/knowledge management and, with this shift, employee expectations are changing in terms of desired levels of participation, leading to an increase in horizontal organizational structures. These changes require the use of teams to solve complex organizational issues, and competition in the global economy requires doing so with as little overhead cost incurred as possible. Virtual teams, therefore, meet the needs of both the organization (in terms of pooling resources in the most effective and effi cient manner possible) and the employee (creating fl exibility and increasing participation).

Virtualness and Distributed Performance

Some researchers maintain very rigid definitions of virtual teams, in that all interactions/processes must be mediated by technology without any face-to-face contact; however, others suggest that if the majority of work is accomplished electronically, then the team can be considered virtual. In light of this debate, researchers have begun to look at the extent of virtualness—the degree of reliance on technology-mediated communication. Nearly all teams, to some degree, utilize technology-mediated communication; therefore, VTs can be conceptualized as teams with a high degree of virtualness as a team characteristic or along a continuum on which teams can be measured as to the amount of interaction and other team processes that are mediated by technology (Kirkman & Mathieu, 2005). In essence, virtual does not describe a unique team type but rather a speciﬁ c member conﬁ guration designed for the purposes of achieving a clear goal. Virtual Teams 423

Distributed performance describes the work of a team whose members are not collocated. Virtualness can certainly affect performance. There are a number of theories designed to focus on this particular issue–some categorize the technology on a continuum, such as media richness (Daft & Lengel, 1986) or media naturalness (Kock, 2002; 2004; 2005), while others focus on the reduced cues associated with distributed interactions (Fiore, Sales, Cuevas, & Bowers, 2003). Regardless of the theoretical focus, the general premise is that higher levels of virtualness negatively inﬂ uence how members handle information (that is, sending and receiving). Greater levels of virtualness reduce the number of cues that are available, which limits information available for interpreting and encoding. However, the literature is mixed as to the effectiveness of virtual teams as compared to face-to-face teams. In some tasks, such as brainstorming, virtualness has been shown to outperform collocated teams. Regardless, virtual teams are a reality in today’s global economy.

Virtual Team Leaders

While some authors have suggested that there are no differences between virtual and team leaders, others have noted that, in reality, virtual team leaders must have the KSAs required to effectively handle the unique characteristics of distributed work. The lack of cues associated with computer-mediated communication can hinder a leader’s ability to facilitate team processes such as communication, coordination, and trust. There is a great deal of literature on techniques that leaders can use with collocated teams; these same techniques apply to virtual teams, just differentially in terms of how they are utilized.

Keys for Virtual Team Success • Reliable communication and collaboration tools: As the majority of interaction among virtual team members is mediated by technology, the fi rst key to success is that the technology allows for desired levels of interaction and reliably provide those levels. • Written goals/objectives/specifi cations/metrics of performance: There must be guidance in terms of expectations and how results will be evaluated. Providing specifi c goals helps (1) assure members strive towards the same result(s) and (2) is an important motivational technique utilized by effective team leaders. Goals should require members to interact and work together. • Appropriate technical assistance: Virtual team members should have technical assistance as needed, whether that is a dedicated technician to help solve issues, 424 The Encyclopedia of Human Resource Management: Volume One

