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I. Why Strategic Planning is Important to all Managers
The firms strategic plan guides much of what is done by all to accomplish organizational goals.
Decisions made by managers depend on the goals set at each organizational level in support of
higher level goals.
In formulating their HR strategies, HR managers must address three basic challenges:
1) Support organizational productivity and performance improvement efforts;
2) Employees play an expanded role in employers performance improvement efforts;
3) HR must be more involved in designing not just executingthe companys strategic plan.
II. Fundamentals of Management Planning
A. Bu si ne ss Pla nThe business plan provides a comprehensive view of the firms situation today and of its company -wide
and departmental goals and plans for the next three to five years.
B. Marketing PlanThe marketing plan specifies the nature of the product or service the organization provides. It also shows
the approaches the company plans to take with respect to pricing and promoting the product or service.
C. Personnel/Human Resource PlanAnything the company does, or plans to do, will require managers and other personnel, and therefore a
personnel plan.
D. Production/Operations PlanImplementing the marketing plan will necessitate having productive assets. For example, it takes
factories and machines to assemble Dells PCs.
E. Financial Planmost managers plans, goals, and accomplishments end up expressed in financial terms.
III. How Managers Set Objectives
SMART Goals: Experienced managers use the acronym SMART to signify that goals are specific,measurable, attainable, relevant, and timely.
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Motivational Goals: Goals are only useful if employees are motivated to achieve them. Assign specificgoals, assign measurable goals, assign challenging goals, and encourage participation.
Management by Objectives (MBO ): The supervisor and subordinate jointly set goals for the latter andperiodically assess progress toward those goals. IV. The Strategic Management Process
A strategic plan is the companys plan for how it will match its internal strengths and weaknesses with
external opportunities and threats in order to maintain a competitive advantage. Figure 3-5 sums up
the strategic management process in seven steps as follows:
1. Define the current business and mission.
2. Perform external and internal audits.
3. Formulate new business and mission statement.
4. Translate the mission into goals.
5. Formulate strategies to achieve the strategic goal.
6. Implement the strategy.
7. Evaluate performance.
V. Improving Productivity through HRISBusiness planning software packages are available to assist the manager in writing strategic and business plans.
A. Types of Strategies
1. Corporate-level strategy Identifies the portfolio of businesses that comprise the company and the ways in
which these businesses are related to each other. Diversification, vertical integration, consolidation and
geographic expansion are all examples of corporate-level strategies.
2. Competitive strategyCompanies try to achieve competitive advantagesfor the business they are in, which
allow them to differentiate its product or services from those of its competitors to increase market share.
Examples of competitive strategies include cost leadership and differentiation.
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3. Functional strategies Identify the basic course of action that each department will pursue in order to help
the business attain its competitive goals.
4. Strategic Fit Strategic planning experts have different views on fitting capabilities to the opportunities and
threats vs. stretching beyond capabilities to take advantage of an opportunity. The fit point of view, as
purported by Michael Porter, states that all of the firms activities must be tailored to or fit its strategy by ensuring
that the firms functional strategies support its corporate and competitive strategies .
VI. the top Managers Role in Strategic Planning Devising a strategic plan is top managements responsibility. Because the consequences of a poor choice can
be dire, few top managers would delegate the job of deciding how the company should match its internal
strengths and weaknesses with its external opportunities and threats to maintain a competitive advantage.
VII. Departmental Managers Strategic Planning Roles It would be reckless for any top executive to formulate a strategic plan without the input of his or her lower-level
manager. Few people know as much about the firms competitive pressures, vendor capabilities, and concern
than do the companys department managers.
VIII. Strategic Human Resource ManagementStrategic human resource management means formulating and executing human resource policies and practices
that produce the employee competencies and behaviors the company needs to achieve its strategic aims.
