What does the New Human Resource Management Process entail? - Chapter 1

Why study human resource management (HRM)?

"The better you can work with people, the more successful you will be in your personal and professional lives - whether as an employee, a (line) manager, or a human resource manager." The role of modern managers also continues to change, requiring today's organizational leaders to deal with increasingly dynamic and complex environments. When it comes to managing organizations, a three-step approach applies:

• To learn the important functions and concepts of HRM.
• To develop your capability to apply HRM functions and concepts by using critical thinking.
• To develop your HRM skills in your personal as well as professional lives.

The main reason in today's business for human resource managers to change their way of working, is the fact that there is much greater competition and an external environment that requires a greater range of change. Therefore, the qualities to be adaptable and productive are considered an absolute requirement. In the 21st century organization, the people within an organization are the most important asset, because they create the competition through competetive performance.

Employee engagement is a combination of job satisfaction, ability, and a willingness to perform for the organization at a high level and over an extended period of time. According to HR Magazine, companies that fall into the top 10% on employee engagement, beat their competition by 72% in earnings per share during 2007-08. Engaged employees are considered those who understand and are willing to do whatever it takes to make the organization succeed.

HRM Past and Present

HRM in the Past

Previously, HR managers were expected to only manage personal paper files and were not involved with the organization's business process. The tasks of a HR manager consisted of keeping track of job applicants, maintaining employee paperwork, and filing annual performance evaluations. The HR department was considered to be more of a cost center.

Present View of HRM

Nowadays, organizations are focused on working through teams and also expect greater productivity than during the past. Within the current vision, organizations are viewed as productivity centers instead of cost centers. A producivity center is considered a revenue center that enhances the profitability of the organization by enhancing the productivity of people within the organization. The function of an HR manager today has grown to improving organizational revenues and profits - by enhancing the performance of the people within the organization.

Productivitiy is considered the amount of output that an organization gets per unit of input, with human input, usually expressed in terms of units in time. Productivity is considered a key element to survive in today's business. Productivity is therefore considered the end result of two components that HR managers work on creating and improve within organizations:

• Effectiveness - focuses on performing the job no matter when or where. It answers the question "Did we do the right things?"
• Efficiency - focuses on the amount of organizational resources used in order to get the job done. It answers the question, "Did we do things right?"

The two elements above indicate the importance of influencing the effectiveness of employees. For this matter, managers need to find an indirect way to affect the employees' productivity (efficiency and effectiveness).

Technology's Effect on Efficiency

One of the effective ways to improve people's efficiency within an organization is through the use of technology. Using technology allows organizations to gather, analyze and manage large amounts of data. This allows managers to look for parts in the data, that can help them create new and more efficient processes.

The Changing World of HRM

New HRM Challenges

The three biggest challenges according to HR executives are:

1. Keeping high levels of employee engagement
2. Developing next generation organization leaders
3. Keeping competetive compensation and benefits offerings

The HR competencies that will be the most critical:

1. "Business acumen: ability to understand and process information to contribute to the organization's strategic plan.
2. Organizational leadership: ability to direct and add value to initiatives and processes within the organization.
3. Essential evaluation: ability to interpret information to make business decisions and recommendations.
4. HR expertise: ability to apply the principles and practices of HRM to add to the success of the business".

Labor Demographics

Businesses no longer have a "typical" worker. In the current reality, there exists a diversity in terms of gender, ethnicity and religion among employees within an organization. Companies in developed countries are experiencing a reduction in the number of quality of potential skilled employees. The lack of skilled workers for fairly complex jobs is considered a major issue. This results in fairly older and highly skilled employees to remain within the workforce of the organizations. Due to an increasing gender mix within organizations, managers of the 21st century will be required to be more culturally aware and take into consideration different work ethics, cultural norms and even languages.

Knowledge workers and the Pace of Change

"Knowledge workers are workers who "use their head more than their hands" and who gather and interpret information to improve a product or process for their organizations." In essence, they manage the knowledge for the firm.

The technology currently available should be used more efficiently through hiring and training better and more capable employees, also known as the human resources. Due to a continuous shortage of knowledgeable workers, there will be a shortage on a global scale for the forseeable future. This means each HR manager is going to be competing with every other HR manger in the world, for the available pool of knowledgeable workers.

Understanding HR's Critical Factors

Due to the free will of each employee to perform in any way they consider a fit for the business, the importance for the HR managers to indirectly control their human resources, has become even more important.

Critical Dependent Variables

Dependent variables are considered variables which cannot be influenced directly, but indirectly, because it involves the free will people have within an organization. HR Managers have brought up the following issues, as being the most important and difficult thing to deal with:

1. Productivity
2. Employee engagement
3. Turnover - permanent loss of workers from the organization. A distinction between voluntary and involuntary turnover is made, depending if someone quitted willingly (voluntary) or was forced to (involuntary).
4. Absenteeism - temporary absence of employees

Turnover causes an organization to experience consequences related to organizational productivity, performance and - potentially - competetive advantage. Also, an increase of costs on several levels will be associated with this new turnover, since employees - in most cases- will have to be replaced.

Absenteeism is the failure of an employee to the workplace as scheduled. The consequence that is related to this phenomenom is that it costs the organization money - indirectly. The productivity lost due to the absence of employees also costs money. Not to forget the decreased employee satisfaction due to the extra workload that needs to be carried by the cowokers due to an absent employee.

The Importance of Strategic HRM

In the last 30-40 years HR management has made a shift from a fairly reactive to a proactive approach. HR managers are now actively seeking for new talent to acquire, instead of waiting for people to quit, sometimes unexpectedly. Good HR managers focus on processes within the organization and optimizing the strategies when it comes to fixing problems, whether it may be a training problem, motivational problem or any other people-oriented problem.

HRM has been redesigned to make organizations more competetive and create sustainable competetive advantages, a capability that creates value for customers that rivals can't copy quickly or easily and that allows the organization to differentiate its products or services from those of competitors.

The Influence of Social Media

Social media has developed itself into a major tool for the workplace. It has created an impact for the following phases: recruiting and selection, the onboarding process, training and development and performance management.

HRM Skills

All managers require a mix of technical, interpersonal, conceptual, design and business skills in order to perform successfully.

Technical Skills

Technical skills are defined as the ability to use methods and techniques to perform a task. A successful HR manager is required to possess knowledge of laws, rules and regulations related to HR. In addition, understanding the performance appraisal process, computer skills and interviewing skills are considered highly important.

Interpersonal Skills

Interpersonal skills comprise the ability to understand, communicate, and work well with individuals and groups through developing effective relationships. An HR manager is required to have strong people skills, meaning they have to be empathetic. Empathy is simply being able to put yourself in another person's place - to understand not only what he or she is saying but why he or she is communicating that information to you. Interpersonal skills also translate into holding the ability to work well with others in teams.

Conceptual and Design Skills

Conceptual design skills include the ability to evaluate a situation, identify alternatives, select a reasonable alternative, and make a decision to implement a solution to a problem. This skill set is critical in creating the ability to lead within an organization. The conceptual part of this skill set is the ability to understand what is going on in the business process and understanding how different departments and divisions within an organization operate.

Design skill is the skill set that allows an HR manager to create innovative solutions to problems that have been identified during application of the conceptual skills.

Business Skills

Business-oriented proficiency competency is also considered a mandatory HRM skill. Business skills are the analytical and quantitative skills - including in-depth knowledge of how the business works and its budgeting and strategic-planning processes - that are necessary for a manager to understand and contribute to the profitability of the organization.

Line Managers' HRM Responsibilities

Line Versus Staff Management

Line managers are the individuals who create, manage and maintain the people and organizational processes. HR managers would generally be staff managers, individuals who advise line managers in some field of expertise.

Major HR Responsibilities of Line Management

Every manager's primary job is to manage the resources of the organization, including the human resources. A line manager should therefore understand the following elements, in order to perform sucessfully:

• Legal matters
• Labour costs controlling mechanisms
• Leadership and motivation
• Training and development
• Appraisal and promotion
• Safety and security of employees

HR Managers' responsibilities: Discplines within HRM

The following specialists careers exists when it comes to the specialties of an HR Manager:

• The legal environment: Equal Employment Opportunity (EEO) and diversity management
• Staffing matters
• Training and development
• Employee relationships
• labor and industrial relationships
• Compensation and benefits programs
• Safety and security conditions
• Ethics and sustainability matters

Sustainability is meeting the needs of today without sacrificing future genrations' ability to meet their needs.

Practioner's Model for HRM

The practioner's model is designed to show how each of the sections of HRM interact and which items must be dealt with. The model first describes the critical elements when it comes to organizational functions in order for an organization to be viable long-term. This way the organization will be allowed to operate legally and work towards the goals that it has identified as critical to gaining success. Secondly, it helps identifying what the organization needs to do in order to sustain itself and its human resources over the long term.

In the next step, the model discusses the critical issues in managing those human resources successfully. Then, the model discusses how to maintain the workfoce by managing the compensations and benefits provided to employees. The model consists of the following five sections:

1. 21st Century HRM, strategic planning and HR laws
2. Staffing
3. Developing and managing
4. Compensating
5. Protecting and expanding stakeholder reach

Chapter Summary

This chapter has focused on the difference between the traditional view of HRM and the present view. Human Resource Management used to be a cost center, whereas now it functions more as a productivity center, delivering highly productive employees with the right skills and increasing this productivity even more by putting the right people in the right places. In addition HR is considered a revenue-generating function nowadays. Some challenges that arise within human resource management are maintaining the high levels of employee engagement, developing organizational leaders, maintaining competetive compensation and benefit offerings and managing loss of key workers and their skill sets.

The four critical variables that managers must control are the following: productivity, employee engagement, turnover and absenteeism. The four HRM skills that are considered a requirement are technical skills, interpersonal skills, conceptual and design skills and business skills. In addition, employee satisfaction, ability and willingness are considered critical factors to the organization's success. Although compensation and benefits can provide incentives for employees to be motivated, they are not considered enough. In order to increase employee engagement, the right tools need to be provided as well, the creation of trust and listening to employees are key elements.

What is Strategy-Driven Human Resource Management? - Chapter 2

Strategy and strategic planning: The Organization and the environment

Strategic planning is about planning for the long-term future. In order to be successful, setting goals and measurable standards are required. The importance of the saying “When you fail to plan, you plan to fail.” has been confirmed by research.

The internal and external environment largely decides which actions must be performed by management to provide the right people to accomplish strategic goals. Therefore, HR is considered to play an important role in gathering the right combination of people to reassure the organization's goals and company objectives.

The External environment

The external environment consists of different elements which exist outside the organization and cannot be controlled. There are nine major forces that exist within the external environment:

1. Customers have a big influence on the organization through the purchases of goods and services that they perform. Therefore, offered products by the organization must be improved continuously and an added value must be provided in order for the client to view this product or service as valuable. Skilled personnel is required to successfully add creativity to the knowledge of the organization and increase the quality of the offered producs and services.
2. Competition is an unavoidable component when it comes to reaching clients. Each firm’s performance must be understood relative to the actions of its competitors. Organizations also compete often for the same employees and sometimes suppliers.
3. Suppliers are the party who provide the resources to organizations. For this reason, partnerships with suppliers affect the organization’s performance.
4. Labor force are the employees and the talent pool available to an organization and have a direct effect on the firm’s performance.
5. Shareholders are the owners of a corporation and generally influence management. Most shareholders are not involved in the day-to-day activities of the firm, but they are involved with picking the directors of the corporation. The board of directors has the permission to fire top management, if the performance doesn’t equal the expectations.
6. Society determines what acceptable business practices are. Individuals and groups of stakeholders have various ways to put pressure on businesses to make changes.
7. Technology has changed the way businesses are operating. Computers and internet have changed the way businesses are performing because of their speed. A requirement exists to obtain employees who are comfortable with constantly changing processes, because of the dynamic of new and changing technology.
8. The economy is an element that cannot be controlled and therefore factors such as economic growth, inflation, interest rates etc. cannot be controlled as well. Through measurement of the gross domestic product (GDP), research has shown that businesses perform better during economic growth than during times of recession.
9. The Government sets laws and regulations for businesses to obey. According to the National Association of Manufacturers, the annual costs of complying with these government regulations amount up to an average of $19,564 per employee. The Occupational Safety and Health Administration (OSHA) sets safety standards and the Environmental Protection Agency (EPA) sets pollution standards that must be met. In addition, every employer must obey the wage guidelines from the Department of Labor (DOL).

Strategic Vision and Mission

G.F. Keller stated “Many military historians and contemporary business students view the Chinese military strategist Sun Tzu as the developer of ‘the Bible’ of strategy.” Sun Tzu’s principles can be divided into two components:

1. Knowing oneself
2. Knowing the enemy

Translated into business this means that one should know the internal and external business environment in which one is operating. Strategic planning follows a process that will be detailed in the next paragraphs.

What is Strategy?

Research has established that HRM is an important strategic asset when it comes to influencing the performance of both smaller and larger firms. Strategy is a plan of action designed to achieve a particular set of objectives. Strategic advantage can be created by correct use of the internal and external environment. Strategic advantage arises when you analyze the environment and react to it quicker than competitors do, while using all internal resources efficiently.

In order to confirm the strategy required, three major (strategic) questions should be answered:

1. What is our present situation (where are we now)?
2. Where do we want to go?
3. How do we envision to get there?

For the first questions, different elements should be analyzed, such as: profits made, satisfaction of products for customers, workforce progress, technological development. Question 2 basically plans what we want the organization to look like in a particular point in the future. In addition, question three gives the required information to create the plan that will support the organization in accomplishing its goals.

Visions and Missions

A vision and mission are considered the two most critical components of any successful corporate strategy. Together, these two components direct every employee to the company’s goals and objectives.

The vision – A vision is what we expect to become as an organization at a particular point in time in the future. A vision is not specific in terms of ‘how’ it will be achieved. It provides a focus point in the future. The vision is considered a state of being. It defines who we are, what we stand for, what we believe in and what we want to become.

The mission – lays out our expectations of what we’re going to do in order to become the organization that we have envisioned. The mission statement provides the activities of the organizational units and what they aspire to accomplish, in order to align with the organizational vision. The mission is usually more specific and narrow than the vision. It takes into account whom we serve and how.

When you put the mission and the vision together, the people in the organization get a more complete picture of the direction in which they are expected to go. This way it helps the organization to direct the people towards its goals. Creating a focus is what makes the mission and vision powerful. Working towards the same end result will make the outcome that it will be achieved more likely.

A strong vision and a good mission statement are critical parts of the strategic planning.

Vission + Mission = FOCUS!

Strategy Types and Analysis

Types of Strategies

The different types of strategies can be broken down into three categories: cost leadership, differentiation, and focus or niche strategies.

COST LEADERSHIP. Cost leaders use everything in their power to minimize the costs required to produce products or services. Reducing these production costs can be combined with either applying the same profit margin and increasing profits or lower the margin and provide more competetive prices.

However, low cost strategies have a downside as well. Being considered ‘too cheap’ by clients might cause the association that a brand and the products or services offered, might be unreliable.

DIFFERENTIATION. Applying the strategy of differentiation attempt to create an impression of difference in the mind of the customer, when it comes to the offered products or services. Differentiation is not necessarily based on an actual difference, but the perception of it. According to Coca Cola, the key(s) to selling consumer products are differentiation, differentiation and differentiation, which it achieved with the scripted name logo and contour bottle.

FOCUS OR NICHE. The focus or niche strategy aims at a s pecific portion of a larger market. This could be for instance, a regional market, a particular product line or a buyer group.

How does strategy affects HRM?

There are different areas where the generic corporate strategy affects how jobs within HR are being performed.

HRM AND COST LEADERSHIP. In cases where a cost leadership strategy is being applied, a fairly great interest in minimizing all internal costs, including employee costs exists. When applying this strategy, a high interest for maximum efficiency exists, in order to minimize the costs associated with production.

HRM AND DIFFERENTIATION. When applying a differentiation strategy, the organization is going to be concerned with employees that are flexible and adaptable, innovative and able to create new processes, who can work in uncertain environments, with cross-functional teams. In a differentiation organization there would be much broader job classifications as well as a broader work-planning process.

Strategic Analysis

There are two primary components of strategic analysis used by most organizations. The five forces analysis is a tool that organizations use to analyze the external competetive environment. The second component is called SWOT-analysis. This analysis is used to analyze company-specific environment.

FIVE FORCES ANALYSIS. This anlaysis has been introduced by Michael Porter, who identified competition within an industry as being composite of five competetive forces that should be considered when analyzing competetive situations.

1. Rivalry among competitors.
2. Threat of substitute products and services
3. Potential new entrants
4. Power of suppliers
5. Power of buyers

Companies use the five-forces analysis and other competetive situation analysis tool primarly to make decisions on which business lines to enter and exit and how to allocate resources among the existing business lines.

SWOT ANALYSIS. This tool helps analyzing the internal environment of the organization, concerning its specific capabilities and limitations. When applying this analysis, the organization creates a list of its strengths, weaknesses, opportunities and threats.

Designing a Strategy

Once the organizational vission, mission, generic strategy and analysis of the external environment have been established, the organization’s strategy can be defined.

SETTING OBJECTIVES. Successful strategic management requires a commitment on the part of managers to a defined set of objectives. Successful managers usually have a goal orentiation, meaning they set and achieve objectives. Objectives state what is to be accomplished in singular, specific, and measurable terms, with a target date. The organization has to write atleast one objective for every major goal in the strategy.

The following presents a model adapted from Max Weber to write effective objectives:

To + action verb + singular, specific, measurable result + target date

CREATE A STRATEGY. After setting the strategy, the next step would be to include everything into an organizational plan. Each strategy is tailored to its company and would therefore not be necessarily successful for another company.

IMPLEMENTING, MONITORING AND EVALUATING STRATEGIES. The last step in the strategic planning process is to implement, monitor and evaluate the plan. Measuring progress towards the objective is also considered an important part of controlling. Staying within the budgets is also crucial when it comes to controlling the objectives. In addition, quality must consistently be controlled.

How HR Promotes strategy

HR managers need to recruit, select, train, evaluate, and interact with employees differently, depending on organizational strategies.

Structure

Organizational structure refers to the way in which an organization groups its resources to accomplish its mission.

Each department affects the organization as a whole and each department is affected by other departments as well. Usually an organization is divided into departments such as finance, marketing production, human resources and so on.

Basics of organizational structure

One way to identify an organizational structure is to look at the fundamental components. Complexity, formalization and centralization could be considered structural components.

COMPLEXITY. The first component of organizational structure, is the degree to which three types of differentiation exists within the organization. These different types of differentiation can be horizontal- , vertical – and spatial differentiation. Vertical diferentiation deals with how we break the organization up vertically: the layers of the organization from top to bottom. Horizontal differentiation identifies how we break the organization up horizontally, referring to the different departments. Spatial differentiation refers to the physical seperation of the different departments.

FORMALIZATION. Formalization is the degree to which jobs are standardized within an organization. This refers to the degree to which policies, procedures and rules are created that “program” the jobs of the employees.

CENTRALIZATION. Centralization is the degree to which decision making is concentrated within the organization.

Organizational Culture

Organizational culture is another characteristic that affects how the HR manager operates within the firm. Providing the right organization culture is one of the most important responsibilities of the CEO and other corporate executives.

