cover & table of contents - managing human resources (7th edition)

MANAGING HUMAN RESOURCES

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MANAGING HUMAN RESOURCES

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

Luis R. Gómez-Mejía Texas A&M University

David B. Balkin University of Colorado, Boulder

Robert L. Cardy University of Texas at San Antonio

Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on the appropriate page in text.

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ISBN 10: 0-13-272982-2 ISBN 13: 978-0-13-272982-6

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Library of Congress Cataloging-in-Publication Data

Gomez-Mejia, Luis R. Managing human resources / Luis R. Gómez-Mejía, David B. Balkin, Robert L. Cardy.—7th ed. p. cm. ISBN 978-0-13-272982-6 1. Personnel management. I. Balkin, David B., 1948 II. Cardy, Robert L., 1955 III. Title. HF5549.G64 2012 658.3—dc22 2011010723

10 9 8 7 6 5 4 3 2 1

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To my wife Ana, my two sons Vince and Alex, and my daughter Dulce

—L.G.M.

To my parents, Daniel and Jeanne —D.B.B.

To my family for their endless support and to Todd Snider for the endless inspiration

—R.L.C.

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vii

Brief Contents

PART I Introduction 1 Chapter 1 Meeting Present and Emerging Strategic Human Resource

Challenges 1

PART II The Contexts of Human Resource Management 52 Chapter 2 Managing Work Flows and Conducting Job Analysis 52 Chapter 3 Understanding Equal Opportunity and the Legal Environment 92 Chapter 4 Managing Diversity 128

PART III Staffing 165 Chapter 5 Recruiting and Selecting Employees 165 Chapter 6 Managing Employee Separations, Downsizing,

and Outplacement 199

PART IV Employee Development 222 Chapter 7 Appraising and Managing Performance 222 Chapter 8 Training the Workforce 256 Chapter 9 Developing Careers 284

PART V Compensation 311 Chapter 10 Managing Compensation 311 Chapter 11 Rewarding Performance 357 Chapter 12 Designing and Administering Benefits 397

PART VI Governance 436 Chapter 13 Developing Employee Relations 436 Chapter 14 Respecting Employee Rights and Managing Discipline 466 Chapter 15 Working with Organized Labor 503 Chapter 16 Managing Workplace Safety and Health 539 Chapter 17 International HRM Challenge 568

Contents

Preface xx Acknowledgments xxv About the Authors xxvii

PART I Introduction 1

Chapter 1 Meeting Present and Emerging Strategic Human Resource Challenges 1 Human Resource Management: The Challenges 2

Environmental Challenges 2 Organizational Challenges 11 Competitive Position: Cost, Quality, or Distinctive Capabilities 11 Individual Challenges 18

Planning and Implementing Strategic HR Policies 21 The Benefits of Strategic HR Planning 21 The Challenges of Strategic HR Planning 22 Strategic HR Choices 24

Selecting HR Strategies to Increase Firm Performance 27 Fit with Organizational Strategies 28 Fit with the Environment 31 Fit with Organizational Characteristics 33 Fit with Organizational Capabilities 33 Choosing Consistent and Appropriate HR Tactics to Implement HR Strategies 34 HR Best Practices 35 The HR Department and Managers: An Important Partnership 35 Specialization in Human Resource Management 36

Summary and Conclusions 37 • Key Terms 38 • Discussion Questions 38 ■ CASE 1.1 EMERGING TRENDS

Managing by the Numbers: A Way to Improve Productivity and Efficiency? 39

■ CASE 1.2 HR IN SMALL BUSINESS Zappos: How to Create an Employee Friendly Culture and Use It as a Source of Competitive Advantage 40

■ CASE 1.3 DISCUSSION Managers and HR Professional at Sands Corporation: Friends or Foes? 41

■ CASE 1.4 DISCUSSION The Enduring Wage Gap by Gender 42

PART II The Contexts of Human Resource Management 52

Chapter 2 Managing Work Flows and Conducting Job Analysis 52 Work: The Organizational Perspective 53

Strategy and Organizational Structure 53 Designing the Organization 54 Work-Flow Analysis 57 Business Process Reengineering 57

viii

CONTENTS ix

Work: The Group Perspective 58 Self-Managed Teams 58 Other Types of Teams 59

Work: The Individual Perspective 61 Motivating Employees 61

Designing Jobs and Conducting Job Analysis 63 Job Design 63 Job Analysis 65 Job Descriptions 72 Job or Work? 75