The following steps demonstrate linking company-wide and HR strategies:
a) Evaluate Companys Competitive Environment
b) Formulate Business Strategy
c) Identify Workforce Requirements
d) Formulate HR Strategic Policies and Activities
e) Develop Detailed HR Scorecard Measures
X. St ra te gic HR Mana ge me nt Tools
XI . Bu il ding Yo ur Ow n Hi gh -P erfo rma nce Wo rk Sy st emA high-performance work system is a set of human resource management policies and practices
that promote organizational effectiveness.
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Examples of the typical components in a high-performance work system.
multi-skilled work teams;
empowered frontline workers; more training;
labor management cooperation;
commitment to quality;
Customer satisfaction.
HR Scorecard: A concise measurement system that shows the metrics the firm uses to measure HR activities,
measures the employee behaviors resulting from these activities, and measures the strategically relevant
organizational outcomes of those employee behaviors.
The ten steps involved in the HR scorecard approach are as follows:
1. Define the business strategy2. Outline the companys value chain.
3. Outline a Strategy Map
4. Identify the strategically required organizational outcomes
5. Identify the required workforce competencies and behaviors
6. Identify the required HR system policies and activities
7. Create the HR Scorecard
8. Choose HR Scorecard Measures
9. Summarize the Scorecard Measures in a Digital Dashboard
10. Monitor, Predict, Evaluate
CONDUCTING THE HUMAN RESOURCE MANAGEMENT AUDITTypes of HR Audits may include the following:
1) Compliance audits in particular, how well are we complying with relevant laws and regulations?
2) Best practices audits in particular, how do our recruitment practices; hiring practices, and so on
compare to those of best practices companies?
3) Strategic audits in particular, are our human resource management practices helping us to achieve our
strategic goals, by fostering the required employee behaviors?
4) Function-specific audits audits here concentrate on one or more specific human resource management
areas, such as compensation, or training and development.
The HR Audit ProcessWe can summarize the basic audit process as follows:
1) Decide on the scope of the audit.
2) Draft an audit team.
3) Compile the checklists and other tools available.
4) Know your budget.
5) Consider the legalities.
6) Get top management support.
7) Develop the audit checklist.
8) Use the questionnaire to collect data.
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9) Benchmark findings.
10) Provide feedback about the results to senior management.
11) Create action plans aimed at improving areas the audit singles out.
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Job analysis The procedure for determining the duties and skill requirements of a job and the kind of person
who should be hired for the job by collecting the following types of information: work activities; human behaviors;
machines, tools, equipment, and work aids; performance standards; job context; and human requirements.
Job descriptionA list of a jobs duties, responsibilities, reporting relationships, working conditions, and
supervisory responsibilities one product of a job analysis.
Job specificationA list of a jobs human requirements, that is, the requisite education, skills, personality, and
so onanother product of a job analysis. Knowledge, Skills, Ability, Others (KSAO)
A. Uses of Job Analysis Information
B. Steps in Job Analysis
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Information Sources Format Advantages Disadvantages
Interview Individual employees
Groups of employees
Supervisors with
knowledge of the job
Structured
(Checklist)/
Unstructured
Quick, direct way to
find overlooked
information
Distorted information
Questionnaires Have employees fill out
questionnaires to describe
their job-related duties
and responsibilities
Structured
checklists /
Open-ended
questions
Quick and efficient
way to gather
information
from large numbers of
employees
Expense and time
consumed in preparing and
testing the questionnaire
Observation Observing and noting the
physical activities of
employees as they go
about their jobs by
managers.
Provides first-hand
information
Reduces distortion
of information
Time consuming
Reactivity response distorts
employee behavior
Difficulty in capturing
entire job cycle
Of little use if job involves a
high level of mental activity
Diary/Logs Workers keep a
chronological diary or log
of what they do and the
time spent on each activity
Draw a more complete
picture of the job
Employee participation
Distortion of information
Depends upon employees
to accurately recall their
activities
E. Quantitative Job Analysis Techniques
1. Position Analysis Questionnaire (PAQ) is a questionnaire used to collect quantifiable data concerning the
duties and responsibilities of various jobs, on five basic activities:
1) having decision-making/communication/social responsibilities,
2) performing skilled activities,
3) being physically active,
4) operating vehicles/equipment, and
5) processing information.
