ManagingHuman

Resources

Productivity, Quality of Work Life, ProfitsEighth Edition

J ' . . .Wayne F. Cascio

The Business SchoolUniversity of Colorado Denver

McGraw-HillIrwin

Boston Burr Ridge, IL Dubuque, IA New York San Francisco St. LouisBangkok Bogota Caracas Kuala Lumpur Lisbon London Madrid Mexico CityMilan Montreal New Delhi Santiago Seoul Singappre Sydney Taipei Toronto

ONTENTS

Boxes and Special Features xxiPreface xxvi

PART ONE ENVIRONMENT 1

CHAPTER 1 HUMAN RESOURCES IN A GLOBALLY COMPETITIVEBUSINESS ENVIRONMENT 2Questions This Chapter Will Help Managers Answer 2Human Resource Management in Action 3

The 21st-century Corporation 3The Enterprise Is the People 5Managing People: A Critical Role for Every Manager 6

Why Does Effective HRM Matter? 9Features of the Competitive Business Environment 10

Globalization 10Technology 11E-Commerce 12Demographic Changes and Increasing Cultural Diversity 13

Responses of Firms to the New Competitive Realities 14New Forms of Organization 15Restructuring, Including Downsizing • 17

, Quality-Management Programs 17Reengineering 18Flexibility 18

Productivity: What Is It and Why Is It Important? 21Quality of Work Life: What Is It? 24Business Trends and HR Competencies 25Human Resource Management in Action: Conclusion 26

The 21st-century Corporation 26Summary 28Key Terms 29Discussion Questions 29Applying Your Knowledge 30

Case 1-1: Smashing the Clock 30References 35

CHAPTER 2 THE FINANCIAL IMPACT OF HUMAN RESOURCEMANAGEMENT ACTIVITIES 38Questions This Chapter Will Help Managers Answer 38Human Resource Management in Action 39

vi

Contents VII

Linking Worker Beliefs to Increased Productivity and Profitability 39Orientation 40The LAMP Model: Foundations of Workforce Measurement 41

Logic: The "Story" that Connects Numbers and Outcomes 42Analytics: Drawing Appropriate Conclusions from Data 42 •Measures: Getting the Numbers Right 42 •Process: Creating Actionable Insights 43 • • • •Some Definitions 44Controllable versus Uncontrollable Costs 45

Financial Effects of Employee Attitudes 46 •'.:.. • 'Behavior Costing and Employee Attitudes 46Measures, Data, and a Casual Model 47Process: Impact on Managers' Behavior and on the Firm 49

Costing Employee Absenteeism 49 • • . •Analytics and Measures for Employee Absenteeism • 50Process: Interpreting the Costs of Absenteeism 51 •

Costing Employee Turnover 52 .Analytics: The Components of Turnover Costs 53The Total Cost of Turnover . 5 6 . . . . . .

Financial Effects of Work-Life Programs 57Who Adopts Work-Life Programs? . 5 7The Logic of Work-Life Programs 57Analytics and Measures: Connecting Work-Life Programsand Outcomes 58Child Care 58Flexible Work Arrangements 60 .Talent Management 60 ? . • .Human-Capital Outcomes: Employee Commitment 60Financial Performance, Operational and Business Outcomes-^—ClientService 61Stock-Market Reactions to Work-Life Initiatives 61Cautions in Making the Business Case for Work-Life Programs 62

Costing the Effects of Training Activities 62Indirect Measures of Training Outcomes 63 . .Direct Measures of Training Outcomes 65

Human Resource Management in Action: Conclusion 67Linking Worker Beliefs to Increased Productivity and Profitability 67

Summary 69Key Terms 69 - "Discussion Questions 69 'Applying Your Knowledge 70 v

Case 2-1: Absenteeism at ONO Inc. 70References 70

CHAPTER 3 THE LEGAL CONTEXT OF EMPLOYMENTDECISIONS 74Questions This Chapter Will Help Managers Answer 74Human Resource Management in Action 75

Retaliation: A New Legal Standard and Some PreventiveMeasures 75

VIII Contents

Societal Objectives 76EEO and Unfair Discrimination: What Are They? 77The Legal Context of Human Resource Decisions 79