Organizational culture consists of the values, beliefs, and assumptions about appropriate behavior that members of an organization share.

There are five artifacts of organizational culture to support employees to learn the culture:

1. Heroes
2. Stories
3. Slogans
4. Symbols
5. Ceremonies

There are three levels of culture, which include behavior, values and beliefs, and assumptions.

Measurement tools for strategic HRM

The Economic added value (EVA) is a measure of profits that remain after the cost of capital has been deducted from operating profits. It provides a better understanding to managers and stakeholders of the overall business performance. This definition could be translated into the following formula:

EVA = Net operating profit after tax – (Capital used x Cost of Capital)

The Return on Investment is a measure of the financial return we receive because of something that we do to invest in our organization or its people. The ROI is mostly being used in financial analyses.

The ROI could be translated into the following formula:

ROI = Gain from investment – Cost of investment

Cost of Investment

Balanced scorecard

The balanced scorecard (BSC) measures financial, customer service, internal process, and learning and growth (or sustainability) measures. All four elements of the scorecard are just as important, because the success rate in each area affects the other.

HR Scorecard

The HR Scorecard identifies HR deliverables and HR system alignment, compares HR alignment with strategy, and measures organizational gains created by HR practices.

Trends and issues in HRM

There are structural and cultural issues that cause organizations not to adapt timely to changes. It’s important for managers to decentralize and allow members within a department to make decisions within their area of responsibility. Formalization should also be reduced, in order to allow processes to adapt to new changes. In addition, more complexity should be allowed, in order for employees to respond in a more suitable way.

Chapter Summary

This chapter identifies and explains the major components that are considered part of the external environment. Customers, competition, suppliers, labor force, shareholders, society, technology, the economy and governments, are all part of the forces that make an impact.

Having a vision and a mission is considered an essential asset to any organization and the organization cannot survive without these two elements. The vision is someting fuzzy, it's not specific, since it doesn't focus on how a goal or objective is going to be achieved. Instead, it defines a future state for the organization. The mission, however, is more specific, since it is a statement of what the various organizational units will do and what their objective is. Putting the vision and the mission together helps the people in the organization to get a more clear perspective on the direction they are expected to go.

Major components of the organizational structure are complexity, formalization and centralization. These resources must be structured effectively in order for the organization to achieve its mission.

Organizational culture consists of the values, beliefs and assumptions about appropriate behavior that are shared between the members of the organization. The organizational culture speaks by the way people act.

What is Legal Environment and Diversity Management? - Chapter 3

The Legal environment for HRM and a user’s guide to managing people.

This chapter explores some of the laws HR managers have to follow and the importance of diversity within an organization.

One of the most important definitions when it comes to diversity is discrimination, which is the act of making distinctions among people. Discrimination is something that occurs by HR managers during selection, however it’s illegal discrimination that should not be allowed. Illegal discrimination is making distinctions that harm people and that are based on those people’s membership in a protected class.

The OUCH test

The OUCH test is a rule of thumb used whenever you are contemplating any employment action, to maintain fairness and equity for all your employees or applicants. This test should be used when someone is contemplating any action that concerns employees.

Objective

Acions can be considered objective or subjective. Something that is considered objective, is based on facts. Something that is concerned subjective is based on an emotional state, not on cognitive knowledge.

Uniform application is considered an action that is being applied uniformly. When asking an applicant to perform a test, it is important to create the exact same testing circumstances, as much as you can control them.

Consistent in effect

The Department of Labor and the Equal Employment Opportunity Commission (EEOC) has given the Four-Fifths Rule, which is a test used by various federal courts, the Department of Labor, and the EEOC to determine whether disparate impact exists in an employment test. If the selection ratio for any group is less than four-fifths (e.g. Asian males) of the selection rate for the majority group (e.g. white males) in an employment action, then it constitutes evidence of a potential disparate impact.

Reverse discrimination is discrimination against the majority employee group based on a legally protected factor, such as race or religion.

Job relatedness refers to the fact if the action performed is directly related to the primary aspects of the job in question.

Major Employment Laws

Equal Pay Act of 1963 (EPA)

The Equal Pay Act is considered an equal employment opportunity (EEO). This act requires the same payment for women as men, where they perform the same job within an organization. The job should identify equal in terms of skill, effort, responsibility and the same working conditions.

In case the pay differences because of a difference in seniority, merit, quantity or quality of production, or any factor other than sex (e.g. training programs), then those differences are legally allowed.

Title VII of the Civil Rights Act of 1964 (CRA)

This act can be considered one of the most significant pieces of legislation regulating the EEO. It virtually changed the way of doing business for every organization in the US. The act states it’s illegal to:

“1. To fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or priviliges of employment, because of such invidual’s race, color, religion, sex or national origin; or

2. to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex or national origin.”

Some important concepts introduced during the CRA of 1964 are the following:

• Disparate treatment
• Disparate (also called adverse) impact
• Routine or practice
• Bona fide occupational qualification (BFOQ)
• Business requirement
• Job relatedness

TYPES OF DISCRIMINATION.

The 1964 CRA described three types of discrimination. In addition to the three types, religious discrimination and sexual harassment have been identified by federal courts as fourth and fifth type of discrimination.

Disparate (adverse) Treatment exists when individuals in similar situations are intentionally treated differently, and this treatment is based on an individual’s membership in a protected class. Disparate treatment is generally illegal, unless the employer can prove that there was a “bona fide occupational qualification” that caused to intentionally disallow members of a protected group from applying to the job.

Disparate (adverse) impact occurs when an officially neutral employment practice disproportionately excludes the members of a protected group; it is generally considered to be unintentional, but intent is irrelevant. To identify discrimination under disparate treatment, there has to be intentional discrimination. For disparate discrimination, intent is not relevant.

Pattern or practice occurs when a person or group engages in a sequence of actions over a significant period of time that is intended to deny the rights provided by the Title VII of the 1964 CRA to a member of a protected class.

ORGANIZATIONAL DEFENSES AGAINST DISCRIMINATION CHARGES.

The organization does have ways to defend itself against charges of illegal discrimination. The defend can be performed by showing either that there was a need for a particular characteristic qualification for a specific job or that there was a requirement that the business does certain things in order to remain viable and profitable.

The first defense is a bona fide occupational qualification (BFOQ), a qualification that is absolutely required in order for an individual to be able to successfully do a particular job. In this case the quality for the qualification must be mandatory.

A business necessity exists when a particular practice is necessary for the safe and efficient operation of the business and when there is a specific business purpose for applying a particular standard that may, be discriminatory. A business necessity defense is applied in cases to proof it was needed for a safe and efficient operation and that a specific business purpose exists to apply a paricular standard that may, be discriminatory.

Job relatedness exists when a test for employment is a legitimate measure of an individual’s ability to do the essential functions of a job. For job relatedness to act as a defense against a charge of discrimination, the organization’s action first has to be a business necessity, and then the employer must be able to show that the performed test for employment action was a legitimate measure of an individual’s ability to do the job.

Americans with Disabilities Act of 1990 (ADA)

The first major law dealing with discrimination against disabled individuals was the Rehabilitation Act of 1973.

A disability is considered a physical or mental impairment that substantially limits one or more major life activities, a record of having such an impairment, or being regarded as having such an impairment. Conditions such as obesitas and left-handedness are not considered disabilities.

An organization is required to make reasonable accomodations to physical or mental limitations of an individual with a disability who was otherwise qualified to perform the “essential functions” of the job, unless it would imply an “undue hardship” on the organization’s operation.

A reasonable accomodation is an accomodation made by an employer to allow someone who is disabled but otherwise qualified to do the essential functions of a job to be able to perform that job. Usually, reasonable accomodation is inexpensive and easy to implement.

When finding accomodations, it is also essential to establish the difference between “essential” and “marginal” job functions. Essential functions are the fundamental duties of the position. A function can be considered essential if it meets the following criteria:

1. The function is something that is done routinely and frequently in the job.
2. The function is done only on occasion, but it is an important part of the job.
3. The function may never be performed by the employee; but if necessary, it’s critical that it will be performed correctly.

Marginal job functions are those that may be performed on the job but don't need to be performed by all holders of the job.

Employers are, according to the ADA not required to make every job disability friendly. They are:

• Not required to make reasonable accomodations if the applicant or employee does not request it;
• Not required to make reasonable accomodation if applicants don’t meet required qualifications for a job;
• Not required to lower quality standards or provide personal use items such as glasses or hearing aids to make reasonable accomodations; and
• Not required to make reasonable accomodation if doing so would be an undue hardship.

An undue hardship exists when the level of difficulty for an organization to provide accomodations, determined by looking at the nature and cost of the accomodation and the overall financial resources of the facility, becomes a significant burden on the organization.

Civil Rights Act 1991

The Civil Rights Act of 1991 was enacted as an amendment designed to correct a few major omissions of the 1964 CRA as well as to overturn several US Court decisions. Compensatory damages are monetary damages awarded by the court that compensate the injured person for losses. Such losses can include future pecuniary loss, emotional pain, suffering and loss of enjoyment of life.

Punitive damages are monetary damages awarded by the court that are designed to punish an injuring party that has intentionally, inflicted harm on others. These damages are meant to discourage employers from intentionally discriminating.

Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA)

USERRA was passed to ensure the civilian reemployment rights of military members who were called away from their regular jobs by US government orders. There is no minimum number of employees required for coverage by USERRA. All employers must, however, comply with the law.

Title II of the Genetic Information Nondiscrimination Act of 2008

Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA) “prohibits the use of genetic information in employment, prohibits the intentional acquisition of genetic information about applicants and employees, and imposes strict confidentiality requirements.”

Immigration laws relating to employment and Equal Opportunity

The employment of immigrants are ruled by a series of federal laws. The two major laws in this area are the Immigration and Nationality Act of 1952 (INA) and the Immigration Reform and Control Act of 1986 (IRCA).

Equal Employment Opportunity Commission (EEOC)

The various federal equal employment opportunity (EEO) laws are enforced by the Equal Employment opportunity Commission (EEOC). This is a federal agency which has significant power over employers in the process of investigating complaints of illegal discrimination.

The EEOC has three significant responsibilities:

1. "investigating and resoving discrimination complaints through conciliation or litigation,
2. gathering and compiling statistical information on such complaints, and
3. running education and outreach programs on what constitutes illegal discrimination.”

If discrimination has been identified by the EEOC, it will attempt to provide reconciliation between the parties. If an agreement cannot be made, there are two options:

1. “The agency may aid the allaged victim in bringing suit in federal court.
2. It can issue a “right-to-sue” letter to the alleged victim.” A right-to-sue is a notice from the EEOC, issued if it elects not to prosecute an individual discrimination complaint within the agency, that gives the recipient the right to go directly to the courts with the complaint.

Employer rights

Retaliation is a situation where the organization takes an “adverse employment action” against an employee because the employee brought discrimination charges against the organization or supported someone who brought the discrimination charges against the company.

An adverse employment action is any action such as frings, demotions, schedule reductions, or changes that would harm the individual employee.

Constructive discharge exists when an employee is put under such extreme pressure by management that continued employment becomes intolerable and, as a result, the employee quits, or resigns from the organization.

EEO, Affirmative Action and Diversity, what’s the difference?

Affirmative action is a series of policies, programs, and initiatives that have been instituted by various entities within both government and the private sector that are designed to prefer hiring of individuals from protected groups in certain circumstances, in an attempt to mitigate past discrimination.

If a company is a contractor to the federal government and receives more than $10,000 a year they are required by presedential order (Executive Order 1124) to maintain an affirmative action program. There are exemptions to this rule as well.

Diversity in the workforce

Diversity is simply the existence of differences—in HRM, it deals with different types of people in an organization. Diversity provides both opportunities and challenges.

Diversity is necessary because as the white population continues to shrink and minority populations grow, interacting with a wide selection of customers and suppliers increases sales, revenues and profits. Embracing diversity therefore, creates business opportunities.

The primary advantages of a diverse workforce is to stimulate and provide more creative and innovative solutions to organizational problems.

Creativitiy is a basic ability to think in unique and different ways and apply those thought processes to existing problems.

Innovation is the act of creating useful processes or products based on creative thought processes.

Divergent thinking is the ability to find many possible solutions to a particular problem, including unique, interested, untested solutions.

One of the challenges of diversity is conflict. There exists functional conflict as well as dysfunctional conflict.

Functional conflict is how organizations go through the process of creating new things. Dysfunctional conflict occurs when conflict gets to the point where creativity is stiffled and almost all work becomes either difficult or impossible.

Cohesiveness is an intent and desire for group members to stick together in their actions.

Sexual Harassment: A special type of discrimination

Types of sexual harassment

Quid pro quo harassment is harassment that occurs when some type of benefit or punishment is made contingent upon the employee submitting to sexual advances.

A hostile work environment is a very specific legal term in HRM meaning harassment that occurs when someone’s behavior at work creates an environment that is sexual in nature and that makes it difficult for someone of a particular sex to work in that environment.

A reasonable person is the average person who would look at the situation and its intensity to determine whether the accused perosn was wrong in their actions.

To qualify as sexual harassment in court, a ‘’prima facie’’ (it looking like sexual harassment from a reasonable person’s perspective) has to be shown by the plaintiff. To qualify as prima facie case of sexual harasment the following characteristics must be included:

1. The plaintiff is a member of a protected class;
2. The harassment was based on sex;
3. The person was subject to unwanted sexual advances; or
4. The harassment was severe enough to alter the terms, conditions, or priviliges of employment.

In order for a organization to be considered for liability, two critical conditions must exist:

1. The plaintiff did not invite or incite the advances.
2. The harassment was undesirable and severe enough to alter the terms, conditions, and priviliges of employment.

Chapter Summary

The OUCH test is a rule of thumb used by organizations when contemplating any employment action. It is meant to maintain fairness for all employees or applicants. OUCH stands for Objective, Uniform in application, Consistent in effect, and Has job relatedness. Employment actions should be objective rather than subjective in any case, meaning all employment tests should be applied the same way for all applicants. In addition, the employment action should not have an inconsistent effect on any protected groups. The test must also be directly related to the job for which it has been prepared.

The EEOC is a federal agency that investigates allegations of illegal discrimination that could be based on color, race, religion, sex, national origin, age, disability or genetic information. The EEOC has three general functions: investigating and resolving discrimination allegations, gathering statistical information on complaints and running education and outreach programs on what illegal discrimination is.

Employee rights include suing employers and engaging in the EEOC investigation. Employer rights include avoiding retaliation for employees participating in the EEOC investigation and avoiding a work environment that could lead to constructive discharge.

Equal employment opportunity deals with different laws and regulations that are specifically and narrowly defined, covering subjects as affirmative action and diversity.

What is the essence of Workforce Planning? - Chapter 4

Job Analysis, Design, and Employment Forecasting

Workforce Planning: workflow analysis

In order to maximize productivity within the organization, it is important to place the right people in the right positions. The reason for this, is that mismatched employees have lower job satisfaction, leading to absenteeism, higher turnover and of course, lower levels of productivity compared to correctly matched people.

Workflow analysis is the tool that we use to identify what has to be done within the organization to produce a product or service.

Organizational Output

Workflow analysis is being performed by analyzing backwards and looking at the output. The steps in a process should be designed based on the desired end result.

Tasks and Input

There is a simple mnemonic tool (a memory tool) available to remember what resource inputs we have available. It’s called the four M’s:

1. Machines: resources such as tools and equipment
2. Material: any physical resource that is being used in production
3. Manpower: the people who are needed in the production process
4. Money: the capital that must be invested to run the processes

Job Analysis

Job analysis is the process used to identify the work performed and the working conditions for each of the jobs within our organizations. It uses a small part of the workflow. The result of the analyses includes duties, responsibilities, skills, knowledge, outcomes and other possible factors. From this analysis the job description and the job specification are prepared.

Job description identifies the major tasks, duties and responsibilities that are components of a job. The job specification identifies the qualifications of a person who should be capable of doing the job tasks noted in the job description.

Job analysis is required for an organization in order to perform any of the following functions:

1. Human resource planning
2. Job evaluation for compensation
3. Staffing
4. Training
5. Performance management
6. Maintain a safe working environment

Other elements that can be effected by performing a job anlaysis are individual career planning and development, organizational strategy, employee relations and legal compliance.

Databases

Databases can be used to perform a job analysis. The US Department of Labor’s O* NET is a free resource to be used for this analysis. It identifies six categories within its occupational classification structure.

• Worker characteristics
• Worker requirements
• Experience requirements
• Occupational requirements
• Workforce characteristics
• Occupation-specific information

Job analysis Methods

QUESTIONNAIRES. There is a number of highly valid and reliable questionnaires available for use in the job analysis process. This questionnaire can be handed to many different people in order to analyze the job in question. This questionnaire helps to identify functions that are part of a specific job.

Questionnaire advantages:

• Quick way to get information from large number of sources
• Easy to quantify
• Relatively low cost
• Generally valid and reliable instruments
• No need for a trained interviewer or observer

Questionnaire Disadvantages

• Incomplete responses
• Responses may be hard to interpret
• Low response rates

INTERVIEWS. During an interview questions are asked of the incumbent and the answers are compiled into a profile.

Interview advantages

• The incumbent is most familiar with the job
• Could include qualitive data
• Allows interviewer to follow up confusing/incomplete answers
• Simple and quick method
• Opportunity to explain the need for the analysis and answer questions

Interview disadvantages

• Dependent on trained interviewer and well-designed questions
• Workers may exaggerate their job duties.

DIARIES. In this case the worker maintains a diary and writes down all the tasks accomplished while performing the job.

OBSERVATION. In this case an observer shadows the worker and logs the tasks performed by the worker over a period of time. This way obvious tasks, that might have been forgotten to be put on paper or mentioned by the employee performing the job, are recorded as well.

SUBJECT MATTER EXPERT (SME) PANEL. In some cases, a panel of subject matter experts are called upon. This method is also called the technical conference method and allows the employees to use their expertise to identify the key factors of the job.

Job design/redesign

Job design is the process of identifying tasks that each employee is responsible for completing, as well as identifing how those tasks will be accomplished. Job design affects job satisfaction and productivity.

Approached to job design and redesign

There are four primary approaches to job design: mechanistic, biological, perpetual-motor, and motivational.

1. Mechanistic job designs focuse on designing jobs around the concepts of task specialization, skill simplification, and repetition.
2. Biological job design focuses on minimizing the physical burden on the worker by structuring the physical work environment in alignment with how the body works.
3. Perceptual-motor job design focuses on designing jobs with tasks that remain within the worker’s normal mental capabilities and limitations.
4. Motivational job design focuses on the job characteristics that affect the psychological meaning and motivational potential of the job, and it views attitudinal variables as the most important outcomes of job design.

Job Characteristic Model (JCM)

The job characteristic model provides conceptual framework for designing or enriching jobs based on core job characteristics. This model can be used by individual managers or team members. In JCM the five core job characteristics can be fine-tuned to improve the outcome of a job when it comes to the employees’ productivity and their quality of working life.

1. Skill variety represents the number of diverse tasks that a job consists of.
2. Task identity refers to the degree an employee performs a whole identifiable task.
3. Task significance represents the significance of a task to the employee.
4. Autonomy shows the degree to which employees have rights to make decisions in planning, organizing and controlling the tasks performed.
5. Feedback gives employees insight in how well they are working.