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2. Department of Labor Procedure (DOL) is a standardized method for rating, classifying, and comparing
virtually every kind of job based on data, people, and things.
III. Writing Job Descriptions
Job Identification
Job title
FLSA status section
Preparation date
Preparer
Job Summary
General nature of the job
Major functions/activities
RelationshipsReports to:
Supervises:
Works with:
Outside the company:
Responsibilities and Duties
Major responsibilities and duties (essential functions)
Decision-making authority
Direct supervision
Budgetary limitations
Standards of Performance and Working Conditions
What it takes to do the job successfully
IV. Writing Job Specifications
A. Specifications for Trained versus Untrained Personnel: Writing job specifications for trained employees is
relatively straightforward because they are likely to focus on traits like length of previous service, quality of
relevant training, and previous job performance. Writing job specifications for untrained employees is more
complex because they are more likely to specify qualities such as physical traits, personality, interests, or
sensory skills that imply some potential for performing or being trained to perform on the job.
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B. Job Specifications Based on Statistical Analysis
Basing job specifications on statistical analysis is more defensible, but a more difficult approach than the
judgmental approach. The aim of the statistical approach is to determine statistically the relationship between
1) some predictor or human trait such as height, intelligence, or finger dexterity, and
2) some indicator or criterion of job effectiveness.
VI. Job Analysis in a Worker-Empowered World
Job enlargement involves assigning workers additional same-level activities, thus increasing the number of
activities they perform.
Job rotation is systematically moving workers from one job to another.
Job enrichment involves redesigning jobs in a way that increases the opportunities for the worker to experience
feelings of responsibility, achievement, growth, and recognition.
Competency-Based Job Analysis
Competencies
Demonstrable characteristics of a person that enable performance of a job.
Reasons for Competency-Based Job Analysis
To support a high-performance work system (HPWS).
To create strategically-focused job descriptions.
To support the performance management process in fostering, measuring, and rewarding:
General competencies
Leadership competencies
Technical competencies
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negligent hiring: Hiring workers with criminal backgrounds without proper safeguards.
Avoiding Negligent Hiring Claims
Carefully scrutinize information on employment applications.
Get written authorization for reference checks, and check references.
Save all records and information about the applicant.
Reject applicants for false statements or conviction records for offenses related to the job.
Balance the applicants privacy rights with others need to know.
Take immediate disciplinary action if problems arise.
II. Basic Testing Concepts
A. Reliability refers to the consistency of scores obtained by the same person when
retested with the identical or equivalent tests.
B. Validity refers to evidence that performance on a test is a valid predictor of subsequent
performance on the job.
1. Criterion Validity shows that scores on
the test (predictors) are related to job
performance.
2. Content Validity shows that the test
contains a fair sample of the tasks and skills
actually needed for the job in question.
Evidence-Based HR: How to Validate a
Test
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III. Types of Tests
A. Tests of Cognitive Abilities Cognitive tests include tests of general reasoning ability
(intelligence) and tests of specific mental abilities like memory and inductive reasoning.
1. Intelligence Tests are tests of general intellectual abilities ranging from memory,
vocabulary, and verbal fluency to numerical ability.
2. Specific Cognitive Abilities (aptitude) include inductive and deductive reasoning,
verbal comprehension, memory, and numerical ability.
B. Tests of Motor and Physical Abilities Employers may use various tests to measure such
motor abilities as finger dexterity, manual dexterity, and reaction time. They may also
want to measure such physical abilities as static strength, dynamic strength, body
coordination, and stamina.
C. Measuring Personality and Interests can be used to assess personal characteristics as
attitude, motivation, and temperament.
1. What Personality Tests Measure Tests measure basic aspects of an applicants personality, such as
introversion, stability, and motivation.
2. The "Big Five" Industrial psychologists emphasize five personality dimensions as they apply to
personnel testing: extraversion, emotional stability, agreeableness, conscientiousness, and openness to
experience.