The Thirteenth and Fourteenth Amendments 79The Civil Rights Acts of 1866 and 1871 80The Equal Pay Act of 1963 80Title VII of the Civil Rights Act of 1964 81Litigating Claims of Unfair Discrimination 83The Civil Rights Act of 1991 83The Age Discrimination in Employment Act of 1967 (ADEA) 85The Immigration Reform and Control Act of 1986 (IRCA) 86The Americans with Disabilities Act of 1990 (ADA) 87The Family and Medical Leave Act of 1993 (FMLA) 88Executive Orders 11246, 11375, and 11478 89The Rehabilitation Act of 1973 90 .The Vietnam Era Veterans Readjustment Act of 1974 90Uniformed Services Employment and Reemployment Rights Actof 1994 90Federal Enforcement Agencies: EEOC and OFCCP 91EEOC Guidelines 91

1 The Office of Federal Contract Compliance Programs 93Affirmative Action Remedies 94Employment Case Law: Some General Principles 95Sex Discrimination 95 • .

•, Pregnancy 96Reproductive Hazards 96Sexual Harassment 97Age Discrimination 100"Overqualified" Job Applicants 101Seniority 101Testing and Interviewing 102Personal History 103Preferential Selection 104

Human Resource Management in Action: Conclusion 106Retaliation: A New Legal Standard and Some PreventiveMeasures 106

Summary 107Key Terms 108Discussion Questions 109Applying Your Knowledge 109

Case 3-1: A Case of Harassment? 109References 110

CHAPTER 4 DIVERSITY AT WORK 116Questions This Chapter Will Help Managers Answer 116Human Resource Management in Action 117

Making the Business Case for Diversity 117Workforce Diversity: An Essential Component of HR Strategy 119

. The Service Economy 120The Globalization of Markets 122New Business Strategies that Require More Teamwork 122

Contents IX

Mergers and Strategic International Alliances 123The Changing Labor Market 124Diversity at Work—A Problem for Many Organizations 124Culture—The Foundation of Group Differences 125African Americans in the Workforce 125Hispanics in the Workforce 128Asian Americans in the Workforce 130Women in the Workforce 131Age-Based Diversity 134Intergenerational Conflict 135

Managing Diversity 135 • . • -Racial and Ethnic Minorities 135 . •Female Workers 137Generations X and Y 137Older Workers 138 • .Workers with Disabilities .139Gay/Lesbian/Bisexual/Transsexual Employees 140

Human Resource Management in Action: Conclusion 143Making the Business Case for Diversity 143

Summary 144Key Terms 145 : / :

Discussion Questions ^145Applying Your Knowledge 146

Case 4-1: The Challenge of Diversity 146References 147

PART Two EMPLOYMENT 153

CHAPTER 5 PLANNING FOR PEOPLE 154Questions This Ghapter Will Help Managers Answer 154Human Resource Management in Action 155

Leadership Succession—A Key Challenge for AllOrganizations 155

Business Strategy: Foundation for All Organizational Decisions . 157Ensuring Coherence in Strategic Direction 157 .

Relationship of HR Strategy to Business Strategy 159 •:Workforce Plans 160 ;

The End of the Job? 162 • • - .Alternative Perspectives on Jobs 162 • .

Job Design 163 . . •Scientific Management—"One Best Way" 165 . •The Job Characteristics Approach to Job Design 166 rIdentifying the Work To Be Done and the Personal Characteristics NeededTo Do the Work 167 . . - . . : • •Competency Models 170 •How Do We Study Job Requirements? 170Job Analysis: Relating Method to Purpose 172 , .