a database of technical how to’s, or online manuals/tutorials. The exact choice depends on member ability and the degree of virtualness. • Training: Virtual teams may face a number of issues due to the nature of this team characteristic. Virtual teams should have technical training on any equipment that is expected to be used to accomplish the targeted goals. Also, members might consist of individuals from different cultures. Therefore, it is important to provide training on working across cultures. • Socialization: For success, there must be an internal team culture of high trust. Typically, there is time for socialization at the start of the team; however, virtual teams are often characterized by fl uid team membership and must continue to maintain performance levels with little time for socialization of new members. Technology can be utilized to streamline socialization through archived written information (discussion postings, chats, blogs) and video/audio recordings of previous meetings. • Virtual team member competencies: Due to the membership fl uidity, lack of cues associated with technology-mediated communication, and the dynamic nature of virtual work, virtual team members must have core competencies in order to succeed. These include technical competence, fl exibility, and adaptability to changing requirements/tasks; ability to engage in boundary spanning; and what has been termed team-generic/task-generic competencies such as an understanding of teamwork skills, confl ict resolution ability, and a collective orientation (for more on team competencies, see Cannon-Bowers & Salas, 1997). • Communication!! Communication has been shown to be important for effective teamwork. This is never truer than with virtual teams. Due to increased ambiguity and artifi ciality of distributed interactions, team processes can be hindered. It is therefore critical to maintain high levels of communication, even more so than in face-to-face team interactions, in order to avoid confusion, maintain shared understanding, and reduce confl ict. Leaders should encourage regular communication—frequency is crucial. However, it is important to remember that nonverbal cues are reduced, so all messages should be concise and professional.

References

Bell, B.S., & Kozlowski, S.W. J. (2002). A typology of virtual teams: Implications for effective leadership. Group & Organization Management, 27, 14–49. Cannon-Bowers, J.A., & Salas, E. (1997). Teamwork competencies: The interaction of team member knowledge skills and attitudes. In O.F. O’Neil (Ed.), Workforce readiness: Competencies and assessment (pp. 151–174). Mahwah, NJ: Lawrence Erlbaum Associates. Virtual Teams 425

Cohen, S.G., & Gibson, C.B. (2003). In the beginning: Introduction and framework. In C.B. Gibson & S.G. Cohen (Eds.), Virtual teams that work: Creating conditions for virtual team effectiveness (pp. 1–13). San Francisco: Jossey-Bass. Daft, R.L., & Lengel, R.H. (1986). Organizational information requirements, media richness and structural design. Management Science, 32(5), 554–571. Fiore, S.M., Salas, E., Cuevas, H.M., & Bowers, C.A. (2003). Distributed coordination space: Toward a theory of distributed team process and performance. Theoretical Issues in Ergonomics Science, 4(3–4), 340–365. Grifﬁ th, T.L., & Neale, M.A. (2001). Information processing in traditional, hybrid, and virtual teams: From nascent knowledge to transactive memory. In B.M. Staw & R.L. Sutton (Eds.), Research in organizational behavior, vol. 23 (pp. 379–421). Greenwich, CT: JAI. Grifﬁ th, T.L., Sawyer, J.E., & Neale, M.A. (2003).Virtualness and knowledge in teams: Managing the love triangle of organizations, individuals, and information technology. MIS Quarterly, 27, 265–287. Guzzo, R.A., & Dickson, R.A. (1996). Teams in organizations: Recent research on performance and effectiveness. Annual Review of Psychology, 47, 307–338. Jarvenpaa, S.L., & Leidner, D.E. (1999). Communication and trust in global virtual teams. Organization Science, 10, 791–815. Kirkman B.L., & Mathieu, J.E. (2005) The dimensions and antecedents of team virtuality. Journal of Management, 31(5), 700–718. Kock, N. (2002). Evolution and media naturalness: A look at e-communication through a Darwinian theoretical lens. Paper presented at the 23rd international conference on information systems, Atlanta, Georgia. Kock, N. (2004). The psychobiological model: Towards a new theory of computer-mediated communication based on Darwinian evolution. Organization Science, 15(3), 327–348. Kock, N. (2005). Compensatory adaptation to media obstacles: An experimental study of process redesign dyads. Information Resources Management Journal, 18(2), 41–67. Martins, L.L., Gilson, L.L., & Maynard, M.T. (2004). Virtual teams: What do we know and where do we go from here? Journal of Management, 30, 805–835. Townsend, A.M., DeMarie, S.M., & Hendrickson, A.R. (1998). Virtual teams: Technology and the workplace of the future. Academy of Management Executive, 12, 17–29.

