Chap 011

Chapter 11 Managing Human Resources

OBJECTIVES

1. Define human resources management and explain its significance.2. Summarize the processes of recruiting and selecting human resources for a company.3. Discuss how workers are trained and their performance appraised.4. Identify the types of turnover companies may experience, and explain why turnover is an

important issue.5. Specify the various ways a worker may be compensated.6. Discuss some of the issues associated with unionized employees, including collective bargaining

and dispute resolution.7. Describe the importance of diversity in the work force.8. Assess an organization’s efforts to reduce its work-force size and manage the resulting effects.

KEY TERMS AND DEFINITIONS

affirmative action programs

Legally mandated plans that try to increase job opportunities for minority groups by analyzing the current pool of workers, identifying areas where women and minorities are underrepresented, and establishing specific hiring and promotion goals, with target dates, for addressing the discrepancy.

arbitration A method of resolving labor and management differences in which a third party is brought in to settle the dispute and whose solution is legally binding and enforceable.

benefits Nonfinancial forms of compensation provided to employees, such as pension plans, health insurance, paid vacation and holidays, and the like.

bonuses Monetary rewards offered by companies for exceptional performance as incentives to further increase productivity.

boycott A labor tactic that attempts to keep people from purchasing the products of a company.

collective bargaining The negotiation process through which management and unions reach an agreement about compensation, working hours, and working conditions for the bargaining unit.

commission A compensation system that pays a fixed amount or a percentage of the employee’s sales.

conciliation A method of resolving labor and management differences in which a third party is brought in to keep the two sides talking.

development Training that augments the skills and knowledge of managers and professionals.

Ferrell/Hirt/Ferrell, Business: A Changing World, Seventh Edition 247


diversity The participation of different ages, genders, races, ethnicities, nationalities, and abilities in the workplace.

human resources management

All the activities involved in determining an organization’s human resources needs as well as acquiring, training, and compensating people to fill those needs.

job analysis The determination, through observation and study, of pertinent information about a job, including specific tasks and necessary abilities, knowledge, and skills.

job description A formal, written explanation of a specific job, including job title, tasks, relationships with other jobs, physical and mental skills required, duties, responsibilities, and working conditions.

job specification A description of the qualifications necessary for a specific job in terms of education, experience, and personal and physical characteristics.

labor contract The formal, written document that spells out the relationship between the union and management for a specified period of time—usually two or three years.

labor unions Employee organizations formed to deal with employers for achieving better pay, hours, and working conditions.

lockout Management’s version of a strike wherein a work site is closed so that employees cannot go to work.

mediation A method of resolving labor and management differences in which a third party is brought in to suggest or propose a solution to the problem.

orientation Familiarizing newly hired employees with fellow workers, company procedures, and the physical properties of the company.

picketing A public protest against management practices that involves union members marching (and carrying anti-management signs) at the employer’s plant.

profit sharing A form of compensation whereby a percentage of company profits is distributed to employees whose work helped to generate them.

promotion Advancement to a higher level job with increased authority, responsibility, and pay.

recruiting Forming a pool of qualified applicants from which management can select employees.

salary A financial reward calculated on a weekly, monthly, or annual basis.

248 Ferrell/Hirt/Ferrell, Business: A Changing World, Seventh Edition




selection The process of collecting information about applicants and using that information to make hiring decisions.

separations Employment changes involving resignation, retirement, termination, or layoff.

strikebreakers People hired by management to replace striking employees; called “scabs” by the striking union members.

strikes A labor tactic in which employees walk off the job.

Title VII of the Civil Rights Act

A law that prohibits discrimination in employment and which created the Equal Employment Opportunity Commission.

training Teaching employees to do specific job tasks through either classroom development or on-the-job experience.

transfer A move to another job within a company at essentially the same level and wage.

turnover Employment changes that occur when employees quit or are fired and must be replaced by new employees.

wage/salary survey A study that tells a company how much compensation comparable firms are paying for specific jobs that the firms have in common.

wages Financial rewards based on the number of hours the employee works or the level of output achieved.

LECTURE OUTLINE AND NOTES(PPT notations below refer to the Premium Content slides.)

I. Introduction

A. If a business is to be successful it must have sufficient numbers of employees who are qualified to perform the required duties.

B. Managing the quantity (through hiring and firing) and quality (through training, compensating, etc.) of employees is an important business function.

II. The Nature of Human Resources Management

PPT11.05-11.06A. Human resources management refers to all the activities involved in

determining an organization’s human resource needs as well as acquiring, developing, and compensating people to fill those needs.



1. Human resources management has increased in importance over the last few decades.

2. Effective human resources managers are aware of changing employee conditions and use them to increase efficiency and productivity.

B. Every manager in an organization practices some of the functions of human resources management at all times.

III. Planning for Human Resources NeedsPPT11.08

A. After determining how many employees and what skills are needed to achieve organizational objectives, a firm must ascertain how many employees it currently has and project how many may be retiring or leaving.

B. Current and forecasted employee requirements then enable the manager to determine hiring and qualification requirements.

C. Next, a strategy for satisfying human resources needs is developed.D. Job analysis determines, through observation and study, the specific tasks

that comprise a job; the skills, knowledge, and abilities needed to perform it; and the job environment. Managers use job analysis in two ways.1. To develop a job description—a formal, written description of a specific

job, including job title, tasks to be performed, relationships with other jobs, physical and mental skills required, duties, responsibilities, and working conditions.

2. To develop a job specification—a description of the qualifications necessary for a specific job in terms of education, experience, personal characteristics, and physical characteristics.