The first three core job characteristics lead to an experienced meaningfulness of work. When an employee is offered a variety of tasks to perform and perceives the tasks and therefore the job as meaningful, the employee is more likely to stay in the job and perform well. In addition, if people are given responsibility, they will likely experience to feel responsible for the decisions they are making. Feedback will lead to the psychological state of knowledge of the results. Knowing this result can create a psychological satisfaction as well.

Designing Motivational Jobs

Job simplification is the process of eliminating or combining tasks and/or changing the work sequence to improve performance. Job simplification breaks a job down into steps using a flowchart, then employees analyze the steps to check if they can perform the following:

• Eliminate a(n) (unnecessary) task
• Combine tasks
• Change sequence of tasks

Job Expansion

Job expansion is the process of making jobs broader, with less repetition. Jobs can be expanded through rotation, enlargement, and enrichment. This supports in making the work more varied.

Work Teams

The purpose of team-based jobs is to provide a team with an entire piece of work. This can be considered a form of job enrichment. As a result, autonomy, task identity and taks siginificance go up at a substantial rate.

Flexible job design

Another tool that can be used in the workplace to improve motivation in the entire groups of jobs include flextime, job sharing, telecommuting, and a compressed workweek.

Flextime allows employees with a flexible set of working hours. There must be a set of core hours where are employees are at work.

In job sharing (also called work sharing) two or more people are allowed to share one job, including the workload and benefits attached to this job.

Telecommuting allows workers to work from different locations. It also saves an organization money since no office space is required for every employee.

A compressed workweek means that a normal regular 40-hour workweek of 5 days is being compressed in less days. For example, a 40-hour workweek can be compressed to a 10-hour workweek based on 4 days.

HR Forecasting

HR Forecasting identifies the estimatd supply and demand for the different types of human resources in the organization over some future period, based on analysis of past and present demand.

Forecasting methods

QUANTITATIVE FORECASTING. Quantitative forecasting utilizes mathematics to forecast future events based on historical data. The three most common methods are trend analysis, ratio analysis and regression analysis.

Trend analysis is a process of reviewing historical items such as revenues and relating changes in those items to some business factor to form a predictive chart.

Ratio analysis is the process of reviewing historical data and calculating specific proportions between a business factor (such as production) and the number of employees needed. Regression analysis is a statistical technique that identifies the relationship between a series of variable data points for use in forecasting future variables. Statistical software can be used to create a regression diagram.

QUALITATIVE FORECASTING. Qualitative forecasting uses nonquantitative methods to forecast the future, usually based on knowledge provided by a pool of experts on a certain subject or industry. The experts will be able to provide a consensus on how to adjust the quantitative data for today’s environment.

Reconciling Internal Labor Supply and Demand

Options for a Labor Surplus

Options in cases of a labor surplus are downsizing, layoffs, pay reduction, natural attrition, hiring freezes, retraining, transfers and early retirement.

A layoff is a process of terminating a group of employees, usually due to some business downturn or perhaps a technological change, with intent to improve organizational efficiency and effectiveness.

Options for Labor shortage

When a labor shortage occurs, possible solutions could be working overtime by current employees, hiring temporary or contract workers, technological innovation, retaining workers, outsourcing and turnover reduction. Also new hires, are a solution to this problem.

Trends and issues in HRM

Gig work is not going to overtake regular employment as the primary means of labor engagement any time soon. However, it is increasing in a massive rate.

Automation work – work that was previously peformed by a person and now has been taken over by a machine – is increasing at a fast rate.

Chapter Summary

The workflow analysis starts by observing the end result. Once the expected results are established, the required steps in order to obtain these results can be identified. This forms an analysis of the tasks that will have to be performed in order to create the expected output. Job analysis is the basis of almost everything that HR executes. Jobs need to be analyzed in order to perform HR planning, compensate employees, recruit, select, train and manage people successfully.

The four major tools for motivational job design are job simplification, job expansion, team-based job design and flexible job design. The two types of HR forecasting are qualitative forecasting and quantitative forecasting. The three most common quantitative methods for forecasting are trend analysis, ratio analysis and regression analysis.

When an organization is facing labor surplus or shortage, there are various options that apply depending on the need. For a labor shortage are overtime, hiring temporary workers, outsourcing, reducing turnover and hiring new employees. The options for a labor surplus are layoff, pay reduction, natural attrition, a hiring freeze, retraining and transferring and early retirement.

The level of automation has increased severely the past years. With the speed of computers there is a possibility to think, learn and analyze faster.

How is the recruiting of job candidates done? - Chapter 5

The total costs associated with recruiting, selecting, and training new employees can often add up to as much as 300% to 400% of their annual salary. After the forecasting process and job analyses, the talent acquisition process can be started. This meant the correct numbers and types of people will have to be recruited.

Recruiting is the process of creating a reasonale pool of qualified candidates for a job opening.

External forces acting on recruiting efforts

There are several factors that influence the ability to recruit individuals at a particular point in time. One factor is the general shape of national and world economies. In addition, legal and regulatory aspects can have some effects on the hiring of part-time and temporary workers instead of full-time employees.

The external factors which are infuencing recruiting fall into two large categories: the available labor market and the social and legal environment.

The labor market is the external pool of condidates from which the recruits are being drawn. When studying the labor market, a research on the supply and demand in a particular category of jobs should be studied. In addition, generational factors in the labor force should be taken into consideration. In the US workforce, currently the millennial generation is the biggest generation. The current generations are: baby boomers (1946-1964), Gen X or the baby bustes (1965-1979), Gen Y or the millennials (1980-1994) and just the beginning of Gen Z or the iGeneration(1995-). Each generation tends to work differently. The millennial generation has shown to work better in a collaborative environment.

Also, competitors should be taken into account when studying the labor market. If, for example, there is great competition to hire technical or capable employees, the recruiting environment will be considered to be more difficult.

SOCIAL AND LEGAL ENVIRONMENT. The social environment people are operating in nowadays, also influences the way recruiting is being performed. Time to ourselves, job satisfaction and opportunities to grow and move up in the company are considered way more important than during the past.

What are organizational recruiting considerations?

Once knowledge on the labor market and legal environment is obtained, the internal issues that control recruiting processes should be considered. When is a recruiting process required? What alternatives are there to recruiting (outsourcing)? Policies must be set up to maintain these topics and consistency should be cherished as well during this process.

What policies to set?

Important things to consider when establishing how to move through the recruiting process:

• Under what conditions will recruitment take place?
• What alternatives are available? In which cases will they be used?
• Should recruitment take place locally regionally, nationally or globally?
• How should technology be incorporated in this process?
• Do we consider our first rank when recruiting? Or do we start outside?
• What primary resources will provide us the right employees for the organization?

Alternatives to Recruitment

There should be no need to hire new employees if a temporary solution like working overtime for one or two months, might solve the problem. It is also important to consider the current labor market if the idea exists to hire new employees. Depending if the labor market is tight or not, it might be beneficial to hire new employees. A policy within each organization should be created to determine when the labor market should be utilized and when it shouldn’t.

Reach of Recruiting Effort

There should be a plan that explains in which situations there should be recruited from local sources, globally or even internationally.

How has social media influenced recruiting?

Social media profiles, such as LinkedIn and Facebook are being heavily used to assist HR managers in the recruiting process. The social media platforms allow HR managers to search more easily for specific employees with a detailed set of skills.

Nowadays, social media provides HR managers with a lot of valuable information. Facebook was estimated to have over 1.9 billion of users during 2017, meaning this provides a huge insight in the possible labor market. In addition, for higher-level jobs, where there will be fewer individuals with the required skills available, job sites like Indeed, Jobvite, Monster.com and Google Jobs can provide a much larger exposure of the vacancy to a group of potential candidates.

Social media sites can also assist in providing core information about the organization and its cultural values to the potential candidates. This particular information can provide the candidates with the necessary information to decide if the organization fits their personal preferences and needs. This prevents the organization from hiring people that are not a fit and having them to quit the job in a fairly short amount of time.

Internal or External Recruiting?

Policies should be created to regulate in which circumstances there will be recruited from the internal pool and for which circumstances there will be a search outside the organization. These policies will assure that the internal employees will have a "fair" perspective of the recruiting process.

What is internal recruiting?

Internal recruiting involves job openings with current employees or people the employees know.

There are two common types of recruiting that can be considered:

• Promotions from within
• Employee referrals

When it comes to promotions from within, there are several options for the organization. The organization can choose from open, targeted or closed recruiting.

Open recruiting refers to advertising a job openly within the organization, so each qualified person can apply for the job. Target recruiting means that the job is not advertised openly, but managers are asked privately to nominate the most suitable candidates for the vacancy. Closed recruiting arises when hiring managers have a space to fill within their team and they notify the HR team.

A managerial sponsorship can be requested for a peson to be considered for a job opportunity through internal recruiting, where this person hasn't been selected yet in the regular recruiting process.

What are the advantages of internal recruiting?

• increases in organizational commitment and job satisfaction
• an increased value of the employee by understanding the bigger picture
• comfortability of the current employee within the organization to continue and knowledge of processes
• the organization has existing knowledge on the employee
• recruiting internally saves money
• the process of recruiting internally is faster

What are the disadvantages of recruiting internally?

• there is a smaller pool of applicants available
• by recruiting internally a job position will open where the applicant has left his or her team
• previous success in one job position doesn't guarantee success in a new position
• an external candidate could possess better qualities for the job position
• a sense of capability and qualification success among internal applicants, whether they are capable or not.
• a strong persistence to change or stagnated creativity and innovation can be created

What is external recruiting?

External recruiting is the process of engaging individuals from the labor market outside the firm to apply for a job.

There are different sources available for the external recruiting process:

• Walk-ins: applicants who apply to the organization for a job without a vacancy being available.
• Educational institutions: the recruiting process can take place at different levels of schools already, for applicants with little or no experience.
• Employment agencies: there are three major types of employment agencies available, which are the temporary agencies, the public agencies and the private employment agencies. Where the temporary agencies provide part- or full-time help for limited periods of time, the public agencies are considered state employment services to provide job candidates at very low or no cost. The private employment agencies are being owned privately and charge a fee for the services they provide.The last category of agencies is especially used for hiring people with prior experience and can be divided into three categories:
  • General employment agencies, which operate on a for-profit basis. These are non-specialized agencies.
  • Contingency agencies offer employees and are paid when the employee is hired. These agencies usually work with a more skilled set of employees.
  • Retained search firms or executive recruiters are paid to search for a specific type of employee for the organization and are paid regardless if an applicant can be offered and the hiring is a success or not.
• Advertising: there are different ways for advertisements to be used effectively. Starting with a ''help wanted'' sign in the window can be effective. Also, advertisements in newspapers, professional magazines and trade magazines are considered very effective for reaching possible applicants.

What are the advantages of external recruiting?

• resistance to change within the organization is being avoided, allowing innovative ways for operating.
• availability of indivduals with complex skill sets
• lowering of training costs for skilled position, by hiring people with the required skills.
• increase of diversity within the organization

What are the disadvantages of external recruiting?

• disruption of the work team by introducing new ways of operating
• longer recruitment time
• possibility of adverse effect on employees by a perceived disability of moving up in the organization
• increase of orientation and training costs
• no organizational history available on the individual

What are the challenges during recruiting?

The following challenges could arise during the recruiting process:

• Budgetary constraints
• Policy constraints and organizational image
• The recruiter-candidate interaction
• Job characteristics and the Realistic Job Preview (RJP)

Evaluation of recruiting programs

Yield Ratio

The yield ratio is a calculation of how many people make it through the recruiting step to the next step in the hiring process.

The cost per hire shows the costs involved with hiring an applicant:

Cost per Hire = Sum (External Costs) + Sum (Internal costs)

Number of hires

Chapter Summary

The primary goal of the recruiting process is to get people within the organization to apply for different job vacancies or get outsiders to join the company. A reasonable pool of candidates must be created in order to select qualified people to work within the organization. The main external forces within recruiting are the external labor market and the social and legal forces that apply as well as the potential recruits. Supply and demand, the unemployment rate, competitors and social media are factors that influence the search of potential recruits.

Main items that need to be considered before recruiting are when to recruit, alternatives to recruitment, the reach of recruiting efforts and the issue of social media and. The advantages of internal recruiting are the increase in organizational commitment and job satisfaction, the ability to learn more on the bigger view, the existing relationship between the organization and the employee. A possible disadvantage is a smaller pool of applicants and a new job position to fill. The advantages of external recruiting are avoiding resistance to change, encourage innovation, increase creativity and to find people with the right and unique skill sets. A possible disadvantage is disruption of the workforce and longer recruiting process.

Which steps lead to selecting new employees? - Chapter 6

What does the selection process look like?

The importance of the selection process

The selection process is the process of choosing the best-qualified applicant who was recruited for a given job. The OUCH-test could be applied in this case to measure if a particular tool or measure should be used during the selection process.

The tool should be objective and facts and knowledge should be used. There should be a uniformity in application of the measure. In addition, the tool or measure should have job relatedness: it should show it has a relationship with the essential requirements of the job.

A negligent hire is a legal concept that says if the organization hires someone who may pose a danger to coworkers, customers, suppliers, or other third parties, and if that person then harms someone else in the course of working for the company, then the company can be held liable for the individual's actions.

What kind of 'fit' should the organization be looking for?

When looking of the perfect fit for the organization there are three categories in which there should be a fit:

• Personality
• Ability
• Person-Organization

What guidelines should be used during the employment selection process?

The Uniform Guidelines on Employee Selection Procedures (UGESP) provide information that can be used to avoid discriminatory hiring practices as well as discimination in other employment decisions.

The UGESP also mentions the need for a valid employment test that is used by an employer to be true and reliable.

Validity is the extent to which a test measures what it claims to measure. The UGESP notes that in order to fulfill the required validity, users may rely upon criterion-related validity studies, content validity studies, or construct validity studies to validate a particular selection procedure.

The measures the UGESP is referring to are the following:

• Criterion-related validity is an assessment of the ability of a test to measure some other factor related to the test.
• Content validity is an assessment of whether a test measures knowledge or understanding of the items it is supposed to measure.
• Construct validity measures a theoretical concept or trait that is not directly observable.
• Reliability is the consistency of a test measurement.

How does application and preliminary screening work?

The first step in the recruiting process is to have applicants fill out an application form or have them send in their resume. Then a preliminary screening takes place, which performs a quick background check testing and initial interviewing to narrow down the applicants to the best matches for the job.

What are pre-employment inquiries?

During an interview, no job applicant can legally be asked any information that can be used to discriminate against the job applicant based on protected group characteristics. Therefore, the elements of the OUCH-test should always be taken into consideration and be memorized:

1. The facts from the job decription and specification should be considered as leading during the interview. If, based on these documents, there is no reason to ask a certain question, that question should not be asked.
2. Any general question that is being asked during an interview, should be presented to all candidates.
3. Any question should be checked with the four-fifth rule to look for consistency between different protected groups. If this question raises an inconsistent effect, it should be eleminated from the interview selection process.
4. Every question asked during an interview should be job related.

Please note that state and local laws may vary when reviewing an application.

What kind of testing should occur during a selection process?

During the selection process, valid tests should be performed to select the appropriate candidates. However, the EEOC stated that the organization will have to show that the selection procedure being used is a valid measure for the job being filled.

• Polygraph testing: this test is only allowed in a few circumstances.
• Genetic Testing: the Genetic Information Nondiscrimination Act (GINA) has been established to protect people from discrimination by health insurers and employers on the basis of their DNA.
• Written Testing: this type of testing can be used to predict job success. Nowadays, written testing is considered to be a common part of the selection process.
  • Personality and interest tests can also assist in selecting the right applicant.
  • Cognitive ability tests test the general intelligence of an applicant, but should however, be developed in a reliable and professional way.
  • Honesty or integrity tests can be performed on a paper method or through a polygraph test.
• Physical testing: these type of tests are designed to ensure that applicants are able to perform in ways as defined in the job specification. This type of testing is generally helpful when specific physical skills are required by the employee.

What types of interviews can be performed?

There are three types of basic interviews that can be performed.

In a structured interview, all candidates are asked the same questions. In an unstructured interview there are no preplanned questions or sequence of topics. In a semistructured interview, a planned list of questions is available, but some unidentified questions will be asked as well to the applicant.

During an interview, there are four types of questions that can be asked:

1. Closed-ended questions: require a limited response.
2. Open-ended questions: require a detailed response.
3. Hypothetical questions: require a description during a certain situation.
4. Probing questions: require a clarification response.

How to prepare for the interview?

Preparing an interview consists of six steps that should be performed.

• Step 1: Review the job description and specification
• Step 2: Prepare a realistic job preview
• Step 3: Plan the interview type
• Step 4: Develop questions for all candidates
• Step 5: Develop a form for the sequence
• Step 6: Develop questions for each candidate

How to conduct the interview?

When conducting the interview, there are five steps that should be followed:

1. Open the interview
2. Present the realistic job preview (RJP)
3. Ask the questions
4. Introduce the top candidates to coworkers
5. Close the interview

Should background checks be performed?

Background checks are required to prevent negligent hires. In addition to the verification of the information provided by the applicant through the application forms and emails, there should be additional background checks performed. The following background checks are available:

• Credit Checks: although several states have put a limit on the use of this check, the most common background check is the credit check. They are subject to the Fair Credit Check Reporting Act (FCRA), which requires that employers disclose the the applicants that they will use credit reports for employment decisions.
• Criminal background checks: due to negligent hires, most companies will nowadays run a complete background check. In the following cases, a background check can result in an applicant being prevented from hiring:
  • The nature and seriousness of the offense
  • how long ago it occurred
  • what type of job the individual is being considered for
• Reference checks: these include calls to references and letters from employers, personal letters of recommendation and possibly cold calls to previous employers.
• Social media and web searches: since very large amounts of information is currently available through the web, this is also used as a source to check the applicant.

How to end the selection process when offering the job?

The following questions should be asked when the decision has to be made on hiring the applicant:

1. Does the candidate possess the basic qualifications for the job (personality, ability and organization-fit?
2. Does this candidate want this actual job?
3. Is the candidate basically honest and telling the truth?

There are two methods available for the final selection process:

• multiple-hurdle selection model requires that each applicant must pass a particular selection test in order to go on to the next test.
• compensatory selection model allows an individual to do poorly on one test but make up for that poor grade by doing exceptionally well on other tests.

It is also beneficial to obtain the coworkers opinion when hiring the right applicant, since they are the ones who will have to work with the new employee. The best candidate should be contacted and offered the job. If the candidate does not accept the job, the next-best candidate can be offered the job.

Chapter Summary

The steps in the selection process when recruiting a new employee are (1) the application, (2) preliminary screening, (3) initial interview and testing, (4), second interviews, (5) detailed background checks, (6) selection decision and conditional job offer, (7) drug screening and physical exam and (8) Hiring. The selection process is a very important step because this is the phase where the best eligible applicant must be chosen. Hiring unproductive members can cause lower motivation and job satisfaction in all companies' employees and is therefore considered a risk that should be avoided at all times.