From Job Analysis to Strategic Workforce Planning 174 . '• •Strategic Workforce-Planning Systems 175

Talent Inventory 176 .Workforce Forecasts 177

Contents

Forecasting External Workforce Supply 178Forecasting Internal Workforce Supply 179Forecasting Workforce Demand 183Identify Pivotal Talent 184Accessing Future Workforce Demand 184How Accurate Is Accurate? 184Integrating Supply and Demand Forecasts 185Make or Buy? 185

Control and Evaluation of SWP Systems 186Human Resource Management in Action: Conclusion 188

Leadership Succession—A Key Challenge for All Organizations 188Summary 189Key Terms 190Discussion Questions 190Applying Your Knowledge 190

Case 5—1: Leadership-Succession Planning—Successes andFailures 190,

References 191

CHAPTER 6 RECRUITING 196Questions This Chapter Will Help Managers Answer 196Human Resource Management in Action 197

The Art of Finding Talent 197Recruitment as a Strategic Imperative 199The,Employee Recruitment/Selection Process 199

Developing Recruitment Policies: Labor Market Issues 203Internal versus External Labor Markets 203Recruitment Policies and Labor-Market Characteristics 204

Recruitment—A Two-Way Process 206Recruitment Planning 206Internal Recruitment 207

Job Posting 208Employee Referrals 209Temporary Worker Pools 210

External Recruitment 211University Relations 211Virtual Job Fairs 213Executive Search Firms 213Employment Agencies 214Recruitment Advertising 214

Special Inducements—Relocation Aid, Help for the Trailing Spouse,and Sign-On Bonuses 215

Summary of Findings Regarding Recruitment Sources 216Diversity-Oriented Recruiting 217

Managing Recruitment Operations 217Evaluation and Control of Recruitment Operations 219Realistic Job Previews 221

The Other Side of Recruitment—Job Search 222Scenario 1: Unemployed 222Scenario 2: Employed, But Searching for a New Job 224

Contents XI

Human Resource Management in Action: Conclusion 225The Art of Finding Talent 225

Summary 226Key Terms 226Discussion Questions 227Applying Your Knowledge 227

Case 6-1: Small Businesses Confront RecruitingChallenges 227

References 228

CHAPTER 7 STAFFING 234Questions This Cliapter Will Help Managers Answer 234Human Resource Management in Action 235

Organizational Culture—Key to Staffing "Fit" 235..Organizational Considerations in Staffing Decisions 236 .

Business Strategy 236Organizational Culture 237The Logic of Personnel Selection 238Reliability of Measurement 239Validity of Measurement 240. • ;

Screening and Selection Methods 240Employment Application Forms 240Recommendations, References, and Background Checks. ,242.

Assessment Methods in Selection 245 • >Drug Screening 245Two Controversial Selection Techniques 247Integrity Tests 248Mental Ability Tests 248 jValidity Generalization 250 /Personality Measures 250 ; .Projective Measures 251Measures of Emotional Intelligence 252 .Personal-History Data 253 .Employment Interviews 253Work-Sample Tests 255 •Leaderless-Group Discussion 256In-Basket Test 257The Situational-Judgment Test 260Assessment Centers 260

Choosing the Right Predictor 264Human Resource Management in Action: Conclusion 265

Organizational Culture—Key to Staffing "Fit" 265Summary 266Key Terms 268Discussion Questions 268Applying Your Knowledge 269

Exercise 7-1: An In-Basket and an LGD for SelectingManagers 269

Technical Appendix 273The Estimation of Reliability 273

XII Contents

Validation Strategies 274Estimating the Economic Benefits of Selection Programs 275

References 276

PART THREE DEVELOPMENT 285

CHAPTER 8 WORKPLACE TRAINING 286Questions This Chapter Will Help Managers Answer 286Human Resource Management in Action 287

Technology-Delivered Instruction (TDI) Catches On 287Employee Training 288

What Is Training? 288Training Trends 289Impact of Training on Individuals, Teams, Organizations, andSociety 291

Characteristics of Effective Training Practice 293The Training Paradox 293How Training Relates to Competitive Strategies 293

What Determines Effective Training? 294Assessing Training Needs and Designing Training Programs , 294

Assessing Training Needs 295Principles that Enhance Learning 299

Motivating the Trainee: Goal Setting 299Behavior Modeling 300Meaningfulness of the Material 302Practice (Makes Perfect) 302Feedback 303Transfer of Training 304Team Training 306Selecting Training Methods 307

Evaluating Training Programs 309Additional Considerations in Measuring the Outcomes of Training 310New-Employee Orientation: An Overview 312Planning, Packaging, and Evaluating an Orientation Program 314