Websites www.gsb.stanford.edu/news/bmag/sbsm0305/feature_virtual_teams.shtml www.managementhelp.org/grp_skll/virtual/virtual.htm www.seanet.com/~daveg/ltv.htm The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 81

WORK VALUES

Agata Dulnik

n general understanding, values are those things that matter the most to us— Ithe ideas and beliefs we hold special. They are powerful drivers of how we perceive, process information, and act in the world. Scholars have long insisted that culture inﬂ uences value systems, which in turn inﬂ uence the behaviors of individuals. Values are direct derivatives of the cultural background, and as such, they allow for explicit and implicit expression of what is wrong and what is right. Some scholars insist values should be seen as a core of culture and say they allow a deeper insight into the cultural phenomena behind which they stand. (See Figure 81.1.) Through their powerful psychological presence, values dominate the natural individual predispositions and also govern the responses to the external stimuli. Therefore, values are extremely important elements for understanding individual behavior under conditions of change and transition. Trompenaars and Hampden-Turner (1998) argued that “cultures which have a natural tendency to reconcile seemingly opposing values have a better chance of being successful economically than cultures that lack this inclination.” That means that adaptability, and therefore a greater potential for survival, may result from individual, group, organizational, or national ability to embrace values that are not inherent to that culture and abandon the ones that are no longer useful. Experts on values observe two levels of values: (1) values held by a person and (2) values held by a group. Although the initial investigation of values centered on

426 Work Values 427

FIGURE 81.1. ILLUSTRATION OF MUTUAL RELATIONSHIP AND INFLUENCE OF CULTURE, VALUES, ATTITUDES, AND BEHAVIOR

Culture

Behavior Values

Attitudes

Source: Adler, 2002. Used with permission from Cengage.

the individual level, more recent studies have also focused on organizational- and group-level values. That’s because, as values occupy a central position in the cognitive system and personality of individuals and determine attitudes, they are closely linked to motivation and therefore can determine collective organizational performance.

Value Measurement and Measures

Can values be classifi ed and measured? The simple answer is yes. The Rokeach Value System (RVS) (Rokeach, 1979) is one of the popular tools made up of two sets of values, with each set containing eighteen individual value items. One set, called terminal values, refers to the desirable “end state of existence.” These values include a prosperous and comfortable life, equality, and freedom. The terminal values serve individuals as life goals—understood as a means by which their life goals are achieved. On the other side are instrumental values. Instrumental values serve as a medium through which terminal values may be accomplished. These values include ambitiousness, capability, logic, and politeness. RVS is a versatile and useful instrument. Studies confi rmed that various cultural groups have different RVS scores, and Hofstede (1980, 1991) praised the RVS as a useful tool in cross-national research. Interestingly, people from various working groups can also score differently on RVS. Evidence suggests, for example, that executive groups will score differently from nonexecutive groups. This fi nding is consistent with the premise that culture, on whichever level of analysis, drives the values of its members. 428 The Encyclopedia of Human Resource Management: Volume One

Another example of how values can be measured is the Schwartz Value Survey (SVS), which was based on research conducted in more than twenty countries. Because of its focus, Schwartz’s instrument is particularly appropriate to measuring the international dimensions of cultural values, as it offers the value dimension of “openness to change” and “conservation” on the other side of the spectrum. This emerges as a critical construct when studying various aspects of the developing countries of the world. The other value continuums in the SVS are individualism- collectivism and self-enhancement versus self-transcendence or bi-polar dimensions.

Work Values

The history of the inquiry into the work-related values dates back to the human relations movement. Particularly, two famous scholars can be given the credit for bringing the work values discussion into focus. These scholars are Abraham Maslow (1968), the creator of the Hierarchy of Needs, and Frederic Herzberg (1968). Maslow’s and Herzberg’s theories had a common theme, whereby satisfi ed needs led to a higher motivation, but needs that were not satisfi ed led to frustration and confl ict. Although discussion of the importance of work values seems to have been a permanent feature of organizational conversations, the concept of work values has been slow to attain the level of importance that some scholars argue it should. Dose (1997) proposed that:

“Values are diagnostic of one’s identity, self-worth and world view; as such, they have major implications for our lives and our interactions with others. Because so much of our time is spent in a working environment, work values are particularly signiﬁ cant and salient. Work values have implications for the kind of career we choose, the work environment we prefer, and the kinds of decisions we will make.”