There should be a fit with the organization on three levels in order to hire the applicant: a personality-job fit, ability-job fit and person-job fit. Managers need to get the best productivity out of their workforce. To accomplish this, managers have to treat employees differently, but fairly, in order to put the right person in the right place. Common problems that managers encounter during the selection process are rushing, stereotyping, halo and horn effects and premature selection.

The steps of an interview performed by HR are opening the interview, presenting a realistic job preview (RJP), asking questions, introducing top candidates to coworkers and closing the interview.

Why is there a need for training and development of new employees?- Chapter 7

When the new application has been hired and the selection process has been completed, the next step is to train the applicant to successfully work within the new environment. The employee should atleast get a basic training on the organization and its routine processes. Effective development and training should be considered investments, not expenses.

Training and development

Training is usally based on the competencies employees are required to have. Competency models identify the knowledge, skills, and abilities (known in HR as KSAs) needed to perform a particular job. The competency models can be utilized to identify what trainings will be required.

Training is the process of teaching employees the skills necessary to perform a job. Employees are trained to provide them with the KSAs that they need to succeed at their job. The training is mainly intended to put to immediate use by the employee.

Employee development is ongoing education to improve knowledge and skills for present and future jobs. This teaches employees how to move up in the organization.

When is training needed?

Training is required in the following situations:

1. new employee onboarding
2. new job requirements or processes
3. remediation: the correction of a deficiency or failure in a process or procedure.
4. employee development for advancement

What are the steps in a training process?

When establishing the training remedies, it is important to know who needs training and what kind of training. The following steps are, therefore, considered part of the training process:

1. Assessing needs
2. Identifying how to impact behavior
3. Design training
4. Deliver training
5. Assess training

What is a needs assessment?

The first and probably most important step in establishing the training process, is the needs assessment: the process of analyzing the difference between what is currently occurring within a job or jobs and what is required - either now or in the future - based on the organization's operation and strategic goals.

If the needs assessment is not done correctly, a training course may be poorly designed and it can cover the wrong information.

What are challenges to the training process?

As part of the needs assessment, there are some common challenges that should be discussed. The common challenges can be divided into the following categories:

1. Unprepared workforce
2. Return on Investment/Cost justification
3. Resistance to change and insecurity of employees
4. Strategic Congruence
5. Scheduling of timing and location of training

What is employee readiness?

The managers needs to select the employees that must be part of the training. It's common for employees to be uncertain about the training process because of their ability to learn. Therefore the employer needs to establish if the employees are ready and willing to learn.

ABILITY. Self-efficacy is whether or not a person believes that they have the capability to do something or achieve a particular goal. If an employee's self-efficicacy is low, it's highly likely that they will not sucessfully complete the training process.

WILLINGNESS. It's important for employees to be willing to learn what is taught in the training process. The employer needs to define the motivation of the employees to learn. Sometimes employees feel that they don't need to learn new information.

What is learning and shaping behavior?

Learning within an organization refers to the fact that the employer needs to know that the employee has learnt what the organization was trying to teach. Learning is any relatively permanent change in behavior that occurs as a result of experience or practice. This definition is functional because it allows to measure the change by the way employees act.

There are three common learning theories: classical conditioning, operant conditioning and social learning.

CLASSICAL CONDITIONING. Classical conditioning is a technique made famous by Ivan Pavlov. Pavlov proved that animals could involuntarily react to a stimulus in their environment if they associate that stimulus with something else. Human beings react to stimuli the same way animals do, involutarily.

OPERANT CONDITIONING. This type of conditioning is based on reinforcement. Behavior is based on consequences received from behaving a certain way.

SOCIAL LEARNING. This type of learning does not involve consequences from or our actions, but consequences from another person's actions. Social learning is also called vicarious learning, meaning "experiences or realized through imaginative or sympathetic participation in the experience of another."

SOCIAL MEDIA FOR SOCIAL LEARNING. This type of learning is considered to be very effective since it is easily accessible nowadays and readily available.

How to shape behavior?

There are four types of shaping behavior. Understanding and knowing these types can assist in motivating coworkers to act in ways which are required for improvement and success in their jobs.

The following types of shaping behavior are available:

1. Positive reinforcement: providing a reward for positive behavior.
2. Negative reinforcement: a withdrawal of a harmful thing from the environment in response to a positive action on the part of the subject.
3. Punishment: application of an adverse consequence or removal of a reward, in order to decrease unwanted behavior.
4. Extinction: the lack of response, either positive or negative, to avoid reinforcing an undesirable behavior.

The above tools allow employers to change the behavior of the employees in the ways they do want them to behave. In cases where target behavior must be increased, positive reinforcement or negative reinforcement can be used. In case targeted behavior must be decreased, punishment or extinction should be used as a method.

What learning styles are available?

The Fleming learning style provides three primary learning options: visual, auditory and tactile learning. Tactile learnings prefer to learn by doing. Depending on the type of people an organization is dealing with, the most suitable learning style can be applied.

The Kolb learning style is considered to be more complex and was developed by David Kolb. A self-assessment should be completed for this style to predict the preferred learning style.

For on-the-job training, a four step procedure should be followed, to complete the training method efficiently:

1. Preparation of the trainee
2. Presentation of the task by the trainer
3. Performance of the task by the trainer
4. Performance of the task by the trainee
5. Follow-up

What are common assessment methods?

One of the most common assessment options, was first identified by Donald Kirkpatrick and is called the Four-Level Evaluation Method. It measures reaction, learning, behaviors, and results.

Reaction evaluations measure the response of individuals to the actual training process. The participants are directly asked how they feel about the training, the content and process.

Learning evaluations are considered level-two measures in order to determine what knowledge the individual has gained, if they learned any new skills from the training, and whether the person's attitude towards their knowledge or skill set has changed as a result.

Behavior evaluations are third level evaluating training processes. Behavior evaluations are designed to determine whether or not the trainee's on-the-job behavior has changed because of the training provided. This measure is usually performed in the form of observation of the indidivual on the job, after completion of the training procedure.

Results evaluation is the fourth and final level of training evaluation. This measures if the behavioral changes of the individual has impacted the organization's results positively.

Measuring training success can be done by using the Return on investment (ROI) as a measure. The following formula should be applied:

ROI = Gain from investment - Cost of investment

Cost of investment

In addition, customer satisfaction is also an area where the training results would be interesting to measure.

What are common methods of employee development?

There are series of common methods used by organizations for development. There are four ways for development:

1. Outsourcing employee development
2. Formal education
3. Experience
4. Employee assessment
   1. Psychological assessment
   2. Emotional intelligence

Chapter Summary

The major difference between training and development is that training is designed to provide employees with the right knowledge, skills and abilities (KSAs) that they require to succeed in their job, whereas development is designed to teach workers how to move up in the organization in the future by becoming skilled at the tasks they need to know, when performing the higher-level job. Important aspects to pay attention to are training of the new workforce, to introduce the new employees to the culture of the organization. Other areas of training that are considered important are changes of processes or procedures, a failure to perform successfully or when employee development opportunities arise.

The first step when deciding a necessary training is to perform a needs assessment. The second step involves selecting how to shape employee behavior.The next steps are desiging the training, selecting the delivery method and delivering the training. Common challenges when providing training are including unprepared workers, difficulty in identifying the ROI provided, employee resistance, matching the training to strategic goals and logistic issues.

Three common learning theories that apply are classical conditioning, operant conditioning and social learning. The delivery types of the training include on-the-job training (OJT), distance learning and simulations.

What are performance management systems and why appraisal? - Chapter 8

Performance evaluation is considered an important part of the job of HRM managers, in order to check if the jobs are being performed in the right way. The performance of employees should be managed over time and they should be motivated to stay productive.

Performance management is the process of identifying, measuring, managing and developing the performance of the human resources in an organization.

Performance appraisal is the ongoing process of evaluating employee performance.

How does performance appraisal work?

There are four steps which are considered to be part of the performance appraisal process.

1. Job analysis
2. Develop standards and measurement methods
3. Informal performance appraisal- coaching and discipline
4. Prepare for and conduct the formal performance appraisal

Accurate performance measures?

The American National Standards Institute (ANSI) has outlined the minimum required elements of a performance management sytem for goal setting, performance review and performance improvement strategies.

In order to obtain an accurate measure of performance, it must be valid, reliable, acceptable, feasible and specific and based on the mission and objectives.

Why are performance appraisals conducted?

If performance appraisals are done in the correct way, they can provide the organization with a series of valuable results. There are three major reasons why performance evaluations are completed and why they are so critical to continually improve organizational performance.

Communication (informing) between management and employees can be influenced by performance appraisals. Successful communication requires two-way interaction.

Decision making (evaluating) about employees within the organization is also an important part connected to performance appraisals. Decisions need to be made based on the information that is obtained from communication.

Motivation (engaging) is defined as the willingness to achieve organizational objectives. The organization wants to create willingness to achieve the organization's objectives by handing over performance appraisals.

Effective performance appraisal

An effective performance appraisal has two parts, evaluating and motivating and it does both parts well. Evaluating is about assessing the past performance and motivating is about influencing the future performance.

A commong problem in evaluation is overpowering the employee with a lot of negative information about their performance they have not heard during coaching. As a human reaction, employees will stop listening and raise their shield towards all this negative information. Usually employees consider this unfair or one-sided.

The key to avoid problems during an evaluation is not to mention a weakness that the employee has not been made previously aware off. This is essential in order to run a smooth evaluation process.

In order to improve the performance of the employees, the manager needs to be able to provide motivational opportunities for the employees. The tools, training and other methods that will allow employees to improve their behavior should be provided by the organization.

Separating evaluation and development into two different interviews can also be beneficial. The first meeting is to evaluate the employee's past performance, to point out the strengths and areas of improvement. The second meeting, should be used to discuss a development plan that should lead to increased performance, which will result in a higher future evaluative rating during the next appraisal.

What is being assessed?

There are different forms of appraisal that can be discussed. The three primary options are traits, behaviors and results.

Traits identify the physical or psychological characteristics of a person. The traits can also be discussed during the performance appraisal process. Traits such as inquisitiveness, conscientiousness and general cognitive ability are considered valuable skills in jobs that require management and leadership skills.

Behaviors are simply the actions taken by an individual. This refers to the things that individuals do and say. Therefore, behavioral appraisals measure what individuals do and say at the workplace, not their personal characteristics. This feedback is more respected and honoured by employees since they prefer to be judged on what they do and not by who they ''are''.

Results are simply a measure of the goals achieved through a work process. Using this as a particular measurement tool allows the management to identify if the organizational goals are achieved by the performance of the employees.

From all these methods results and behavior are the most defendable options for appraisal, since they are more reliable and valid than trait based appraisals.

How and when are appraisal methods and forms used?

The critical incidents method is a performance appraisal method in which a manager keeps a written record of the positive and negative performance of the employees throughout the performance period.

The management by objectives (MBO) method is a process in which managers and employees jointly set objectives for the employees, periodically evaluate performance, and reward employees according to their results.

The narrative method or form requires a manager to write a statement about the employee's performance.

The graphic rating scale form is a performance appraisal checklist form on which a manager simply rates performance on a continuum such as excellent, good, average, fair and poor.

A behaviorally anchored rating scale (BARS) form is a performance appraisal that provides a description of each assessment along a continuum.

Ranking is a performance appraisal method that is used to evaluate the employee performance from best to worst.

The best method is considered to be a combination of different methods, other than just using one. For developmental objectives, the critical incidents, MBO and narrative method work well.

The assessment should be performed by the supervisor, peers, subordinates, customers, the employee him- or herself or the 360-degree evaluation, depending on the preference. A return on investment should be made, therefore there should be a realistic view towards the costs and what options would be feasible in the depending cases.

What are common problems with performance appraisal processes?

Bias is a personality-based tendency, either towards or against something. Bias is towards or against an individual employee within the organization.

Stereotyping is mentally classifying a person into an affinity group and then identifying the person as having the same assumed characterstics as the group. Although stereotyping is commonly perceived to be negative, there is also positive stereotyping.

Halo errors occur when the evaluator creates a generally positive impression of an individual and then artifically extends that impression to many of the individual's performance categories, which results in an overall positive evaluation of that person. This results in generally "good" impressions being translated by managers to overall good impressions, while the opposite might be true for other areas of the employee it concerns.

Distributional errors occur in three forms: severity or strictness, central tendency and leniency. These errors are based on the standard normal distrbution, also known as the bell curve. In severity or strictness, the rater values (nearly) everyone below average. Central tendency error occurs when the rater values everyone under their control as average, resulting in nobody being rated either good or bad. Leniency error occurs when the rater values everyone as above average.

A similarity error occurs when the rater gives better evaluations to employees whom they consider more similar to themselves and poorer evaluations to employees whom they consider to be different from themselves.

Proximity error occurs when similar grades may be given to items that are close to eachother on the evaluation form, regardless whether the employee performs similarly in those categories.

A recency error occurs when the rater uses only the last few weeks of a rating period as evidence when preparing the evaluation form.

A contrast error occurs when the rater compares and contrasts performance between two employees, instead of using absolute performance measures to assess each employee individually.

Attribution error occurs when an individual makes an assumption about the reasons or motivation for an observed behavior. This can be the case when the rater observes an employee action and assumes that the individual has a negative attitude toewards their job and performs poor.

Chapter Summary

Performance management is a continual process which identifies, measures, manages and develops performance of people within the organization. Its goal is to improve employee performance over time. Performance appraisal is part of the process that evaluates the employee's performance. The purpose of a performance appraisal is to formally communicate to the employee how the performance is perceived by the organization. The second reason is to take evaluative decisions. During a performance appraisal traits, behavior and results are being evaluated.

Some traits are favoured when it comes to a certain job type, because those traits have been proven to perform better in a certain job. However, there are many traits that don't influence job performance as well. Measuring behaviors is a more suitable method, because physical actions can be directly measured and are therefore a more likely assessment factor of the individual's performance. Eventually, the performance can be evaluated based on the results.

Personal biases and stereotyping are two of the biggest appraisal problems. When accurate performance measures are developed, these problems can be prevented. This can also be done by performing the OUCH test. In addition, the evaluators should be trained and additional raters could be appointed in order to prevent biases.

What are commonly accepted employee rights and how can employees best be managed? - Chapter 9

This chapter follows up on the developmental interview in order to keep improving the employee relations. Individual performance will be managed through coaching, counseling and to discpline and terminate employees who don't perform within the acceptable norms. Therefore it is utmost important to understand the employee and management rights, so developed and disciplined employees can create high-performance teams within the organization.

What are the rights and priviliges?

Priviliges are things that individuals are allowed to do based on asking permission from an authority. Therefore, a privilige must be earned, because an individual needs to perform something successfully in order to obtain the privilige.

A right is something a person in a society is allowed to do without any permission required from an authority. Rights are based on the membership in the society.

Right of free consent refers to the right of the individual to know what they are being asked to do and the possible consequences of actions to the individual or others, inside and outside the organization.

Is monitoring the workplace allowed?

Generally, managers in the workplace have the right to monitor the workplace, to ensure that the employees are acting legally and ethically in all of the actions that they take on behalf of the organization. One kind of monitoring that is commonly used is website monitoring, to assure the organization that the employee is not defaming anyone.

What is employment-at-will?

Employment-at-will allows the company or the worker to break the work relationship at any point in time, with or without any particular reason, as long as in doing so, no law is violated. However, employment-at-will is limited in many jurisdictions. There are three standard exceptions for employment-at-will:

1. Public policy exceptions
2. Implied contract
3. Lack of good faith and fair dealing

Coaching

Coaching is considered to be an important managment skill used to get the best results from each employee. This is considered a popular approach to building leadership skills. Coaching is the process of giving motivational feedback to maintain and improve performance.

DETERMING CORRECTIVE COACHING ACTION. Coaching is required in area's where the performance is considered to be below the aspired levels. The following formula applies in this case: performance = Ability x Motivation x Resources.

THE COACHING MODEL. Coaching is a way to provide continuous feedback on the performance of employees. Weak employees are advised to improve their performance.

The following four step coaching model applies when performance should be improved:

1. Describe the current performance
2. Describe preferred performance
3. Obtain commitment to the change
4. Follow up

What is counseling?

During a coaching process, the performance is being fine-tuned. However, during counseling and disciplining, you are dealing with an individual who is not performing as expected. Management counseling is the process of giving employees feedback and referring employees with problems that cannot be managed within work structure to the organization's employee assistance program.

TYPES OF PROBLEM EMPLOYEES. Employees with problems display certain recognizable behavior and performance-related issues. They also deliver poor-quality work, don't get along with coworkers, display negative attitudes and they frequently don't show up for work. Research has shown that low performance workers demotivate high performance coworkers and that low performers: hurt workplace morale, form an obstacle to innovation and when in managment positions, directly affect attrition.

There are four types of problem employees:

1. Employees who don't have the ability to meet the job performance standards.
2. Employees who don't have the motivation to meet job performance standards.
3. Employees who violate the rules of code of conduct intentionally.
4. Employees with problems.

PERSONAL PROBLEMS AND PERFORMANCE. A manager should not give advice on how to solve personal problems. Employee assistance programs (EAPs) provide a staff of people who help employees get professional assistance in solving their problems.

Disciplining

The job of a manager is to enforce the rule and therefore it is not a manager's job to be liked. The goal is to enforce the employees consistently without favoring anyone.

Discipline is corrective action designed to get employees to meet standards and the code of conduct. The main goal of coaching, counseling and disciplining is to change behavior.

Just cause is a set of standard tests for fairness in disciplinary actions- tests that were originally used in union grievance arbitrations. These tests have been adopted to include fairness. The Just Cause standards try to ensure that any disciplinary action is investigated fairly and completely and provide action that equals the level of offence. The standards are the following:

Progressive discipline is a process in which the employer provides the employee with opportunities to correct poor behavior before terminating them. Progressive discipline is typically used in cases of minor behavior events such as arriving late to work. The progressive disciplinary steps in this case are (1) informal coaching talk, (2) oral warning, (3) written warning, (4) suspension, and (5) dismissal.

The discipline model

Each time an employee should be disciplined, the following steps must be followed:

1. Refer to past feedback
2. Ask why the employee showed undesirable behavior
3. Administer the discipline
4. Get a commitment to change and develop a plan
5. Summarize a state expected follow-up

Terminating

Unfortunately, the designed steps to provide feedback to the employee and improive their behavior will not always work. Since turnover is considered extremely expensive for an organization, it is not preferred to terminate any employee. It is important that during the process of termination that the employee is treated the same way as other employees who have performed the same infractions.

In case of gross negligence there is a serious failure to exercise care in the work environment. This is a reckless action that could cause harm to others.

Serious misconduct is intentional behavior that has the potential to cause great harm to another or the company. An example of this is bringing a weapon to work.

Leadership and management

What is leadership?

Leadership is the process of influencing employees to work toward the achievement of organizational objectives. Success or failure is based on the performance of top management.

What is situational management?

Contingency leadership or situational leadership means changing characteristics to meet situational characteristics. Leaders have to take into account contingency factors as well.

A leadership model is a short summary of the theory that should be used when selecting the appropriate leadership style. The situational management model promotes positive leadership:

• Employee capability can be divided in ability and motivation.
• The manager interactions with the employee can be classified into directive behavior and supportive behavior.
• Management styles can be autocratic or consultative based on the employee's capability level and the type of behavior. In addition there is a participative style or empowering style that can be applied as well.