3. Both job descriptions and job specifications are used to develop recruiting materials.

IV. Recruiting and Selecting New EmployeesPPT11.09

A. Recruiting. 1. Recruiting is the formation of a pool of qualified applicants from which

management will select employees. 2. There are two sources for this pool of applicants.

a. Internal sources of applicants are the organization’s current employees. This approach is relatively inexpensive.

b. External sources are outside the firm. 1) External sources consist of newspaper and journal ads,

employment agencies, recommendations from current employees, unsolicited applications, and online.

2) This approach is more expensive than hiring from within.3) Recruiting for entry-level managerial and professional positions

is often carried out on university campuses.4) For managerial and professional positions above the entry level,

employment agencies or executive search firms (headhunters) are often used.



B. SelectionPPT11.10

1. Selection is the process of collecting information about applicants and using that information to decide which ones to hire.

PPT 11.112. The application is the first stage of the process.

a. The applicant usually fills out an application with information on current salary, reason for seeking a new job, years of experience, availability, and level of interest.

b. The goal at this stage is to get acquainted with the applicants and eliminate those obviously not qualified for the job.

PPT 11.123. The interview is the second phase of the selection process. The interview

provides in-depth information both to the company and to the prospective employee.

PPT 11.134. Testing is the third stage of the selection process.

a. Ability, performance, aptitude, IQ, or personality tests may be given to determine whether an applicant has the necessary skills or his/her ability to fit into the firm’s culture.

b. Polygraph (lie detector) tests, once a common tool for evaluating applicants’ honesty, were restricted in 1988 to specific government jobs and jobs involving security or access to drugs.

c. Applicants may also undergo physical examinations to determine their suitability for some jobs.

d. Many companies require applicants to be screened for illegal drug use, but this practice is controversial.

PPT 11.145. Reference checking, the final step, involves verifying educational

background and previous work experience.a. Background checking is important because applicants sometimes

misrepresent themselves on their applications or résumés.b. Many organizations will confirm employment but will not release

details about the quality of a previous employee’s work.

C. Legal Issues in Recruiting and SelectingPPT11.18-11.19

1. Legal constraints and regulations are present in almost every phase of the recruitment and selection process, and violations can result in lawsuits and fines.

2. Title VII of the Civil Rights Act of 1964 bans discrimination in employment.a. The Equal Employment Opportunity Commission (EEOC) is the

federal agency set up to enforce Title VII of the Civil Rights Act of 1964 and specifically charged with increasing job opportunities for women and minorities and with eliminating job discrimination based on race, religion, color, sex, national origin, or handicap.

b. Employers must not impose sex distinctions in job specifications, job



descriptions, and newspaper ads.c. The Civil Rights Act of 1964 also outlaws the use of discriminatory

tests for applicants.3. The Americans with Disabilities Act (ADA) prevents discrimination

against disabled persons.4. The Age Discrimination in Employment Act, passed in 1967 and

amended in 1978, specifically outlaws discrimination against people between the ages of 49 and 69 and also outlaws policies that require employees to retire before

5. The Equal Pay Act mandates that men and women who do equal work must receive the same wage.

V. Developing the Work ForcePPT11.20

A. Training and Development1. Training is teaching employees how to do their specific job tasks.

a. On-the-job-training allows workers to learn by actually performing the tasks of the job.

b. Classroom training teaches employees with lectures, conferences, videotapes, case studies, and web-based training.

2. Development is training that augments the skills and knowledge of managers and professionals.

PPT 11.22-11.23B. Assessing Performance

1. A performance appraisal identifies an employee’s strengths and weaknesses on the job.

2. It has three main objectives:a. It provides employees with feedback on how they are doing and what

they need to do to improve their performance.b. It provides a basis for determining how to compensate and reward.c. It provides the organization with information about the quality of its

selection, training, and development activities.3. Performance appraisals may be objective or subjective.

a. Objective assessments are quantifiable. b. Subjective assessments are used when jobs do not lend themselves to

objective appraisals. A ranking system is used to assess various performance factors.

4. Another performance appraisal method used is the 360-degree feedback system, which provides feedback from a panel that typically includes superiors, peers, and subordinates.

C. TurnoverPPT11.24

1. Turnover, which occurs when employees quit or are fired and must be replaced by new employees, results in lost productivity, fees to recruit new employees, management time devoted to interviewing, and costs for new employees.

2. Turnover is not always an unhappy occasion when it occurs in the form



of promotions or transfers.a. A promotion is an advancement, or vertical movement, within an

organization to a position with increased authority, responsibility, and salary. In some companies, the length of time or service determines who should be promoted.

b. A transfer is a move from one job to another within a company. The transferred employee remains at the same wage and job level.

c. A separation is the departure of the employee from the organization because of resignation, retirement, layoff, or termination.1) Employees may be terminated, or fired, for poor performance,

violation of work rules, absenteeism, and so on.2) Recent legislation and court decisions require that companies fire

employees fairly, for just cause only. Managers should therefore exercise care to warn employees when their performance is unacceptable and may lead to dismissal.

3) Usually a function of economic trouble, layoffs are sometimes temporary; employees may be brought back when business conditions improve.

d. Because of the expense of recruiting and training new employees, well-organized human resources departments try to minimize losses caused by separations and transfers.

VI. Compensating the Work ForcePPT11.26

A. Designing fair financial compensation plans for employees is important because wages and salaries are a substantial portion of an organization’s expenses.1. Wages that are too high may result in high-priced products, while wages

that are too low may harm morale and result in costly turnover. 2. Designing a fair financial compensation plan is a difficult task. 3. A wage/salary survey tells a company how much compensation

comparable firms are paying for specific jobs that the firms have in common.