Recent studies have shown that work values have a structure similar to cultural values. One popular view says that work values have a three-dimensional structure. The dimensions observed are instrumental or material, cognitive, and affective. The instrumental or material classifi cation includes the work values that are related to material aspects, such as salary. Cognitive work values include aspects related to work goals or outcomes, such as a meaningful job. Affective work values relate to self-esteem aspirations, such as performance recognition. Work values can also be seen as intrinsic and extrinsic. The idea, although new to the work values discipline, is not totally new, as it was fi rst introduced by the motivation branch of learning. The intrinsic work values involve the way in which a person relates to the work Work Values 429 itself. The extrinsic work values relate to the work as means through which social rewards and other gains can be accomplished. Studies suggest that high work values lead to a higher motivation level and more positive attitudes toward work activities than others. Work values differ among various generations and influence aspects of job satisfaction. Organizations would greatly benefi t from paying more attention to a thorough screening of employee values in the workplace to avoid unproductive confl icts. In fact, as shown in Figure 81.2, value-based confl icts, very real in almost every walk of life, play out most strongly in the workplace dynamics. This increased workplace value-confl ict scenario arises from several factors. (See Figure 81.2.) One is the duration of a workday, as the majority of gainfully employed people spend most of their time at work. Second, there is a higher likelihood that value divergence, in terms of different backgrounds of people, will play out at work than in more homogenous environments. Third, most of today’s workplaces are stressful because of the increased speed and volume of information and productivity pressures that workers must contend with. Rapid socioeconomic and political transitions also produce generational value differences that may lead to a greater potential for confl ict. Generally speaking, organizations are unable to operate effectively and effi ciently unless shared values exist among employees. From the organizational strategy

FIGURE 81.2. MUTUAL RELATIONSHIP OF VALUES AND VALUE CONFLICT POSSIBILITIES

SOCIETAL VALUES THROUGH GOVERNMENT, BUSINESS AND CONSUMENT ADVOCATES ETC. ORGANIZATIONAL VALUES

THROUGH FAMILY, THROUGH YEARS OF REWARD SCHOOL, CHURCH, PEERS XXAND PUNISHMENT

XX EMPLOYEE VALUES MANAGER’S VALUES

X - Possibility of conflict XX - Possiblity of a strong conflict

Source: Brown, 1976, pp. 14–17. Used with permission from Cengage. 430 The Encyclopedia of Human Resource Management: Volume One

standpoint, values inside the organization show what is being rewarded and what is sanctioned. Through the reward process, they help to secure buy-in for the shared future of the organization and how that can be best accomplished.

National Differences in Work Values

A wealth of research shows that differences in work values do exist by nation, and that these differences are important to understanding how to motivate people from respective countries. For example, studies show that managerial work values are infl uenced by national cultures and economic ideology, while national cultures infl uence the organizational ones. It also seems that national cultures have the potential to influence the corporate strategic decision-making processes. Specifi cally, marketing and advertising are strongly linked to national cultures. Clearly, from the overall business effectiveness standpoint, these are major considerations. Business ethics and social responsibility are the other two areas strongly infl uenced by the relationships of national culture and work values and, for most part, it is the country culture—not workplace ideology—that drives workplace values. Value change and adaptation, although possible, is a lengthy and complex process. Therefore, most scholars currently argue that the stable cultural characteristics and values can either be permissive to local economic growth or an inhibitor thereof.