How to build effective work teams?

Team building program goals vary considerably, depending on the needs of the group and the change management skills. Some typical goals are:

• To clarify the objectives of the team and responsibilities of individual members.
• To identify problems preventing the team from reaching its goals.
• To develop open, honest relationships between employers and employees, based on trust and understanding.

How to manage the change process?

People go through four stages when facing change, which are denial, resistance, exploration and commitment.

Chapter Summary

The commonly accepted individual rights in the workplace are free consent, right to due process, right to life and safety, right of freedom, right to privacy and right to free speech. The rights of management include create and enforce a code of conduct, create data and device policies, monitor the workplace, identify employment relationships, set up an orientation period and the right to test for drugs.

Coaching is designed to give employees feedback in order to improve their performance over time. The management counseling process is designed to provide employees with feedback so they understand that their performance level is not acceptable. Progressive discipline is used for minor disciplinary infractions within the organization. The sequence for progressive discipline is: (1), informal talk, (2) oral warning, (3) written warning, (4) suspension, (5) in some cases demotion and (6) dismissal.

The factors that are part of positive leadership in order to be successful are employee capability, directive behavior, supportive behavior and management style. The four stages of the change process include denial, resistance, exploration, and commitment. Denial is the natural reaction of employees when change is announced. The next step will be resistance when it's clear to employees their work will be affected. After the changes, the employee gets to explore the effect the change has made within the working environment.

Why are labor relations important for employees? - Chapter 10

Labor relations: a function that combines trust and communication

People in organizations must be able to communicate well with each other in order to accomplish goals. Communication is the foundation of human resource skills. In addition, this is considered to be a transferable skill.

Trust and communication

Trust is faith in the character and actions of another. It is a belief that another person keeps their promise and does what he or she says, and not take advantage. In today's business we see a crisis of trust, meaning we have to convince people to trust the organization.

Good managers should be good communicators. Communication is the process of transmitting information and meaning. Communication involves providing information to others in the role of sender and receiver of messages. Employees should have a trusting relationship with their manager when it comes to communication. In any communication, receivers consider the trust they have in the sender including the senders' credibility.

How does the message sending process work?

The message sending process consists of five steps:

1. Develop rapport: start putting the receiver at ease.
2. Clear communication objective: explain the objective of the communication before explaining any details.
3. Transmit the message: tell the message calmly and with respect.
4. Check the receiver's understanding: ask direct questions.
5. Get a commitment and follow up: if the message involves a task, communicate that it should be done at a certain time or date.

Checking understanding of the recipient is a very important step. Feedback is information provided by the receiver that verifies that a message was transmitted sucessfully. If no one asked a question after communication, that doesn't mean the communication was performed properly. Senders of the message should therefore, obtain feedback from the receiver to make sure they ''really'' understand the message.

Paraphrasing is the process of restating a message that has been communicated by the sender in the recpient's words.

How does receiving messages work?

It is important to be just as good in sending messages as in receiving messages. Listening, is therefore an essential part of communication. Successfully receiving and interpreting messages is not as easy as it might seem.

Listening skills are considered to be a very important skill for graduates nowadays. Fortunately there are listening processes that can be performed to improve the listening skills.

The message receiving process includes several elements such as active listneing analyzing and checking for understanding. Active listening is the intention and abilitiy to listen, use the content and context of the communication correctly and respond appropriately. The following tips can provide support when it comes to improving listening skills:

• Active listening: is about giving your full time and attention to the message of the sender the entire time of the message sending. Multitasking degrades the ability to listen for a longer period of time and do this successfully.
• Analyzing: the process of thinking, decoding and evaluating the message. Our ability to comprehend words five time faster than the speed in which the sender is talking, allows our mind to wander.
• Checking understanding by responding when appropriate: the process of giving feedback to the sender. It is the job of the recipient to help the sender obtain feedback, even though it's the job of the sender to provide the message. This is the timing to convey that the message has been understood clearly.

What are legal issues in job relations?

As with many management processes, a couple of legal issues affect the labor relations. All managers must understand the contraints that are being set by these labor laws to successfully perform their jobs. The major laws in the United States are the Railway labor Act (RLA) of 1926, the National Labor Relations Act (NLRA) of 1935 (Wagner Act), The Labor Management Relations Act (LMRA) of 1947 (Taft-Hartley Act), the Labor Management Reporting and Disclosure Act of 1959 (Landrum-Griffin Act or LMRDA) and the Worker Adjustment and Retraining Notification Act of 1988 (WARN Act).

What are other legal issues?

A whistle-blowers is an individual who tells an authorative organization outside the individual's own company about actions within the company of which the individual thinks it's illegal. Laws as the Federal False Claims Act protect whistle-blowers from exposing fraud.

There are incentives for whistle-blowing in many federal and state laws and therefore organizations need to create incentives as well, to bring complaints as fraud to the attention (or any other illegal activities).

There are six things that can encourage internal reporting and limit outside reports of dangerous actions by the firm:

1. Create and maintain an organizational culture that values reporting of unethical and illegal activities.
2. Provide a written policy on actions to be taken by the organization when reports of illegal or unethical activities arise.
3. Train all employees, especially managers and supervisors, on the content of organizational policies when it comes to reporting illegal and unethical activities.
4. Provide multiple ways to report or suspected illegal or unethical activities. Some situations might require different parties to report to, in case an issue that occurred concerns one of the reporting parties.
5. Create and follow clear guidelines for investigation of reports. Keep the whistle-blower informed of the progress in case of investigation.
6. Maintain confidentiality if possible during and after the investigation. The individual reporting may have to be identified during the investigation, but if possible the identity should remain protected.

Express contracts, implied contracts, and quasi-contracts

There are different kind of contracts, to disclose both formal and informal agreements. An express contract is a transaction in which the agreement between two parties is specifically stated, this could be orally or in writing.

An implied contract exists when "the parties form an agreement from their actions rather than from a specific oral or written agreement."

A quasi-contract is a court-ordered implied agreement to prevent one party in an action from benefitting at the expense of another party.

Wrongful discharge is simply terminating an individual employee for an illegal reason, either in violation of a contract or in violation of state of federal law. Even if the employee is at-will, employers are not entitled to just terminate the contract. Usually labor contracts contain clauses which state that it is considered a wrongful discharge. It is important to understand these clauses clearly, in order to prevent contract violation.

Unions and labor rights

The United States has a long history of unions and labor rights creation. Therefore, workers in the US have more rights and freedom than other workers in other countries. Currently, most organizations don't have unions as part of their HR process.

People join unions for different reasons. This could be increasing pay and benefits, good health care coverage and retirement plans. There are good an bad sides when it comes to unions of organizational workforces. On one hand, unions have the task and responsibility to provide their members with jobs in which they are provided with fair wages and good benefits, as well as protecting them from arbitrary disciplinary or other negative actions imposed by employers. On the other hand, unions frequently spike up employer costs, protect employees and could disrupt organizational work through strikes and other work stopping actions.

What is the role of labor relations and collective bargaining?

Labor relations are the interactions between management and unionized employees. They are also called union-management relations and industrial relations.

Collective bargaining refers to the negotiation process resulting in a contract between union employees and management that covers employment conditions. The most common employment conditions covered in contracts are compensation, hours and working conditions. However, job security conditions remain a big bargaining issue for many unions.

The role of grievances

A grievance is a formal complaint concerning pay, working condition and violation of other factors that are part of a collective bargaining agreement.

Grievance procedures are meant to protect employees against arbitrary decisions mde by management. These issues relate to discipline, discharge, promotions and benefits. Grievance procedures provide a process to allow an individual to communicate a complaint and make the company solve the issue in a timely manner.

The existance of such a grievance mechanism will generally motivate employees to raise conerns about fairness, working conditions, or contract provisions, directly with management.

What are management rights and decertification elections?

Management also has rights when it comes to unions organizations and labor relations. It is within the responsibility of the managers to control and manage issues that arise concerning union and labor issues and protect the firm and all stakeholders.

How to limit union organizing efforts?

There are different actions management can take in order to limit the effects of unions:

• Disallow unionization during company time.
• Allow communication on the managements' opinion on unionization.
• Change agreements of nonunion employee representation.

A lockout is the event where the manager refuses and literally locks out workers from the workplace. During the period of a lockout, employees may not be paid. An economic strike is a work stoppage for authorized collective bargaining issues that can be related to pay or working conditions.

How to manage conflict?

There is always a possibility that a conflict arises in the workplace. The chance increases when employees or colleagues have to work together, but both have a different vision on the opposing goals. As a manager it is therefore, utmost important to understand and know how to work through conflicting goals.

Conflict arises whenever people are in disagreement and opposition. It is important to recognize conflict and act carefully, since any wrong move could damage relationships, hurt feeligns or even ruin your career. This makes conflict management a very important skill, professionally as well as personally.

The cause of conflict is usually set expectations that have not been met by the other party. Therefore a conflict exists. There are three major reasons why people don't meet the expected expectations and conflict arises. The first one is failing to let others know the exact expectations, meaning communication was off. The second reason is assuming that others have the same expectations that we have. The third reason is people are actually not aware of their expectations, until someone counteracts them.

There are two forms of conflict, also known as functional and dysfunctional conflict. With functional conflict there is a positive experience, because it can actually help to increase performance and meet the organizational goals. However, with dysfunctional conflict, there is a prevention of individual achievements and organizational goals. When there is a conflict between management and labor, usually there exists a dysfunctional conflict, because of different opinions. However, conflict of ideas is a factor that can actually stimulate changes that will eventually increase performance within the teams of the organization. On the other hand, personal conflict is known to hurt relationships and generally decreases performance, which makes it a dysfunctional conflict as well.

What are conflict management styles?

When facing conflict, there are five basic conflict management styles that can be applied, in order to face and solve the conflicting issues or opinions. Each conflict management style results in its own win- or loss pattern:

1. Avoiding conflict.
2. Accommodating conflict.
3. Forcing conflict.
4. Negotiating conflict
5. Collaborating.

A difference between avoiding and accommodating is that with avoiding, there is nothing said or done. However, when someone accommodates, they are doing something that they don't really want to do.

A difference between negotiating and collaborating is the different solutions they lead to. With negotiating, you will try to divide the tasks or concern and assign some parts your way and other parts the other person's way. However, with collaborating, you develop an approach to work on a task that both parties agree on.

There is no best or preferred style when it comes to managing conflicts. A method can be chosen depending on the issue and preferred outcome.

Negotiation is a process in which two or more parties in conflict attempt to come to an agreement. Negotiation is usually considered a zero-sum gain, meaning that a win for one party, means a loss for the other party. Although negotiation should result in a deal, it doesn't always end in an agreement.

Chapter Summary

The value of trust and communication in organizations is highly important, since it helps to create respect between all individuals in the organization. Some level of trust between the manager and employees is required in order to communicate successfully. In cases the receiver of a message doesn't trust the sender, they will be reluctant to accept the message. Therefore, open and honest communication is essential.

Measuring of job satisfaction consists of questioning individual personality, the work itself, growth and upward mobility, coworkers, management and communication. Job satisfaction is considered an attitude and not behavior.

The major laws in the United States are the Railway labor Act (RLA) of 1926, the National Labor Relations Act (NLRA) of 1935 (Wagner Act), The Labor Management Relations Act (LMRA) of 1947 (Taft-Hartley Act), the Labor Management Reporting and Disclosure Act of 1959 (Landrum-Griffin Act or LMRDA) and the Worker Adjustment and Retraining Notification Act of 1988 (WARN Act).

A whistle-blower is an individual who tells an authorative organization outside the individual's own company about actions within the company of which the individual thinks it's illegal. There are incentives created in order to assure that cases of fraud will be reported and the whistle-blower's identity will be protected.

What is compensation management? - Chapter 11

Compensation is the total of an employee's pay and benefits. Compensation affects the possibility to attract and retain employees. Pay is currently the top reason for job satisfaction.

The compensation system of an organization inludes anything that an employee may see as and desire and is willing and able to offer in exchange. This can include the following:

1. Compensation components: all rewards that can be categorized as monetary payments and in-kind payments.
2. Noncompensation components: all rewards other than monetary ones and in-kind payments.

What are the types of compensation?

There are four basic parts which a compensation system consists of:

1. Base pay: this is a flat rate, which could be an hourly wage or salary. This is considered the most important compensation by the employees.
2. Wage and salary add-ons: this includes overtime pay, shift differential, premium pay for working weekends and holidays and other add-ons.
3. Incentive pay: variable pay for performance, especially in the form of short-term incentive pay, continues to increase.
4. Benefits: compensation that provides a value to the employee. Benefits are a must to include in the compensation system.

The first three compensation types, base pay, wage and incentive pay, are known as direct compensation. These go directly to the employees as part of their paycheck. Benefits are indirect compensation methods. There are no direct funds provided in this case to the employee, but the employee is receiving a benefit.

Motivation and compensation planning

When designing compensation programs, it is important to remember that the goal is to motivate the employees. The expectancy theory proposes that employees are motivated when they believe they can accomplish a task that rewards for doing so and is worth the effort.

This theory is based on the Victor Vroom's formula:

Motivation = Expectancy x Instrumentality x Valence

There are some keys to using this theory efficiently:

1. Define obective and performance required clearly.
2. Tie a reward to the peformance.
3. Check that the rewards are valuable to the employees.
4. Confirm employees believe that management will deliver as promised.

The equity theory is another theory that affects people within the organization. In general, the equity theory proposes that employees are motivated when the ratio of their perceived outcomes to inputs is at least roughly equal to that of other referent individuals. This means that employees are more likely to believe they will receive a reward if they feel that they are being treated in a fair way.

Applying the equity theory can cause difficulty since it is not easy to establish to what reference group the employee belongs. The theory, on the other hand, does offer some useful general recommendations:

1. Managers should be aware that equity, in this case, is based on the perception of it.
2. Rewards should be equitable.
3. High performance should be rewarded, but the required input should also be clear to all employees.When incentive payments are used as a method, it is very important to precisely define the exact requirements in order for the employee to apply for obtaining this benefit.

What are legal and fairness issues with compensation?

The minimum wage is the lowest hourly rate that can be permitted to pay to an employee, as provided by federal law. In the US, during 2017, this was established to be $7.25 per hour.

Overtime is a higher than minimum, federally mandated wage, required for nonexempts employees if they work more than a certain number of hours a week. Overtime is currently set by the FLSA as "time-and-a-half" or 150% of the individual's normal wage.

What are pay equity, comparable worth and other legal issues?

Comparable worth refers to the principle that, when jobs are distinctly different but do hold similar levels of ability, responsibility skills and working conditions they are considered to be of equal value and should have the same pay scale. Legislation has been proposed in order to compare these type of jobs.

There are also federal laws that place controls on pay and benefits. Mandatory employee pension and benefits legislation includes the following elements as well:

• Social Security
• Compensation for workers
• Unemployment insurance
• Family and Medical Leave Act (FMLA)
• Patient Protection and Affordable Care Act (PPACA)
• Employee Retirement Income Security Act (ERISA)
• Healt Insurance Portability and Accountability Act (HIPAA)

Job evaluation

Job evaluation is the process of determining the worth of each position relative to the other positions within an organization. There are several methods available to evaluate a job.

The job-ranking method puts jobs in order from lowest to highest in terms of value to the company.

The Point-Factor method is an objective method which breaks down a job into components based on its difficulty. These component are also known as compensable factors.

The Factor Comparison method combines the job-ranking and the point-factor methods to establish a more detailed evaluation. It is similar to the point-factor method in the sense that it also assigns points to compensable factors.

A pay structure is a hierarchy of jobs and their rates of payment within the organization. A pay structure is usually composed of a job structure and the pay levels. The job structure is what gives the hierarchy within the organization. Each job, therefore, will be categorized in a particular pay level. In order to establish the correct rates for the minimum and maximum pay rates within a payment level, some market factors need to be taken into consideration.

In order to set the minimum value, the labor market competition should be taken into account. This means looking at labor supply and demand. A graph can support greatly in establishing this information clearly.

The top level of pay is established by looking at product market competition. This is a function of value of the product or service that is being sold to the customer.

Product market competition sets the top of the pay level for most types of jobs in the company, because you cannot charge more for the product or service than the value that has been added.

A rate range provides the maximum, minimum and midpoint of a pay for a certain group of jobs. Once this rate has been created, for other similar jobs an analysis can be performed as well.

What is the importancy of developing a pay system?

When developing a pay system, it is important to study motivational incentives, applicable laws, and equity.

A pay structure is a hierarchy of jobs based on their payment rates within the organization. This structure allows to understand the different pay rates for each job. A pay rate is composed of a job structure and the pay levels. Job structure is the element that gives the job a position in the hierarchy, whereas a pay level (also called pay grade) is made up of many different jobs and each pay level has a maximum pay rate and a minimum pay rate.

The creation of pay levels

In order to establish the pay levels for each jobs, the maximum and minimum pay rates for particular jobs need to be established and the market factors need to be studied. External equity and fairness is very important during this process in order to determine the right pay levels.

Product market competition and labor market competition

In order to set the minimum value for a particular pay level, the labor market competition should be analyzed. If a graph would be made for a given type of work versus the number of workers in the labor market, the point where the two lines cross eachother, is considered the average pay for that work. The market will pay around what workers expect to be paid, if not, workers with necessary skills will not be filling the jobs.

When creating a payscale it is important to remember that the job of HR in this case is to value the worth of the job and not the worth of the person. In the end if a product or service is being sold, which the employee engages in, the product or service cannot be sold for more than it's worth or more than competitors are asking for the same product in the same market. Therefore, product market competition sets the top of the pay level for most types of jobs in the company.

When pay levels are plotted in a graph, a market pay line or market pay curve can be drawn. This line shows the average pay at different levels in a particular industry. This line can be used as a benchmark to check if the organization is doing well. If the created pay level of the organization doesn't align with this graph, the organization needs to check why the range created was not correct.

The rate range that is created from drawing the pay curve, shows a rate range, which provides the maximum, minimum and midpoint payment for a certain group of jobs.

How is a pay structure established?

When looking at the pay levels that have been created previously, these need to be analyzed. So taking the pay levels, bottom, midpoint and top. The bottom level will most likely be close to the minimum wage. The ranges of these pay levels could show overlap with eachother and this can provide additional space for payments to employees within a certain level.

Delayering refers to changing the company struture in order to get rid of some of the vertical hierarchy. Broadbanding, on the other hand, is performed by combining multiple pay levels into one. The benefit of combining these levels either vertically or horizontally, is that it simplifies the process. It also creates extra capacitiy to reward extraordinary performance from employees.

What are current trends and issues in HRM?

One trend that is being recognized is classyfing individuals as independent contractors instead of employees. Also, gender equity in pay continues to elude most organizations, even though awareness has been created.

Since there is a bigger demand for on-demand workers, there is an increase in independent contractor relationships and fewer employee-employer relationships as result of this trend. While in most cases this type of contracting is being performed legally, in most cases this structure has been set up purposely in order to prevent employee relationships and all the administrative burdens and legal issues that are involved with employee relationships.