B. Financial CompensationPPT 11.27

1. Wages are financial rewards based on the number of hours the employee works or the level of output produced.a. Time wages are based on the number of hours worked. They are easy

to compute but provide no incentive to increase productivity.PPT 11.29

b. Piece wages are based on the level of output. A major advantage of piece wages is that employees are encouraged to supervise their own activities and to increase output.



2. Commissions are payments to an employee for a fixed amount or a percentage of the employee’s sales. This method motivates employees to sell as much as they can.

PPT 11.30-11.313. A salary is a financial reward calculated on a weekly, monthly, or annual

basis. This method is associated with white-collar workers and professionals.

4. Other forms of financial compensation:a. Bonuses are an addition to regular compensation and are given as

rewards for exceptional performance.b. Profit sharing is a distribution of a percentage of company profits to

the employees whose work helped generate those profits. 1) Employee stock ownership plans (ESOPs) have gained in

popularity in recent years.2) Profit sharing can motivate employees to work hard, because

increased productivity and sales mean that the profits or stock dividends will increase.

C. BenefitsPPT11.33

1. Benefits are nonfinancial forms of compensation provided to employees, such as pension plans, health insurance, life insurance, sick-leave pay, vacation pay, credit unions, health programs, and child care.

2. Such benefits increase employee security and, to a certain extent, morale and motivation.

PPT 11.353. A benefit increasingly offered is the employee assistance program (EAP).

a. Most EAPs offer counseling for and assistance with employees’ personal problems that might hurt job performance if not addressed (e.g., drug and alcohol abuse, fitness programs, and so forth).

b. EAPs help reduce costs associated with poor productivity, absenteeism, and other workplace issues by helping employees deal with personal problems that contribute to these issues.

4. Companies try to provide the benefits they believe their employees want, but diverse people may want different things. Some companies use fringe benefit programs to allow employees to choose the benefits they would like, up to a specified amount.

PPT 11.36a. Traditional fringe benefits: sick leave, pension plans, health plans,

bonusesb. Soft benefits (to help achieve a work/life balance): on-site child care,

spas, food service hair salonsPPT 11.37

c. Cafeteria benefits plans: allows employees to select the benefits most important to them

VII. Managing Unionized EmployeesPPT11.38

A. A labor union is an employee organization formed to deal with employers



for achieving better pay, hours, and working conditions.

B. Although unions provide employees with considerable negotiation power, union growth has slowed in recent years, and prospects for growth do not look good.1. Most blue-collar workers have already been organized.2. An increased focus on productivity and efficiency has lead to more

participative management, blurring the line between management and workers.

C. Collective BargainingPPT11.39

1. Collective bargaining is the negotiation process through which management and unions reach an agreement about compensation, working hours, and working conditions for the bargaining unit.

PPT 11.402. The objective of negotiation is to reach agreement about a labor contract

—the formal, written document that spells out the relationship between the union and management for a specified period of time.a. In collective bargaining, each side tries to negotiate an agreement that

meets its demands; compromise is frequently necessary.b. Management negotiates to gain or retain control over employment

issues (hiring, firing, standards, schedules, and so forth).c. Unions focus on contract issues such as magnitude of wages, better

pay, holidays, better scheduling, and benefits.d. Many labor contracts contain a cost-of-living escalator clause

(COLA).

D. Resolving disputesPPT11.43

1. Even though the labor contract is a legal document, management and labor may interpret it differently, sometimes causing disputes.

2. When collective bargaining breaks down, either side may resort to more drastic measures to achieve its objectives.

3. Labor Tacticsa. Picketing is a public protest against management practices with

workers marching (often waving antimanagement signs and placards) at the employer’s plant.

b. Strikes—employee walkouts—are one of labor’s most effective weapons against management; however, they are a weapon of last resort.

c. A boycott is an attempt to keep people from purchasing a company’s products.

4. Management Tacticsa. A lockout is management’s version of a strike; management actually

closes a work site so that employees cannot go to work.b. Strikebreakers are people hired by management to replace striking

employees; they are often called “scabs” by union members.



5. Outside ResolutionPPT11.44

a. Outside resolution may be necessary if other means of dispute resolution fail.

b. In such cases, the parties have three choices:1) Conciliation involves the use of a neutral third party, a

conciliator, to keep labor and management bargaining. The conciliator’s goal is to get both parties to focus on the issues and prevent negotiations from breaking down.

2) Mediation involves using a neutral third party, a mediator, to suggest a solution to the problem. This third party has no formal power over labor or management.

3) Arbitration involves bringing in a neutral third party, an arbitrator, to decide how to settle the dispute. An arbitrator’s solution is legally binding and enforceable.

4) Generally, arbitration occurs on a voluntary basis; management and labor must agree to it. Sometimes, management and labor submit to compulsory arbitration, in which an outside party (usually the federal government) requests arbitration to head off a prolonged strike.

VIII. The Importance of Workforce DiversityPPT11.45

A. Diversity refers to the participation of different ages, genders, races, ethnicities, nationalities, and abilities in the workplace.

PPT 11.47B. Why Is Diversity Important?

1. The U.S. work force is becoming more diverse. Employment of women, African-Americans, Hispanics, and other minorities, as well as disabled workers will continue to rise.

2. More and more companies are trying to improve HRM programs to recruit, develop, and retain more diverse employees to better serve their diverse customers.

3. Effectively managing diversity in the work force involves cultivating and valuing its benefits and minimizing its problems.

C. The Benefits of Workforce Diversity1. There are a number of benefits to fostering and valuing work-force

diversity.a. More productive use of a company’s human resources.b. Reduced conflict among employees of different ethnicities, races,

religions, and sexual orientations.c. More productive working relationships among diverse employees.d. Increased commitment to and sharing of organizational goals among

diverse employees at all organizational levels.e. Increased innovation and creativity as diverse employees bring new,

unique perspectives to decision-making and problem-solving tasks.f. Increased ability to serve the needs of an increasingly diverse



customer base.2. As work-force diversity becomes a valued organizational asset,

companies spend less time managing conflict and more time accomplishing tasks and satisfying customers.