The Flexible Workforce 76 Contingent Workers 76 Flexible Work Schedules 79 The Mobile Workplace 81

Human Resource Information Systems 82 HRIS Applications 82 HRIS Security and Privacy 83

Summary and Conclusions 83 • Key Terms 84 • Discussion Questions 85 ■ CASE 2.1 ETHICS

Job Title Inflation Runs Rampant in Businesses 85 ■ CASE 2.2 EMERGING TRENDS

Work–Life Balance Is the New Perk Employees Are Seeking 86 ■ CASE 2.3 GLOBAL

The Dilemma of Offshore Outsourcing 87 ■ CASE 2.4 CUSTOMER-DRIVEN HR

Writing a Job Description 88

Chapter 3 Understanding Equal Opportunity and the Legal Environment 92 Why Understanding the Legal Environment Is Important 93

Doing the Right Thing 93 Realizing the Limitations of the HR and Legal Departments 94 Limiting Potential Liability 94

Challenges to Legal Compliance 95 A Dynamic Legal Landscape 95 The Complexity of Laws 95

Conflicting Strategies for Fair Employment 95 Unintended Consequences 96

Equal Employment Opportunity Laws 96 The Equal Pay Act of 1963 97 Title VII of the Civil Rights Act of 1964 97 Defense of Discrimination Charges 99 Title VII and Pregnancy 100 Sexual Harassment 100 The Civil Rights Act of 1991 104 Executive Order 11246 105 The Age Discrimination in Employment Act of 1967 105 The Americans with Disabilities Act of 1990 105

EEO Enforcement and Compliance 108 Regulatory Agencies 108 Office of Federal Contract Compliance Programs (OFCCP) 110 Affirmative Action Plans 110

Other Important Laws 112

x CONTENTS

Avoiding Pitfalls in EEO 114 Provide Training 114 Establish a Complaint Resolution Process 114 Document Decisions 114 Be Honest 115 Ask Only for Information You Need to Know 115


Walgreens Leads the Way in Utilizing Workers with Disabilities 120 ■ CASE 3.2 HR IN SMALL BUSINESS

Can an Employee Be Dismissed for Lacking Beauty for the Job? 121 ■ CASE 3.3 DISCUSSION

Are Women Breaking Through the Glass Ceiling? 121 ■ CASE 3.4 ETHICS

Are Employee Noncompete Agreements Legally Enforceable? It Depends 122

Appendix to Chapter 3 126 Human Resource Legislation Discussed in This Text 126

Chapter 4 Managing Diversity 128 What Is Diversity? 129

Why Manage Employee Diversity? 129 Affirmative Action Versus Managing Employee Diversity 130 Demographic Trends 130 Diversity as Part of Corporate Strategy 134

Challenges in Managing Employee Diversity 134 Diversity Versus Inclusiveness 135 Individual Versus Group Fairness 135 Resistance to Change 135 Group Cohesiveness and Interpersonal Conflict 135 Segmented Communication Networks 135 Resentment 135 Retention 136 Competition for Opportunities 136

Diversity in Organizations 136 African Americans 137 Asian Americans 137 People with Disabilities 138 The Foreign Born 139 Homosexuals 140 Latinos (Hispanic Americans) 141 Older Workers 141 Religious Minorities 142 Women 144

Improving the Management of Diversity 146 Creating an Inclusive Organizational Culture 146 Top-Management Commitment to Valuing Diversity 148 Appraising and Rewarding Managers for Good Diversity Practices 148 Diversity Training Programs 148 Support Groups 149 Accommodation of Family Needs 149 Senior Mentoring Programs 150 Apprenticeships 151 Communication Standards 151 Diversity Audits 151 Management Responsibility and Accountability 151

CONTENTS xi

Some Warnings 151 Avoiding the Appearance of “White Male Bashing” 152 Avoiding the Promotion of Stereotypes 152

Summary and Conclusions 152 • Key Terms 153 • Discussion Questions 153 ■ CASE 4.1 DISCUSSION

