S E V E N T H E D I T I O N

nI N T E R N A T I O N A L E D I T I O N

Texas A&M University

University of Colorado, Boulder

University of Texas at San Antonio ,

PEARSON

Boston Columbus Indianapolis New York San Francisco Upper Saddle River

Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto

Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei

Contents

Preface 10Acknowledgments 25About the Authors 27

PART I Introduction 29

Chapter 1 Meeting Present and Emerging Strategic HumanResource Challenges 29Human Resource Management: The Challenges 30

Environmental Challenges 30

Organizational Challenges 39 f

Competitive Position: Cost, Quality, or Distinctive Capabilities .39

Individual Challenges 46

Planning and Implementing Strategic HR Policies 49The Benefits of Strategic HR Planning 49

The Challenges of Strategic HR Planning 50

Strategic HR Choices 52

Selecting HR Strategies to Increase Firm Performance 55

Fit with Organizational Strategies 56

Fit with the Environment 59

Fit with Organizational Characteristics 61

Fit with Organizational Capabilities 61

Choosing Consistent and Appropriate HR Tactics to Implement HR Strategies 62

HR Best Practices 63

The HR Department and Managers: An Important Partnership 63

Specialization in Human Resource Management 64

Summary and Conclusions 65 • Key Terms 66 • Discussion Questions 66

a CASE 1.1 EMERGING TRENDSManaging by the Numbers: A Way to improve Productivity

and Efficiency? 67

0 CASE 1.2 HR IN SMALL BUSINESSZappos: How to Create an Employee Friendly Culture and Use It

as a Source of Competitive Advantage 68

D CASE 1.3 DISCUSSIONManagers and HR Professional at Sands Corporation: Friends

or Foes? 69

D CASE 1.4 DISCUSSIONThe Enduring Wage Gap by Gender 70

PART II The Contexts of Human Resource Management 80

Chapter 2 Managing Work Flows and Conducting Job Analysis 80Work: The Organizational Perspective 81

Strategy and Organizational Structure 81

Designing the Organization 82

Work-Flow Analysis 85

Business Process Reengineering 85

CONTENTS

Work: The Group Perspective 86

Self-Managed Teams 86

Other Types of Teams 87

Work: The Individual Perspective 89

Motivating Employees 89

Designing Jobs and Conducting Job Analysis 91

Job Design 91Job Analysis 93Job Descriptions 100Job or Work? 103

The Flexible Workforce 104

,- Contingent Workers 104Flexible Work Schedules 107

The Mobile Workplace 109

Human Resource Information Systems 110

HRIS Applications 110

HRIS Security and Privacy 111

Summary and Conclusions 111 • Key Terms 112 • Discussion Questions 113• CASE 2.1 EMERGING TRENDS

y Are American Empioyees Overworking? 113a CASE 2.2 EMERGING TRENDS

Work-Life Balance Is the New Perk Employees Are Seeking 114

B CASE 2.3 GLOBALThe Dilemma of Offshore Outsourcing 115

a CASE 2.4 CUSTOMER-DRIVEN HRWriting a Job Description 116

Chapter 3 Understanding Equal Opportunity and the LegalEnvironment 120Why Understanding the Legal Environment Is Important 121

Doing the Right Thing 121Realizing the Limitations of the HR and Legal Departments 122

Limiting Potential Liability 122

Challenges to Legal Compliance 123A Dynamic Legal Landscape 123

The Complexity of Laws 123

Conflicting Strategies for Fair Employment 123

Unintended Consequences 124

Equal Employment Opportunity Laws 124

The Equal Pay Act of 1963 125Title VII of the Civil Rights Act of 1964 125Defense of Discrimination Charges 127Title VII and Pregnancy 128Sexual Harassment 128The Civil Rights Act of 1991 132Executive Order 11246 133The Age Discrimination in Employment Act of 1967 133

The Americans with Disabilities Act of 1990 133

EEO Enforcement and Compliance 136Regulatory Agencies 136Office of Federal Contract Compliance Programs (OFCCP) 138