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IV. Work Samples and Simulations
situational test: Requires examinees to
respond to situations representative of
the job.
miniature job training: Training
candidates to perform several of the jobs
tasks, and then evaluating the candidates
prior to hire.
V. Background Investigations and Other Selection Techniques
Reference checks Background employment checks Criminal records
Driving records Credit checksWhy?
To verify factual information providedby applicants
To uncover damaging information
Making Background Checks More Useful
1. Include on the application form a statement for applicants to sign explicitly authorizing a background check.2. Use telephone references if possible.3. Be persistent in obtaining information.4. Compare the submitted rsum to the application.5. Ask open-ended questions to elicit more information from references.6. Use references provided by the candidate as a source for other references.
Limitations on Background Investigations and Reference Checks
DefamationThe rejected applicant has various legal
remedies, including the right to sue for defamation.
Privacy Truth is not always a defense. Employees
can sue employers for disclosing true but
embarrassing private facts to those without a need toknow.
Supervisor Reluctance Rather than damage a
former employees chance for a job, supervisors may
sometimes give good references.
Employer Guidelines Defensible reference policies
include having only authorized managers provide
information about employees. Some employers only
provide dates of employment, salary, and position title
to reference seekers.
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The Polygraph and Honesty Testing
Employee Polygraph Protection Act of 1988, Generally prohibits polygraph examinations by all
private employers unless:
The employer has suffered an economic loss or injury.
The employee in question had access to the property.
There is a reasonable prior suspicion.
The employee is told the details of the investigation, as well as questions to be asked on the
polygraph test itself.
Private business exceptions:
Private security employees
Employees with access to drugs
Ongoing economic loss or injury investigations
Graphology (handwriting analysis) assumes that handwriting reflects basic personality tests.
Physical Exams Once an offer is made and the person is hired, a medical exam is usually the next step in the
selection process.
To verify that the applicant meets the physical requirements of the position.
To discover any medical limitations to be taken into account in placing the applicant.
To establish a record and baseline of the applicants health for future insurance or compensation
claims.
To reduce absenteeism and accidents.
To detect communicable diseases that may be unknown to the applicant.
Substance Abuse Screening Because drug abuse is a serious problem for employers, it is common practice
for most employers to conduct drug screening just before employees are formally hired.
Types of Screening
Before formal hiring
After a work accident
Presence of obvious behavioral symptoms
Random or periodic basis
Transfer or promotion to new position
Types of Tests
Urinalysis
Hair follicle testing
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Improving Productivity through HRIS:
1)"Knock out" applicants who do not meet minimum, non-negotiable job requirements;
2) Test and screen applicants online including Web-based skills testing, cognitive skills testing, and psychological
testing; and
3) discover "hidden talents" by identifying talents in the candidate pool that lend themselves to job matches at the
company that the applicant didn't know existed when he applied. Minimum functionality requirements of ATS are
discussed here.
expectancy chart: A graph showing the relationship between test scores and job performance for a large group
of people.
interest inventory: A personal development and selection device that compares the persons current interests
with those of others now in various occupations so as to determine the preferred occupation for the individual.
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Comparing Performance Appraisal and Performance Management
Performance appraisal is part of a total integrated process of performance management, which consolidates goal
setting, performance appraisal, and development into a single, common system, the aim of which is to ensure that
the employee's performance is supporting the company's strategic aims.
Defining the Employee's Goals and Work Standards
At the heart of performance management is the idea that employees effort should be goal directed, which
involves clarifying expectations and quantifying them by setting measurable standards for each objective.
Why Appraise Performance
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A. Realistic Appraisals It is important that a manager be candid when a subordinate is underperforming.
The Supervisor's Role The HR Departments Role
The Supervisors Role
Usually do the actual appraising
Must be familiar with basic appraisal techniques
Must understand and avoid problems that can
cripple appraisals
Must know how to conduct appraisals fairly
Serves a policy-making and advisory role.
Provides advice and assistance regarding the
appraisal tool to use. Trains supervisors to improve their appraisal
skills.
Monitors the appraisal system effectiveness and
compliance with EEO laws.