References

Adler, N.J. (2002). International dimensions of organizational behavior (4th ed.). Boston: Ken Publishing. Bardi, A., & Goodwin, R. (2011). The dual route to value change: Individual process and cultural moderators. Journal of Cross-Cultural Psychology, 42(2), 271–287. Brown, M.A. (1976). Values—A necessary but neglected ingredient of motivation on the job. Academy of Management Journal, 5(7), 14–17. Danis, W.M., Liu, L.A., & Vacek, J. (2011). Values and upward inﬂ uence strategies in transition: Evidence from the Czech Republic. Journal of Cross-Cultural Psychology, 42(2), 288–306. Dose, J. (1997). Work values: An integrative framework and illustrative application to organizational socialization. Journal of Occupational and Organizational Psychology, 70, 219–240. Elizur, D., Borg, I., Hunt, R., & Beck, I.M. (1991). Structure of work values: A cross-national comparison. Journal of Organizational Behavior, 12(1), 21–38. Herzberg, F. (1968). One more time: How do you motivate employees? Harvard Business Review, 46(1), 53–62. Work Values 431

Hofstede, G. (1980). Culture’s consequences: International differences in work-related values. Thousand Oaks, CA: Sage. Hofstede, G. (1991). Cultures and organizations: Software of the mind. London: McGraw-Hill. Klein, A. (2011). Corporate culture: Its value as a resource for competitive advantage. Journal of Business Strategy, 32(2), 21–28. Kowske, B., Rasch, R., & Wiley, J. (2010). Millennials’ (lack of) attitude problem: An empirical examination of generational effects on work attitudes. Journal of Business and Psychology, 25(2), 265–279. Maslow, A.H. (1968). Cognition of being in the peak experiences. In Toward a psychology of Being (2nd ed., pp. 71–102). New York: Van Nostrand Reinhold. Rokeach, M. (1979). Understanding human values: Individual and societal. New York: The Free Press. Schwartz, S.H., & Bilsky, W. (1987). Toward a universal psychological structure of human values. Journal of Personality and Social Psychology, 53(3), 550–562. Trompenaars, F., & Hampden-Turner, C. (1998). Riding the waves of culture (2nd ed.). London: Nicholas Brealey. The Encyclopedia of Human Resource Management: Short Entries Edited by William J. Rothwell Copyright © 2012 John Wiley & Sons, Inc. Y

ARTICLE 82

WORK/FAMILY BALANCE

Michele L. Newhard

ore encompassing than the somewhat narrow work/family balance term, Mthe expression of work/life balance includes all aspects of life affected by work, not just families (Greenhaus & Allen, 2011). However, for the purpose of this work, the two terms will be interchangeable. According to a report posted by the Work Life Balance Centre website, the concept of “work-life balance” was created in 1986, when Americans began putting their jobs ahead of everything else, including their families (Halpin, 2004). It should come as no surprise that time spent at one’s job will have an effect on one’s personal life (Bohle, Willaby, Quinlan, & McNamara, 2011). Recent unpublished research conducted at Florida State University by Hochwater, Everett, and Tapley suggests that the recession has caused employees to question whether the sacriﬁ ces made for work, which hurt their work/family balance, are worth the tradeoff (Anonymous, 2011; Flagg, 2010). Yet still, in this fast-paced, capitalistic society, people often need reminders of the importance and, perhaps, even the necessity of work/family balance. The excessive workload endured by many Americans results not only in pressure on the employee, but stress on the family of the employee as well. The majority of studies relating to the interplay of work and family have been conducted in the Western world (Kalliath, Kalliath, & Singh, 2011). While addressing the hearing of H.R. 4855, the Work-Life Balance Award Act, in