One of the reasons most organizations are keen on increasing their independent contractor relationships, is the fact that they are trying to create maximum flexibility within the organization. If there is no long-term contract, the company can release the independent contractor immediately, after completion of the job or project. An additional reason for this type of contracting is that it can decrease a significant amount of costs for the organization. The compensation for independent contractors is much more simplified compared to internal employees.

For independent contractors, there is usally a simple payment agreement to cover a certain amount. There is no need to calculate hours, minimum wage, overtime, benefit costs, health care insurance or other compensation factors. For independent contracts, the organization doesn't need to pay federal taxes as well.

Sometimes organization think it is easy to make an employee an independent contractor, however the organization must make sure the employee is completely independent of the company's control. The US Supreme Court identified "economic realities" that can be used to test whether or not there is a employer-employee relationship:

• The extent to which work is performed as integral part of the employer's business.
• If managerial skills affect profit opportunities or loss.
• Relative investments in facilities and equipment.
• The contractor's skill and initiative.
• Durability of the contractor's relationship with the employer.
• The nature and level of control by the employer.

It is important for employers to study the requirements for an independent contractor closely and make sure the relationship can be classified as such, if preferred. If it turns out to be differently, this will be considered unethical and illegal to intentionally misclassify indivdiuals to avoid paying them what would be reasonably.

Pay equity has become an executive concern and should be taken seriously by management. HR managers need to keep track of records of initial salary negotiations and eventual offers, manage and evaluate any compensation changes overtime. If any errors arise during this process, HR needs to make recommendations to senior management in order to correct the issue.

Chapter Summary

Some of the components of compensation include the following four items: Base pay, wage and salary add-ons, incentive pay for performance and benefits. The Expectancy Theory states that motivation equals expectancy x instrumentality x valence. Employees expect to provide a certain output and they believe to be able to accomplish the objective. This effort should result in some level of performance, which will result in some type of reward. The importance of the reward in this formula is huge, because it should move the employee to actually perform at the desired level in order to receive the reward. If there exists a link between the desire of the employee and the reward, the chance is greater that the employee will show the preferred performance and create the desired output. According to this theory, people compare their inputs and outcomes to those of relevant others. In case employees believe there is inequity, they will change their behavior in order to create equity. It is important for employees to perceive that they are being treated fairly, relative to others. Compensation forms therfore a big part of the perceived outcome.

There are seven basic issues that form an organization's compensation strategy. These are the ability to pay, the types of compensation, pay for perfromance or longevity, skill- or competency-based pay, at, above or below the market, wage compression and pay secrecy.

The types of compensation refers to the mix of the four basic components of compensation. The wage compression lowers the pay differential between long-term and newly hired employees. Pay secrecy is utilized in order to allow the organization to hide actual wage inequities from employees. However, it has the potential to create dissatisfaction and demotivation.

There are three types of job evaluation methods, which are job-ranking, point-factoring and the factor copmarison method.

Why is incentive compensation an important part of the HR process? - Chapter 12

Incentive compensation is an important part of the HR process. Incentive pay allows to provide a reward depending on the reward that is provided.

Why do we use incentive pay?

Variable pay is compensation that depends on a measure of an individual or group performance or results in order to be awarded. Not in all cases the salary provided to the employees is considered enough. Therefore, rewards and recognition are used to create motivational incentive systems. The final reason to use incentive pay is that the responsibility of the HR department is to find the right people and put them in the right places, in order to meet the organizational goals.

Individual or group based incentives?

Individual incentives reinforce performance of a single person with a reward that is significant to that person. There are several advantages and disadvantages that arise when it comes to individual incentives.

Advantages of individual incentives:

• Easy to evaluate individual employees. Individual efforts are more easy to identify.
• Allows to match rewards to the employee's desires.
• Promotes the link between performance and results. Individual incentives allow to make a direct connection between performance levels and the rewards obtained.
• May motivate less productive employees to work harder. Employees are influenced by their enivronment, so if they see someone getting rewarded for showing additional effort, this employee might also be motivated to work harder.

Disadvantages of individual incentives:

• Many jobs have no direct or measurable output. This makes it difficult to assign a reward to a certain outcome or result.
• A potential to motivate undesirable employee behavior. There could be a sense of favoritism created because different incentives are assigned to different employees. Therefore it is important to explain why certain incentives are assigned to certain employees and why some incentives are greater than others.
• Administrative burden is considered high. Tracking individual incentive means that indivdiual performance needs to be measured and kept track off at all times. Supervisors need to develop comprehensive records to manage the incentive program.
• Might not fit the organizational culture. Individual incentives might not be accepted in organizations where team-based working and performance is highly valued or in societies where the culture is highly collectivist.

What are the criteria for individual incentives?

• There needs to be distinct and measurable outcomes tied to individual efforts. Individual results must be isolated in order to evaluate them and provide the incentives.
• The individual jobs require autonomy. In some job types autonomy is a requirement, because group efforts might cause confusion.

Group incentives

Although individual incentives work well in many cases, there are also enough cases where group incentives might perform better. Group incentives provide reinforcement for actions of more than one individual within the organization.

The following advantages apply when it comes to group incentives:

• Group incentive can promote better teamwork. The levels of teamwork and group cohesiveness can be improved.
• Broadens the individual perspective. When an individual is provided several things to do that are outside the regular workscope, it might motivate them and increase the productivity accordingly.
• Requires less supervision. Since a group can educate its own members if they are not performing according to the expectations.
• More practical to develop than individual incentive programs. Creating a group incentive program is less time consuming than creating incentives for each individual employee. In most cases, a large piece of the workforce can be covered with one set of incentives in many cases.

Disadvantages of group incentives:

• Social loafing: these are considered the employees within the group who may hide behind the colleagues who actually perform the majority of the work. Social loafers avoid showing their maximum effort in group settings because it is difficult to pick out individual performance. This phenomenon can cause a significant drop in group motivation and performance.
• Individual output may be discounted. Individual effort and results may vanish within the group. Some of the group members may feel like they are providing most of the group's effort, while others are taking a 'free ride'.
• Outstanding performance may weaken efforts. If there is a highly cohesive group and the concerning group has low performance norms, this could degrade the individual performance of the other group members as well.
• Group infighting could occur. There is a possibility for breakdown of communication or cooperation within the group, which could cause the employees to compete instead of working together on a project.

What are the criteria for group incentives?

• When people are required to cooperate. In cases where group effort is necessary to provide the maximum output, group incentives are considere to be more powerful than individual incentives.
• When individual contributions are too difficult to identify.
• When group members have complementary or similar skills. If group members all have similar skill levels, it might be difficult to establish who's efforts have played a greater role in achieving the desired outcome.

Options for Individual Incentives

A bonus is a lump sum payment, typically given to an individual at the end of a time period. It does not carry over to the next period. Bonuses are usually provided on an annual basis.

Commissions are payments provided to a salesperson for selling an item to a customer and is usually predicted to be a percentage of the price of a sold item.

Merit pay is a program to reward top performers with increases in their annual wage that carry over from year to year. This incentive is different from the incentives mentioned above in the way that the annual income can increase consistently compared to the employees who don't get the merit pay.

Pricework plans are considered as one of the simplest forms of compensation and can act as an incentive to produce at a higher level, because the payment is dependent on the production level.

Standard hour plans are usually applied in service type of work. In a standard hour plan, each task has been assigned a ''standard'' amount of time for completion. This time will be showns as the standard-hour manual.

Giving praise and other nonmonetary incentives are also important when it comes to recognition for the work that has been done. Employee recognition does lead to profits. Therefore, both financial and nonfinancial rewards and recognition are important to motivate employees to reach the objectives.

Options for group incentives

Profit-sharing plans provide a portion of company earnings over a specific period of time through a bonus payment. Usually, this is quarterly or annualy. This will get anyone in the organization focused on the organization's profitability.

Gainsharing plans

Gainsharing is an alternative to profit sharing. For gain sharing, in each case, the gain (this could be profit or another factor) is being shared with the employees who've helped to create the gain.

With gainsharing it is important to show employees that they can affect their desired outcome in order for them to be motivated and change the way they perform and work. However, for gainsharing it is more difficult for management to actually manipulate part of the profit. Therefore the workforce will feel and experience that they have more control on the output and results, which increases their motivation.

Employee Stock ownership Plan (ESOP)

An Employee Stock ownership Plan allows that part of the stock in the company is being provided to the employees over a period of time based on a formula. An ESOP is actually considered a retirement benefits plan, since the company puts the tax-deferred stock in a trust for eventual use by retired employees.

Stock options and stock purchasing plans

There are two other common stock plans used by companies, which are stock options and stock purchasing.

Stock options are usually offered to an individual employee to allow them to buy a certain nuber of shares of stock in the company at a certain point in the future, but for the price that has been set when the option is being offered. These options can be either provided to executives or to nonexecutive employees. The intention of this option is to increase the employee's motivation in order to improve the value of the company, so they have the option to buy the stock at the end of the year, with increased value.

Stock purchase plans are similar to stock options, however, instead of giving the option to buy stock in the future, they qualify employees who buy the stock essentially anytime.

What are failures and challenges in creating incentive pay systems?

When creating incentive programs, there are, of course, issues that can arise. Now that the incentive types are clear, the issues can be discussed. The reason incentive pay systems can fail is because they are often poorly designed and implemented badly. The trick when creating an incentive pay system is to create it carefully, but also to manage and execute it properly.

Poor management can cause even the best incentive pay systems to fail, since managers are considered the core of the management program. The managers are responsible to keep track of the individual and group performance in any case. It is also the responsibility of the manager to monitor the program and make adjustments in case things change or the tasks within the organization change.

If programs are designed to complicated or it is not clear to employees what they need to do in order to receive an incentive, then they will not change their behavior as a result and company performance and profits will not be improved. Too complex programs will almost in any case lead to failure, since it will not be clear to employees what they need to do or how to reach the goals. Failure to communicate the goal and the tied rewards properly will also result in the same problem.

If employees can't affect the desired outcome the reward programs are obviously useless in those cases. In cases where the job responsibility of the employee has no direct relation with the company profit for example, their performance doesn't influence the profit and therefore they have no impact on the reward system by improving their performance. In this case there is no incentive for the employee to work more productive.

In some cases, it can be unclear for the employees how they are currently performing, compared to the desired outcomes. If a worker need to accomplish a certain production target by the end of next week in order to receive a reward, the worker will be very like to work harder and be motivated, because the goal and the reward are made very clear. However, if the worker doesn't know what the current performance rating is, they cannot increase their efforts to match the desired outcome.

What are guidelines for creating motivational incentive systems?

When developing a variable pay plan, it is very important to consider the required actions in order to make it work.

The first step when desigining an payment incentive system, is to make sure that the incentive program is based on the goals in the strategic plan. The rewards needs to be based on measurable and specific goals. In addition, it is important to keep in mind the short-term and long-term goals for all members that are part of the organization.

Any incentive program should provide incentives to all individuals involved in the process that is being targeted. Not just to managers, because this will create frustration among employees. There should be incentives created for all line workers and the job of the manager should be to remove obstacles out of their way, in order to increase performance and reach the desired outcome.

In addition, the incentive programs need to be set up in a way that every employee within the organization can understand how the incentive program works. Even if it is understandable, the next step is to communicate it properly to the correct parties within the organization.

Also, it is important that the factors that are part of the incentive systems, focus on factors that can be affected by the employee. If the factors cannot be affected by the employee, then obviously, the employee has no impact on the desired outcome and cannot be rewarded by the incentive system.

The SMART goals as mentioned in previous chapters, are also important to take into consideration, because they provide a clear link between performance and payout. The goals of the incentive program should be set up in SMART fashion, in order to accurately measure and reward employees.

There must be a clear seperation from base pay, in order for employees to understand they are receiving an additional benefit. In addition, employees must understand that they only receive an incentive rewards if they increase their performance significantly and meet the incentive requirements.

A significant piece of compensation, in order for the employees to be considered valuable, holds at least 10% of overall pay and in some cases 20% or more.

The adiminstration of the program is something that is highly important during this process and should be taken care of seriously. By offering the incentive programs and rewards to employees, whether they are individual or group based, the organization must make sure when they are eligible for such rewards, that they are being paid timely. Once performance is measured, those who are entitled to receive a reward should receive this as fast as possible.

Finally, nonmonetary awards are also very important to take into consideration. Especially, since not every employee might be motivated by the monetary part. Nonmonetary rewards usually work even better than monetary rewards. And in all cases, nonperformers should not be rewarded in any case.

Chapter Summary

Incentive pays are necessary in order to recognize the best performing people within the organization. Therefore it is important to have flexibility to provide the best performing people with greater rewards, than average or low performers. In case the company and employees underperforms, the organization is not tied to provide any additional reward or benefit, since these rewards are performance-related. The goal of providing benefits and incentives to employees is to motivate them to increase their performance, be more productive and reach the organizational strategic goals.

The advantage of individual incentives is that it makes it easy to evaluate each individual employee, because they provide the ability to choose rewards that match desires of the employees. Since their is a link to performance and results, this creates an incentive for employees to be motivated and increase the motivation of less motivated workers within the organization as well. Disadvantages of the individual incentives are that it is considered to be very time consuming, since all employees need to be evaluated seperately and seperate incentives need to be created. In addition performance could be hard to measure since there is not always a direct output measurable for every job type. The administrative burden is also very high when different records for each employee need to be kept seperately.

Providing indivdual incentives can come in many forms. These can be bonus payments, lump sum payments, commissions, merit pay, recognition and nonmonetary forms of appraisal.

Group based incentives are usually based on organizational gains or gaining an ownership stake in the company. Since profit can be easily manipulated, gainsharing is most of the time the best alternative. The advantage of group incentives is that employees within the group can motivate eachother and that performance doesn't have to be measured and tracked individually.

What is the strategic value of employee benefits programs? - Chapter 13

When benefits are being provided to employees, there are mandatory laws applicable, that need to be taken into consideration as well. In addition to providing these benefits, of course, there are costs involved as well in order to arrange these benefits for the employees.

"According to the US Bureau of Labor Statistics (BLS), benefits for all groups of workers average roughly 32% of total employee compensation costs."

Why do benefits as part of compensation continue to grow?

There are several reasons the employee benfits have experienced an increased growth in the United States and worldwide.

Tax advantages are one of the reasons benefits are growing. In case the organization provides benefits to its employees, it can write off these provided benefits as costs.

Statutory requirements are porposed by federal and sometimes state and local law as well. A number of states have made sick leaves, paid time off, retirement, health care and other benefits mandatory for most or all private corporate employers (on top of minimum wage).

Considerations in providing benefits programs

The goal is to create a program that increases the motivation of employees and engagement and helps to create a competetive advantage. As part of their strategic value, therefore, some companies use generous voluntary benefits.

There are also issues that arise with providing these benefits. The first one is the height of the benefit that is being provided. Most companies will determine this value by calculating a standard percentage of the direct compensation.

Once the company has established how much money is available to provide the benefits, the type of benefits needs to be established.

Finally, there needs to be a consideration on how much flexibility there should be to build into the benefits program, because flexible options are very important to today's employees. Flexible benefit programs allow employees in some way to choose their preferred option.

Old age, survivors and disability insurance (OASDI)

Statutory benefits are benefits which are required by law. Some benefits are required by federal law in the US (also in other countries) and there are also laws that apply if the company chooses a certain optional benefits.

Social security and medicare

Employers and employees are required to provide funds for Social Security benefits. The employer and the employee jointly pay into Social Security through withholding from the employee's paycheck, including a mandatory employer payment.

What are retirement options?

Once employees reach the retirement age requirement and have obtained 40 credits, they can receive a monthly check. Although the social security system was meant to focus on only 30% of retirement payment, most employees plan on it as their only retirement.

If an employee becomes disabled or dies the disability or survivor benefit will apply usually. The employee, will get payments each month roughly equal to what the employee would have gotten in the retirement based on their historical earnings. If an employee has been disabled for 5 months and is predicted to be disabled for atleast 12 months, the Social Security disability will apply.

There is also a Medicare component. Employees become eligible at the same moment they become eligible for Social Security retirement.

What are other statutory benefits?

While the Social Security benefits take up much of the federal budget in the US, there are also other required benefits. There are several statutory requirements if the company chooses to provide certain health and welfare or retirement benefits to their workforce.

Worker's Compensation

The Worker's compensation is an insurance program designed to provide medical treatment and temporary payments to employees who cannot work because of an employment-related injury or illness.

Employment-related in this case means, that the illness or injury didn't have to happen while the employee was actually at work.

Worker's compensation costs vary between 1.2% and 2% of payroll for most companies. Rates are primarily determined by three factors:

1. Occupations. The risk of injuries associated with each job play a role in this case. Some jobs are considered to be more risky than others, obviously.
2. Experience ratings are considered a measure of how often claims are made against an insurance policy.
3. Level of benefits payable. Injured workers will receive a compensation based on their particular state's workers' compensation rating manual.

Unemployment Insurance (UI) provides workers who lose their jobs with continuing subsistence payments from their state for a specified period of time. This program is federally mandated, but is being managed separately by each of the states. This also applies for the administration.

In order for an individual to become eligible for the UI they have to be terminated from employment, either through downsizing, layoff or other processes. In addition, they must have worked four of the last five quarters and met minimum income guidelines in each of those quarters as wel. A series of events can occur that make the individual ineligible:

• voluntary quit of the employee
• failure to look for work
• terminated for cause (because of a wrong action)
• refusal of suitable work offered
• participation in a strike against the company
• failure to disclose any money earned in a period of unemployment

What are voluntary benefits?

In addition to the mandatory benefits, almost all employers provide some group of voluntary benefits to their employees. These benefits can range from a group of commonly provided benefits (such as retirement accounts, life insurance) to a very broad group.

Group health insurance

Employers with more than 50 full-time employees are required to provide health insurance to their full-time workforce. All other organizations can choose to provide or not provide this benefit.

Traditional health care plans usually cover a standard percentage of fees for medical services - for either doctors or in-patient care. The most utilized plan for the percentage split between the insurance plan and the employee is 80/20.

HMO refers to managed care programs. It is a health care plan that provides health maintenance and medical care. This is the type of health care that provides the patient with routine preventive care, but for nonpreventive care, it requires a research on the individual's health condition, before any medical bills are approved.

With the managed care, the insured person will be required to use doctors and facilities within the network. The employee will have to choose a primary care physician (PCP). The primary care physician will be the first point of contact for all preventive care and for any routine medical situation, except emergencies.

Preferred provider organizations (PPOs) are a kind of hybrid between traditional fee-for-service plans and HMOs. They include some of the advantages and disadvantages and also have some of the same requirements.

Utilization analysis is a review of the program costs and comparison of program costs within the rate of the program's usage.

Retirement benefits

A defined benefit plan provides the retiree with a set amount and type of benefits that will become available when the employee retires. For the retiree it should be exactly clear what they will receive when they retire.

Defined contribution plans only identify the amount of funds that will be placed in a retirement account, therefore it does not define what the employee will receive upon retirement. The employee is only aware of the amount that is being contributed tot the retirement account.