Affirmative Action Plans 138

Other Important Laws 140

10 CONTENTS

Avoiding Pitfalls in EEO 142

Provide Training 142

Establish a Complaint Resolution Process 142

Document Decisions 142

Be Honest 143

Ask Only for Information You Need to Know 143

Summary and Conclusions 146 • Key Terms 147 • Discussion Questions 147

a CASE 3.1 EMERGING TRENDS

Walgreens Leads the Way in Utilizing Workers with Disabilities 148

m CASE 3.2HR IN SMALL BUSINESS

Can an Employee Be Dismissed for Lacking Beauty for the Job? 149

D CASE 3.3 DISCUSSION

Are Women Breaking Through the Glass Ceiling? 149

• CASE 3.4 ETHICSAre Employee Noncompete Agreements Legally Enforceable?It Depends 150

Appendix to Chapter 3 154

Human Resource Legislation Discussed in This Text 154

Chapter 4 Managing Diversity 156What Is Diversity? 157

Why Manage Employee Diversity? 157Affirmative Action Versus Managing Employee Diversity 158Demographic Trends 158 (

Diversity as Part of Corporate Strategy 162

Challenges in Managing Employee Diversity 162Diversity Versus Inclusiveness 163Individual Versus Group Fairness 163Resistance to Change 163Group Cohesiveness and Interpersonal Conflict 163Segmented Communication Networks 163Resentment 163Retention 164

Competition for Opportunities 164

Diversity in Organizations 164African Americans 165Asian Americans 165People with Disabilities 166The Foreign Born 167Homosexuals 168Latinos (Hispanic Americans) 169Older Workers 169Religious Minorities 170

Women 172

Improving the Management of Diversity 174Creating an Inclusive Organizational Culture 174Top-Management Commitment to Valuing Diversity 176Appraising and Rewarding Managers for Good DiversityPractices 176Diversity Training Programs 176Support Groups 177Accommodation of Family Needs 177Senior Mentoring Programs 178Apprenticeships 179Communication Standards 179Diversity Audits 179Management Responsibility and Accountability 179

CONTENTS 11

Some Warnings 179Avoiding the Appearance of "White Male Bashing" 180

Avoiding the Promotion of Stereotypes 180

Summary and Conclusions 180 • Key Terms 181 • Discussion Questions 181

Q CASE 4.1 DISCUSSION

Why Women Lag Behind in MBA Programs 182

a CASE 4.2 ETHICSInterpreting the Disabilities Act: The Hot Frontier of Diversity

Management 183

• CASE 4.3 DISCUSSIONConflict at Northern Sigma 184 r

B CASE 4.4 GLOBALManagerial Diversity in the United States by International Firms:A Case of Cultural Misunderstanding? 185

PART III Staffing 193

Chapter 5 Recruiting and Selecting Employees 193

Chapter 6

196

Human Resource Supply and Demand 194

A Simplified Example of Forecasting Labor Demand and Supply

Forecasting Techniques 198

The Hiring Process 199

Challenges in the Hiring Process 199

Determining Characteristics Important to Performance 200

Measuring Characteristics That Determine Performance 200

The Motivation Factor 200

Who Should Make the Decision? 201

Meeting the Challenge of Effective Staffing 201Recruitment 201 <-

Sources of Recruiting 202 -"

Selection 207

Reliability and Validity 207

Selection Tools as Predictors of Job Performance 208

Combining Predictors 215

Selection and the Person/Organization Fit 216

Reactions to Selection Devices 217

Legal Issues in Staffing 217Discrimination Laws 217

Affirmative Action 218

Negligent Hiring 218

Summary and Conclusions 219 • Key Terms 219 • Discussion Questions

• CASE 5.1 CUSTOMER-DRIVEN HRWomen: Keeping the Supply Lines Open 220

• CASE 5.2 ETHICSWhat a Fraud! 221

• CASE 5.3 ETHICS

Put Things in Balance to Keep Employees and Boost Performance 221

a CASE 5.4 EMERGING TRENDS

Managing with a Shortage 222

m CASE 5.5 HR IN SMALL BUSINESSOne Job, Many Roles 223

Managing Employee Separations, Downsizing,and Outplacement 227What Are Employee Separations? 228