Orientation Follow-Up 316Evaluation of the Orientation Program 317

Lessons Learned 317Human Resource Management in Action: Conclusion 318

Technology-Delivered Instruction (TDI) Catches On 318Summary 320Key Terms 321Discussion Questions 321Applying Your Knowledge 321

Case 8-1: Evaluating Training at Hutchinson Inc. 321References 322

CHAPTER 9 PERFORMANCE MANAGEMENT 328Questions This Chapter Will Help Managers Answer 328Human Resource Management in Action 329

Performance Reviews: The Dilemma of Forced Ranking 329

Contents XIII

Managing for Maximum Performance 330Define Performance 331 >Facilitate Performance 332Encourage Performance 332 ' ,Performance Management in Practice 333

Purposes of Performance-Appraisal Systems 334Requirements of Effective Appraisal Systems .335The Strategic Dimension of Performance Appraisal 339 .

Alternative Methods of Appraising Employee Performance 340 <. <Behavior-Oriented Rating Methods 341 •Results-Oriented Rating Methods 344When Should Each Technique Be Used? 346 '

Who Should Evaluate Performance? 347 'The Immediate Supervisor 348Peers 348Subordinates _ 348 ' 'Self-Appraisal 349Customers Served 349Computers 350

» Are Supervisors' Ratings Affected by Other Sources of Information aboutPerformance? <, 351Multi-Rater or 360-Degree Feedback 351

When and How Often Should Appraisal Be Done? 353 •Evaluating the Performance of Teams 354Appraisal Errors and Rater-Training Strategies 355Secrets of Effective Performance-Feedback Interviews 358Human Resource Management in Action: Conclusion 362

Performance Reviews: The Dilemma of Forced Ranking 362Summary 363 /Key Terms 364Discussion Questions 364Applying Your Knowledge 365 .

Case 9-1: Problems in Appraisal at Peak Power 365References 366 "

CHAPTER 10 MANAGING CAREERS 374Questions This Chapter Will Help Managers Answer 374Human Resource Management in Action 375

Self-Reliance: Key to Career Management 375Toward a Definition of Career .376 . . .Proactive Career Management 377

Toward a Definition of Career Success 378Adult Life-Cycle Stages 378

Career Management: Individuals Focusing on Themselves 379Selecting a Field of Employment and an Employer 380Knowing Where You Are 380Planning Your Exit 381The Role of the Organization 381Dual-Career Couples: Problems and Opportunities • 381 '•'•.

Career Management: Organizations Focusing on Individuals 383

XIV Contents

Organizational Entry 383Mentoring 383Early Career: The Impact of the First Job 384Managing Men and Women in Midcareer 386Managing the Older Worker 388Myths versus Facts about Older Workers 390Implications of the Aging Workforce for HRM 391

Career Management: Organizations Focusing on Their Own Maintenanceand Growth 393

Internal Staffing Decisions: Patterns of Career Change 394Human Resource Management in Action: Conclusion 401

Self-Reliance: Key to Career Management 401Summary 402Key Terms 403Discussion Questions 403Applying Your Knowledge 403

Exercise 10-1: Self-Assessment and Career Planning 403References 406

PART FOUR COMPENSATION 413CHAPTER 11 PAY AND INCENTIVE SYSTEMS 414Questions This Chapter Will Help Managers Answer 414Human Resource Management in Action 415

The Trust Gap 415Changing Philosophies Regarding Pay Systems 417

Cost-Containment Actions 417Paying What the Company Can Afford 418Programs that Encourage and Reward Performance 418

Components arid Objectives of Organizational Reward Systems 420Strategic Integration of Compensation Plans andBusiness Plans 422Determinants of Pay Structure and Level 423

Labor-Market Conditions 423Legislation 424Collective Bargaining 426Managerial Attitudes and an Organization'sAbility to Pay 427

An Overview of Pay-System Mechanics 427Linking Internal Pay Relationships to Market Data 429Developing a Pay Structure 430Alternatives to Pay Systems Based on JobEvaluation 433

Policy Issues in Pay Planning and Administration 434Pay Secrecy 434The Effect of Inflation 435Pay Compression 436Pay Raises 437

Performance Incentives 438Requirements of Effective Incentive Systems 438

Contents XV

Merit-Pay Systems 439Barriers Can Be Overcome 440

Guidelines for Effective Merit-Pay Systems 440Incentives for Executives 441 . . .Incentives for Lower-Level Employees 443