D. Affirmative ActionPPT11.48

1. Many companies strive to improve their working environments through affirmative action programs, which are legally mandated plans that try to increase job opportunities for minority groups by analyzing the current pool of workers, identifying areas where women and minorities are underrepresented, and establishing specific hiring and promotion goals to resolve the discrepancy.

2. Legislation reinforces affirmative action but prohibits organizations from setting hiring quotas that might result in reverse discrimination.

BOXED TEXT DISCUSSION QUESTIONS

Consider Ethics and Social Responsibility: AT& T Achieves Supplier Diversity

1. Why should large companies such as AT&T invest valuable resources in increasing the diversity of suppliers?

Increasing supplier diversity can help to improve communities in which businesses operate, allowing for better business and a stronger community reputation. Working with diverse suppliers also often leads to working with a number of smaller businesses, offering a wider variety of resources.

2. How does a diverse supplier base help a company’s bottom line?

A diverse supplier base can help AT&T’s bottom line by bringing increased innovation and creativity with the new, unique perspectives of diverse suppliers. A diverse supplier base also offers the company a wider variety of resources, reducing its dependency on any one company for needed parts, materials or technology. A diverse supplier base also helps the company better serve its increasingly diverse customers.

3. What else could AT&T do to ensure diversity?

AT&T could also focus on the diversity of its own workforce by offering diversity training for managers and employees and ensuring diversity in hiring and promotion practices. A diverse internal workforce will benefit AT&T itself, with less time spent managing conflict and more time and better ability to meet customer needs. Having a diverse internal workforce may also lead to an even more diverse supplier base, as different employees have different connections in their communities and different ideas of where to find suppliers.



Going Green: Green Coffee?

1. How does Starbucks compensate its employees in ways that encourage lower turnover and a more productive workforce?

Starbucks vows to treat all of its partners with respect and dignity. All eligible full-time and part-time Starbucks partners are offered comprehensive health care. Healthier Starbucks workers are more productive and have less absenteeism. All eligible global partners are offered Bean Stock options. Stock options based on seniority and amount of time with the company encourage employees to remain with the company, reducing turnover of valuable employees.

2. How do Starbucks’ green initiatives affect employees?

Starbucks is encouraging its partners and customers to go green. It has run a few prominent campaigns, such as planetgreengame.com, and is working to track how much energy is used by specific equipment throughout its stores. Being environmentally sustainable gives Starbucks employees something to be passionate about at work. It makes their jobs meaningful, and gives them a feeling of truly contributing to their community and the world at large. Partners may take advantage of the Make Your Mark program to champion environmental causes.

3. What might encouraging volunteerism do for employee morale and company loyalty?

Because partners are able to contribute to their communities with the help of the company. Starbucks partners in the United States and Canada volunteer about 383,000 hours a year. This again gives employees something to be passionate about at work, giving them a true feeling of giving back to their communities. Employees see Starbucks’ efforts to contribute to the community in ways that are meaningful to the employees, which increases both morale and loyalty.

Solve the Dilemma

1. What did Medallion’s HRM department do right in dealing with the employees who were laid off?

Medallion’s HRM department implemented an employee assistance program for laid-off employees. This employee assistance program included free classes on job search tactics and résumé writing. These classes helped smooth the transition and worked to reduce any animosity the laid-off employees might have felt toward the organization.

2. What are some of the potential problems that must be dealt with after an organization experiences a major trauma such as massive layoffs?

After a major layoff, employee morale is likely to be very low. It is not uncommon for the remaining employees to 1) feel a sense of loss (they miss the people who were laid off), 2) feel guilty for being kept, 3) feel uncertain about their own professional future, and 4) experience role ambiguity related to the new and leaner structure.



3. What can Medallion do to make the team approach work more smoothly? What role do you think diversity training should play?

Medallion can smooth the transition to the team approach by ensuring employees are clear as to their roles and responsibilities. Toward that end, Medallion should provide its employees with new job descriptions that include explanation of how the team is to function, and implement a diversity training program. Finally, Medallion should ensure that its task force (that handles employee concerns) maintains employee confidentiality so employees do not fear retribution for voicing concerns. Diversity training should play a key role in the transition because it will help to reduce conflict (and improve productivity) among employees of different ethnicities, races, religions, and sexual orientations.

SUPPLEMENTAL LECTURE

Firing Employees

Chapter 11 deals with the topics of promotions, transfers, and separations. Firing an employee is one aspect of management that most managers hate. Despite all the literature about effective management and motivation, there are still times when an employer has to fire an employee.

Firing is a bit more complicated than might have been the case 70 years ago. At that time, it seemed that all a boss had to do was say: “Charlie, at the end of today’s shift, you’re through here at Murkeeville Car Markers. I’ve put two extra weeks of pay in your pay envelope.” In those days, Charlie didn’t know that he might be able to pursue legal action. Charlie might not have a union to stand behind him and possibly get the firing decision overturned.

However, Charlie could make things tough for the boss by any number of emotional reactions to being fired. (The same reactions are often replayed today.) Charlie could have broken down and cried, punched his boss in the nose, spread malicious lies about his boss, placed a bomb in company headquarters, or taken any number of other possibly bizarre actions.

Today, an employee, in many cases, will sue an employer over what the employee believes to be an unfair discharge. And very often, there is considerable merit to the employee’s case. Firing an employee is not a routine matter that a manager handles with ease. Because of managers’ lack of daily experience in dismissing people, many firings are bungled badly. And when the fired employee and his or her attorney look over the chain of events involved, it may become clear that established procedures were not followed.