Chapter Summary

Human resources are one of the few potential sources for competetive advantage in a modern organization. The totality of their compensation, including offered benefits, is one major factor in keeping employees satisfied and engaged. Employees need an incentive to be motivated so they can create a competetive advantage for the company. Today's workers demand more benefits in order to mix their lifestyles. By providing benefits, the company can increase job satisfaction and engagement, since taking care of employees results in making them work harder, take better care of customers and the organization.

Social Security is composed of Old-Age, Survivors and Disability Insurance (OASD) prgrams. The Old-Age part provides retirement payments to those who reach the assigned retirement age, according to the OASDI rules. In case the employee dies before reaching the retirement age and would be eligible in case alive, the survivor will be able to receive the benefits related to that payment, which will be similar to what should be granted to the actual retiree in case they would still be alive.

Medicare is the national health care program for the elderly or disabled. An employee becomes eligible for Medicare at the same time they become eligible for Social Security or disability retirement. The goal of Medicare is to cover at least part of the costs of hospitalization and non-hospital related care and provides prescription coverage options as well. Worker's compensation is a program that provides medical treatment and temporary payment to employees who are injured on the job or become ill because of their job.

Major voluntary benefits that can be provided by the organization are paid time off, group health insurance, and employee services. Paid time off can occur in the form of holidays, sick leave, vacation time and personal days. Group health insurance provides employees with health care coverage and retirement plans allow them to save for their own retirement.

Why is Workplace Safety, Health and Security important for employees? - Chapter 14

Workplace safety and OSHA

When the workforce is prepared for the assigned task, knows how to be productive and the compensation is clear, the next step is to keep the workforce safe and healthy. This way they can continue to perform at high levels.

There are many federal safety laws and regulations, as well as governing agencies for industrial safety and health. Employee health issuess, such as the need for work-life balance, employee assistance and employee wellness programs also affect employees.

The Occupational Safety and Health Act

Workplace safety deals with the physical protection of people from injury or illness while on the job. Therefore, all employers must meet the requirements of the Occupational Safety and Health Administration (OSHA). They must maintain records of injuries and deaths due to workplace accidents and submit to on-site inspections.

Those who do not comply with the standards and rules provided by the OSHA will be faced with citations and penalties, such as fines. The consequences are so severe that employers even risk going to jail if they are willfully failing to maintain a safe working environment.

The general duties that are required by the OSHA from the employers regarding safety and health are the following:

• provide a place of employment that is free from identified hazards that are causing or are known to cause death or serious physical harm to the employee.
• comply with occupational safety and health standards, regulations and orders issued that are tied to this Act.

The general duty clause also states it's within the responsibilities of the employee to comply with the rules, standards and regulations as proposed by the Act.

The Occupational Safety and Health Administration (OSHA)

OSHA is the division within the Department of Labor that has the responsibility to oversee the execution of the OSH Act. It was created in order to "assure safe and healthful working conditions for working men and women by setting and enforcing standards and providing training, outreach education and assistance."

OSH has been given the broad authority to investigate complaints and impose citations and penalties on employees or employers who violate the OSH Act.

What does OSH do?

OSHA is responsible for providing federal safety and health standards and promoting those standards to employers. OSHA is also the responsible entity to perform inspections related to the proper execution of the OSH Act. Inspections are usually performed without any advance notice to the employer and are done based on one of the following reasons and/or issues:

• Immediate danger
• Catastrophes
• Complaints and referrals by workers and
• Follow-up inspections

Inspectors must, at all times, identify themselves and provide the employer with the reason for the investigation. However, the employer can decide to refuse the inspection if the inspectors are not able to identify themselves at the moment of inspection. On the other hand, this does not provide a good impression to the authorities, since refusal could imply that the company has something to hide. In general, it would make more sense in such a case, to allow the inspection, in accordance with the OSHA rules.

What are employer and employee rights under the OSHA?

Employer rights

The employer has the right to request the inspector's credentials, name, badge number and to receive the reason for the inspection. This would be the employee complaint or the program inspection information. The following rights of the employer should be taken into account when an inspection is being performed:

• If the inspection is being performed due to a worker complaint, a copy of the complaint can be requested. The employee who has submitted this complaint will, of course, remain anonymous.
• The organization has a right to send a company representative, usually the HR representative, to accompany the inspectors as they continue their inspection.

There are a few reasons why it is beneficial to accompany the inspectors during their inspection. The first reason is that it is important to understand the violations made in case it concerns an employee complaint. Even though the inspector will provide notes afterwards, it might not always be as easy to comprehend if the actual situation has not been observed by a representative. The second reason is, that usually in many cases, the problem can be fixed immediately. This will also show the inspectors (and authorities) that the organization is willing to comply with the rules of the Act and are flexible to directly make any changes to fix the situation. The third reason to accompany the inspector with the research is to make sure the inspection stays within the reach of the scope.

An employer also has the right to be present when the inspector is interviewing employees. During these interviews, the right to stop the interview if it gets too confrontational or disturbing the current work environment. In addition, the employer has the right to inform the employees of their rights during the research performed by the inspector.

Employee rights

When it comes to employee rights, they can also refuse to do an interview with the inspector. They can also request that an employer will be present during such an interview or that the interview will be held privately. In addition, the employee has the right for legal representation during the interview, if they prefer. The employee can also end the interview by requesting discontinuation.

What are hazard communication standards?

The OSHA requires that all employers keep track of information at the work site that describes any chemical hazards that may be present on-site. All employers are required to provide a hazard communication program, including container labels, safety data sheets and employee training. Safety Data Sheets (SDS) are documents that provide information on a hazardous chemical and its characteristics.

Violations, citations and penalties.

OSHA violations include the following elements:

• Willful: this refers to a violation in which the employer knew that a hazardous condition was present, but performed no action to eliminate the hazard.
• Serious: this refers to a violation where the hazard could cause injury or illness, that could cause severe physical harm or even death.
• Other than serious: this refers to a violation that is unlikely to result in death or severe injury, but it does impact the safety and health of the employees.
• De minimis: have no direct impact on safety or health and do not result in citations or penalties.
• Failure to abate: the employer has not corrected a previous violation for which a citation was granted and the due date has passed already.
• Repeated: the employer has been cited previously for the same violation type.

National Institute of Occupational Safety and Health (NIOSH)

NIOSH works under the same roof as the Centers for Disease Control and Prevention (CDC). Its mission is to conduct research and provide recommendations to prevent worker injury and illness. NIOSH sets three major goals in the strategic plan:

1. Perform research to diminish work-related illnesses and injuries
2. Promote safe and healthy workplace by performing interventions, providing recommendations and capacity building.
3. Improve international workplace safety and health through global collaboration.

The NIOSH regularly works with the worldwide government health laboraties and other member nations in the World Health Organization (WHO) in order to indentify workplace issues that could cause illness or injury and to create standards for the WHO member countries. One of the most important research areas of the NIOSH is communicable disease research. The NIOSH attempts to identify methods of transfer and then provide guidelines for minimizing danger of transmission of dangerous diseases to others, that may exist in the workplace.

What is employee health?

Employee health refers to the state of physical and psychological wellness in the workforce. Employees need to be provided with both physical and psychological health in order to have a strong workforce.

Work-life balance

Having a work-life balance is an element that is considered high on the list of issues facing employers as well as employees. Therefore, individual employees are seeking a work-life balance. Bad work-life balances are usually linked with conflicts such as stress; absenteeism; burnout; and dissatisfaction with the job, family or life in general. All of this could result in excessive job turnover and the breakup of families.

In order to support employees in maintaining a healthy work-life balance, companies are offering more work-family benefits, commonly called family-friendly practices. Companies are offering, for example, flexible work hours, so the day can be built around the family responsibilities easily. In addition, flexible time off is granted in order to attend family related activities, such as parent-teacher meetings.

Employee Assistance Programs (EAPs) and Employee Wellness Programs (EWPs)

There are two important employee services that can also assist in work-life balance and other aspects of mental and physical health of employees. These are the Employee Assistance Programs (EAPs) and the employee wellness programs (EWPs).

An EAP is a set of counseling and other services provided to employees in order to assist hem to resolve personal issues that could affect their work performance. Around 77% of private-sector workers have access to an employee assistance plan. The EAP is designed to assist employees in confronting and overcoming problems in their personal life. This could be marital problems or divorce, financial problems, substance addictions, emotional problems and many other issues. The reason employers pay for these services is because it could save employees and prevent costs to only opt for these services when needed.

EWPs are designed to provide the employee's physical welfare by providing education and training programs. These programs offer health education, training and fitness, weight and lifestyle mangement, and health risk assessment services to employees. The main goal in this case is to improve the health of the workforce, because there is strong evidence that Americans don't exercise enough. Being obese causes all kinds of health problems and the effects are noticed in the workplace.

Ergonomics and Musculoskeletal Disorders

Ergonomics refers to the science of fitting the workplace conditions and job demands to the capabilities of the working population. The goal of ergonomics is to reduce stress and eliminate injuries and disorders associated with overusing the muscles, bad posture and repeating tasks." In order to prevent such issues, ergonomics focuses on improving and arranging the working place to a suitable environment.

Musculoskeletal disorders (MSDs) affect the body's muscles, joints, tendons, ligaments and nerves and can arise in different work environments. These issues impact the working condition and performance of the employee severely. Therefore, all these cases form a potential risk to the organization in the form of lost producitivity or even lost employees.

Safety and health management training

It is important for HR to understand the OSHA rules and standards in order to arrange the workplace in a safe way. If the organization can focus on keeping the number of injuries and accidents low, the absenteeism can be lowered as well and job satisfaction will increase. In return, this will increase the productivity over time.

Stress

People usually have internal reactions to external environmental stimuli. Stress is the body's reaction to environmental demands. The form of this reaction can be emotional, and/or physical and can be caused by a lack of work-life balance. However, stress is an individual perception. One person might be able to handle stress a lot better than the other.

Functional and dysfunctional stress

Functional stress is when the stress actually helps to improve the performance. So it can be considered reinforcement in a positive way. Therefore it could help increase motivation and meet objectives. People can perform better under stress, because it allows to stretch their capacity and fuels creativity.

Dysfunctional stress has a negative impact because it actually decreases performance. Stressors are factors that may, if extreme, cause people to feel overwhelmed by anxiety, tension and/or pressure. Stress that is considered to be constant and severe, can actually lead to a burnout over time. A burnout is a constant lack of interest and motivation to perform one's job.

What are causes of job stress?

There are actually five elements that contribute to job-related stress. These are personality type, organizational culture and change, management behavior, type of work, and interpersonal relations.

Stress management

Although experiencing stress can be healthy if it increases performance, it is also important to manage stress that arises, in order to maintain health of the employee. Many companies are making stress management a top priority through training employees in stress management, because it affects the working employees. EWPs also provide stress mangement programs frequently. The actual goal of stress management is about taking control of stress and making it functional. There are seven management techniques that can be used to reduce stress:

1. Time management
2. Relaxing (on and off the job)
3. Nutrition/health
4. Positive thinking
5. Positive supportive networ
6. Stop smartphone addiction

Workplace security is the management of personnel, equipment and facilities so they can be protected. Workplace security covers topics such as violence in the workplace, bombthreats, management of natural and man-made disasters, computer-related risk and many more. Therefore, the workplace security is concerned with mitigating these risks to the organization and its members.

The importance of cyber security

Cyber security is the use of tools and processes to protect the computer systems and networks within the organization. This is a very popular topic, that has been a lot in the news the past and most recent years, with concerns on hackers, terrorist organizations and hactivists.

HRM is therefore especially concerned with external people penetrating company computer systems that obtain sensitive employee information on medical records, payroll and banking data and other personal data. For this matter, it is utmost important to work closely with company security managers to set up strong roadblocks to protect the organization from outsiders who want to penetrate into the organization.

Workplace Violence

In business the form of desk rage, is where yelling, verbal abuse, and physical violence occur. Emotions such as frustration, stress and fear are known to bring out anger. Anger is usually the outcome from unresolved conflict and in business the violence often takes the form of sabotage against other employees or even the organization.

Anger can lead to perception problems and this results in poor decisions and hostility. Although it's natural to get angry, sometimes we cannot control the feeling of anger. We can, however, control the way we behave and react. Some tips to effectively get rid of anger are the following:

• use objective thinking
• look for positivity
• look for humor in a situation to defuse the anger
• develop a positive attitude on anger management
• keep an anger journal

Keeping an anger journal is the first step to emotional control and self-awareness. There are certain questions you can ask yourself to identify such behavior in order to be able to control it eventually. One great way to improve the ability to control anger is to write the questions in the anger journal. This can be questions such as "how upset do you get?", "What feelings do you have when you are angry?" and "What is the reason for your anger?". People who maintain such a journal often change their behavior without even trying.

Chapter Summary

The OSHA is an inspection authority and can inspect a worksite without advance notice. This research could be performed because of an employee complaint. During the inspection, the inspector has the right to interview employers and employees. The organization also has the right to send a company representative together with the inspector, when performing the inspection. This way the organization is aware of the exact complaints and some issues can be fixed on the spot, to show willingness to corporate and obey to the law and regulations. However, in order for the inspector to continue the research, he needs to show a court order. Without this order, the employer is legally allowed to refuse a reasearch, however this aproach is not advised. During an inspection, the employer and employee can stop an interview in case it gets too confrontational.

Upon the completion of the inspection, the inspector will provide the manager with list of discrepancies upon completion of the inspection. These can include the following violations: willful, serious, other than serious, de minimis, failure to abate and repeated.

EAPs end EWPs both help employees with their work-life balance. EAPs can provide confidential counseling and other personal services to employees in order to help them cope with stress created by personal issues related to work or home life. EWPs help employees with their physical wellness. These provide health programs such as health education, training and fitness programs, weight management and health risk assessment. Ergonomics is the science of fitting the workplace conditions and job demands to the capabilities of the working population. The goal of ergonomics is to reduce stress and limit injuries due to overuse of muscles. Therefore the OSHA provides guidelines on ergonomics in the workplace that are voluntary and can be inspected during a reasearch performed by the inspector.

What is the essence of Organizational Ethics, Sustainability, and Social Responsibility? - Chapter 15

Ethical Organizations

Research and studies have shown a positive relationship between ethical bavior and leadership effectiveness. Being ethical could be difficult at times, but it provides great rewards on the other hand. Honest people are known to have fewer mental health problems and physical complaints, like anxiety and back pain and better social interactions.

Ethics in the business place

Unethical behavior has long-tern negative consequences for companies, including their repuation, legal fees and fines. Sales could decline and cost of capital could increase. Market share detereoration and network partner loss could also be the result of showing unethical corporate behavior. For some companies this behavior can even result in going out of business.

Ethics defined

There are various definitions developed for ethics in different books and articles. Some of them are:

• "Ethics is a reflection on morality, that is, a reflection on what constitutes right or wrong behavior."
• "Ethics is the principles, values and beliefs that define right and wrong decisions and behavior.'
• "Ethics is a set of moral principles or values which is concerned with the righteousness or wrongness of human behavior and which guides your conduct in relation to others."

Contributing Factors to Unethical Behavior

There are several reaons why unethical behavior occurs. A couple of them will be discussed below.

PERSONALITY TRAITS AND ATTITUDES. The level of ethics someone obtains could be tied to their personality and therefore, some people have a higher natural sense of ethics than others. Unfortunately, a culture of lying and dishonesty is infecting American business and society as this kind of behavior has become more common and accepted. Some people don't even recognize their ''lying'' behavior and believe there is nothing wrong with the way they act.

MORAL DEVELOPMENT. A second factor which influences ethical behavior is moral developent. This refers to distinguishing right from wrong and choosing to do the right thing. The ability of people to make ethical decisions is based on their level of moral development. There are three levels of moral development. The first level is called the preconventional level, where a decision is based on self-interest and the possible consequences of the behavior (reward or punishment). The second level is called the convential level, which seeks to maintain expected standards and live up to the expectations of others. The third level is called the postconventional level, where an effort has been made to define moral principles for themselves; regardless of leaders' or the group's ethics, people at this level will make the right decision.

INCENTIVES. We respond to "incentives" and can usually be manipulated to behave ethically or unethically, depending on the incentives presented. The incentive is usually because of personal benefits or reasons, in order to prevent any trouble.

THE SITUATION. It can be tempting to be unethical in certain situations, for example when you are negotiating. Unsupervised people in a competitive environment are usually more likely to show unethical behavior. Unethical behavior occurs more in situations where there is no formal ethics policy available to guide these kind of situations and no punishments or consequences are tied to this kind of behavior.

Why justify ethical behavior?

Unfortunately, all people have the capacity to be dishhonest. One percent of people will always be honest, one percent of people will always be dishonest and 98% of people will be unethical at times, however just a little bit.

The problem with ethical behavior is that people like to see themselves as good or ethical. So therefore, when people do behave unethically, they often justify the behavior to protect the self-concept to prevent them from feeling bad. By cheating only a little, people can still feel good about their integrity.

Some common justifications for unethical behavior are the following:

• Everyone else does it
• To do something for the good of others in the company
• Claiming to follow orders
• Claiming not to be as bad as others
• Disregards or distortion of consequences

CAUTION OF ESCALATION. We are currently living in a time where ethical confusion exists, because relativism takes the upperhand and people are justifying their behavior. Statements like "do what is best for me" and "to do whatever I want".

What are ethical approaches?

There are several ethical approaches and guidelines that exist to support in making ethical choices. Understanding these common approaches can help in resolving ethical dilemmas.

General guides to ehtical decision making

The Golden Rule is "Do unto others as you would have them do unto you" or "Don't do anything to anyone that you would not want someone to do to you." Most successful people live by the Golden Rule. This is actual a moral principle that can be found in any religious text across the world.

The motto "Service Above Self" from Rotary International is a great motto to live by because it refers to helping others as opposed to the question what people can do for them.Rotary uses a four-way test to decide if there is ethical behavior:

1. Is this the truth?
2. Is it fair to all parties concerned?
3. Will it build goodwill and better friendship?
4. Will it be beneficial to all parties concerned?

The stakeholder's approach to ethics opts to create a win-win situation for all stakeholders that are affected by a certain decision. The difficult part is that different stakeholders have different interests.

Research has shown that making a decision without using an ethical guide leads to less ethical choices. In cases where there exists uncertainty on the decision, higher-level managers should be consulted for advice.

Codes of Ethics

Every culture endorses an ethical way to live. Following a code of ethics is considered to be an actual ethic approach.

Values are basic concepts of good and bad, or right and wrong. Values are created in society and culture. Each culture holds concepts of what is right and wrong. However, a primary goal of the code of ethics is to define what the company is about and make it clear that the company operates by being honest and fair.

Principles are a basic application of our values. Principles are applied to specific situations to come up with a set of actions that are considered to be ethical. An example of such a principle is to maintain personal integrity.

Managerial support, is absolutely critical to successful code of ethics. If the managers don't pay attention to the ethical codes, the subordinate managers and employees won't as well.

Within the organization it is not just the organization and the CEO but each individual that is reponsible for living the ethical conduct of business. Personal responsibility also refers to accountability of one's own actions.

From a compliance perspective, there are applicable laws that can be identified to find regulations that must be adhered to as part of the code of ethics. The OSH Act would certainly apply to all public companies, however there are other laws and regulations that apply to certain industries and groups.

How to create and maintain ethical organizations?