Setting Workload Standards 443Union Attitudes 445 " • ""

Team Incentives 445Organizationwide Incentives 447

Profit Sharing 447 • ;

Gain Sharing 448 .Employee Stock-Ownership Plans 449

Human Resource Management in Action: Conclusion 452The Trust Gap 452

Summary 453Key Terms 453Discussion Questions 454Applying Your Knowledge 454

Case 11-1: Nucor: The Art of Motivation 454References 455

CHAPTER 12 INDIRECT COMPENSATION: EMPLOYEE BENEFITPLANS 462Questions This Chapter Will Help Managers Answer 462Human Resource Management in Action 463

The New World of Employee Benefits 463Strategic Considerations in the Design of Benefits Programs 464

Long-Term Strategic Business Plans . 465 . -• •Diversity in the Workforce Means ̂ Diversity in BenefitsPreferences 466 /

Legal Requirements 466Competitiveness of the Benefits Offered 469Total Compensation Strategy .470

Components of the.Benefits Package 470Cost 470 :Security and Health Benefits 470Group Life Insurance 471Workers' Compensation 472Disability Insurance 473 :Hospitalization, Surgical, and Maternity Coverage 474Cost-Containment Strategies 476 .- -,Toward the Future 479Other Medical Coverage 479Sick-Leave Programs 480Pensions 480Social Security 484Unemployment Insurance- 486 . :

Severance Pay 488Payments for Time Not Worked 488 ,Employee Services 489

XVI Contents

Benefits Administration 491Benefits and Equal Employment Opportunity 491Costing Benefits 491Cafeteria, or Flexible, Benefits 492Communicating the Benefits 493

Human Resource Management in Action: Conclusion 494The New World of Employee Benefits 494

Summary 496Key Terms 496Discussion Questions 497Applying Your Knowledge 497

Case 12-1: Reducing Health-Care Costs 497References 499

PART FIVE LABOR-MANAGEMENT ACCOMMODATION 505CHAPTER 13 UNION REPRESENTATION AND COLLECTIVEBARGAINING 506Questions This Chapter Will Help Managers Answer 506Human Resource Management in Action 507

Restructuring through Union-Management Collaboration 507Why Do Employees Join Unions? 508Union Membership in the United States 509The Changing Nature of Industrial Relations in the United States 511Fundamental Features of the U.S. Industrial RelationsSystem 512 .A Brief History of U.S. Labor Relations 513

Emergence of the American Federation of Labor (AFL) 514Emergence of the Congress of Industrial Organization (CIO) . 514Merger of the AFL-CIO 514Breaking Away from the AFL-CIO 515

The Unionization Process 515The Legal Basis 515The Organizing Drive 517The Bargaining Unit 518The Election Campaign 519The Representation Election and Certification 520The Decertification of a Union 520

Collective Bargaining: Cornerstone of American LaborRelations 522

The Art of Negotiation 522 . . .Bargaining Impasses: Strikes, Lockouts, or Third-PartyInvolvement 524

Strikes 524Lockouts 528Third-Party Involvement 528

Administration of the Collective Bargaining Agreement 530Union-Security Clauses 530Grievance Procedures in the Unionized Firm 530

Contents XVII

Union Membership in Countries Other Than theUnited States , 5 3 3 , -Union Wage Premiums and the Spillover Effect 534Human Resource Management in Action: Conclusion . 534

Restructuring through Union-Management . .Collaboration 534

Summary 537Key Terms 538Discussion Questions 538Applying Your Knowledge .538

Exercise 13-1: Contract Negotiations at Moulton MachineShop 538

References 540

CHAPTER 14 PROCEDURAL JUSTICE AND ETHICS IN EMPLOYEERELATIONS 546Questions This Chapter Will Help Managers Answer 546Human Resource Management in Action 547

Alternative Dispute Resolution: Good for the Company, Good forEmployees? 547

Some Definitions 548Why Address Procedural Justice? 549

Components of Procedural Justice 550Procedural Justice in Action: Employee Voice Systems 551