432 Work/Family Balance 433

April 2010, Congresswoman Lynn Woolsey, the chair of the Subcommittee on Workforce Protections, stated that the United States was behind other countries in offering “paid leaves and other work-life benefi ts to their employees” (p. 2). Within the United States, a number of reasons for work overload emerge. Although certainly not an exhaustive list, these reasons can include competition, globalization, customers, downsizing, families, moonlighting, busyness, lack of control, variability (Bass & Grzywacz, 2010; Bohle, Willaby, Quinlan, & McNamara, 2011; Gryna, 2004). Competition breeds a need for low labor cost, and, thus, a resulting culture of fewer employees doing more work materializes (Gryna, 2004). Second, globalization has further prompted the necessity to operate leanly, cutting heavy work rosters whenever possible and subsequently adding work hours to the remaining workforce. The population of demanding customers expects instant service, further pressing the schedules of the workers who are forced to answer the demand. Traveling for business has become more common in some industries or organizations as a typical response to competition or globalization, but also adds stress to work/family balance (Murtaugh, 2010). Corporate mergers and job losses have pinched the workforce as well (Gryna, 2004). Next, family responsibilities (Bass & Grzywacz, 2010), such as shuttling children back and forth to sporting events, drain away more time, often unexpectedly (Gryna, 2004). Moonlighting or working extra to generate more income to keep up with the economy, often just to survive fi nancially, takes time. The chaos of traffi c, along with too many appointments and responsibilities during an average day, sap any remaining time from the American worker. Feeling a loss of control over one’s schedule just adds to the overload (Bohle, Willaby, Quinlan, & McNamara, 2011). Globally, we have witnessed more people entering the workforce, and agricultural-oriented jobs and family caretaking are no longer the primary tasks of men and women (Heymann, 2003). The rise of the dual income family in non-Western cultures is bringing similar challenges of work/family balance to these developing societies as well (Heymann, Fischer, & Engelman, 2003). Some suggest that, although globalization has seemingly improved the fi nancial status of women through the increase of jobs in the manufacturing sector, the structural job attributes of such opportunities, actually limit or even detract from work/ family balance (Glick, 2003). Still other research has indicated that societies that view work as an enhancement of family will tend to report high work/family balance (Greenhaus & Allen, 2011). Overall, many cultural differences exist as they relate work and family throughout the world. 434 The Encyclopedia of Human Resource Management: Volume One

Hours Worked

Americans are working more hours than ever (Twenge, Campbell, Hoffman, & Lance, 2010). Specifi cally, an International Labour Organization Report from 2001 referenced by Florida (2002) showed that Americans were working about three and one-half weeks more per year than Japanese employees were, as well as six and one-half weeks more per year than British workers, and twelve and one-half weeks more per year than the Germans (Greenhouse, 2001). Despite an assertion that quality of life is important, Americans continue to top the hours- worked charts, while British workers outpace other Europeans (Lack, 2011). It is no surprise, then, that two-thirds of college-educated Americans report a great deal of stress related to work/family issues (Florida, 2002). Another report of American women aged twenty-fi ve to thirty-four in 2000 found that married women with children were most likely employed, whereas in 1976 they likely would have been working only at home (DiNatale & Boraas, 2002). Further, the same study found that, by the year 2000, the number of women who worked more than forty-nine hours per week had doubled from the 1976 survey, to 13 percent (DiNatale & Boraas, 2002). Jobs with fl exible scheduling and freedom allow women to juggle work and family more effectively (Lack, 2011). The lack of schedule control has been shown to lead to heightened work/ family confl ict (Bass & Grzywacz, 2010; Bohle, Willaby, Quinlan, & McNamara, 2011) and therefore, less work/life balance.

Japanese Workers

The Japanese workforce has historically worked long hours. In 2006, each employee worked on average, 1,784 hours per year, a higher number than most other countries’ averages, while only half of Japanese workers seemed to use paid holiday time off provided for them (Craig, 2010). Like their Western counterparts, Japanese employees have reported an increase in workload due to technology (Craig, 2010; Wheatley, 2005) and a decrease in staffi ng, further compounding work stress and, thus, causing issues with work/family balance (Craig, 2010). Further, workforce morale has been eroded in general, as the traditional Japanese cultural value of group work has been superseded by a focus on individual performance (Craig, 2010). Workplace wellness programs have been developed in Japan with the aim of decreasing absenteeism (“Strong global growth,” 2008), while other benefi ts remain superfl uous. Impediments to eradicating issues with work/family balance in Japan include the heightened acceptance of work bleeding into home life, Work/Family Balance 435

particularly among men, along with the reticence to release a long-time belief that childrearing and running the household is female work (Craig, 2010), much like researchers found to be true in India (Kalliath, Kalliath, & Singh 2011) and Iran (Ghorayshi, 2003), among other countries. Until more social conventions change, the tradition seems entrenched to keep work/family balance just out of reach in dual-income Japanese households as parents continue to work long hours outside of the home.