The Costs of Employee Separations 228

The Benefits of Employee Separations 231

219

12 CONTENTS

Types of Employee Separations 232Voluntary Separations 232

Involuntary Separations 233

Managing Early Retirements 235The Feature of Early Retirement Policies 235

Avoiding Problems with Early Retirements 236

Managing Layoffs 236Alternatives to Layoffs 237Implementing a Layoff 238

Outplacement 242

The Goals of Outplacement 242

Outplacement Services 242

Summary and Conclusions 243 • Key Terms 243 • Discussion Questions 243

• CASE 6.1 GLOBAL

Retraining! Great Concept, but You Have to Execute 244

a CASE 6.2 ETHICS

Employment-at-Will: Fair Policy? 245

• CASE 6.3 EMERGING TRENDS

From Turnover to Retention: Managing to Keep Your Workers 246

a CASE 6.4 ETHICSWhy Me? Procedural Justice in the Layoff Process 247

PART IV Employee Development 250

Chapter 7 Appraising and Managing Performance 250What Is Performance Appraisal? 251

The Uses of Performance Appraisal 251

Identifying Performance Dimensions 253

Measuring Performance 254

Measurement Tools 254

Measurement Tools: Summary and Conclusions 262

Challenges to Effective Performance Measurement 263

Rater Errors and Bias 263

The Influence of Liking 264

Precautions 264

Organizational Politics 265

Individual or Group Focus 266

Legal Issues 267

Managing Performance 268

The Appraisal Interview 268

Performance Improvement 268

Identifying the Causes of Performance Problems 268

Managing the Causes of Problems 271

Developing an Action Plan and Empowering Workers to Reach a Solution 271

Directing Communication at Performance 271

Summary and Conclusions 273 • Key Terms 273 • Discussion Questions 274

a CASE 7.1 ETHICSRank and Yank: Legitimate Performance Improvement Tool or Ruthless

and Unethical Management? 274

B CASE 7.2 GLOBAL

Cultural Competency 276

a CASE 7.3 EMERGING TRENDS

One Job or Multiple Roles? 276

D CASE 7.4 CUSTOMER-DRIVEN HR 'Electronic Appraisal: Using Performance Review Software 278

CONTENTS 13

D CASE 7.5 CUSTOMER-DRIVEN HRFrom Appraisal to Coaching 278

Appendix to Chapter 7 282

The Critical-Incident Technique: A Method for Developing a BehaviorallyBased Appraisal Instrument 282