Steps in Appraising Performance
define the job;
appraise performance; and
provide feedback.
Performance Appraisal Methods
1) Graphic Rating Scale Methodis the simplest and very popular technique. A scale is used to list traits and
a range of performance for each, then the employee is rated by identifying the score that best describes
his/her performance level for each trait. Managers must decide which job performance aspects to measure.
2) Alternation Ranking Method is where employees are ranked from best to worst on a particular trait,
choosing highest, then lowest, until all are ranked. Figure 9-6 shows an example of this method.
3) Paired Comparison Method involves ranking employees by making a chart of all possible pairs of
employees for each trait and indicating which the better employee of the pair is.4) Forced Distribution Method is where predetermined percentages of rates are placed in various
performance categories; similar to grading on a curve.
5) Critical Incident Method is where a supervisor keeps a record of uncommonly good and/or undesirable
examples of an employees work-related behavior, and reviews it with the employee at predetermined times.
6) Narrative Forms involve rating the employees performance for each performance factor, writing down
examples and an improvement plan, aiding the employee in understanding where his/her performance was
good or bad, and summarizing by focusing on problem solving.
7) Behaviorally Anchored Rating Scales (BARS)combines the benefits of narratives, critical incidents, and
quantified scales, by anchoring a scale with specific behavioral examples of good or poor performance.
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The five steps in developing a BARS are:
1) generate critical incidents;
2) develop performance dimensions;
3) reallocate incidents;
4) scale the incidents; and
5) develop final instrument.
The advantages of BARS include
a more accurate gauge;
clearer standards;
feedback;
independent dimensions; and
consistency.
8) Management by Objectives (MBO) requires the manager to set specific measurable goals with each
employee and then periodically discuss his/her progress toward these goals. The process consists of six
steps: 1) set the organization's goals; 2) set departmental goals; 3) discuss departmental goals; 4) define
expected results; 5) performance reviews; and 6) provide feedback.
9) Computerized and Web-Based Performance Appraisal generally enables managers to keep notes on
subordinates during the year, to rate employees on a series of performance traits, and then generate written
text to support each part of the appraisal. About 1/3 of employers use online performance management tools
for at least some employees.
10) Electronic Performance Monitoringthese systems use computer network technology to allow managers
access to their employees computers and telephones.
11) Appraisal in Practicethe most effective appraisal forms often merge several approaches.
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Dealing with Performance Appraisal Problems
1. Unclear Standards Ambiguous traits and degrees of merit can result in an unfair appraisal.
2. Halo Effect the influence of a raters general impression on ratings of specific qualities can be a problem.
3. Central Tendency where supervisors stick to the middle of the rating scales, thus rating everyone
average.
4. Leniency or Strictness supervisors have the tendency to rate everyone either high or low.
5. Bias the tendency to allow individual differences such as age, race, and sex to affect the appraisal ratings
employees receive, is a problem.
Who Should Do the Appraising?
1. The Immediate Supervisor
2. Peer Appraisals
3. Rating Committees
4. Self-Ratings
5. Appraisal by Subordinates
6. 360-Degree
The Appraisal Interview is an
interview in which the supervisor
and subordinate review the
appraisal and make plans to
remedy deficiencies and
reinforce strengths.
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How to Conduct the Interview
Prepare for the interview by
assembling the data, preparing the
employee, and choosing the time
and place. Be direct and specific,
using objective examples; dont get
personal; encourage the person to
talk; and dont tiptoe around.
Purposes of a Written Warning
To shake your employee out of bad habits.
To help you defend your rating, both to your own boss and (if needed) to the courts.
A Written Warning Should:
Identify standards by which employee is judged.
Make clear that employee was aware of the standard.
Specify deficiencies relative to the standard.
Indicate employees prior opportunity for correction.
Performance Management
is the continuous process of identifying,
measuring, and developing the performance of
individuals and teams and aligning their
performance with the organizations goals
Performance management's emphasis on the
integrated nature of goal setting, appraisal, and
development reflect Total Quality Management
concepts.