Firing procedures vary from company to company, but here is a list of good suggestions gleaned from the experiences of several firms and their employees.

1. Have adequate documentation before firing. If it is your contention that the employee is a troublemaker, you should be able to back up that contention with written documentation. Many firms (often in conjunction with their unions) have worked out a system in which an employee is given one or two oral reprimands for improper conduct. Although an employee is told orally of his shortcomings, his personnel file also receives a note from the supervisor reading something



like: “On May 5, 2002, I had to caution Frank about his continued use of profanity in our day nursery for employees’ children.” After the prescribed number of oral warnings, Frank will receive letters, copies of which will go into his personnel file. Such a letter could read: “This date, May 30, 2002, your supervisor and four members of the shift (Al Bean, Fred Toker, Amy Wilson, and Lu Thurgen) informed the plant manager that your degree of inebriation was such as to prevent you from performing your regular job. You were sent home. A repeat of this conduct will result in your suspension.”

If it becomes necessary to fire Frank, the manager assigned the unpleasant task will feel bolstered if he or she has a folder on Frank that is crammed with documentation that Frank is indeed a troublemaker. If litigation follows the firing, that folder will be of utmost importance to the firm in defending itself.

2. Have at least one very serious meeting with the person to be fired PRIOR TO the meeting for firing. Several such meetings should take place. This will prevent a firing coming as a complete surprise to the employee. A good manager will make every effort to save the employee’s job, and these preliminary meetings are an effort in that direction. Such a meeting is like a life preserver thrown to a drowning person: “Grab hold and perhaps we can save you.” The trouble is that there will be some employees who will refuse to grab hold. An employer was once told by an employee, as the two met for a second time to discuss the employee’s attitude: “I’m not just going to sit here and take another scolding.” The employer had no choice but to respond: “If you won’t take a scolding, then perhaps you are through here.”

3. Do NOT handle a firing all by yourself. There is something courageous about handling your own firing duties, but such a move is also foolish. Invite a colleague in management to sit with you as you tell the employee of his or her dismissal. Bring along two colleagues if you want. Under no circumstances should you go alone to a firing when the employee will be accompanied by a union official or other colleagues. Different versions of what went on at a firing can develop, and you want a colleague present to verify your version of the incident. Also, if the employee reacts in a manner that is socially irresponsible, it can be a great comfort to know you have support at the scene. Having such support may discourage the employee from losing control of his or her emotions.

4. Keep cool. Although there may have been times when you were so exasperated with the employee in question that you wanted to shout and curse, the firing moment is not the time for your emotional release. You should allow time for as much anger as possible to dissipate. When the ultimate words must be uttered, with as little emotion in your voice as possible, try to cushion the blow. You might try: “So, you see, Frank, it just seems best for you and the company that we come to a parting of the ways. I know this will be a big adjustment, and I am personally sorry that . . .”

5. Be prepared for anything. Part of keeping cool is being prepared for all possible reactions. Don’t be shocked if Frank starts to shout obscenities at you; expect that and more. If your colleague has never witnessed a firing, then clue him to the fact that the employee may very well erupt emotionally. Assuming that the employee will act professionally is a very dangerous assumption.

It is hoped that those listening to this lecture will never have to fire an employee. Unfortunately, that is a vain hope because managers sometimes encounter employees who are no longer assets to the firm



and who must be discharged as quickly and painlessly as possible.

Questions1. What is the first step for the manager before the firing?2. What reactions may a manager find when firing an employee today?3. How many persons should be present during the actual firing of an employee?



CONTROVERSIAL ISSUE

How Easy Is It to Be an Arbitrator?

Unlike mediation and conciliation, arbitration leads to a binding decision that in most cases will settle the issue permanently. As you can see, an arbitrator must take his or her role very seriously because his or her decision will have significant impact on people’s lives. An arbitrator does not necessarily pick a middle ground that will satisfy both sides. He or she will carefully consider the facts in the case and then make a ruling; often, such a ruling will grant to one side everything it could have hoped for.

Note to Instructors: Help your students step into the kind of controversy that an arbitrator must deal with. Two sides of a dispute have been sketched below. Bring both sides to the attention of your students and have them decide which kind of directive would settle the impasse in the most fair and equitable manner. The situation could be transformed into a role play by having some students represent each of the sides in the issue and then leaving a student or group of students with the task of arriving at a fair settlement.Here are the sides to the dispute turned over to an arbitrator.

Management

Dillon Haskill reported to work 30 minutes late on April 4. This is not the first time Haskill has been late, and on previous occasions he has been warned that a repeat of this tardiness without a good excuse could mean suspension or dismissal. When he was tardy on April 4, Dillon Haskill was given yet another warning by his supervisor. After hearing this warning, Haskill became angry and began cursing his supervisor. Haskill had to be restrained by some fellow workers. Because of his habitual tardiness and his attack on his supervisor, Dillon Haskill was dismissed and given three weeks of pay at the end of the April 4 work day.

Labor

Dillon Haskill has never been given a written warning that tardiness will not be tolerated. His personnel record in the human resources office will verify this. When Dillon reported for work on April 4, he was met at the door by his supervisor, who began throwing curses at Dillon. When Dillon tried to respond quietly to these taunts, several management personnel (other supervisors) brutally grabbed Dillon from behind. Further, on April 4, there were seven other employees who were later than Dillon, and they received no reprimand, formal or otherwise. It is our contention that Dillon’s supervisor does not like Dillon and is just making serious trouble for him.