Chapter 8 Training the Workforce 284Key Training Issues 285

Training Versus Development 286

Challenges in Training 286Is Training the Solution? 286

Are the Goals Clear and Realistic? 287

Is Training a Good Investment? 287

Will Training Work? 288

Managing the Training Process 289The Needs Assessment Phase 290

Clarifying the Objectives of Training 291

The Training and Conduct Phase 292

The Evaluation Phase 302

Legal Issues and Training 304

A Special Case: Orientation and Socialization 304

Summary and Conclusions 306 • Key Terms 306 • Discussion Questions 306

m CASE 8.1 HR IN SMALL BUSINESS

Training Employees in a Small Business 307

• CASE 8.2 CUSTOMER-DRIVEN HR

Costs and Benefits: Assessing the Business Case for Training 308

m CASE 8.3 ETHICS

The Ethics Challenge 309

0 CASE 8.4 EMERGING TRENDSBeyond RO1? 309

Chapter 9 Developing Careers 312What Is Career Development? 313

Challenges in Career Development 314Who Will Be Responsible? 314

How Much Emphasis Is Appropriate? 314

How Will the Needs of a Diverse Workforce Be Met? 315

Meeting the Challenges of Effective Development 317The Assessment Phase 317

The Direction Phase 321

The Development Phase 326

Self-Development 328Development Suggestions 330

Advancement Suggestions 331

Summary and Conclusions 331 • Key Terms 332 • Discussion Questions 332

a CASE 9.1 CUSTOMER-DRIVEN HR

Be Strategic About Your Career 333

m CASE 9.2 HR IN SMALL BUSINESS

Being Big on Development in Small Business 333

m CASE 9.3 ETHICS

Anchors II 334

B CASE 9.4 GLOBAL

Mentoring as Global Development 335

a CASE 9.5 EMERGING TRENDSCapitalizing on Techno Savvy: Putting Mentoring in Reverse 336

14 CONTENTS

PART V Compensation 339

Chapter 10 Managing Compensation 339What Is Compensation? 340

Designing a Compensation System 341

Internal Versus External Equity 341

Fixed Versus Variable Pay 343

Performance Versus Membership 345

Job Versus Individual Pay 346

Elitism Versus Egalitarianism 348

Below-Market Versus Above-Market Compensation 348

Monetary Versus Nonmonetary Rewards 349

Open Versus Secret Pay 351

Centralization Versus Decentralization of Pay Decisions 351

Summary 352

Compensation Tools 352Job-Based Compensation Plans 353

Skill-Based Compensation Plans 364

Special Compensation Issues in Small Firms 365

The Legal Environment and Pay System Governance 367

The Fair Labor Standards Act 367

The Equal Pay Act 369

The Internal Revenue Code 369

Summary and Conclusions 370 • Key Terms 370 • Discussion

Questions 371

• CASE 10.1 DISCUSSION

Money Doesn't Buy Happiness. Well, on Second Thought... 371

• CASE 10.2 HR IN SMALL BUSINESS

David Versus Goliath: Compensation in Small Versus Large Firms 373

D CASE 10.3 DISCUSSION

An Academic Question 374

a CASE 10.4 EMERGING TRENDSMore Suits for Overtime Pay 375

• CASE 10.5 EMERGING TRENDS

A Challenge at Antle Corporation 376

Chapter 11 Rewarding Performance 385Pay for Performance: The Challenges 386

The "Do Only What You Get Paid For" Syndrome 386

Unethical Behaviors 387

Negative Effects on the Spirit of Cooperation 387

Lack of Control 387

Difficulties in Measuring Performance 389

Psychological Contracts 389

The Credibility Gap 390

Job Dissatisfaction and Stress 390

Potential Reduction of Intrinsic Drives 390

Meeting the Challenges of Pay-for-Performance Systems 391

Link Pay and Performance Appropriately 391

Use Pay for Performance as Part of a Broader HRM System 391

Build Employee Trust 392

Promote the Belief That Performance Makes a Difference 392

Use Multiple Layers of Rewards 393

Increase Employee Involvement 393

Stress the Importance of Acting Ethically 393

Use Motivation and Nonfinancial Incentives 393

CONTENTS 15

, Types of Pay-for-Performance Plans 394Individual-Based Plans 394

Team-Based Plans 396

Plantwide Plans 400

Corporatewide Plans 402

Designing Pay-for-Performance Plans for Executives

and Salespeople 404

Executives 404

Salespeople 409

Rewarding Excellence in Customer Service 411

Pay-For-Performance Programs in Small Firms 411

Summary and Conclusions 413 • Key Terms 414 • Discussion Questions 414

a CASE 11.1 EMERGING TRENDS

When Schools Offer Money as a Motivator 415

• CASE 11.2 DISCUSSION

Loafers at Lakeside Utility Company 416

B CASE 11.3 GLOBAL

Are American CEOs That Much Better? 416

m CASE 11.4 ETHICSThe Pitfalls of Merit Pay and Pay for Performance 417

Chapter 12 Designing and Administering Benefits 425An Overview of Benefits 426

Basic Terminology 428

The Cost of Benefits in the United States 428

Types of Benefits 429

The Benefits Strategy 431The Benefits Mix 431

Benefits Amount 432 .,'