Characteristics of Effective Voice Systems 551Grievance Procedures in Nonunion Companies: Workplace DueProcess 553 j

Discipline 555 /Progressive Discipline 557 /

Documenting Performance-Related Incidents 558The Disciplinary Interview 558 .Employment-at-Will 560 .Employment Contracts 562Termination , 5 6 4

Employee Privacy and Ethical Issues 568Fair Information Practices in the Internet Age 569Assessment of Job Applicants and Employees 571Whistle-Blowing 572Conclusion 574

Human Resource Management in Action: Conclusion 575Alternative Dispute Resolution: Good for the Company, Good forEmployees? 575

Summary 576Key Terms 577Discussion Questions 577Applying Your Knowledge 577

Case 14-1: Mr. Stone Blows the Whistle 577References 578

XVIII Contents

PART SIX SUPPORT AND INTERNATIONAL IMPLICATIONS 585CHAPTER 15 SAFETY, HEALTH, AND EMPLOYEE ASSISTANCEPROGRAMS 586Questions This Chapter Will Help Managers Answer 586Human Resource Management in Action 587

Substance Abuse on the Job Produces Tough Policy Choices forManagers 587

The Extent and Cost of Safety and Health Problems 589Workers' Compensation: Current Trends 589

The Occupational Safety and Health Act 590Purpose and Coverage 590Administration 590Safety and Health Standards 590Record-Keeping Requirements 591

, OSHA Enforcement 592Penalties 593 , 'OSHA's Impact 594

Assessing the Costs and Benefits of Occupational Safety and HealthPrograms 595Organizational Safety and Health Programs 596

Loss Control 597The Role of the Safety Committee 598Safety Rules 598Employee Selection 599Training for Employees and Supervisors 599Feedback and Incentives 601

Health Hazards at Work 603The Need for Safeguards 603AIDS and Business 604

Employee Assistance Programs 606Do Employee Assistance Programs Work? 606How Employee Assistance Programs Work 607More on the Role of the Supervisor 607Alcoholism 608Drug Abuse 609Violence at Work 610

Corporate Health Promotion: The Concept of "Wellness" 612Linking Unhealthy Lifestyles to Health-Care Costs 613Evaluation: Do Wellness Programs Work? 614Wellness Programs and the Americans withDisabilities Act 616

Human Resource Management in Action: Conclusion 616Substance Abuse on the Job Produces Tough Policy Choices forManagers 616

Summary 618Key Terms 618Discussion Questions 618

Contents XIX

Applying Your Knowledge 619Case 15-1: Skyline Machine Shop 619

References 620

CHAPTER 16 INTERNATIONAL DIMENSIONS OF HUMAN RESOURCEMANAGEMENT 628Questions This Chapter Will Help ManagersAnswer 628Human Resource Management in Action 629

What's It Like to Be a Global Manager? 629The Global Corporation: A Fact of Modern OrganizationalLife 630

Signs of Globalization 630The Backlash against Globalization 632The Costs of Overseas Executives 633

The Role of Cultural Understanding in International ManagementPractice 635 ,Human Resource Management Practices as a CulturalVariable - 635

Sense of Self and Space 636Dress and Appearance 636Food and Feeding Habits 636Communication and Language 636Time and Time Consciousness 637Relationships 637Values and Norms 637Beliefs and Attitudes 638Work Motivation and Practices I 638Mental Processes and Learning- 638Lessons Regarding Cross-Cultural Differences 641

Human Resource Management Activities of GlobalCorporations 643

Organizational Structure 643Workforce Planning 644Recruitment -. 645International Staffing 646Orientation 651Cross-Cultural Training and Development 652Integration of Training and Business Strategy 655International Compensation 656Labor Relations in the International Arena 663Toward International Labor Standards 664The North American Free Trade Agreement 665

Repatriation 666Planning 666Career Management 666Compensation 667

XX . Contents

Human Resource Management in Action: Conclusion 667What's It Like to Be a Global Manager? 667

Summary 668 \Key Terms 669Discussion Questions 670Applying Your Knowledge 670

Exercise 16-1: Expatriate Orientation Role-Play 670References 671

GLOSSARY 678

CREDITS 697

NAME INDEX 699

SUBJECT INDEX 706