Home Work

According to the U.S. Bureau of Labor Statistics, 20.7 million people conducted at least some of their work at home, in addition to their hours spent on-site (Bureau of Labor Statistics, 2005). Fifty-six percent of respondents reported that they completed work at home in order to catch up and, thus, were not receiving extra compensation. This type of work at home does not provide the same beneﬁ ts inherent in a telecommuting scenario, also known as ﬂ ex-place, which in theory is intended to help provide balance in an employee’s life, not drain more time away from it (Gryna, 2004, p. 166).

Moonlighting

The Bureau of Labor Statistics (2002) reports that 7.8 million workers in America, or 5.7 percent of the workforce, were employed in multiple jobs in 2001. This statistic is down from the survey in 1997, but the methodology changed in the meantime, so a comparison between studies may not be justifi ed. The prevailing motivation for multiple jobs was to earn extra income, while the second most popular reason for moonlighting was “to meet expenses or pay off debt” (2002, p. 2). The keeping-up-with-the-Joneses approach to personal fi nances may also drive numerous Americans to seek extra work. Two disparate groups suffer from work/family imbalance because of holding multiple jobs—those who technically do not need the money and those who view additional employment as a fi nancial necessity. Lower income families weather- ing work/family issues suffer in a different way from higher income employees in that they tend to have infl exibility in the form of very strict mandates on start and end times, which may cost the employee his or her job (Williams, Manvell, & Bornstein, 2006). These lower income families endure diffi cult structural job attributes, such as variability of scheduled hours and days off (Bass & Grzywacz, 2010) that result in a higher possibility of work/family imbalance. 436 The Encyclopedia of Human Resource Management: Volume One

American Families and Work

According to a 1997 current population survey supplement referenced by DiNatale & Boraas (2002), almost three million women aged twenty-fi ve to thirty-four held full-time jobs that offered schedule fl exibility. Yet, a recent report published by the Hastings College of Law at the University of California argues that American organizations are overrun with infl exible, outdated policies and practices that will not bend to the changing needs of today’s workforce, in particular, the needs of caregivers (Williams, Manvell, & Bornstein, 2006), a sentiment shared by Congresswoman Woolsey when addressing the Subcommittee on Workforce Protections (Work-Life Balance Award Act, 2010). Despite the notion that 70 percent of American families send all able adults to work, workplaces are still functioning as if the mother of a family stays at home while the father goes to work (Williams, Manvell, & Bornstein, 2006). The report, which examined 119 news articles focused on females departing from the American workforce, contends that the majority of women fi tting this description did not choose to leave, but were forced into exiting the workplace due to company infl exibility and lack of support. Most recently, the economic downturn is more likely to have caused a shift in numbers of working parents with children under eighteen leaving the workforce. From the 34.8 million American families with children in 2009, at least 87.8 percent had one parent in the workforce, while in 2008 the rate was 2.2 percentage points higher (Bureau of Labor Statistics, 2010). For those remaining employed, stress from different factors comes into play. Florida (2002) asserts that many college-educated Americans are front-loading their careers with workaholic schedules. It is assumed that advancing in one’s occupation will pay off later, and then the individual can catch up with other life pursuits. This same trend is noted in academia (Hannay & Fretwell, 2011). Rothwell (2005) believes, however, that employees will continue to balk at superhuman expectations of their employers and will shift toward a more well- rounded approach to work life. Employers may be expected to allow more schedule fl exibility for their staff simply without question (Hannay & Fretwell, 2011). Very soon, companies may have no choice but to relax previously intense schedule expectations and infl exibility in favor of placating high-potential employees who would otherwise refuse to accept such personal sacrifi ce (Hannay & Fretwell, 2011; Rothwell, 2005). Gryna (2004) revisits the results of a 2003 Working Mother magazine examination of the one hundred highest rated companies for mothers in the workplace, citing the top ten alphabetically, as: “Abbott Laboratories, Booz Allen Hamilton, Bristol- Myers Squibb Co., Eli Lilly, Fannie Mae, General Mills, IBM Corporation, Work/Family Balance 437