Flexibility of Benefits 432

Legally Required Benefits 432

Social Security 432

Workers' Compensation 434

Unemployment Insurance 435

Unpaid Leave 437

Voluntary Benefits 438

Health Insurance 438

Retirement Benefits 444

Insurance Plans 448

Paid Time Off 449

Employee Services 451

Administering Benefits 453Flexible Benefits 453Benefits Communication 454

Summary and Conclusions 455 • Key Terms 456 • DiscussionQuestions 456

D CASE 12.1 EMERGING TRENDSEmployees Are Paying increasingly Larger Shares of TheirHealth Care Benefit Costs 457

m CASE 12.2 ETHICSShould Employers Penalize Employees Who Do Not AdoptHealthy Habits? 458

• CASE 12.3 ETHICSGoogle's On-Site Child-Care Policy Stirs up a Controversy 459

D CASE 12.4 CUSTOMER-DRIVEN HRIBM's 401 (k) Plan Sets the Standard 460

16 CONTENTS

PART VI Governance 464

Chapter 13 Developing Employee Relations 464The Roles of the Manager and the Employee Relations Specialist 465

Developing Employee Communications 466

Types of Information 466How Communication Works 466

Encourage Effective Communications 468

Information Dissemination Programs 468The Employee Handbook 469Electronic Communications 471Employee Feedback Programs 477Employee Assistance Programs 481

Employee Recognition Programs 483

Suggestion Systems 483

Recognition Awards 484

Summary and Conclusions 486 • Key Terms 487 • Discussion Questions 487

a'CASE 13.1 HR IN SMALL BUSINESS

Treating Employees Like Family is Good for Business 488

a CASE 13.2 ETHICS

Should Having Fun Be a Job Requirement? 489

Q CASE 13.3 EMERGING TRENDS

Going Green Keeps New Belgium Brewing Company in the Black 490

a CASE 13.4 GLOBAL !

In Praise of Nepotism? 491

Chapter 14 Respecting Employee Rights and Managing Discipline 494Employee Rights 495

Statutory Rights 495Contractual Rights 496Other Rights 497 '

Management Rights 499

Employment at Will 500

Employee Rights Challenges: A Balancing Act 501

Random Drug Testing 501Electronic Monitoring 504

- Whistle-Blowing 506Restrictions on Moonlighting 507

Restrictions on Office Romance 508

Disciplining Employees 509Progressive Discipline 510

Positive Discipline 512

Administering and Managing Discipline 513The Just Cause Standard of Discipline 514The Right to Appeal Discipline 514

Managing Difficult Employees 515

Poor Attendance 515Poor Performance 516Insubordination 517Workplace Bullying 518Alcohol-Related Misconduct 519Illegal Drug Use and Abuse 520

Preventing the Need for Discipline with Human Resource

Management 520

Recruitment and Selection 520c Training and Development 521

CONTENTS 17

Human Resource Planning 521

Performance Appraisal 521

Compensation 521

Summary and Conclusions 522 • Key Terms 523 • Discussion Questions 523

a CASE.14.1 HR IN SMALL BUSINESS

Should Employees Be Disciplined for "Stealing Time"? 524

B CASE 14.2 ETHICSBackground Checks Can Misfire, Harming Employees'

Career Prospects 524

B CASE 14.3 ETHICSEmployees Should Be Aware of the Risks Before They Attempt to

Blow the Whistle 525

a CASE 14.4 GLOBALIllegal Immigrants in the Workforce: Opportunity or Challenge? 527

Chapter 15 Working with Organized Labor 531Why do Employees Join Unions? 532

The Origins of U.S. Labor Unions 532

The Role of the Manager in Labor Relations 533

Labor Relations and the Legal Environment 533The Wagner Act 534

The Taft-Hartley Act 535

The Landrum-Griffin Act 536

Labor Relations in the United States 536

Business Unionism 536

Unions Structured by Type of Job 537

Focus on Collective Bargaining 537

Labor Contracts 537

The Adversarial Nature of Labor-Management Relations and Shrinking UnionMembership 537 ,.'