It is crucial for the code of ethics to be effective, that managers lead ethically. It is not aways easy to decide what the the "right thing to do is" in every situation that is presented in the workplace, especially since they can provide personal advantages like receiving a gift.

Authority

Authority is the right to give orders, enforce obedience, make decisions and commit available resources towards completing organizational goals. Authority is based on the positioin that a person has within the organization, not because of their individual knowledge or skills. It is important for managers to have certain authority to use resources in order to manage the their departments well.

Responsibility

Responsibility is the obligation to answer for something/someone. It's a duty to perform an assignment to a satisfactory outcome. This means that when authority is given to a certain individual it should use the right to use certain resoures within the organization accordingly, in order to meet the organizational objectives.

Accountability

Accountability means having a personal duty to someone else to use organization resources in an effective way in order to fulfill an assignment. This also means a manager can be held personally responsible for not using the available resources in the right way.

Facing ethical questions

In order to perform in an ethical way, it is important to learn to apply the concepts of authority, responsibility, and accountability constantly in order to avoid unethical actions. By doing so, there will be a gain of trust from others within the organization. Therefore, it is important to obtain knowledge on the appropriate use of company assets and what defines misuse of those assets as well.

Bribery, for example is a payment meant to result in a decision from someone that will help a person or the organization but could harm other organizations or other stakeholders in this decision. Corrupt payments to government officials is also a phenomenon where a payment is designed to allow the company to avoid scrutiny of their actions by government agencies. It could also be used to facilitate a desired company action.

Employment and personnel issues that can arise are who to hire, fire and promote, since all these factors influence productivity, absenteeism and turnover within the organization.

Marketing practices that are being performed in a dishonest way can form a big risk to the reputation of any organization. In addition, unethical practices performed by many financial firms are thought to be the cause of the massive recession that started in late 2007.

Also, customer privacy is an arising issue, since large amounts of personal data have become pretty common in organizations. Use of such data should be required for legitimate reasons only. There are also companies who monitor all employee communication on company computers and other devices. There can be a debate if this kind of monitoring can be considered ethical or an invasion of employee privacy.

What is Corporate Social Responsibility?

Ethics and Corporate Social Responsibility are closely linked, since being socially responsible refers to being aware of legal and economic obligations and always choosing for the right option so society can benefit from it.

The definition of CSR

Corporate Social Responsibility is based on the belief that "companies have some responsibilities to society beyond that of making profits for the shareholders." CSR is mainly about taking actions without causing any harm and doing good, taking into consideration shareholder interests. Corporate Social Responsibility is therefore the concept that organizations have a duty to all societal stakeholders to operate in a way that takes care of their needs. This means that organizations have to take into consideration their effect on society and not just look at shareholders but all stakeholders within the organzation.

Employees must be provided with safe working conditions and adequate pay and benefits. Companies need to make sure that the products and services they provide to customers are safe. From a society perspective, each organization or company should add value to the quality of life and not destroy the environment.

In addition a corporation must work fairly with competitors and work with their suppliers in a positive and cooperative way. The organization must, at all times, follow the laws and regulations provided by the government and on top of that, it must provide shareholders with a reasonable profit.

THE BUSINESS CASE FOR CSR. A business case is a term used for justification of a business action. The level of CSR can actually show up in the profits received. Companies with a better reputation for CSR are actually known to make larger profits than those that have poor CRS reputations.

Showing socially irresponsible behavior actually impacts the company and their reputation, which can lead to more difficulty in attracting (new) customers, investors and employees. A negative reputation that has been caused due to irresponsible behavior can cost years to improve or may even, be lost forever.

SOCIAL ENTREPRENEURS AND HYBRID ORGANIZATION. There is actually a growth in social entrepreneurs who are concerned for social issues related to financial rewards. Social entrepreneurs usually create hybrid organizations or enterprises. Hybrid organizations usually pursue a social mission. Their operations are in most cases sustained through commercial activities through work integration and social enterprises.

CSR REPORTING. Obviously, all the Fortune 500 companies have formal CSR programs. These corporations are even measuring how well they meet their SR objectives. The measures that result from this anlaysis are usually called corporate social performance (CSP).

What is the relationship between stakeholders and CSR?

Apart from the fact that CSR is considered to be a good public practice, CSR is actually codified more often in the US law compared to other countries and regions. There are a number of corporate compliance laws provided by the state and federal government stakeholders. Employees are also part of the performance rating of a company, since they are part of the firm. There are also employee groups that are currently receiving much more attention than previously. These are older workers, women executives, lesbian/gay/bi/transgender (LGBT) employees and increasing diversity.

What are the levels of Corporate Social Responsibility?

An important question when it comes to CSR is at what level should the company be operating? The diferent levels of corporate social responsibility are legal, ethical or benevolent. It is also possible for a firm to be in between levels or on different levels for different issues. The three levels are:

1. Legal CSR, which focuses on maximizing profits while obeying the law. It focuses on maximizing profit, while minimizing costs.
2. Ethcal CSR focuses on profitability and doing the right thing. Providing ethical leadership is required when dealing with market stakeholders.
3. Benevolent CSR tries to help society through philanthropy. This is considered the highest level of CSR and is also called "good corporate citizenship". The companies on this level are philanthropic by giving money and gifts to charitable organizations or other resources to charitable causes.

Sustainability

Sustainability practices are also part of the CSR policy. Sustainability includes meeting the needs of the current generation without compromising the ability of future generations to meet their needs.

A sustainable mindset takes into consideration how to develop products for the current generation by taking advantage of the current environment and enhancing how well a company's products perform using renewable resources. Therefore, organizations are currently working hard to reduce their environmental impact. There is a realization at the moment for different companies and organizations, that sustainability and economic growth can work together.

Our current society expects organizations and managers to work responsibly by using resources wisely and responsibly. The goal is to protect the environment and minimalize the amount of air, water, energy, minerals and other materials found in the final goods we consume. Also, recycling and reusing these goods to extent their use is preferred. Organizations are now actually accepting the environment as a highly important external stakeholder.

Sustainability training is a necessary tool in order to incorporate the mind-set of social responsibility and sustainability into the people of the organization. This should happen through the top of the organization all the way down. First the culture of executives must be altered in order to alter the mindset of the employees at lower levels within the organization.

Chapter Summary

There are many definitions when it comes to ethics, however they all have common elements. These common elements include morals, values, beliefs and principles. These concepts lead to the need for personal integrity and trust in the character of another person. Factors that contribute to unethical behavior are personality traits and attitudes, moral development and the situation. Moral development can cause individuals to act more childlike in a sense they will create strict rules for themselves.

When creating ethical codes the Golden Rule applies. This approach says to treat others as you would want to be treated. There are a couple questions provided by this rule to ask yourself to test if you are making an ethical decision. Values define what the company is about and make it clear that the company is fair and honest in its actions. Principles apply our values to specific situations so we can identify actions that were unethical. When it comes to coordinating ethical behavior, the involvement of management is crucial, because if managers don't pay attention to ethical behavior, employees won't either. Personal responsibility refers to the fact that everyone is responsible for their own actions and behavior. Compliance is the department in this case that points out the applicable laws and regulations that guide ethical behavior in certain industries.

Authority is a specific right within the organization that allows a certain person to give orders to others in the organization in order to reach organizational goals. In this case the responsibility refers to the personal obligation to use the company's resources effectively in order to help reach the organization's goals. Accountability refers to the personal duties to use organizational resources correctly, because if this is not done right, people can be held personally liable for that misuse. Common ethical issues that arise are bribery and corrupt payments.

Which Global Issues do Human Resource Managers encounter? - Chapter 16

Capital and goods flow easily between countries. Because of the ability to communicate fast, services can usually be performed in the locations where they can be performed against the lowest costs and most efficiently. There are four types of capital flow between countries according to one specific model:

• Natural capital
• Social capital
• Manufactured capital
• Human capital

There are several reasons why businesses continue to globalize. One is to increase business. Most large corporations want to increase their growth. This usually means the company would have to go overseas, because there are billions of potential customers if they go global.

The global village concept has become a reality in the sense that the entire world can see and interact with goods that were previously only available to a certain area. Currently, ideas, products and services move easily across the world, form one country to another. The power of free flow of ideas, information exchange and knowledge around the world has reshaped the way people see their world.

Declining trade barriers and the World Trade Organization (WTO) are reasons for increasing globalization over the past 50 years.

Trade blocs are groups of countries who form an association in order to facilitate movement of goods across national borders. One of the first trade blocs was NAFTA - the North American Free Trade Agreement among Canada, the US, and Mexico.

What are the stages of corporate globalization?

These days, people around the world are having more and more similar requests, when it comes to the products or services they would like to have. The fast impact and reach of internet has changed the way individuals think, act and react. There are four stages in the evolution of a company from local producer to global firm: domestic, international, multinational, and transnational. Please see the table below for some additional information on each of these stages:

Is HRM different in global organizations?

In order for international organizations who operate in a multicultural business environment, individuals and organizations must be capable of adapting smoothly across cultural boundaries. As the organization expands its scope, individuals need to learn to broaden their perspective from a local focus towards a broader concept of society.

Most copmanies start small and locally. In many industries, when the company will consider international performance in order to gain a competetive advantage over its competitors, the complexity of the firm will increase even more. Together with the creation of an international presence, the HR must be involved closely and become a more complex department. This results in every huge function within HR to be reconsidered:

• Staff: each location requires different sourcing, training, disciplinary actions and compensations.
• Training: training programs need to be modified to align with local cultures, religion and language.
• Employee and work relations: different laws in different countries concerning employee relations require HR to become advanced in legal issues.
• Compensation: the compensation type depends on the location and culture. This also applies for the incentives.

What are legal, ethical and cultural issues?

It is considered the repsonsibility of the HR department to identify issues that are of legal, ethical or cultural matter when operating globally. This applies for international labor laws, organizational ethics policies, communication, training and cultural training.

The HR managers have to ensure that the organization in each country complies wth the local laws. The major laws are considered to be in the area of staffing, labor relations, and disciplinary action/termination.

The National culture is even more powerful in many cases, because it refers to everything people have known their entire lifes. People that have lived in one culture, might not realize there exist other cultures, with different norms, values and beliefs. This type of view is often reffered to as parochialism: a narrow-minded view of the world including the inability to recognize individual differences. It is therefore a requirement to managers in global organizations to have a parochial view of the world.

Global staffing

For international organizations it is crucial to hire people with the required and necessary skills in order for the organization to survive internationally. The people with the right skills need to be gathered and specific trainings in order to function properly in the new environment should be provided as well. For expatriates there are some personality traits that are highly beneficial in order to fit into a culture better. There are five big factors in determining if someone fits into an international culture:

• Extroversion: there is some evidence claiming that extroverts are better able to survive in a different culture and are able to adjust more easily. However, it is not proven that they are more effective in the workplace.
• Openness to experience: usually, people who are open to experience are able to adjust better to a foreign culture.
• Conscientiousness: this apparently has a very little effect on the ability to tolerate international work.
• Agreeableness: individuals who are agreeable also tend to adapt to a new working environment better.
• Neuroticism (negative affectivity): people with this characteristic may have a higher change to react negative when taking international assignments.

What staffing choices are available?

The next question would be from which source to get the individuals from. There are three generic options that apply in this case:

• Parent-country nationals: people who work for the organization in the headquarter location.
• Host-country nationals: people who live in a different country than where a work assignment will take place.
• Third-country nationals: people who have a skill set required for an international assignment, but are not citizens of the headquarter location of the organization or the target location.

The staffing choice that will be applied eventually, depends on the organizational preference and culture. There are three approaches that drive the decision for which option the organization will choose. These are: ethnocentric, geocentric and polycentric.

Ethnocentric organizations believe their values are superior to others and therefore they staff their international organizations with home-country managers. Polycentric firms emphasize the importance of local values and culture and will therefore opt for host-country nationals. Geocentric businesses believe in global management and therefore opt for the third-country nationals.

Is outsourcing an alternative?

Outsourcing is the process of hiring another oganization to do work that was previously done within the host organization. If together with the new employees that will be hosted, one of the processes will move to another country, then the process is called offshoring. This means that in the home country there will be a cost reduction and less employees that will have to be managed by the organization.

Onshoring is the process of shuttering operations in other countries and bringing work back to the home country to increase employment locally. This action is not always something that makes sense for every party and it could be questioned if it is ethical to do so.

For both options, outsourcing and onshoring, it is important to consider the potential job loss or gain in the home country, because jobs are created in a new location. In addition, it is important when considering such a decision to take the interest of shareholders into consideration as well.

How does recruiting and selection work for international offers?

Companies are now sourcing managerial and technical talent from offshore. Social media is one of the most common platforms used to reach skilled and knowledgeable workers worldwide.

The recruiting and selection process in this case is quite similar, however there are a few new areas that can be introduced:

• Negotiating the assignment: the offer needs to be made the same way when it concers a local offer, however the compensation should be negotiated differently. The length of the assignment, and repatriation, allowances for relocation, housing arrangements, family accompaniment, income and other individual tax issues nee to be discussed. This results in a longer and more detailed negotiation process.
• Tax issues are one of the more complex subjects that arise when discussing international assignments. It is important to establish clearly where the employee will have to pay taxes. The laws regulate this principle so it cannot be chosen by any individual. Therefore it is important to assist the employee with the correct tax strategy.
• Relocation costs: when moving to certain locations, this can be a difficult part. There may not be enough housing available or it may be fairly expensive. From this perspective it might be important to have company housing or have contracts with local firms that will house employees for a set fee.

What does expatriate training include?

An expatriate is an employee who leaves their home country to go work in another country.

Cultural training is an essential part when it comes to preparing expatriates. Also communication training is necessary since the expatriate will have to deal with a new culture and perhaps new language. Verbal, nonverbal and symbolic communication is important to take into consideration for this type of training. Communication can always be difficult, even when everyone is speaking the same language. It's usually the nonverbal communication that differs depending on the norms, values and cultures. Therefore, it is utmost important to have well-trained employees available that understand the body language and nonverbal cues that are being provided during communication by their coworkers in the new environment.

Other expatriate isues that could arise are reporting structure, performance management processes, mentoring, other support and repatriation. Since the employee will be in a host country there should be an agreement on whom to report to. Also the performance appraisal should be prepared by either the host-country or the home-country. This is also essental to agree on for both parties.

Compensating the global workforce

When it comes to determining the compensation in a global environment, the question is whether compensation in various countries needs to be different. The same compensation system as for regular employees applies (pay, incentives and benefits) for the global workforce.

What are the payment elements?

Is different compensation required in global firms? The answer is, of course. Each country has a different standard of living and labor laws vary differently across each country. If the expectation exists to request high-quality and high-performance managers to work within the organization and also travel across different countries to provide the same quality, they also need to be compensated in a fair way.

When analyzing the differences between the local country of the manager and the host-country, it is important to take into consideration the current cost of living, the current salary and how these two align with eachother. Another question that arises is in what currency should the employees be paid? Their home currency or the new local currency? Luckily, there are different approaches available that support in choosing the right payment and compensation method.

BALANCE SHEET APPROACH. The balance sheet approach is one of the most common methods to provide expatriate compensation. When applying the balance sheet approach, the organizatio usually continues to pay the individual an equal payment rate, usually in the home currency, while providing additional allowances during an overseas assignment to enable that employee to maintain a normal standard of living during their time abroad.

SPLIT-PAY APPROACH. A variant on the balance sheet approach is the use of split payment. Many organizations have admitted to use this strategy as part of their compensation plan. The idea behind split payment is that half ot the compensation is provided to the employee in the home country currency, while the other half is provided in the local currency, therefore reducing currency exchange rate costs.

LOCAL PLUS APPROACH. This approach opts for applying the same payment structures that are considered regular in the host country. In addition there will be allowances provided to the employee in the host country, so they are still able to match their lifestyle to the one in their home country.

OTHER APPROACHES. A different approach then the ones discussed above is a negotiation approach, where the employer and the employee close a deal by discussing the options for a compensation package. There is also a localization approach available, where the compensation of the employee is based on the host country norms. Then, there is also a lump sum option, which provides the possibility for the employee to receive a sum of money in order to cover certain expenses such as taxes, vehicles, housing and similar items.

What are incentives in global firms?

In today's world, effective global leaders are an essential asset that could offer a competetive advantage within the organization. One of the biggest challenges can actually be to keep developing leadership talent and to grow an organization internationally. This arises the question if the payment incentives work the same way globally as they do locally. Shortly, the answer would be "no". The conclusion is that it is not possible to provide the same type of incentives to employees regardless of the organizational and country culture and structure.

Benefit programs around the world

Of course, it is logical that benefit programs, in any place, should be adapted to the local norms, values and culture that applies in that specific location. Due to regulations and laws that apply, some countries, might for example require benefits that are not mandatory in other countries. The living condition, is also a factor that should be taken into consideration when choosing the right benefit package. The organization (and employee) want to make sure that everything is provided in order to operate effectively once on location. Companies in many of the European Union, have to apply many more benefits compared to the United States. This is due to the laws and regulations that apply within the European Union.

Recession can cause a great impact on the benefits provided by organization to employees, but also the governmnental benefits, such as retirement programs and health care might be severely impacted.

Retirement benefits vary among countries, since some countries provide a centralized approach and other countries might have another approach, whereas other governments provide very little on a centralized approach. An issue is that currently, the new generation of retirees are planning on retiring earlier than historically planned. Most people would like to retire from the age of 60 or earlier. This issue is creating a potential gap for retirement funding. For this reason, financial counseling can be very beneficial to advise employees what they should be saving, in order to fund additional retirement accounts. This will help them to fill the future retirement gap that might be caused.

Although there are many differences around the world, due to regulations, law and cultural matters, there exists a strong connection between employee satisfaction and benefit packages that are being offered. Therefore, it would be highly beneficial for employers to arrange proper communication with the employee to discuss applicable benefit plans that would satisfy the employee and motivate them to perform better on the job as well.

Chapter Summary

There are several reasons why business could be increased, but the main reason is to become a global village in which goods, ideas, services and knowledge are flowing freely across national borders, creating an even greater demand for the offered products. In the recent years, barriers to trade have been minimized, even though there are some trade blocs that exist in certain countries. Due to technology, innovation and recent changes, barriers to transportation, communication, and culture have also decreased. However, the most important reason to go internationally is, to remain competetive.

The stages are domestic, international, multinational and transnational. Domestic firms generally operate in only one country, whereas international firms operate in a few, usually similar countries. Multinational businesses start to source capital resources from anywhere in the world, where they can be provided at the lowest cost. Transnational firms compete on a global level without any boundaries or barriers. This group is also known to be culturally sensitive.

When it comes to embracing new cultures, there are five aspects that describes how globe dimensions differ. These are power-distance, individualist cultures, masculine societies, high uncertainty avoidance and short-term societies. There are five big personality traits that can create advantages or disadvantages when an expatriate must be chosen to represent the organization in a foreign country, in a new and different culture. The personality traits are extroversion, openness to experience, agreeable, conscientious and neuroticism. Depending on the level of these traits (positive) or negative, they can impact the capacity of the potential expatriate to be able to survive well in the new foreign country with different norms, values and a new culture. Depending on the job-type and the preference of the organization, there are three types of employees that can be chosen to fill the spot of the expatriate. These are parent-country members, host-country nationals and third-country nationals.