It is possible for your students to make a decision using the above information. However, if an arbitrator felt that the above evidence or testimony was incomplete, then he or she would request more data or call in more witnesses to the incident. Although the two versions of the story differ, it is possible that the versions are merely highly subjective interpretations of what took place. In an effort to make a fair ruling, an arbitrator must often read between the lines in reconstructing just what happened.

Questions1. What should the arbitrator’s decision be? Can there be a compromise in the dispute?



2. Could management avoid some of the problems brought out in this controversy by published policies and rules?



REVISIT THE WORLD OF BUSINESS

1. How do you think employees’ opinions about fair compensation changes during an economic slowdown?

In an economic slowdown, many people lose their jobs completely. Those that keep their jobs are often forced to consider lower salaries and fewer benefits than in a strong economy. Employees may consider other benefits such as flexible scheduling to be more important in such times. Opportunities for additional training and development may also become more significant for employee satisfaction.

2. How can employees who receive commissions maintain their pay if their industry has declining sales?

It is very hard for employees with commission-based salaries to maintain former levels of pay when their industry as a whole experiences sharp declines in sales. An employee may have to work more hours or see more customers to make up for the difference. To keep the best sales people, companies may have to consider restructuring their salaries with higher baseline pay or additional bonuses if possible.

3. Do you think that allowing employees more flexible scheduling of work hours can be an important contribution to a satisfying work experience?

With increasing demands on their time from children and aging parents to health problems, employees often value the ability to maintain a flexible work schedule. A compressed workweek, with less time traveling to and from the office, can allow for more leisure time for employees to recuperate and can also save them money by using less gasoline. Flexible work scheduling can be an important fringe benefit for employees that companies can still afford to offer in slow economic times.

CHECK YOUR PROGRESS

1. Distinguish among job analysis, job descriptions, and job specifications. How do they relate to planning in human resource management?

Job analysis is observing the specific tasks that make up a job; the skills, knowledge, and abilities needed to perform it; and the job environment. A job description is a formal, written description of a specific job. A job specification is a description of the qualifications necessary for a specific job. Employment analysis establishes the general personnel requirements of the business. Next, managers analyze the jobs within the organization to match the human resources to the available jobs.

2. What activities are involved in acquiring and maintaining the appropriate level of qualified human resources? Name the stages of the selection process.

Human resources managers are concerned with maximizing employees’ satisfaction and



improving their efficiency to meet organizational objectives. Human resources managers are involved with planning and forecasting, recruitment and selection, training and development, and determining compensation. The selection process includes an application, interview, testing and reference checking.

3. What are the two types of training programs? Relate training to kinds of jobs.

Training is teaching employees how to do their job; development is teaching managers and professionals how to perform their jobs. On-the-job-training allows workers to learn by actually performing the task on the job under the guidance of an experienced employee. Classroom training consists of lectures, conferences, films, case studies, and other classroom teaching techniques to teach employees about a job and its requirements.

4. What is the significance of a performance appraisal? How do managers appraise employees?

The performance appraisal is identifying an employee’s strengths and weaknesses on the job. It is one of the most difficult tasks for managers. It provides employees with feedback on how they are doing and what they need to do to improve their performance. It provides a basis for determining how to distribute rewards. It provides the organization with information about the quality of its selection, training, and development activities.

Appraisals can be objective or subjective. Whether objective or subjective, the manager uses the performance appraisal to discuss the results with the employee.

5. Why does turnover occur? List the types of turnover. Why do businesses want to reduce turnover due to separations?

Turnovers can occur because they are initiated by the employer or by the employee. Sometimes the turnovers, especially layoffs, are initiated because of economic downturns. The types of turnover of employees are resignation, discharge, layoff, and retirement. Businesses want to reduce turnover due to separation because selection and training of new employees is an expensive and time consuming process.

6. Relate wages, salaries, bonuses, and benefits to Herzberg’s distinction between hygiene and motivation factors. How does the form of compensation relate to the type of job?

Frederick Herzberg’s theory of motivation focused on job factors, as discussed in Chapter 10. Hygiene factors relate to the work setting and include adequate wages, comfortable working conditions, fair company policies, and job security. Motivational factors relate to the content of the work and include achievement, recognition, the work itself, involvement, responsibility, and advancement. It should be obvious to students that adequate wages, salaries, and benefits are necessary hygiene factors for employees.

In general, salaries are associated with white-collar workers such as office personnel, executives, and professional employees. Time-based wages are associated with blue-collar workers, clerks, maintenance personnel, and so forth. Finally, piece-based wages are associated with skilled craftworkers while commissions are associated with certain types of sales positions.



7. What is the role of benefits? Name some examples of benefits.

The role of benefits is to attract and help retain employees, increase employee security and, to a certain extent, increase morale and motivation. In addition, utilization of the benefits may keep employees healthy and productive, thereby reducing absenteeism, waste, and turnover. Some examples of benefits include: pension plans, holidays, health programs, employee assistance programs, health insurance, and so forth.

8. Describe the negotiation process through which management and unions reach an agreement on a contract.

Collective bargaining is the negotiation process through which management and unions reach an agreement about issues such as compensation, working hours, and working conditions. The union prepares a list of concessions that it wants from management; management defines what it is willing to concede to the union and still maintain a reasonable level of profitability. Management tries to maintain control over work schedules, the hiring and firing of workers, production standards, and other work policies. Unions tend to focus on issues such as magnitude of wages; better pay rates for holidays, overtime, and undesirable shifts; scheduling of pay increases; and benefits. After union representatives and management negotiate issues and reach agreement on terms of a contract, union members vote on the contract. If they ratify the contract, it becomes the legally binding agreement for union and management for a specified period.

9. Besides collective bargaining and grievance procedures, what other alternatives are available to labor and management to handle labor disputes?