The Growth of Unions in the Public Sector 538

Labor Relations in Other Countries 539How Unions Differ Internationally 540

Labor Relations in Germany 541

Labor Relations in Japan 541

Labor Relations Strategy 542Union Acceptance Strategy 542

Union Avoidance Strategy 544

Managing the Labor Relations Process 545Union Organizing 545

Collective Bargaining 548

Contract Administration 554

The Impact of Unions on Human Resource Management 556Staffing 556

Employee Development 557

Compensation 557

Employee Relations 558

Summary and Conclusions 559 » Key Terms 560 • Discussion Questions 560

a CASE 15.1 EMERGING TRENDSThe Freelancers Union: A New Approach to Unionism? 561

n CASE 15,2 CUSTOMER-DRIVEN HRA Lengthy Screenwriters' Strike Forces Television Networksto Broadcast Reruns 562

• CASE 15.3 CUSTOMER-DRIVEN HRWhen Is a Team a Union? 563

B CASE 15.4 ETHICSRecognizing and Avoiding Unfair Labor Practices 563

18 CONTENTS

Chapter 16 Managing Workplace Safety and Health 567Workplace Safety and the Law 568

( Workers' Compensation 568

The Occupational Safety and Health Act (OSHA) 570

The Occupational Safety and Health Administration 573

Managing Contemporary Safety, Health, and Behavioral Issues 576

AIDS 576

Violence in the Workplace 578

Cumulative Trauma Disorders 581

Hearing Impairment 581

Fetal Protection, Hazardous Chemicals, and Genetic Testing 582

Safety and Health Programs 583Safety Programs 585Employee Assistance Programs (EAPs) 586

Wellness Programs 587

Summary and Conclusions 588 • Key Terms 589 • Discussion Questions 589

B CASE 16.1 ETHICSStanding Up to Workplace Bullies 590

• CASE 16.2 EMERGING TRENDSOn the Tip of a Beryllium Iceberg? 591

B CASE 16.3 GLOBALMental Health: A Global Concern 592

a CASE 16.4 HR IN SMALL BUSINESS^ Safety and Health in the Small-Business Environment 593

Chapter 17 International HRM Challenge 596The Stages of International Involvement 597

The Rise of Outsourcing 600

FallingBarriers 601

Small- and Medium-Size Enterprises Are Also Going Global 601

The Global Manager 602

Determining the Mix of Host-Country and Expatriate Employees 603

The Challenges of Expatriate Assignments 606Why International Assignments End in Failure 606Difficulties on Return 608

Effectively Managing Expatriate Assignments with HRM Policies

and Practices 610

Selection 610

Training 611

Career Development 615

Compensation 615

Role of HR Department 617

Women and International Assignments 617

Developing HRM Policies in a Global Context 617National Culture, Organizational Characteristics, and HRM Practices 618

EEO in the International Context 618

Important Caveats 619

Human Resources Management and Exporting Firms 623Ethics and Social Responsibility 625

Dealing with Political Risks 626

Summary and Conclusions 627 • Key Terms 627 • Discussion Questions 628

B CASE 17.1 GLOBALAmerican Universities Moving Overseas 628

D CASE 17.2 HR IN SMALL BUSINESSRural Outsourcing: How Small U.S. Businesses May Keep LargeFirms from Going Overseas to Subcontract Work 629

CONTENTS 19

a CASE 17.3 DISCUSSION

Two Sides to Every Story 630

m CASE 17.4 ETHICSWhen in Rome Do as the Romans Do? The Case of Foreign Bribes 631

a CASE 17.5 DISCUSSION

Are Culture-Specific HR Polices a Good Idea? 631

Appendix 638

Concise Dictionary of HR Terminology 641

Company, Name, and Product Index 650

Subject Index 657