Second, it reflects what many studies have
shown that traditional performance appraisals
are useless and counter-productive.
Third, it is a process that recognizes that every
employees efforts must focus on helping the
company to achieve its strategic goals.
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Improving Productivity through HRIS:
Assign financial and nonfinancial goals to each teams activities along the strategy map chain of activities
leading up to the companys overall strategic goals.
Inform all employees of their goals.
Use IT-supported tools like scorecard software and digital dashboards to continuously monitor and
assess each teams and employees performance.
Take corrective action at once.
Employee compensation refers to all forms of pay
or rewards going to employees, which include direct
financial payments and indirect payments. Direct
financial payments include wages, salaries,
incentives, commissions, and bonuses. Indirect
payments include financial benefits, like employer-
paid insurance and vacations.
Corporate Policies, Competitive Strategy, and Compensation The basic thrust in pay plans today is to
produce an aligned reward strategy to create compensation plans that guide employee behaviors in the desired,
strategic direction. Distinguishing between high and low performers is a policy issue, as is seniority-based pay.
Salary Compressionmeans longer-term employees salaries are lower than those of workers entering the firm
today. To raise salaries, employers can give raises based on longevity (plus skills), install a more aggressive
merit pay program, or authorize supervisors to recommend equity adjustments for selected employees who are
both highly valued and victims of pay compression.
Geography Cost of living differences between cities can be considerable. There are several ways that
employers handle cost of living differentials.
External equity refers to pay comparing favorably
with rates in other organizations.
Internal equity refers to employees viewing their pay
as equitable given other pay rates in the organization.
Individual equity refers to the fairness of an
individuals pay as compared with what his/her
coworkers are earning for the same or very similar
jobs in the company. Last,
procedural equity refers to the perceived fairness of
the processes and procedures used to make decisions
regarding the allocation of pay
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Establishing Pay Rates
Step1: The Salary Survey
Step 2: Job Evaluation
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How to Evaluate Jobs
III. Pricing Managerial and Professional Jobs
Elements of Executive Pay Executive Compensation emphasizes performance incentives more than
do other employees pay plans, since organizational results are likely to reflect executives contributions
more directly.
Compensating Professional Employees Most employers use a market-pricing approach instead of
job evaluation, since its not easy to identify factors and degrees of factors which meaningfully
differentiate among the values of professional work.
IV. Competency-Based PayThe company pays for the employees range, depth, and types of skills and knowledge,
rather than for the job title he or she holds. Three reasons are given:
1) in a high performance work system you want employees to be enthusiastic about learning and moving
among other jobs;
2) you can enhance your strategic plans by paying for skills that are critical for those plans; and
3) measurable skills, knowledge, and competencies are at the heart of performance management
processes.
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Competency-Based Pay contains four main components:
1) a system that defines skills and processes for tying those skills to pay;
2) a training system for acquiring skills;
3) competency testing system; and
4) a work design that allows employees to move among jobs.
Competency-Based Pay: Pros and Cons
Pros
Higher quality
Lower absenteeism
Fewer accidents
Cons
Pay program implementation problems
Costs of paying for unused knowledge, skills, and behaviors
Complexity of program
Uncertainty that the program improves productivity
V. Other Compensation Trends
A. Broadbanding means collapsing salary grades
and ranges into just a few wide levels or bands.
Pros and Cons Broadbanding injects greater flexibility into employee assignments, and allows an
employee to move up or down along the pay scale without changing pay ranges. Broadbanding can,
however, eliminate a sense of permanence in a set of job responsibilities. This is particularly difficult
for new employees.
B. Comparable Worth refers to the requirement to pay equal wages for jobs of
comparable value to the employer rather than strictly equal value.
1. The Gunther Supreme Court Case involved Washington County, Oregon, prison
matrons who claimed sex discrimination. Washington County finally agreed to pay
35,000 employees in female-dominated jobs almost $500 million in pay raises over 7
years to settle the suit.
2. The Pay Gap Although the gap is narrowing a bit, women still earn only about 77%
as much as men. Education may reduce the wage gap.