Why Women Lag Behind in MBA Programs 154 ■ CASE 4.2 ETHICS

Interpreting the Disabilities Act: The Hot Frontier of Diversity Management 155

■ CASE 4.3 DISCUSSION Conflict at Northern Sigma 156

■ CASE 4.4 GLOBAL Managerial Diversity in the United States by International Firms: A Case of Cultural Misunderstanding? 157

PART III Staffing 165

Chapter 5 Recruiting and Selecting Employees 165 Human Resource Supply and Demand 166

A Simplified Example of Forecasting Labor Demand and Supply 168 Forecasting Techniques 170

The Hiring Process 171 Challenges in the Hiring Process 171

Determining Characteristics Important to Performance 172 Measuring Characteristics That Determine Performance 172 The Motivation Factor 172 Who Should Make the Decision? 173

Meeting the Challenge of Effective Staffing 173 Recruitment 173 Sources of Recruiting 174

Selection 179 Reliability and Validity 179 Selection Tools as Predictors of Job Performance 180 Combining Predictors 187 Selection and the Person/Organization Fit 188 Reactions to Selection Devices 189

Legal Issues in Staffing 189 Discrimination Laws 189 Affirmative Action 190 Negligent Hiring 190

Summary and Conclusions 191 • Key Terms 191 • Discussion Questions 191 ■ CASE 5.1 CUSTOMER-DRIVEN HR

Women: Keeping the Supply Lines Open 192 ■ CASE 5.2 ETHICS

What a Fraud! 193 ■ CASE 5.3 ETHICS

Put Things in Balance to Keep Employees and Boost Performance 193 ■ CASE 5.4 EMERGING TRENDS

Managing with a Shortage 194 ■ CASE 5.5 HR IN SMALL BUSINESS

One Job, Many Roles 195

Chapter 6 Managing Employee Separations, Downsizing, and Outplacement 199 What Are Employee Separations? 200

The Costs of Employee Separations 200 The Benefits of Employee Separations 203

xii CONTENTS

Types of Employee Separations 204 Voluntary Separations 204 Involuntary Separations 205

Managing Early Retirements 207 The Feature of Early Retirement Policies 207 Avoiding Problems with Early Retirements 208

Managing Layoffs 208 Alternatives to Layoffs 209 Implementing a Layoff 210

Outplacement 214 The Goals of Outplacement 214 Outplacement Services 214

Summary and Conclusions 215 • Key Terms 215 • Discussion Questions 215 ■ CASE 6.1 GLOBAL

Retraining! Great Concept, but You Have to Execute 216 ■ CASE 6.2 ETHICS

Employment-at-Will: Fair Policy? 217 ■ CASE 6.3 EMERGING TRENDS

From Turnover to Retention: Managing to Keep Your Workers 218 ■ CASE 6.4 ETHICS

Why Me? Procedural Justice in the Layoff Process 219

PART IV Employee Development 222

Chapter 7 Appraising and Managing Performance 222 What Is Performance Appraisal? 223

The Uses of Performance Appraisal 223 Identifying Performance Dimensions 225 Measuring Performance 226 Measurement Tools 226 Measurement Tools: Summary and Conclusions 234

Challenges to Effective Performance Measurement 235 Rater Errors and Bias 235 The Influence of Liking 236 Precautions 236 Organizational Politics 237 Individual or Group Focus 238 Legal Issues 239

Managing Performance 240 The Appraisal Interview 240 Performance Improvement 240 Identifying the Causes of Performance Problems 240

Managing the Causes of Problems 243 Developing an Action Plan and Empowering Workers to Reach a Solution 243 Directing Communication at Performance 243


Rank and Yank: Legitimate Performance Improvement Tool or Ruthless and Unethical Management? 246

■ CASE 7.2 GLOBAL Cultural Competency 248

■ CASE 7.3 EMERGING TRENDS One Job or Multiple Roles? 248

■ CASE 7.4 CUSTOMER-DRIVEN HR Electronic Appraisal: Using Performance Review Software 250

CONTENTS xiii

■ CASE 7.5 HR IN SMALL BUSINESS Let’s Do It Right 250

Appendix to Chapter 7 254 The Critical-Incident Technique: A Method for Developing a Behaviorally Based Appraisal Instrument 254

Chapter 8 Training the Workforce 256 Key Training Issues 257 Training Versus Development 258 Challenges in Training 258