Both labor and management can use pressure tactics to resolve disputes. Although most labor disputes are handled through collective bargaining or grievance procedures, sometimes management or labor may resort to more drastic measures to achieve their objectives. The most effective weapon wielded by unions against management is the strike. Striking makes carrying out the normal operations of a business difficult or impossible. A lockout is management’s version of a strike; management actually closes down the workplace so the employees cannot work. Strikebreakers are people hired by management to replace striking employees; they’re sometimes called scabs. Sometimes a third party may be brought in to mediate or arbitrate.

10. What are the benefits associated with a diverse workforce?

Some of the benefits of work-force diversity include a more productive use of a firm’s human resources, reduced conflict among employees, increased attention to organizational goals, increased innovation and creativity in decision making and problem solving, and greater ability to serve a diverse customer base.



GET INVOLVED

1. Although many companies screen applicants and test employees for illegal drug use, such testing is somewhat controversial. Find some companies in your community that test applicants and/or employees for drugs. Why do they have such a policy? How do the employees feel about it? Using this information, debate the pros and cons of drug testing in the workplace.

2. If collective bargaining and the grievance procedures have not been able to settle a current labor dispute, what tactics would you and other employees adopt? Which tactics would be best for which situations? Give examples.

3. Find some examples of companies that value their diverse workforces, perhaps some of the companies mentioned in the chapter. In what ways have these firms derived benefits from promoting cultural diversity? How have they dealt with the problems associated with cultural diversity?

BUILD YOUR SKILLS

Suggestions for Use

After students have completed the self-assessment, ask them to discuss the results either in a small group discussion or in a class discussion. Encourage the students to share their experiences learning about other cultures using the suggested methods provided in the text and to generate some ideas of their own.

SO YOU WANT TO WORK IN HUMAN RESOURCES

What is the value of having a diverse workforce, and why does it present challenges to human resource managers?

Diversity is an asset and can help a company from having blindspots or harmony in thought, background, and perspective which stifles good team decisions. However, a diverse workforce can present some management challenges. Human resource management is often responsible for managing diversity training and compliance to make sure employees do not violate the ethical culture of the organization or break the law. Different people have different goals, motivations, and ways of thinking about issues that are informed by their culture, religion, and the people closest to them.

BUILD YOUR BUSINESS PLAN

Have students identify how they have learned about jobs they have applied for in the past. What sources work best in your community? Assuming that the majority of employees (if not all) they will be hiring will be part-time, ask them in class to go through the steps they need to proceed through to determine the size of their workforce. This will force them to start thinking about how to organize



their business.

SEE FOR YOURSELF VIDEOCASE: Patagonia Focuses on Employees and the Environment

Case Overview

This case profiles Patagonia, an outdoor clothing and outfitter company that has long been known for its ecologically responsible approach and green business methods. From the very outset, Yvon and Malinda Chouinard set out to create a company with environmental preservation at its core. In addition to its green perspective, Patagonia also goes out of its way to look out for employees. Patagonia encourages its employees to balance work with a healthy mix of play and family time. While the company has grown too large to shut down completely when the surf is good, as it did in the beginning, employees are expected to use their lunch hours pursuing athletic activities like surfing, biking, or yoga. To help the environment, the company gives 10% of pre-taxed profits to grassroots environmental organizations. Patagonia’s unorthodox approach to business has draw criticism from more conservative business circles, but employees and customers are loyal because it is a company that cares. Chouinard tries every day to strive for the highest quality products made with the least environmental impact by the most compassionate and involved employees possible.

Questions for Discussion

1. How do Chouinard’s personal and work values affect the daily lives of Patagonia employees?

Chouinard and those at Patagonia believe strongly that employees are to be treated as human beings whose lives outside of work are honored and attended to. Patagonia encourages all employees to balance work, play, and family and maintains a highly casual atmosphere. Chouinard, himself, is a passionate and dedicated mountain climber, surfer, and skier, spending at least half the year in the field doing what he loves, testing Patagonia’s many products, and spreading Patagonia’s message of environmental preservation. Much of the workforce the company attracts shares the same passions.

2. What does Patagonia do for its employees to inspire such loyalty and fierce competition for jobs?

Patagonia offers extensive benefits to support employees in both their work and personal lives. 100 percent of insurance premiums are paid for both full and part time employees. The company has run a childcare facility at its headquarters since 1985. After one year of employment Patagonia covers up to 60 days worth of an employee’s salary, enabling that employee to volunteer with a grassroots cause. Patagonia employees work on flex time. Employees are expected to use their lunch “hours” to surf, cycle, or take company-offered yoga and Pilates classes.

3. What can other businesses learn from Chouinard and Patagonia?

Because of its business practices, Patagonia employees are extremely loyal and productive. There



are about 900 applicants for every job opening at Patagonia’s headquarters, so those who make it through this fierce competition are entirely committed to Chouinard, the company, and Patagonia’s values, including a dedication to producing quality products. Annual turnover at Patagonia is only four percent.

TERM PAPER OR PROJECT TOPICS

1. The Advantages and Disadvantages of Piece-rate Compensation Plans2. The Benefits of Providing Child Care or Day Care for Employees3. Employee Stock Ownership Plans (ESOPs)4. The Effects of the Age Discrimination in Employment Act (1967)

GUEST SPEAKER SUGGESTIONS

1. A human resources management representative from a business firm to speak about different aspects of the selection process, compensation plans, and benefits plans.

2. A representative from the EEOC to speak about how it helps to ban discrimination in employment and how it seeks to increase job opportunities for women and minorities.

3. A representative from a college or university office for students with disabilities to speak about providing opportunities for the handicapped in the workplace.