Prudential Financial Inc., S.C. Johnson & Son, Inc., and Wachovia Corporation” (p. 170). These one hundred companies boast a shift from traditional business thinking to the implementation and social acceptance of work/family programs. These examples are called psychosocial job attributes and can be described as those higher level-thinking and interpersonal skill sets (Bass & Grzywacz, 2010).

Family Responsibility Discrimination

According to its website (www.uchastings.edu), the Center for Work Life Law functions within the University of California’s Hastings College of Law as a nonproﬁ t research and advocacy dedicated to preventing family responsibility discrimination, a recent violation trend. The need for such a service provider indicates that perhaps the business world is not all that supportive of the quest for work/family balance. Corporations can protect themselves from poor judgment by instituting and upholding policies that embrace caregiver status within the organization’s anti-discrimination doctrine. Employers must guard against generating assumptions about an employee’s ability to handle duties based on home responsibilities. The University of California–Hastings website asserts “that employees who feel supported by their supervisors and who are not distracted by unnecessary conﬂ icts between work and personal lives are more loyal and more productive” (p. 6), consequently, leading to more return for the company’s bottom line.

Generations in the Workplace

The work habits of the Baby Boomer generation, Americans born between 1943 and 1964 (Zemke, Raines, & Filipczak, 2000), may be responsible for the need to dialogue about work/family balance, given their driven tendencies in the workplace (Hannay & Fretwell, 2011). Additionally, the descriptor “workaholic” was created for the Boomers back in the 1970s (Zemke, Raines, & Filipczak, 2000, p. 85). As the Boomers enter mid-life and beyond, the pursuit of balance tends toward evolving opinions about the necessity of work/family balance in the organizational rule books. This shift away from constant work mimics the previously maligned approach of the quintessentially work-life–balanced Generation X. Comprised of Americans born from 1964 to 1980, Generation X witnessed a seismic shift in the way companies treated their employees. Suddenly in the early 1980s, with a downturning economy, the idea of giving one’s all to the advancement of a company was met with downsizing, closing, and, generally, a lack of compassion visited upon their boomer parents, despite their intense live-to-work 438 The Encyclopedia of Human Resource Management: Volume One

attitude. The message was clear to Generation X—utter devotion to a company was tantamount to thankless servitude; thus, this generation often adopted a work-to-live attitude (Hannay & Fretwell, 2011; Zemke, Raines, & Filipczak, 2000). Nor do they believe the famous theory that each American can have it all. Generation X tends to champion technology within the workplace (Hannay & Fretwell, 2011). Yet, technology has made achieving work/family balance more tenuous, as many employees are never disconnected from their jobs because of the prevalence of wireless technology and high-speed Internet connections (Wheatley, 2005). The virtual on-call at all times nature of connectivity has impinged upon home life and blurs the lines between professional and personal time. Corporations should begin to examine their expectations of an employee’s connectedness in an effort to assuage excess time spent on the job after hours. One suggestion posited company communication policy forbidding weekend electronic interactions (Anonymous, 2011). The Millennials or Generation Y share some attributes in common with their older siblings, such as a love of and ease with technology as well as an unwillingness to accept the boomer workaholism as the norm (Hannay & Fretwell, 2011; Twenge, Campbell, Hoffman, & Lance, 2010; Zemke, Raines, & Filipczak, 2000). In fact, both younger generations have witnessed an increase in work hours required. With an excess of seventy million Millennials, the large cohort has the numbers to effect change in the workplace (Anonymous, 2011). Their pressure for increased work/ family balance has a substantial chance to take hold and become the convention.