Is Training the Solution? 258 Are the Goals Clear and Realistic? 259 Is Training a Good Investment? 259 Will Training Work? 260

Managing the Training Process 261 The Needs Assessment Phase 262 Clarifying the Objectives of Training 263 The Training and Conduct Phase 264 The Evaluation Phase 274 Legal Issues and Training 276

A Special Case: Orientation and Socialization 276 Summary and Conclusions 278 • Key Terms 278 • Discussion Questions 278

■ CASE 8.1 HR IN SMALL BUSINESS Training Employees in a Small Business 279

■ CASE 8.2 CUSTOMER-DRIVEN HR Costs and Benefits: Assessing the Business Case for Training 280

■ CASE 8.3 ETHICS The Ethics Challenge 281

■ CASE 8.4 EMERGING TRENDS Beyond ROI? 281

Chapter 9 Developing Careers 284 What Is Career Development? 285 Challenges in Career Development 286

Who Will Be Responsible? 286 How Much Emphasis Is Appropriate? 286 How Will the Needs of a Diverse Workforce Be Met? 287

Meeting the Challenges of Effective Development 289 The Assessment Phase 289 The Direction Phase 293 The Development Phase 298

Self-Development 300 Development Suggestions 302 Advancement Suggestions 303

Summary and Conclusions 303 • Key Terms 304 • Discussion Questions 304 ■ CASE 9.1 CUSTOMER-DRIVEN HR

Be Strategic About Your Career 305 ■ CASE 9.2 HR IN SMALL BUSINESS

Being Big on Development in Small Business 305 ■ CASE 9.3 ETHICS

Anchors II 306 ■ CASE 9.4 GLOBAL

Mentoring as Global Development 307 ■ CASE 9.5 EMERGING TRENDS

Capitalizing on Techno Savvy: Putting Mentoring in Reverse 308

xiv CONTENTS

PART V Compensation 311

Chapter 10 Managing Compensation 311 What Is Compensation? 312 Designing a Compensation System 313

Internal Versus External Equity 313 Fixed Versus Variable Pay 315 Performance Versus Membership 317

Job Versus Individual Pay 318 Elitism Versus Egalitarianism 320 Below-Market Versus Above-Market Compensation 320 Monetary Versus Nonmonetary Rewards 321 Open Versus Secret Pay 323 Centralization Versus Decentralization of Pay Decisions 323 Summary 324

Compensation Tools 324 Job-Based Compensation Plans 325 Skill-Based Compensation Plans 336 Special Compensation Issues in Small Firms 337

The Legal Environment and Pay System Governance 339 The Fair Labor Standards Act 339 The Equal Pay Act 341 The Internal Revenue Code 341

Summary and Conclusions 342 • Key Terms 342 • Discussion Questions 343

■ CASE 10.1 DISCUSSION Money Doesn’t Buy Happiness. Well, on Second Thought . . . 343

■ CASE 10.2 HR IN SMALL BUSINESS David Versus Goliath: Compensation in Small Versus Large Firms 345

■ CASE 10.3 DISCUSSION An Academic Question 346

■ CASE 10.4 EMERGING TRENDS More Suits for Overtime Pay 347

■ CASE 10.5 EMERGING TRENDS A Challenge at Antle Corporation 348

Chapter 11 Rewarding Performance 357 Pay for Performance: The Challenges 358

The “Do Only What You Get Paid For” Syndrome 358 Unethical Behaviors 359 Negative Effects on the Spirit of Cooperation 359 Lack of Control 359 Difficulties in Measuring Performance 361 Psychological Contracts 361 The Credibility Gap 362 Job Dissatisfaction and Stress 362 Potential Reduction of Intrinsic Drives 362

Meeting the Challenges of Pay-for-Performance Systems 363 Link Pay and Performance Appropriately 363 Use Pay for Performance as Part of a Broader HRM System 363 Build Employee Trust 364 Promote the Belief That Performance Makes a Difference 364 Use Multiple Layers of Rewards 365 Increase Employee Involvement 365 Stress the Importance of Acting Ethically 365 Use Motivation and Nonfinancial Incentives 365

CONTENTS xv

Types of Pay-for-Performance Plans 366 Individual-Based Plans 366 Team-Based Plans 368 Plantwide Plans 372 Corporatewide Plans 374