TEACHING SUGGESTIONS

1. Review the “Boxed Text Discussion Questions” provided in this Instructor’s Manual. Have students gone over these questions before class? Call on various students for answers.

2. Have students select and complete an exercise from “Get Involved.” Then, at the next session, have them give a brief presentation of their work to the class.

3. Discuss the “Check Your Progress” questions in the textbook. To give students additional questions, use “Additional Discussion Questions,” available in this Instructor’s Manual.

DESTINATION CEO VIDEO NOTES (The Destination CEO Videos can be found on the OLC at www.mhhe.com/ferrell7e.)

Anne Mulcahy, CEO of XEROX

Summary:Anne Mulcahy is one of America’s most powerful women. She is one of a handful of women occupying the CEO office of a major corporation. In this case, XEROX. Mulcahy joined the company 30 years ago following in her brother’s footsteps. Starting in sales, Mulcahy rose through the ranks and served in various capacities in Human Resources, the printer division, as president, and


http://www.mhhe.com/ferrell7e


then promoted to CEO. Her promotion came during a highly volatile period in Xerox’s history. In 2000, Xerox was flirting with bankruptcy, sales were dismal, costs were out of control, and the company was not competitive. These weren’t Xerox’s only troubles, however. The SEC was investigating Xerox for its questionable accounting practices leading to a fine of $10 million.

Against this troubling backdrop, enter Anne Mulcahy, who many say, has Xerox running through her veins. Xerox is one of the few companies that is still considered family friendly. It is not at all uncommon for several members of a family to be employed with the firm. Mulcahy’s task was to slash costs and to revive the company’s competitiveness. In her first year as CEO, she cut a billion dollars in costs, reduced the labor force substantially, and discontinued product lines that were no longer competitive. Under her leadership, Xerox moved quickly away from consumer imaging products to the more lucrative high-end commercial color printing and processing technologies where profit margins are five times that of black and white imaging technologies.

Despite the major reductions in labor and the restructuring of the firms divisions, Mulcahy remains highly regarded by employees at Xerox. Her eternal optimism and her unswerving commitment to Xerox seem to have had a motivating impact on the company’s employees. Mulcahy has ensured that the corporate culture remains intact in spite of the company’s transformation. While the company’s position has improved dramatically under Mulcahy’s leadership, competition remains fierce and pressure to cut costs even further present formidable challenges. The instructor should focus on the motivational and interpersonal elements of Mulcahy’s style of leadership. Despite massive layoffs that continue, she is able to transform the organization and remain a popular executive among employees.

Discussion Questions:1. Given the challenges facing Xerox CEO Mulcahy, how can she ensure that the workforce

remains motivated?Answer: This is a formidable challenge. Mulcahy has the advantage of being highly regarded by employees at Xerox. She has been with the company for 30 years. She spends a considerable amount of her time among rank and file employees, as shown in the video. This personal contact and emphasis on interpersonal relationships with the company’s employees can have a positive impact on keeping employees interested and motivated despite the tremendous downsizing that is occurring.

2. Xerox is know for being a family-friendly company. As such, what types of progressive human resources practices would you expect to see?

Answer: Given the emphasis on family friendly employee relations, one could reasonably expect to discover practices designed to support and maintain the corporate culture’s values. Flextime, job sharing, and job enrichment may be practices in place designed to motivate and retain qualified employees..

3. Would you consider Anne Mulcahy to have a Theory X or Theory Y philosophy of management?

Answer: Given her personality and the emphasis on values and interpersonal relations, it would appear that Mulcahy embraces the Theory Y philosophy of management. This approach assumes that workers like to work and that they will seek out responsibility. She would most likely maintain less control and involve employees in decision making.

Additional Discussion Questions:1. Which factors under the control of CEO Mulcahy would be considered as hygiene factors,



according to the Two-Factor Theory of motivation??Answer: Hygiene factors at Xerox would most likely include wages, comfortable and safe working conditions, job security and fair company policies and practices. These hygiene factors would be very important in minimizing dissatisfaction among employees.

2. How would low morale among employees most likely impact Xerox?Answer: Morale is an important consideration for managers and leaders. An employee’s attitude toward the employer, the work, and one’s colleagues are important factors that can determine the relative success of the company. When there is low morale, productivity can suffer, absenteeism is high, and turnover is high. These are important considerations for Mulcahy and Xerox given the competitive nature of the industry and the constant need to reduce costs.

Multiple Choice Questions for Students on the OLC:1. Anne Mulcahy is said to have Xerox flowing through her veins. This observation indicates

that she is highly:a. Motivatedb. Isolatedc. Alienatedd. Deferentiale. Particular

Answer: a. Motivated

2. Which of the following theories of motivation would Mulcahy subscribe to if she was convinced that employees are motivated exclusively by money?

a. Classical theory of motivationb. Hawthorne studiesc. Two-Factor Theoryd. Theory Xe. Theory Y

Answer: a. Classical theory of motivation

3. According to the Maslow Hierarchy of Needs, Mulcahy would be motivated by which of the following:

a. Esteem needsb. Physiological needsc. Psychological needsd. Self actualizatione. Security needs

Answer: d. Self actualization

4. Achievement, recognition, involvement and responsibility are clearly factors that contribute to Mulcahy’s success as CEO of Xerox. According to Herzberg, what would these factors be called?

a. Self actualizationb. Hygienec. Motivationald. Theory Xe. Theory Y

Answer: c. Motivational



5. An individual Xerox employee assume that if he produces a high quality product, the company will be fair in determining his reward. This approach is best explained by which of the following theories of motivation?

a. Expectancy Theoryb. Two Factor Theoryc. Hierarchy of Needs Theoryd. Equity Theorye. Theory X and Theory Y.

Answer: d. Equity theory.