Designing Pay-for-Performance Plans for Executives and Salespeople 376

Executives 376 Salespeople 381 Rewarding Excellence in Customer Service 383 Pay-For-Performance Programs in Small Firms 383


When Schools Offer Money as a Motivator 387 ■ CASE 11.2 DISCUSSION

Loafers at Lakeside Utility Company 388 ■ CASE 11.3 HR IN SMALL BUSINESS

How Should Incentive Money Be Distributed? 388 ■ CASE 11.4 ETHICS

The Pitfalls of Merit Pay and Pay for Performance 389

Chapter 12 Designing and Administering Benefits 397 An Overview of Benefits 398

Basic Terminology 400 The Cost of Benefits in the United States 400 Types of Benefits 401

The Benefits Strategy 403 The Benefits Mix 403 Benefits Amount 404 Flexibility of Benefits 404

Legally Required Benefits 404 Social Security 404 Workers’ Compensation 406 Unemployment Insurance 407 Unpaid Leave 409

Voluntary Benefits 410 Health Insurance 410 Retirement Benefits 416 Insurance Plans 420 Paid Time Off 421 Employee Services 423

Administering Benefits 425 Flexible Benefits 425 Benefits Communication 426

Summary and Conclusions 427 • Key Terms 428 • Discussion Questions 428

■ CASE 12.1 EMERGING TRENDS Employees Are Paying Increasingly Larger Shares of Their Health Care Benefit Costs 429

■ CASE 12.2 ETHICS Should Employers Penalize Employees Who Do Not Adopt Healthy Habits? 430

■ CASE 12.3 ETHICS Google’s On-Site Child-Care Policy Stirs up a Controversy 431

■ CASE 12.4 CUSTOMER-DRIVEN HR IBM’s 401(k) Plan Sets the Standard 432

xvi CONTENTS

PART VI Governance 436

Chapter 13 Developing Employee Relations 436 The Roles of the Manager and the Employee Relations Specialist 437 Developing Employee Communications 438

Types of Information 438 How Communication Works 438

Encourage Effective Communications 440 Information Dissemination Programs 440 The Employee Handbook 441 Electronic Communications 443 Employee Feedback Programs 449 Employee Assistance Programs 453

Employee Recognition Programs 455 Suggestion Systems 455 Recognition Awards 456

Summary and Conclusions 458 • Key Terms 459 • Discussion Questions 459 ■ CASE 13.1 HR IN SMALL BUSINESS

Treating Employees Like Family Is Good for Business 460 ■ CASE 13.2 ETHICS

Should Having Fun Be a Job Requirement? 461 ■ CASE 13.3 EMERGING TRENDS

Going Green Keeps New Belgium Brewing Company in the Black 462 ■ CASE 13.4 GLOBAL

In Praise of Nepotism? 463

Chapter 14 Respecting Employee Rights and Managing Discipline 466 Employee Rights 467

Statutory Rights 467 Contractual Rights 468 Other Rights 469

Management Rights 471 Employment at Will 472

Employee Rights Challenges: A Balancing Act 473 Random Drug Testing 473 Electronic Monitoring 476 Whistle-Blowing 478 Restrictions on Moonlighting 479 Restrictions on Office Romance 480

Disciplining Employees 481 Progressive Discipline 482 Positive Discipline 484

Administering and Managing Discipline 485 The Just Cause Standard of Discipline 486 The Right to Appeal Discipline 486

Managing Difficult Employees 487 Poor Attendance 487 Poor Performance 488 Insubordination 489 Workplace Bullying 490 Alcohol-Related Misconduct 491 Illegal Drug Use and Abuse 492

Preventing the Need for Discipline with Human Resource Management 492 Recruitment and Selection 492 Training and Development 493 Human Resource Planning 493

CONTENTS xvii

Performance Appraisal 493 Compensation 493

Summary and Conclusions 494 • Key Terms 495 • Discussion Questions 495 ■ CASE 14.1 HR IN SMALL BUSINESS

Should Employees Be Disciplined for “Stealing Time”? 496 ■ CASE 14.2 ETHICS

Background Checks Can Misfire, Harming Employees’ Career Prospects 496

■ CASE 14.3 ETHICS Employees Should Be Aware of the Risks Before They Attempt to Blow the Whistle 497

■ CASE 14.4 GLOBAL Illegal Immigrants in the Workforce: Opportunity or Challenge? 499

Chapter 15 Working with Organized Labor 503 Why do Employees Join Unions? 504

The Origins of U.S. Labor Unions 504 The Role of the Manager in Labor Relations 505

Labor Relations and the Legal Environment 505 The Wagner Act 506 The Taft-Hartley Act 507 The Landrum-Griffin Act 508

Labor Relations in the United States 508 Business Unionism 508 Unions Structured by Type of Job 509 Focus on Collective Bargaining 509 Labor Contracts 509 The Adversarial Nature of Labor–Management Relations and Shrinking Union Membership 509 The Growth of Unions in the Public Sector 510

Labor Relations in Other Countries 511 How Unions Differ Internationally 512 Labor Relations in Germany 513 Labor Relations in Japan 513

Labor Relations Strategy 514 Union Acceptance Strategy 514 Union Avoidance Strategy 516

Managing the Labor Relations Process 517 Union Organizing 517 Collective Bargaining 520 Contract Administration 526

The Impact of Unions on Human Resource Management 528 Staffing 528 Employee Development 529 Compensation 529 Employee Relations 530


The Freelancers Union: A New Approach to Unionism? 533 ■ CASE 15.2 CUSTOMER-DRIVEN HR

A Lengthy Screenwriters’ Strike Forces Television Networks to Broadcast Reruns 534

■ CASE 15.3 CUSTOMER-DRIVEN HR When Is a Team a Union? 535

■ CASE 15.4 ETHICS Union Members Protest a 50 Percent Wage Cut at a General Motors Plant 535

xviii CONTENTS

Chapter 16 Managing Workplace Safety and Health 539 Workplace Safety and the Law 540

Workers’ Compensation 540 The Occupational Safety and Health Act (OSHA) 542 The Occupational Safety and Health Administration 545

Managing Contemporary Safety, Health, and Behavioral Issues 548 AIDS 548 Violence in the Workplace 550 Cumulative Trauma Disorders 553 Hearing Impairment 553 Fetal Protection, Hazardous Chemicals, and Genetic Testing 554

Safety and Health Programs 555 Safety Programs 557 Employee Assistance Programs (EAPs) 558 Wellness Programs 559


Standing Up to Workplace Bullies 562 ■ CASE 16.2 EMERGING TRENDS

On the Tip of a Beryllium Iceberg? 563 ■ CASE 16.3 GLOBAL

Mental Health: A Global Concern 564 ■ CASE 16.4 HR IN SMALL BUSINESS

Safety and Health in the Small-Business Environment 565

Chapter 17 International HRM Challenge 568 The Stages of International Involvement 569

The Rise of Outsourcing 572 Falling Barriers 573 Small- and Medium-Size Enterprises Are Also Going Global 573 The Global Manager 574

Determining the Mix of Host-Country and Expatriate Employees 575 The Challenges of Expatriate Assignments 578

Why International Assignments End in Failure 578 Difficulties on Return 580

Effectively Managing Expatriate Assignments with HRM Policies and Practices 582

Selection 582 Training 583 Career Development 587 Compensation 587 Role of HR Department 589 Women and International Assignments 589

Developing HRM Policies in a Global Context 589 National Culture, Organizational Characteristics, and HRM Practices 590 EEO in the International Context 590 Important Caveats 591

Human Resources Management and Exporting Firms 595 Ethics and Social Responsibility 597 Dealing with Political Risks 598

Summary and Conclusions 599 • Key Terms 599 • Discussion Questions 600 ■ CASE 17.1 GLOBAL

American Universities Moving Overseas 600 ■ CASE 17.2 HR IN SMALL BUSINESS

Rural Outsourcing: How Small U.S. Businesses May Keep Large Firms from Going Overseas to Subcontract Work 601

CONTENTS xix

■ CASE 17.3 DISCUSSION Two Sides to Every Story 602

■ CASE 17.4 ETHICS When in Rome Do as the Romans Do? The Case of Foreign Bribes 603

■ CASE 17.5 DISCUSSION Are Culture-Specific HR Polices a Good Idea? 603

Appendix 610

Concise Dictionary of HR Terminology 613

Company, Name, and Product Index 622

Subject Index 629

cover & table of contents - managing human resources (7th edition)

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